<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 27, 1997
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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LEUKOSITE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 2834 04-3173859
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
215 FIRST STREET
CAMBRIDGE, MA 02142
(617) 621-9350
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
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CHRISTOPHER K. MIRABELLI, PH.D.
CHAIRMAN OF THE BOARD OF DIRECTORS,
PRESIDENT AND CHIEF EXECUTIVE OFFICER
LEUKOSITE, INC.
215 FIRST STREET
CAMBRIDGE, MA 02142
(617) 621-9350
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
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WITH COPIES TO:
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JUSTIN P. MORREALE, ESQ. STEVEN D. SINGER, ESQ.
JULIO E. VEGA, ESQ. VIRGINIA H. KINGSLEY, ESQ.
BINGHAM, DANA & GOULD LLP HALE AND DORR LLP
150 FEDERAL STREET 60 STATE STREET
BOSTON, MA 02110 BOSTON, MA 02109
(617) 951-8000 (617) 526-6000
</TABLE>
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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<CAPTION>
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PROPOSED MAXIMUM
PROPOSED MAXIMUM AGGREGATE
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED(1) PER SHARE(2) PRICE(2) REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------
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Common Stock, $0.01 par value........... 2,875,000 $10.00 $28,750,000 $8,713.00
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(1) Includes up to 375,000 shares of Common Stock which the Underwriters have
the option to purchase from the Company to cover over-allotments, if any.
See "Underwriting."
(2) Estimated solely for the purpose of determining the registration fee in
accordance with Rule 457(o) under the Securities Act of 1933.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED JUNE 27, 1997
PROSPECTUS
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2,500,000 SHARES
[LOGO]
LEUKOSITE, INC.
COMMON STOCK
All of the 2,500,000 shares of Common Stock offered hereby are being sold
by the Company. Prior to this offering, there has been no public market for the
Common Stock of the Company. It is currently estimated that the initial public
offering price will be between $8.00 and $10.00 per share. See "Underwriting"
for a discussion of the factors to be considered in determining the initial
public offering price. The Company has applied to have the Common Stock approved
for quotation on the Nasdaq National Market under the symbol LKST.
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THE SHARES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" COMMENCING ON PAGE 5.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2)
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Per Share........................ $ $ $
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Total(3)......................... $ $ $
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(1) See "Underwriting" for indemnification arrangements with the several
Underwriters.
(2) Before deducting expenses payable by the Company estimated at $600,000.
(3) The Company has granted to the Underwriters a 30-day option to purchase up
to 375,000 additional shares of Common Stock solely to cover
over-allotments, if any. If all such shares are purchased, the total Price
to Public, Underwriting Discount and Proceeds to Company will be
$ , $ and $ , respectively. See "Underwriting."
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The shares of Common Stock are offered by the several Underwriters subject
to prior sale, receipt and acceptance by them, and subject to the right of the
Underwriters to reject any order in whole or in part and certain other
conditions. It is expected that certificates for such shares will be available
for delivery on or about , 1997, at the offices of the agent of
Hambrecht & Quist LLC in New York, New York.
HAMBRECHT & QUIST UBS SECURITIES
, 1997
<PAGE> 3
Leukosite's drug discovery and development programs:
selectively blocking leukocytes and their role in diseases.
[GRAPHIC OF LEUKOCYTE CELL TYPES AND THEIR ASSOCIATION WITH INFLAMMATORY,
AUTOIMMUNE, CANCER AND OTHER DISEASES.]
A variety of diseases result when leukocytes malfunction. Leukosite's drug
discovery and development programs target molecules on the surface of
disease-causing leukocytes. Drugs that bind to these molecules will selectively
destroy or block the functions of leukocytes. Leukosite's technology and
expertise provide a platform for the identification of novel and proprietary
anti-cancer, anti-inflammatory and anti-viral drugs.
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CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE MARKET PRICE OF THE COMMON
STOCK, INCLUDING BY ENTERING STABILIZING BIDS, EFFECTING SYNDICATE COVERING
TRANSACTIONS OR IMPOSING PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES,
SEE "UNDERWRITING."
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LEUKOSITE and the Company's logo are trademarks of the Company. This
Prospectus also includes trademarks of companies other than LeukoSite.
<PAGE> 4
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and the Consolidated Financial Statements and Notes thereto
appearing elsewhere in this Prospectus. The Common Stock offered hereby involves
a high degree of risk. See "Risk Factors."
THE COMPANY
LeukoSite, Inc. ("LeukoSite" or the "Company") is a leader in the discovery
and development of therapeutics based upon the biology of leukocytes (white
blood cells), with potential applications in cancer and inflammatory, autoimmune
and viral diseases. The Company's technologies and expertise in leukocyte
biology facilitate the discovery and development of novel and proprietary drugs
that destroy or block the disease-causing actions of leukocytes. The Company has
one product candidate that has completed Phase II clinical trials, two product
candidates that are expected to begin human clinical trials by early 1998, and
seven small molecule drug discovery programs.
In a properly functioning immune system, leukocytes rid the body of
infectious organisms and repair damage to tissues and organs. However,
leukocytes can also cause or exacerbate disease processes when their growth is
uncontrolled, resulting in malignant diseases such as lymphomas and leukemias,
or when they are abnormally recruited into tissues, resulting in autoimmune or
inflammatory diseases. In addition, disease can also result when viruses such as
HIV attach to, invade and destroy leukocytes.
LeukoSite focuses on distinct cell surface molecules found on leukocytes
and their roles in disease. The Company is developing monoclonal antibodies and
small molecule drugs that selectively deplete leukocytes or block specific
leukocyte recruitment pathways controlled by chemokines and their receptors as
well as by integrins and adhesion molecules. LeukoSite believes that these drugs
will have a high degree of specificity and reduced side effects compared to
existing anti-cancer, anti-inflammatory, immunosuppressive and anti-viral
therapies.
The Company expects to initiate late stage clinical trials of its lead
product candidate, LDP-03, in 1998. LDP-03 is a humanized monoclonal antibody to
the leukocyte antigen CAMPATH, which was licensed by the Company after reviewing
data from Phase I and II clinical trials showing activity in the treatment of
chronic lymphocytic leukemia. The Company has entered into a joint venture with
Ilex Oncology, Inc. ("Ilex") for the clinical development and commercialization
of LDP-03. Under the terms of the agreement with Ilex, LeukoSite and Ilex will
generally share equally in any profits from the sales of LDP-03 and in all
future research, development, clinical and commercialization costs. The
Company's second product candidate, LDP-01, is a humanized anti-integrin
monoclonal antibody that inhibits early leukocyte recruitment and inflammation
resulting from reperfusion injury. The Company intends to initiate two Phase
I/IIa clinical studies of LDP-01 in the United Kingdom in early 1998, one for
kidney transplantation and a second for thrombotic stroke. The Company's third
product candidate, LDP-02, is a humanized monoclonal antibody to the a4b7
integrin and is being developed for the treatment of inflammatory bowel disease,
such as Crohn's disease and ulcerative colitis. The Company intends to initiate
a Phase I/IIa study of LDP-02 in the United Kingdom in early 1998.
To date, the Company has also generated six chemokine-receptor drug
discovery targets that are the subject of collaborations with pharmaceutical
companies for small molecule drug discovery and development. The Company has
collaboration agreements with Warner-Lambert Company ("Warner-Lambert"), Roche
Bioscience and Kyowa Hakko Kogyo Co. Ltd. As of March 31, 1997, the Company had
received $5.1 million under these collaborations for research funding and
license fees and will be entitled to receive $16.3 million of additional funding
that is not subject to the achievement of milestones. In addition, in the event
that a product is successfully developed and commercialized under each of the
collaborations, LeukoSite will be entitled to receive up to $44.3 million in
development and commercialization milestone payments, as well as royalties
associated with product sales. As of March 31, 1997, Warner-Lambert had invested
$9.0 million and Roche Finance Ltd had invested $3.0 million in equity of the
Company.
The Company's executive offices are located at 215 First Street, Cambridge,
Massachusetts 02142, and its telephone number is (617) 621-9350.
3
<PAGE> 5
THE OFFERING
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Common Stock offered by the Company................... 2,500,000 shares
Common Stock to be outstanding after the offering..... 8,683,176 shares(1)
Use of proceeds....................................... To fund research and development
programs and for working capital and
general corporate purposes. See "Use
of Proceeds."
Nasdaq National Market symbol......................... LKST
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SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
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<CAPTION>
FOR THE PERIOD FOR THE PERIOD
FROM INCEPTION FROM INCEPTION
(MAY 1, 1992) THREE MONTHS (MAY 1, 1992)
THROUGH YEARS ENDED DECEMBER 31, ENDED MARCH 31, THROUGH
DECEMBER 31, ------------------------------------- --------------------- MARCH 31,
1992 1993 1994 1995 1996 1996 1997 1997
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CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Revenues.................... $-- $ -- $ -- $ 450 $ 3,674 $-- $ 906 $ 5,030
Operating expenses.......... 129 2,044 5,782 7,917 9,873 2,238 3,160 28,905
Interest income (expense),
net....................... -- (19) 148 (10) 177 11 75 371
----- ------- ------- ------- ------- ------- ------- --------
Net loss (2)................ $ (129) $(2,063) $(5,634) $(7,477) $(6,022) $(2,227) $(2,179) $(23,504)
===== ======= ======= ======= ======= ======= ======= ========
Pro forma net loss per
common share (2).......... $ (1.04) $ (.35)
======= =======
Shares used in computing pro
forma net loss per common
share (2)................. 5,770 6,289
======= =======
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<CAPTION>
MARCH 31, 1997
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PRO FORMA
ACTUAL PRO FORMA(3) AS ADJUSTED(4)
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CONSOLIDATED BALANCE SHEET DATA:
Cash, cash equivalents and marketable securities...................... $ 11,576 $ 11,576 $ 31,901
Working capital....................................................... 8,988 8,988 29,313
Total assets.......................................................... 13,901 13,901 34,226
Long-term obligations, net of current portion......................... 1,210 1,210 1,210
Redeemable convertible preferred stock................................ 24,977 -- --
Deficit accumulated during development stage.......................... (23,748) (23,748) (23,748)
Stockholders' equity (deficit)........................................ (14,998) 9,979 30,304
</TABLE>
- ------------------------------
(1) Based on the number of shares outstanding as of June 27, 1997. Excludes (i)
an aggregate of 967,074 shares of Common Stock issuable upon exercise of
stock options outstanding as of June 27, 1997 at a weighted average exercise
price of $3.89 per share and (ii) an aggregate of 84,145 shares of Common
Stock issuable upon exercise of warrants outstanding as of June 27, 1997, at
a weighted average exercise price per share of $4.10. See "Capitalization,"
"Management -- Amended and Restated 1993 Stock Option Plan" and Note 2 of
Notes to Consolidated Financial Statements.
(2) See Note 2 of Notes to Consolidated Financial Statements for an explanation
of the determination of shares used in computing pro forma net loss per
common share.
(3) Presented on a pro forma basis to give effect to the automatic conversion
upon the closing of this offering of all outstanding shares of the Company's
Preferred Stock into an aggregate of 5,087,935 shares of Common Stock
(assuming an initial public offering price of $9.00 per share).
(4) As adjusted to reflect the sale of 2,500,000 shares of Common Stock offered
by the Company hereby at an assumed initial public offering price of $9.00
per share and the receipt of the estimated proceeds therefrom. See "Use of
Proceeds" and "Capitalization."
------------------------------
Except in the Consolidated Financial Statements of the Company or as
otherwise noted, all information in this Prospectus: (i) assumes no exercise of
the Underwriters' over-allotment option; (ii) reflects a one-for-4.1 reverse
stock split of the Common Stock to be effected prior to the date of this
Prospectus; (iii) reflects the conversion upon the closing of this offering of
all outstanding shares of the Company's Preferred Stock into 5,087,935 shares of
Common Stock (assuming an initial public offering price of $9.00 per share);
(iv) reflects the conversion upon the closing of this offering of all
outstanding warrants to purchase shares of Preferred Stock into warrants to
purchase 84,145 shares of Common Stock; and (v) reflects the amendment of the
Company's Restated Certificate of Incorporation prior to the date of this
Prospectus. See "Capitalization," "Description of Capital Stock," "Underwriting"
and Notes to Consolidated Financial Statements.
4
<PAGE> 6
RISK FACTORS
This Prospectus contains forward-looking statements that involve risks and
uncertainties. Actual results could differ materially from those discussed in
the forward-looking statements as a result of certain factors, including those
set forth below and elsewhere in this Prospectus. The following risk factors
should be considered carefully in addition to the other information in this
Prospectus before purchasing the shares of Common Stock offered hereby.
Early Stage of Product Development; Absence of Developed Products. The
Company's research and development programs are at an early stage of
development, and the Company does not expect that any drugs resulting from its
or its collaborative partners' research and development efforts will be
commercially available for several years, if at all. The Company has not
optimized any small molecule lead compound or selected any small molecule drug
candidates. Any drug candidates developed by the Company will require
significant additional research and development efforts, including extensive
preclinical (animal and in vitro) and clinical testing as well as regulatory
approval to begin testing in humans. The Company has limited experience in
conducting preclinical trials and no experience in conducting clinical trials.
Furthermore, the results obtained in preclinical trials are not necessarily
indicative of results that will be obtained in later stages of preclinical
development or in human clinical testing. In addition, the Company's potential
drug candidates will be subject to the risks of failure inherent in the
development of pharmaceutical products. These risks include the possibilities
that no drug candidate will be found safe or effective, or will otherwise meet
applicable regulatory standards or receive the necessary regulatory clearances.
There can be no assurance that these drug candidates, if safe and effective,
will be developed into commercially viable drugs, will be economical to
manufacture or produce on a large scale, will be successfully marketed or will
achieve customer acceptance. Furthermore, the Company's potential drug
candidates are subject to the risks that the proprietary rights of third parties
will preclude the Company from marketing such drugs or that third parties will
market superior or equivalent drugs. The failure to develop safe, commercially
viable drugs would have a material adverse effect on the Company's business,
financial condition and results of operations.
Dependence on Collaborative Partners. A key element of the Company's
strategy is to accelerate certain of its drug discovery and development programs
and to fund its capital requirements, in part, by entering into collaboration
agreements with major pharmaceutical companies. The Company has entered into
collaboration agreements with Warner-Lambert, Roche Bioscience and Kyowa. Under
their collaboration agreements with the Company, the Company's collaborative
partners have the right, but are not obligated, to conduct preclinical and
clinical trials of compounds developed during the collaboration with the Company
and to develop and commercialize any drug candidates resulting from the
collaborations. The collaboration agreements allow the Company's collaborative
partners significant discretion in electing whether to pursue the development of
any potential drug candidates. As a result, the Company cannot control the
amount and timing of resources dedicated by the Company's collaborative partners
to their respective collaborations with the Company. The Company's receipt of
revenues from drug development milestones or royalties on sales under the
collaboration agreements is dependent upon the activities and the development,
manufacturing and marketing resources of its collaborative partners. There can
be no assurance that such partners will pursue the development and
commercialization of compounds resulting from the collaboration, that any such
development or commercialization would be successful or that the Company would
derive any revenue from such arrangements. Moreover, certain drug candidates
discovered by the Company may be competitive with its partners' drugs or drug
candidates. Accordingly, there can be no assurance that the Company's
collaborative partners will proceed with the development of LeukoSite's drug
candidates or that they will not pursue their existing or alternative
technologies in preference to LeukoSite's drug candidates. There can be no
assurance that the interests of the Company will continue to coincide with those
of its collaborative partners, that some of the Company's collaborative partners
will not develop independently or with third parties drugs that compete with
drugs of the types contemplated by the Company's collaboration agreements, or
that disagreements over rights or
5
<PAGE> 7
technology or other proprietary interests will not occur. Disagreements between
the Company and its collaborative partners could lead to delays in research or
in the development and commercialization of certain product candidates, or could
require or result in litigation or arbitration, which could be time-consuming
and expensive. Any of these factors could have a material adverse effect on the
Company's business, financial condition and results of operations.
The Company is relying on its collaborative partners to fund a substantial
portion of its research operations over the next several years. Although each of
the collaboration agreements may be extended past its initial term, there can be
no assurance that these contracts will be extended or renewed, or that any
renewal, if made, will be on terms favorable to the Company. Moreover, each of
the collaboration agreements with Warner-Lambert may be terminated at any time
and for any reason upon six months written notice. The collaboration with Kyowa
may be terminated after April 1998 with 60 days notice. Consequently, there can
be no assurance that any of the collaboration agreements will remain in effect
for their expected term. If any of the collaborative partners terminates or
breaches its agreement with the Company, or otherwise fails to conduct its
collaborative activities in a timely manner, the development or
commercialization of any drug candidate or research program under the
collaboration agreement with such partner could be delayed, terminated, or the
Company may be required to undertake unforeseen additional responsibilities or
to devote unbudgeted additional resources to such development or
commercialization. In addition, there have been a significant number of recent
consolidations among pharmaceutical companies. Such consolidations involving the
companies with which the Company is collaborating could result in the diminution
or termination of, or delays in, the development or commercialization of drug
candidates or research programs under the collaboration agreements. The
termination or expiration of research provisions of any of the Company's
collaboration agreements, the failure by any of the Company's collaborative
partners to provide research and development funding, or the merger or
consolidation of any of the Company's collaborative partners could have a
material adverse effect on the Company's business, financial condition and
results of operations. See "Business--Collaboration Agreements."
Limited Operating History; History of Losses and Expectation of Future
Losses; Uncertainty of Future Profitability. The Company has a limited history
of operations. The Company has incurred a net operating loss every year since
its inception in May 1992, and has an accumulated deficit of approximately $23.7
million through March 31, 1997. The Company expects to incur significant
additional operating losses over the next several years and expects cumulative
losses to increase substantially due to expanded research and development
efforts, preclinical and clinical trials and the funding of development
activities under the joint venture with Ilex. In the next few years, the
Company's revenues are expected to be limited to any research support payments
it may receive under the collaboration agreements and any amounts received under
other research or drug development collaborations that the Company may
establish. There can be no assurance, however, that the Company will be able to
establish any additional collaborative relationships on terms acceptable to the
Company or maintain in effect the current collaboration agreements or achieve
the milestones thereunder that are required for the Company to receive funds
from its current collaborative partners. The Company's ability to generate
revenue or achieve profitability is dependent in part on its or its
collaborative partners' ability to complete the development of drug candidates
successfully, to obtain regulatory approvals for the drug candidates and to
manufacture and commercialize any resulting drugs. The Company will not receive
revenues or royalties from commercial sales for a number of years, if ever, and
any royalties may be subject to reduction under certain circumstances. Failure
to receive significant revenues or achieve profitable operations would impair
the Company's ability to sustain operations. There can be no assurance that the
Company will ever successfully identify, develop, commercialize, manufacture and
market any products, obtain required regulatory approvals or achieve
profitability. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations--Liquidity and Capital Resources."
Substantial Additional Financing Requirements; Uncertainty of Available
Funding. The Company will require substantial additional funds in order to
finance its drug discovery and development
6
<PAGE> 8
programs, fund operating expenses, pursue regulatory clearances, develop
manufacturing, marketing and sales capabilities and prosecute and defend its
intellectual property rights. The Company depends upon its collaborative
partners for research funding. As of March 31, 1997, the Company had received
approximately $5.1 million for research and development under its collaboration
agreements. There can be no assurance that the Company will continue to receive
funding under its existing collaboration agreements, or that existing and
potential collaboration agreements will be sufficient to fund the Company's
operating expenses. See "Dependence on Collaborative Partners."
The Company believes that the net proceeds of this offering, together with
its existing capital resources, interest income and revenue from the
collaboration agreements, will be sufficient to fund its currently planned
operating expenses and capital requirements through early 2000. However, there
can be no assurance that such funds will be sufficient to meet the Company's
operating expenses and capital requirements during such period. The Company's
actual cash requirements may vary materially from those now planned and will
depend upon numerous factors, including the results of the Company's research
and development and collaboration programs, the timing and results of
preclinical and clinical trials, the timing and costs of obtaining regulatory
approvals, the progress of the milestone and royalty producing activities of the
Company's collaborative partners, the level of resources that the Company
commits to the development of manufacturing, marketing and sales capabilities,
the cost of filing, prosecuting, defending and enforcing patent claims and other
intellectual property rights, the ability of the Company to maintain existing
and establish new collaboration agreements with other companies, the
technological advances and activities of competitors and other factors.
The Company will need to raise substantial additional capital to fund its
operations. The Company intends to seek such additional funding through public
or private financing or collaboration or other arrangements with collaborative
partners. If additional funds are raised by issuing equity securities, further
dilution to existing stockholders may result and future investors may be granted
rights superior to those of existing stockholders. There can be no assurance,
however, that additional financing will be available from any sources or, if
available, will be available on acceptable terms. If adequate funds are not
available, the Company may be required to delay, reduce the scope of or
eliminate one, more or all of its development programs or to obtain funds by
entering into arrangements with collaborative partners or others that require
the Company to issue additional equity securities or to relinquish rights to
certain technologies or drug candidates that the Company would not otherwise
issue or relinquish in order to continue independent operations. See "Use of
Proceeds" and "Management's Discussion and Analysis of Financial Condition and
Results of Operation--Liquidity and Capital Resources."
Impact of Extensive Government Regulation. The Company's products under
development are subject to extensive and rigorous regulation by the federal
government, principally the Food and Drug Administration ("FDA"), and by state
and local governments. If these products are marketed abroad, they also are
subject to export requirements and to regulation by foreign governments. The
applicable regulatory clearance process, which must be completed prior to the
commercialization of a product, is lengthy and expensive. There can be no
assurance that the Company will be able to obtain necessary regulatory approvals
on a timely basis, if at all, for any of its products under development, and
delays in receipt or failure to receive such approvals, the loss of previously
received approvals, or failure to comply with existing or future regulatory
requirements could have a material adverse effect on the Company's business,
financial condition and results of operations.
The Federal Food, Drug, and Cosmetic Act (the "FDC Act") and the Public
Health Service Act (the "PHS Act") govern or influence the development, testing,
manufacture, labeling, storage, approval, advertising, promotion, sale and
distribution of most FDA-regulated products in the United States. Failure to
comply with the applicable FDA regulatory requirements can result in sanctions
being imposed on the Company (or its collaborative partners and contract
manufacturers), including warning letters, fines, product recalls or seizures,
injunctions, refusals to permit products to be imported into or exported out of
the United States, FDA refusal to grant premarket approval of products and/or to
allow the Company to enter into government supply contracts, withdrawals of
previously approved marketing applications and criminal prosecutions.
7
<PAGE> 9
Product development and approval to meet FDA regulatory requirements takes
a number of years, involves the expenditure of substantial resources and is
uncertain. Many products that initially appear promising ultimately do not reach
the market because they are not found to be safe or effective or cannot meet the
FDA's other regulatory requirements. In addition, there can be no assurance that
the current regulatory framework will not change or that additional regulations
will not arise at any stage of the Company's product development that may affect
approval, delay the submission or review of an application or require additional
expenditures by the Company.
It is uncertain if and when the Company, independently or with its
collaborative partners, will submit any marketing applications for any of its
monoclonal antibodies or small molecular antagonists under development for any
indications. There can be no assurance that any studies will be completed or, if
completed, will demonstrate that the products are safe and effective for their
intended uses, or that required approval will be granted by FDA on a timely
basis, or at all, for any of these products for any studied indications. Failure
of the Company to obtain marketing approval of any of its products on a timely
basis, or at all, would have a material adverse effect on the Company's
business, financial condition and results of operations. See
"Business--Government Regulation."
All of the Company's product candidates will require FDA and foreign
government approvals for commercialization, none of which have been obtained.
The Company and Ilex are required to file an IND with the FDA before beginning
clinical trials of LDP-03 in the United States. The Company intends to commence
trials of its LDP-01 and LDP-02 product candidates in the United Kingdom and to
continue to perform preclinical and clinical trials abroad, subject to receipt
of required United Kingdom regulatory approvals. There can be no assurance that
as a result of a request from the FDA or otherwise, the Company would not be
required to repeat certain or all of such trials in the United States, which
would increase the time and expense required to obtain approval. See
"Business--Government Regulation--Foreign Requirements."
The effect of government regulation may be to delay marketing of the
Company's products under development for a considerable or indefinite time,
impose costly procedural requirements upon the Company's activities and furnish
a competitive advantage to larger companies or companies more experienced in
regulatory affairs. Delays in obtaining governmental regulatory approval could
adversely affect the Company's marketing strategy as well as the Company's
ability to generate revenue from commercial sales.
If regulatory approval is obtained, the Company will be required to comply
with a number of post-approval requirements, including reporting certain adverse
reactions, if any, to the FDA, post-marketing testing and surveillance to
monitor the safety and efficacy of the Company's product candidates and
complying with advertising, and promotional labeling requirements. In addition,
facilities and procedures used in the manufacture of the Company's product
candidates must comply with Good Manufacturing Practices ("GMP") prescribed by
the FDA. Both before and after approval is obtained, violations of regulatory
requirements may result in various adverse consequences, including the
suspension or termination of clinical trials, delays in approving or refusal to
approve a product, the withdrawal of an approved product from the market,
seizures of product, and/or the imposition of injunctions, criminal penalties
and/or civil penalties against the manufacturer and/or license holder.
In addition to the applicable FDA requirements, if the Company attempts to
sell its products overseas, the Company will be subject to foreign regulatory
requirements governing clinical trials, approvals and product sales. Whether or
not FDA approval has been obtained, approval of a product by the comparable
regulatory authorities of foreign countries must be obtained prior to the
commencement of marketing of the product in those countries. The approval
process varies from country to country and the time required may be longer or
shorter than that required for FDA approval. There can be no assurance that any
foreign country will approve any of the Company's product candidates on a timely
basis, if at all, or that if the Company receives such approval, that it will be
able to market
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products for the indications that the Company desires or that it will be able to
comply with post-approval restrictions.
The Company is subject to numerous federal, state and local laws and
regulations relating to such matters as safe working conditions, manufacturing
practices, environmental protection, fire hazard control, the experimental use
of animals and the disposal of hazardous or potentially hazardous substances.
There can be no assurance that the Company will not be required to incur
significant costs to comply with such laws and regulations in the future or that
such laws or regulations will not have a material adverse effect upon the
Company's business, financial condition and results of operations. See
"Business--Government Regulation."
Uncertainties Relating to Patents and Proprietary Rights. The Company's
success will depend in part on its ability to obtain United States and foreign
patent protection for its drug candidates and processes, preserve its trade
secrets and operate without infringing the proprietary rights of third parties.
Considerable importance is placed on obtaining patent and trade secret
protection for significant new technologies, products and processes. There can
be no assurance that any patents will issue from any of the patent applications
owned by, or licensed to, the Company. Further, there can be no assurance that
any rights the Company may have under issued patents will provide the Company
with sufficient protection against competitive products or otherwise cover
commercially valuable products or processes. Legal standards relating to the
validity of patents covering pharmaceutical and biotechnological inventions and
the scope of claims made under such patents are still developing. There is no
consistent policy regarding the breadth of claims allowed in biotechnology
patents. The patent position of the Company is highly uncertain and involves
complex legal and factual questions. There can be no assurance that any existing
or future patents issued to, or licensed by, the Company will not subsequently
be challenged, infringed upon, invalidated, found to be unenforceable or
circumvented by others. In addition, patents may have been granted, or may be
granted, covering products or processes that are necessary or useful to the
development of the Company's drug candidates. If the Company's drug candidates
or processes are found to infringe upon the patents, or otherwise impermissibly
utilize the intellectual property of others, the Company may be required to
obtain licenses from third parties to utilize the patents or proprietary rights
of others. There can be no assurance that the Company will be able to obtain
such licenses on acceptable terms, or at all. In such event, the Company's
development, manufacture and sale of such drug candidates could be severely
restricted or prohibited. There has been significant litigation in the
pharmaceutical and biotechnology industry regarding patents and other
proprietary rights. If the Company becomes involved in litigation regarding its
intellectual property rights or the intellectual property rights of others, the
potential cost of such litigation and the potential damages that the Company
could be required to pay could be substantial.
The Company's product candidates LDP-01, LDP-02 and LDP-03 are recombinant
humanized, complementarity determining region ("CDR")-grafted, monoclonal
antibodies. The Company is aware that patents have been issued in the United
States to third parties which relate to processes for producing recombinant
antibodies, compositions useful in the production of recombinant antibodies,
CDR-grafted humanized antibodies, processes for producing CDR-grafted humanized
antibodies and compositions useful in the production of CDR-grafted humanized
antibodies. Patents have also been granted to these parties in Europe, but the
European patents have been opposed. The Company may be required to seek licenses
under these patents for its humanized antibody products.
The Company is also aware of patents which have been issued to a third
party in the United States and Europe variously relating to "chimeric"
immunoglobulins and immunoglobulin chains, processes for production of such
chimeric molecules and compositions useful in the production of chimeric
molecules. The European patent has been opposed. Assuming that the European
patent survives in current form, the Company believes that, properly construed,
the United States and European patent claims do not cover the Company's LDP-01,
LDP-02 or LDP-03 product candidates.
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<PAGE> 11
The Company is also aware of patents which have been issued to third
parties in the United States and/or Europe variously relating to certain
modified humanized immunoglobulins, methods of producing modified humanized
immunoglobulins, compositions useful in the production of modified humanized
immunoglobulins and methods of use of modified humanized immunoglobulins. The
European patents in these areas have also been opposed. The Company believes
that, properly construed, the U.S. patent claims do not cover the Company's
LDP-01 and LDP-03 product candidates, and that no valid claim of the European
patents covers the Company's LDP-01 and LDP-03 product candidates. The Company
is uncertain about the scope of the claims which have issued in the United
States and is uncertain whether these claims, when properly construed, cover
LDP-02. If it is determined that they do encompass LDP-02, the Company will
likely be required to seek a product license.
The Company is also aware of other third party published applications
relating to altered antibodies, methods of use of altered antibodies and methods
of production of altered antibodies. To the Company's knowledge, neither these
applications nor possible unpublished counterpart applications have proceeded to
grant in Europe or have issued as U.S. patents. There can be no assurance that
the Company may not be required to seek a license to some or all of the patents
which might issue from these patent applications.
The Company may be required to seek or choose to seek licenses to some or
all of these or other patents in order to develop and commercialize certain
product candidates or potential products incorporating the Company's technology
in the United States, Europe and other markets. There can be no assurance that
such licenses, if required, will be available to the Company, or that if they
are available, they can be obtained on commercially acceptable terms, and the
failure to do so could have a material adverse effect on the Company. In the
absence of required licenses, the patent owners may obtain an injunction, which
could prevent the manufacture, sale and use of the Company's products, with
material adverse effects on the Company. In addition, assuming such patents are
valid and enforceable, the Company can provide no assurances that if enforcement
actions were brought by the patent owners against the Company that such actions
would be resolved in the Company's favor. The Company may also choose to
challenge the validity of one or more patents or patent claims. Any such action
or challenge could result in substantial costs to the Company and diversion of
Company resources and could have a material adverse effect on the Company.
Moreover, there can be no assurance that the Company would be successful
defending against an infringement action or in challenging any such patents or
patent claims, and the failure to do so could have a material adverse effect on
the Company. If the Company does not obtain required licenses, it could
encounter delays in product development while it attempts to design around the
patents, or it could find that the development, manufacture or sale of products
requiring such licenses could be foreclosed.
Litigation, which could result in substantial costs to the Company, may be
necessary to enforce any patents issued or licensed to the Company or to
determine the scope and validity of third party proprietary rights. Some of the
Company's competitors have, or are affiliated with companies having,
substantially greater resources than the Company, and such competitors may be
able to sustain the costs of complex patent litigation to a greater degree and
for longer periods of time than the Company. Uncertainties resulting from the
initiation and continuation of any patent or related litigation could have a
material adverse effect on the Company's business, financial condition and
results of operations. An adverse outcome in connection with an infringement
proceeding brought by a third party could subject the Company to significant
liabilities, require disputed rights to be licensed from third parties or
require the Company to cease using the disputed technology, any of which could
have a material adverse effect on the Company's business, financial condition or
results of operations. If another party or parties file or have filed patent
applications in the United States that claim technology also claimed by the
Company, the Company may have to participate in interference proceedings
declared by the Patent and Trademark Office to determine priority of invention.
Participation in such proceedings could result in substantial costs to the
Company. The Company could incur substantial costs as a result
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<PAGE> 12
of such proceedings, whether or not the eventual outcome is favorable to the
Company, or results in a determination that an opposing party is entitled to the
patent, or results in another unfavorable result.
In addition to patent protection, the Company relies on trade secrets,
proprietary know-how and technological advances which it seeks to protect, in
part, by confidentiality agreements with its collaborative partners, employees
and consultants. There can be no assurance that these confidentiality agreements
will not be breached, that the Company would have adequate remedies for any such
breach, or that the Company's trade secrets, proprietary know-how and
technological advances will not otherwise become known or be independently
discovered by others. See "Business--Patents and Proprietary Rights."
Intense Competition; Rapid Technological Change. The biotechnology and
pharmaceutical industries are intensely competitive and subject to rapid and
significant technological change. Competitors of the Company in the United
States and elsewhere are numerous and include, among others, major,
multinational pharmaceutical and chemical companies, specialized biotechnology
firms and universities and other research institutions. Many of these
competitors have greater financial and other resources, including larger
research and development staffs and more effective marketing and manufacturing
organizations, than the Company. Acquisitions of competitors by large
pharmaceutical companies or others could enhance financial, marketing and other
resources available to such competitors. In addition, academic and government
institutions have become increasingly aware of the commercial value of their
research findings, and such institutions are now more likely to enter into
exclusive licensing agreements with commercial enterprises, including
competitors of the Company, to market commercial products. There can be no
assurance that the Company's competitors will not succeed in developing or
licensing on an exclusive basis technologies and drugs that are more effective
or less costly than any which are being developed by the Company or which would
render the Company's technology and future drugs obsolete and noncompetitive.
The Company's competitors may succeed in obtaining FDA or other regulatory
approvals for drug candidates before the Company. Companies that commence
commercial sale of their drugs before their competitors may achieve a
significant competitive advantage, including certain patent and FDA marketing
exclusivity rights that would delay the Company's ability to market certain
products. There can be no assurance that drugs resulting from the Company's
research and development efforts, or from the joint efforts of the Company and
its collaborative partners, if approved for sale, will be able to compete
successfully with competitors' existing products or products under development.
Biotechnology and related pharmaceutical technology have undergone rapid
and significant change. The Company expects that the technologies associated
with the Company's research and development will continue to develop rapidly,
and the Company's future success will depend in large part on its ability to
maintain a competitive position with respect to these technologies. Rapid
technological development by the Company or others may result in compounds,
products or processes becoming obsolete before the Company recovers any expenses
it incurs in connection with developing such products. There can be no assurance
that the Company's approach to drug discovery will be viable or that it will
achieve market acceptance or that it will not be superseded by other drug
discovery techniques. See "Business--Competition."
Reliance on Contract Manufacturers; Lack of Manufacturing Experience. The
Company is dependent on third parties for the manufacture of its product
candidates and is aware of only a limited number of manufacturers which it
believes have the ability and capability to manufacture the Company's drug
candidates for preclinical and clinical trials. The Company is currently in
discussions with a contract manufacturer for the production of LDP-03 for some
or all of the Company's clinical trial production. The Company has also been
relying on the Therapeutic Antibody Center ("TAC") for the manufacture of LDP-01
and LDP-02 for preclinical testing and intends to employ the manufacturing
capability of the TAC through early clinical trials. If the Company were
required to transfer manufacturing processes to other third-party manufacturers,
it could experience significant delays in supply. Delays in production would
delay the Company's preclinical and clinical trials which could have a material
adverse effect on the Company's business, financial condition and results of
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<PAGE> 13
operations. There can be no assurance that the Company will be able to enter
into satisfactory arrangements with contract manufacturers or that such parties
will be able to meet the Company's needs with respect to timing, quantity or
quality. If, at any time, the Company is unable to maintain, develop or contract
for manufacturing capabilities on acceptable terms, the Company's ability to
conduct preclinical and clinical trials with the Company's drug candidates will
be adversely affected, resulting in delays in the submission of drug candidates
for regulatory approvals. See "Business--Manufacturing and Supply."
The Company's collaborative partners generally have the exclusive right to
manufacture products resulting from the collaborations. The Company has no
experience in, and currently lacks the facilities and personnel to, manufacture
products in accordance with GMP as prescribed by the FDA or to produce an
adequate supply of compounds to meet future requirements for preclinical and
clinical trials. See "Business--Collaboration Agreements."
Reliance upon the Therapeutic Antibody Centre. The Company has an
exclusive research and license agreement with the TAC. As a part of the
agreement, the Company employs the TAC's manufacturing capabilities and
established network of clinical investigators to perform early stage clinical
trials on certain monoclonal antibodies being developed by the Company for
therapeutic use. By leveraging the TAC's established antibody manufacturing
infrastructure and network of clinical investigators, the Company is able to
obtain a source of supply for its monoclonal antibody requirements and to
commence early clinical trials in the United Kingdom with respect to its
monoclonal antibodies without having to make costly investments in manufacturing
infrastructure and personnel. If the Company's collaborative relationship with
the TAC were to terminate or if the TAC were otherwise unable to supply the
Company with monoclonal antibodies, the Company would have to incur significant
costs and suffer delays in commencing and completing early clinical trials.
There can be no assurance that the Company will have the resources required to
do so.
In addition, the Company believes that its access to the resources of the
TAC will enable the Company to commence and complete early phase clinical trials
in the United Kingdom more rapidly and that this in turn may accelerate the
commencement of clinical trials in the United States if the FDA accepts the
results of any such United Kingdom clinical trials in support of an application
to commence such clinical trials in the United States. However, there can be no
assurance that any results obtained by the Company in any clinical trials in the
United Kingdom will be satisfactory to the FDA or be accepted by the FDA as the
basis for the Company to clinical trials in the United States. If such results
are not satisfactory to the FDA, the Company may be required to repeat certain
or all of such trials in the United States, which would increase the time and
expense to obtain approvals relating to such drug candidates in the United
States.
Risks Associated with Ilex Joint Venture. The Company has entered into a
joint venture with Ilex for the development and commercialization of LDP-03 for
chronic lymphocytic leukemia. As part of the joint venture, the Company is
obligated to provide up to $5 million in funding during the next two years.
There can be no assurance that the Company will have the cash available or will
desire to maintain its commitment to the joint venture. In the event that
LeukoSite fails for any reason to make a required capital contribution to the
joint venture, Ilex may gain control of the management of the joint venture and
become entitled to a greater share of the profits derived from product sales of
LDP-03. There can also be no assurance that Ilex will have the cash available or
will desire to maintain its commitment to the joint venture. In the event that
Ilex fails for any reason to make a required capital contribution to the joint
venture, the Company may be required to make additional capital contributions to
the joint venture to maintain the desired level of development activities by the
joint venture. There can be no assurance that the Company will be able to
compensate for any failure by Ilex to make any capital contribution or that the
joint venture would be able to continue operations with lesser funding. In
addition, the joint venture agreement provides for either company, under certain
circumstances, to purchase the other company's ownership of the joint venture
upon a change in control of such company (as defined therein) or after October
2, 2000. As a result, there can be no assurance that the Company will ever be
able to recoup its investment in the joint venture. See
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"Management Discussion and Analysis of Financial Condition and Results of
Operations" and "Business -- Collaboration Agreements -- Ilex."
No Assurance of Market Acceptance. There can be no assurance that any
drugs successfully developed by the Company, independently or with its
collaborative partners, if approved for marketing, will achieve market
acceptance. The degree of market acceptance of any drugs developed by the
Company will depend on a number of factors, including the establishment and
demonstration of clinical efficacy and safety, their potential advantage over
existing therapies and reimbursement policies of government and third-party
payors. There can be no assurance that physicians, patients or the medical
community in general will accept and utilize any drugs that may be developed by
the Company independently or with its collaborative partners.
Dependence on Key Personnel and Consultants. The Company is highly
dependent upon the efforts of its senior management, scientific team and
consultants, including the members of its Scientific Advisory Board. The loss of
the services of one or more of these individuals might impede the achievement of
the Company's objectives. Because of the specialized scientific nature of the
Company's business, the Company is highly dependent upon its ability to attract
and retain qualified scientific and technical personnel and consultants. There
is intense competition among major pharmaceutical and chemical companies,
specialized biotechnology firms and universities and other research institutions
for qualified personnel and consultants in the areas of the Company's
activities. There can be no assurance that the Company will be able to continue
to attract or retain the qualified personnel and consultants necessary for the
development of its business. The failure to recruit or retain key scientific and
technical personnel and consultants could adversely affect the Company's
business, operating results and financial condition. See "Business--Employees,"
"--Scientific Advisory Board" and "Management--Executive Officers and
Directors."
Lack of Marketing and Sales Capability and Experience. The Company has not
yet invested in the development of marketing or sales capabilities. The Company
has no experience in marketing pharmaceutical products. The Company has granted
marketing rights to its collaborative partners with respect to drugs developed
through the collaboration agreements. The Company has retained the right to
participate jointly with Warner-Lambert in the promotion in North America of any
drugs developed through their collaboration. If the Company elects to exercise
these joint marketing and promotional rights with respect to any drug candidate,
the Company will be required, under the terms of the Warner-Lambert agreements,
to assume certain of the costs associated with preclinical and clinical trials
and regulatory filings required to obtain marketing approval in such countries.
There can be no assurance that the Company will have the resources necessary to
be able to assume these costs and, accordingly, the Company may not be able to
exercise these rights with respect to any particular drug. In addition, the
Company may seek to collaborate with third parties to market those drugs
developed by the Company independent of any drug development collaboration or
may seek to market and sell such drugs directly. If the Company seeks to
collaborate with a third party, there can be no assurance that an agreement can
be reached on acceptable terms. If the Company seeks to market and sell such
drugs directly, the Company will need to hire additional personnel skilled in
marketing and sales as it develops drugs with commercial potential. There can be
no assurance that the Company will be able to acquire, or establish third-party
relationships to provide, any or all of these capabilities. See
"Business--Collaboration Agreements."
Management of Growth. The Company's success will depend on the expansion
of its operations and the management of these expanded operations. The Company
also must successfully manage multiple additional collaboration relationships.
There can be no assurance that the Company will be successful in managing its
expansion and meeting the staffing and administrative requirements that
additional collaboration relationships will bring. Failure to achieve these
goals could have a material adverse effect on the Company's business, financial
condition and results of operations. See "Business--LeukoSite's Drug Discovery
Programs" and "--Employees."
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Uncertainties Related to Pharmaceuticals Pricing and Third Party
Reimbursement. The successful commercialization of, and the interest of
potential collaborative partners to invest in, the development of the Company's
drug candidates will depend substantially on reimbursement of the costs of the
resulting drugs and related treatments at acceptable levels from government
authorities, private health care insurers and other organizations, such as
health maintenance organizations ("HMOs") and pharmacy benefits management
companies. There can be no assurance that reimbursement in the United States or
elsewhere will be available for any drugs the Company may develop or, if
available, will not be decreased in the future, or that reimbursement amounts
will not reduce the demand for, or the price of, the Company's drugs, thereby
adversely affecting the Company's business. If reimbursement is not available or
is available only to limited levels, there can be no assurance that the Company
will be able to obtain collaborative partners to manufacture and commercialize
its drugs, or would be able to obtain a sufficient financial return on its own
manufacture and commercialization of any future drugs.
Third-party payors are increasingly challenging the prices charged for
medical products and services. Also, the trend toward managed health care in the
United States and the concurrent growth of organizations such as HMOs, which can
control or significantly influence the purchase of health care services and
products, as well as legislative proposals to reform health care or reduce
government insurance programs, may result in lower prices for pharmaceutical
products. The cost containment measures that health care providers are
instituting, including practice protocols and guidelines and clinical pathways,
and the effect of any health care reform, could materially adversely affect the
Company's ability to sell any of its drugs, even if successfully developed and
approved. Furthermore, in certain foreign markets, pricing or profitability of
prescription pharmaceuticals is subject to government control. In the United
States there have been, and the Company expects that there will continue to be,
a number of federal and state proposals to implement similar government control.
The Company is unable to predict what additional legislation or regulation, if
any, relating to the health care industry or third-party coverage and
reimbursement may be enacted in the future or what effect such legislation or
regulation would have on the Company's business.
Exposure to Product Liability Claims and Limited Availability of
Insurance. The Company's business exposes it to potential liability risks that
are inherent in the testing, manufacturing and marketing of pharmaceutical
products. The use of the Company's drug candidates in clinical trials may expose
the Company to product liability claims and possible adverse publicity. These
risks will expand with respect to the Company's drug candidates, if any, that
receive regulatory approval for commercial sale. Product liability insurance for
the biotechnology industry is generally expensive, if available at all. The
Company does not have product liability insurance but intends to obtain such
coverage if and when its drug candidates are tested in clinical trials conducted
by the Company. However, such coverage is becoming increasingly expensive and
there can be no assurance that the Company will be able to obtain insurance
coverage at acceptable costs or in a sufficient amount, if at all. A successful
product liability claim or series of claims brought against the Company could
have a material adverse effect on the Company's business, financial condition
and results of operations.
Control by Management and Existing Stockholders. Upon completion of this
offering, the Company's officers, directors and principal stockholders and their
affiliates will own or control approximately 60% of the Company's outstanding
Common Stock. As a result, these stockholders, acting together, will have the
ability to control most matters requiring approval by the stockholders of the
Company, including the election of the Company's Board of Directors, the
adoption of charter amendments, and the approval of mergers and acquisitions and
other extraordinary corporate transactions. Such a concentration of ownership
may have the effect of delaying or preventing a change of control of the
Company, including transactions in which the stockholders might otherwise
receive a premium for their shares over their current market prices. See
"Principal Stockholders."
No Prior Public Market, Stock Price Volatility. Prior to this offering
there has been no public market for any of the Company's securities.
Accordingly, there can be no assurance that an active trading market will
develop after this offering or that the Common Stock offered hereby will not
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<PAGE> 16
decline below the initial public offering price. The initial public offering
price will be determined by negotiations between the Company and the
Underwriters. See "Underwriting." The market price of the Company's securities
is likely to be highly volatile and there has been a history of significant
volatility in the market price for shares of other companies in the
biotechnology field. Announcements of technological innovations, new commercial
products, preclinical and clinical trials by the Company or its competitors,
other evidence of the safety or efficacy of products of the Company or its
competitors, governmental regulations and developments, health care legislation,
developments relating to patents or proprietary rights of the Company or its
competitors, including litigation, fluctuations in the Company's operating
results, market conditions for biotechnology stocks in general and other factors
may have a significant effect on the market price of the Company's Common Stock.
In particular, the realization of any of the risks described in these "Risk
Factors" could have a material adverse effect on the market price of the
Company's Common Stock. See "Underwriting."
Possible Adverse Impact of Shares Available for Future Sale. Future sales
of substantial amounts of Common Stock (including shares issued upon the
exercise of outstanding options and warrants) in the public market after this
offering or the prospect of such sales could adversely affect the market price
of the Common Stock and may have a material adverse effect on the Company's
ability to raise any necessary capital to fund future operations. Upon
completion of this offering, the Company will have 8,683,176 shares of Common
Stock outstanding. The 2,500,000 shares offered hereby will be freely tradable
without restriction or further registration under the Securities Act of 1933, as
amended (the "Securities Act"), except for any shares held by "affiliates" of
the Company within the meaning of the Securities Act which will be subject to
the resale limitations of Rule 144 promulgated under the Securities Act ("Rule
144"). The remaining 6,183,176 shares are "restricted" securities that may be
sold only if registered under the Securities Act, or sold in accordance with an
applicable exemption from registration, such as Rule 144. The officers and
directors of the Company, each person known by the Company to beneficially own
more than 5% of the Common Stock and certain other stockholders, who together
hold 6,183,176 shares of Common Stock, and options to purchase an additional
967,074 shares of Common Stock, have agreed not to sell directly or indirectly,
any Common Stock without the prior written consent of Hambrecht & Quist LLC for
a period of 180 days from the date of this Prospectus (the "Lock-up
Agreements"). Commencing on the expiration of the Lock-up Agreements, 659,289
shares of Common Stock will be eligible for sale in the public market, subject
to compliance with Rule 144. In addition, holders of 5,981,716 shares of Common
Stock will be entitled to certain registration rights with respect to such
shares. If such holders, by exercising their registration rights, cause a large
number of shares to be registered and sold in the public market, such sales
could have a material adverse effect on the market price of the Common Stock. In
addition, any demand of such holders to include such shares in Company-initiated
registration statements could have an adverse effect on the Company's ability to
raise needed capital. See "Description of Capital Stock--Registration Rights"
and "Shares Eligible for Future Sale."
Potential Anti-Takeover Effect of Certain Charter and By-Law
Provisions. Pursuant to the Company's Restated Certificate of Incorporation
(the "Restated Certificate of Incorporation"), special meetings of stockholders
may be called only by the Chairman of the Board of Directors, the President, a
majority of the Board of Directors of the Company or holders of 20% or more of
the then outstanding shares of capital stock of the Company. The Company has
agreed in principle to give each of the entities affiliated with HealthCare
Investment Corporation, who will collectively own approximately 23% of the
Company's shares of Common Stock after the closing of this offering, the right
to call a special meeting of stockholders so long as they collectively hold 15%
of the then outstanding shares of capital stock of the Company. In addition, the
Restated Certificate of Incorporation authorizes the Board of Directors to issue
preferred stock and to determine its rights and preferences in order to
eliminate delays associated with a stockholder vote on specific issuances. The
Company has no present plans to issue any shares of preferred stock. The
Restated Certificate of Incorporation also provides for specific procedures for
director nominations by stockholders and submission of other proposals for
consideration at stockholder meetings. These provisions may have the effect of
deterring hostile takeovers or delaying or preventing changes in control or
management of the Company, including
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transactions in which stockholders might otherwise receive a premium for their
shares over then-current market prices. Certain provisions of Delaware law
applicable to the Company could also delay or make more difficult a merger,
tender offer or proxy contest involving the Company, including Section 203 of
the Delaware General Corporation Law (the "DGCL"), which prohibits a Delaware
corporation from engaging in any business combination with any stockholder
owning 15% or more of Company's outstanding voting stock ("interested
stockholder") for a period of three years from the date a stockholder becomes an
interested stockholder unless certain conditions are met. These provisions could
also limit the price that investors might be willing to pay in the future for
shares of Common Stock. See "Description of Capital Stock--Delaware Law and
Certain Charter and By-Law Provisions."
Broad Management Discretion in Use of Proceeds. The Company's management
will have broad discretion to allocate the proceeds of this offering to uses
that it believes are appropriate. There can be no assurance that the proceeds of
this offering can or will be invested to yield a positive return. See "Use of
Proceeds."
Dilution. The initial public offering price is substantially higher than
the net tangible book value per share of the currently outstanding Common Stock.
Purchases of shares of Common Stock offered hereby will therefore suffer
immediate and substantial dilution in net tangible book value of $5.51 per
share. The dilution will be increased to the extent that the holders of
outstanding options or warrants to purchase Common Stock at prices below the
initial public offering price exercise such options or warrants. See "Dilution."
Absence of Dividends. The Company has never declared or paid cash
dividends and does not intend to declare or pay any cash dividends in the
foreseeable future. See "Dividend Policy."
16
<PAGE> 18
USE OF PROCEEDS
The net proceeds to the Company from the sale of the 2,500,000 shares of
Common Stock offered by the Company hereby at an assumed initial public offering
price of $9.00 per share are estimated to be approximately $20,325,000
($23,464,000 if the Underwriters' over-allotment option is exercised in full).
The Company intends to use the net proceeds for research and development,
working capital and general corporate purposes. The Company expects to expand
its proprietary research, drug discovery and drug development activities,
including the further development of its leukocyte-based platform technologies
and its proprietary product development programs in cancer and inflammatory,
autoimmune and viral diseases. The Company also expects to spend funds to
recruit and employ additional scientific and technical staff and to increase
capabilities in the area of preclinical and clinical testing. Further, the
Company plans to expand its facilities to accommodate these additional staff, as
well as to support additional activities with collaborative partners. The
Company also may spend funds on clinical development activities for its
proprietary product candidates. The Company may use a portion of its available
cash to acquire technologies or products under its strategy to continue to
broaden its platform technologies. The Company may use a portion of its
available cash to acquire or invest in companies complementary to its business.
The Company is not currently in any negotiations with respect to any such
acquisitions or investments. Pending application as described above, the Company
intends to invest the net proceeds of this offering in investment-grade,
interest bearing securities.
The Company believes that the net proceeds of this offering, together with
its existing capital resources, interest income and revenue from the
collaboration agreements, will be sufficient to fund its currently planned
operating expenses and capital requirements through early 2000. However, there
can be no assurance that such funds will be sufficient to meet the Company's
operating expenses and capital requirements during such period. The Company's
actual cash requirements may vary materially from those now planned and will
depend upon numerous factors, including the results of the Company's research
and development and collaboration programs, the timing and results of
preclinical and clinical trials, the timing and costs of obtaining regulatory
approvals, the progress of the milestone and royalty producing activities of the
Company's collaborative partners, the level of resources that the Company
commits to the development of manufacturing, marketing and sales capabilities,
the cost of filing, prosecuting, defending and enforcing patent claims and other
intellectual property rights, the ability of the Company to maintain existing
and establish new collaboration agreements with other companies, the
technological advances and activities of competitors and other factors.
The Company's management will have broad discretion to allocate proceeds of
this offering to uses that it believes are appropriate. There can be no
assurance that the proceeds of this offering can or will be invested to yield a
positive return.
DIVIDEND POLICY
To date, the Company has neither declared nor paid any cash dividends on
shares of its Common Stock. The Company currently intends to retain its earnings
for future growth and, therefore, does not anticipate paying any cash dividends
in the foreseeable future.
17
<PAGE> 19
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
March 31, 1997, (i) on an actual basis; (ii) on a pro forma basis as described
in Note 1 below; and (iii) on a pro forma basis as adjusted to give effect to
the sale by the Company of the 2,500,000 shares of Common Stock offered hereby
at an assumed initial public offering price of $9.00 per share and the
application of the estimated proceeds therefrom. This table should be read in
conjunction with the Consolidated Financial Statements of the Company and the
Notes thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
MARCH 31, 1997
-------------------------------------------
ACTUAL PRO FORMA(1) AS ADJUSTED(1)(2)
-------- ------------ -----------------
(IN THOUSANDS)
<S> <C> <C> <C>
Current portion of capital lease obligations........... $ 607 $ 607 $ 607
======== ======= =======
Capital lease obligations, net of current portion...... $ 804 $ 804 $ 804
-------- ------- -------
Redeemable convertible preferred stock, $.01 par value;
21,667,199 shares authorized and 16,746,346 shares
issued and outstanding, actual; no shares authorized,
issued or outstanding, pro forma and pro forma as
adjusted............................................. 24,977
-------- ------- -------
Stockholders' equity:
Preferred Stock, $.01 par value; no shares
authorized, issued or outstanding, actual;
5,000,000 shares authorized and no shares issued
and outstanding, pro forma and pro forma as
adjusted........................................ -- -- --
Convertible Preferred Stock, $.01 par value;
2,250,000 shares authorized, issued and
outstanding, actual; no shares authorized,
issued or outstanding, pro forma and pro forma
as adjusted..................................... 23 -- --
Common Stock, $.01 par value; 25,000,000 shares
authorized; 1,094,151 shares issued and
outstanding, actual; 6,182,126 shares issued and
outstanding, pro forma; and 8,682,126 shares
issued and outstanding, pro forma as
adjusted(3)..................................... 11 62 87
Additional paid-in capital........................ 8,716 33,665 53,965
Deficit accumulated during the development
stage........................................... (23,748) (23,748) (23,748)
-------- ------- -------
Total stockholders' equity (deficit)......... (14,998) 9,979 30,304
-------- ------- -------
Total capitalization.................... $ 10,783 $ 10,783 $31,108
======== ======= =======
</TABLE>
- ------------------------------
(1) Presented on a pro forma basis to give effect to (i) the automatic
conversion upon the closing of this offering of all outstanding shares of
the Company's Preferred Stock into an aggregate of 5,087,935 shares of
Common Stock (assuming an initial public offering price of $9.00 per share),
and (ii) the amendment of the Company's Restated Certificate of
Incorporation prior to the date of this Prospectus.
(2) Adjusted to give effect to the sale of the 2,500,000 shares of Common Stock
offered pursuant to this offering at an assumed initial public offering
price of $9.00 per share, after deducting the estimated underwriting
discount and offering expenses payable by the Company. See "Use of Proceeds"
and "Capitalization."
(3) Excludes (i) an aggregate of 967,074 shares of Common Stock issuable
pursuant to stock options outstanding as of June 27, 1997 at a weighted
average exercise price per share of $3.89, (ii) 84,145 shares of Common
Stock issuable pursuant to warrants outstanding as of June 27, 1997, at a
weighted average exercise price per share of $4.10 and (iii) shares of
Common Stock issuable pursuant to warrants outstanding as of June 27, 1997
that will expire unexercised upon the consummation of this offering. See
"Management--Amended and Restated 1993 Stock Option Plan" and Note 10 of
Notes to Consolidated Financial Statements.
18
<PAGE> 20
DILUTION
As of March 31, 1997, the Company had a pro forma net tangible book value
of approximately $9,979,000 or $1.61 per share of Common Stock. Pro forma net
tangible book value represents the amount of total tangible assets, less total
liabilities divided by 6,182,126, the number of shares of Common Stock, after
giving effect to the conversion of all outstanding shares of the Company's
Preferred Stock into an aggregate of 5,087,935 shares of Common Stock upon the
closing of this offering (assuming an initial public offering price of $9.00 per
share). Without taking into account any other changes in pro forma net tangible
book value after March 31, 1997, other than to give effect to the receipt by the
Company of the net proceeds from the sale of the 2,500,000 shares of Common
Stock offered by the Company hereby at an assumed initial public offering price
of $9.00 per share, the pro forma net tangible book value of the Company as of
March 31, 1997, would have been approximately $30,304,000 or $3.49 per share.
This represents an immediate increase in pro forma net tangible book value of
$1.88 per share to existing stockholders and an immediate dilution in pro forma
net tangible book value of $5.51 per share to new investors. The following table
illustrates this per share dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share......... $ 9.00
Pro forma net tangible book value per share before the
offering............................................. $ 1.61
Increase per share attributable to new investors........ 1.88
Pro forma net tangible book value per share after the
offering............................................. 3.49
------
Dilution per share to new investors..................... $ 5.51
======
</TABLE>
The following table summarizes, on a pro forma basis as of March 31, 1997,
the differences between existing stockholders and the new investors with respect
to the number of shares of Common Stock purchased from the Company, the total
consideration paid and the average price per share paid:
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
-------------------- ---------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
--------- ------- ----------- ------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders......... 6,182,126 71% $33,823,258 60% $5.47
New investors................. 2,500,000 29% $22,500,000 40% 9.00
--- -----
Total..... 8,682,126 100% $56,323,258 100%
========= === =========== ===
</TABLE>
Other than as noted above, the foregoing tables assume the exercise of no
outstanding stock options or warrants after March 31, 1997. At March 31, 1997,
options to purchase 201,085 shares of Common Stock were exerciseable at a
weighted average price of $0.70 per share, and warrants to purchase 84,145
shares of Common Stock were exercisable at a weighted average price of $4.10 per
share. To the extent these options or warrants are exercised, there will be
further dilution to new investors. See "Management--Amended and Restated 1993
Stock Option Plan," "Certain Transactions," "Description of Capital
Stock--Warrants" and Note 11 of Notes to Consolidated Financial Statements.
19
<PAGE> 21
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated balance sheet data set forth below, as of
December 31, 1995 and 1996, and the consolidated statements of operations data
for each of the three years in the period ended December 31, 1996, are derived
from the Company's Consolidated Financial Statements which have been audited by
Arthur Andersen LLP, independent public accountants, and which are included
elsewhere in this Prospectus. The selected consolidated financial data as of
December 31, 1992, 1993 and 1994 and for the period from inception (May 1, 1992)
to December 31, 1992 and for the year ended December 31, 1993, are derived from
the Company's consolidated financial statements not included in this Prospectus,
all of which have been audited by Arthur Andersen LLP, independent public
accountants. The selected financial data as of March 31, 1997 and for the three
months ended March 31, 1996 and 1997 and from the period from inception (May 1,
1992) to March 31, 1997 are derived from the Company's unaudited consolidated
financial statements which are included elsewhere in this Prospectus and which
include, in the opinion of the Company, all adjustments (consisting only of
normal recurring adjustments) that are necessary for a fair presentation of its
financial position and the results of its operations for those periods.
Operating results for the three months ended March 31, 1997 are not necessarily
indicative of the results that may be expected for the fiscal year ending
December 31, 1997. The selected consolidated financial data should be read in
conjunction with, and are qualified by reference to, "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and the Company's
Consolidated Financial Statements and Notes thereto.
<TABLE>
<CAPTION>
FOR THE PERIOD FOR THE PERIOD
FROM INCEPTION FROM INCEPTION
(MAY 1, 1992) THREE MONTHS (MAY 1,1992)
THROUGH YEARS ENDED DECEMBER 31, ENDED MARCH 31, THROUGH
DECEMBER 31, ------------------------------------- ------------------------ MARCH 31,
1992 1993 1994 1995 1996 1996 1997 1997
-------------- ------- ------- ------- ------- ----------- ----------- --------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Revenues:
Corporate collaborations... $ -- $ -- $ -- $ 250 $ 3,591 $ -- $ 799 $ 4,640
Government grants.......... -- -- -- 200 83 -- 107 390
----- ------- ------- ------- ------- ------- ------- --------
-- -- -- 450 3,674 -- 906 5,030
----- ------- ------- ------- ------- ------- ------- --------
Operating expenses:
Research and development... 41 1,540 5,056 7,051 8,502 2,022 2,781 24,971
General and
administrative........... 88 504 726 866 1,371 216 379 3,934
----- ------- ------- ------- ------- ------- ------- --------
Total operating
expenses............... 129 2,044 5,782 7,917 9,873 2,238 3,160 28,905
----- ------- ------- ------- ------- ------- ------- --------
Interest income (expense),
net........................ -- (19) 148 (10) 177 11 75 371
----- ------- ------- ------- ------- ------- ------- --------
Net loss..................... $ (129) $(2,063) $(5,634) $(7,477) $(6,022) $(2,227) $(2,179) $(23,504)
===== ======= ======= ======= ======= ======= ======= ========
Pro forma net loss per common
share(1)................... $ (1.04) $ (.35)
======= =======
Shares used in computing pro
forma net loss per common
share(1)................... 5,770 6,289
======= =======
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF MARCH 31, 1997
----------------------------------------------- -----------------------------------------------
1992 1993 1994 1995 1996 ACTUAL (PRO FORMA)(2) (AS ADJUSTED)(3)
----- ------- ------- -------- -------- ----------- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET
DATA:
Cash, cash equivalents and
marketable securities.... $ -- $ 3,002 $ 7,504 $ 1,734 $ 9,384 $ 11,576 11,576 31,901
Working capital............ (128) 2,398 5,061 439 7,226 8,988 8,988 29,313
Total assets............... 1 3,687 10,932 4,538 11,874 13,901 13,901 34,226
Long-term obligations, net
of current portion....... -- 320 1,319 1,583 1,230 1,210 1,210 1,210
Redeemable convertible
preferred stock.......... -- 4,874 11,782 13,733 20,913 24,977 -- --
Deficit accumulated during
the development stage.... (129) (2,192) (7,826) (15,303) (21,324) (23,748) (23,748) (23,748)
Stockholders' equity
(deficit)................ (128) (2,151) (4,776) (12,161) (12,581) (14,998) 9,979 30,304
</TABLE>
- ------------------------------
(1) Computed on the basis described in Note 2b of Notes to Consolidated
Financial Statements.
(2) Presented on a pro forma basis to give effect to the automatic conversion
upon the closing of this offering of all outstanding shares of the Company's
Preferred Stock into an aggregate of 5,087,935 shares of Common Stock
(assuming an initial public offering price of $9.00 per share).
(3) Adjusted to reflect the sale of 2,500,000 shares of Common Stock offered
pursuant to this offering at an assumed initial public offering price of
$9.00 per share, after deducting the estimated underwriting discount and
offering expenses payable by the Company. See "Use of Proceeds" and
"Capitalization."
20
<PAGE> 22
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of the financial condition and results of
operations of the Company should be read in conjunction with the Consolidated
Financial Statements and the related Notes thereto included elsewhere in this
Prospectus. Except for the historical information contained herein, the
discussion in this Prospectus contains certain forward-looking statements that
involve risks and uncertainties, such as statements of the Company's plans,
objectives, expectations and intentions. The cautionary statements made in this
Prospectus should read as being applicable to all related forward-looking
statements wherever they appear in the Prospectus. The Company's actual results
could differ materially from those discussed here. Factors that could cause or
contribute to such differences include those discussed in "Risk Factors," as
well as those discussed elsewhere herein.
OVERVIEW
The Company is a leader in the discovery and development of therapeutics
based upon the biology of leukocytes with potential applications in cancer and
inflammatory, autoimmune and viral diseases. The Company's technologies and
expertise in leukocyte biology facilitates the discovery and development of
novel and proprietary drugs that destroy or block the disease-causing actions of
leukocytes. The Company's funding has consisted of proceeds from private
placements of equity securities, receipts from corporate collaborations and
capital leases. The Company has not received any revenues from the sale of
products to date and does not expect to generate such revenues for at least the
next several years. The Company has experienced operating losses since its
inception and expects that the additional activities required to develop and
commercialize its products will result in further operating losses for at least
the next several years. As of March 31, 1997, the Company had an accumulated
deficit of approximately $23.7 million.
In 1994, 1995 and 1996, the Company entered into collaboration agreements
with Warner-Lambert for the discovery and development of drugs that inhibit the
action of the MCP-1, IL-8 and CCR5 receptors. In July 1996, the Company entered
into a collaboration agreement with Roche Bioscience for the discovery and
development of a drug to block the binding of the CCR3 receptor. In April 1997,
the Company entered into a collaboration agreement with Kyowa for the discovery
and development of a drug to inhibit the action of the CXCR3 and CCR1 receptors.
As of March 31, 1997, the Company had received approximately $5.1 million in
funding and license fee payments under these collaborations and will be entitled
to receive approximately $16.3 million of additional funding that is not subject
to the achievement of milestones (assuming each collaboration remains in effect
for its full term). In addition, in the event that a product is successfully
developed and commercialized under each of the collaborations, LeukoSite will be
entitled to receive up to approximately $44.3 million in development and
commercialization milestone payments, as well as royalties associated with the
sale of products. As of March 31, 1997, Warner-Lambert had invested $9.0 million
and Roche Finance Ltd had invested $3.0 million in equity of the Company. As of
March 31, 1997, the Company had recorded a portion of amounts received in
respect of its collaboration agreements as deferred revenue.
RESULTS OF OPERATIONS
Three Months Ended March 31, 1997 and 1996
Revenues. Revenues during the three month period ended March 31, 1997 were
$906,000. The Company had no revenues during the comparable period in 1996.
Revenues in 1997 were the result of milestone payments and research funding from
corporate collaborations with Warner-Lambert, Roche Bioscience and from Small
Business Innovation Research ("SBIR") grants.
Research and development. Research and development expenses were
$2,781,000 during the three months ended March 31, 1997 compared to $2,022,000
during the comparable period in 1996. This increase was primarily due to an
increase in preclinical development expenditures and to a lesser extent to an
increase in staffing and supplies associated with the Company's drug development
21
<PAGE> 23
programs. The Company expects research and development spending to increase over
the next several years as the Company further expands its discovery and
development programs.
General and administrative. General and administrative expenses were
$379,000 for the three months ended March 31, 1997 compared to $216,000 during
the comparable period in 1996. The increase was primarily due to an increase in
staffing and expenses associated with financing and corporate partnering
activities. These expenses will likely increase in future periods to support the
projected growth of the Company.
Net interest income (expense), net. Net interest income (expense), net was
$75,000 for the three months ended March 31, 1997 and $11,000 for the
corresponding period in 1996. This increase was primarily due to an increase in
interest income resulting from greater cash balances available for investment as
a result of the Company's preferred stock financings completed in 1996 and 1997.
Net loss. The net loss was $2,179,000 during the three months ended March
31, 1997 and $2,227,000 during the comparable period in 1996. The net loss
remained relatively unchanged as revenues increased on pace with expenditures.
Year Ended December 31, 1996 and 1995
Revenues. Revenues were $3,674,000 in 1996 compared to $450,000 in 1995.
Revenues in 1996 resulted from the collaboration agreements with Warner-Lambert
and Roche Bioscience and from SBIR grants. Revenues in 1995 were the result of a
license fee from Warner-Lambert and SBIR funding.
Research and development. Research and development expenses were
$8,502,000 during 1996 and $7,051,000 in 1995. The increase in research and
development expenses was primarily due to an increase in staffing and supplies
and preclinical development expenditures.
General and administrative. General and administrative expenses were
$1,371,000 in 1996 and $866,000 in 1995. The increase was primarily due to an
increase in financing activities as well as an increase in staffing and expenses
associated with corporate partnering activities.
Net interest income (expense), net. Net interest income (expense), net was
$177,000 in 1996 and an expense of $10,000 in 1995. This change was primarily
due to greater cash balances available for investment generating greater
interest income in 1996 combined with a comparable level of interest expense in
both years.
Net loss. The net loss was $6,022,000 during 1996 and $7,477,000 during
1995. The net loss decreased in 1996 as revenues generated from corporate
partners increased in 1996.
Years Ended December 31, 1995 and 1994
Revenues. Revenues were $450,000 in 1995. The Company had no revenue in
1994. Revenues in 1995 resulted from the collaboration agreements with
Warner-Lambert and SBIR funding.
Research and development. Research and development expenses were
$7,051,000 during 1995 and $5,056,000 in 1994. The increase in research and
development expenses was primarily due to an increase in staffing and expenses
associated with the Company's expansion into new facilities and to a lesser
extent to increases in supplies and preclinical development expenditures.
General and administrative. General and administrative expenses were
$866,000 in 1995 and $726,000 in 1994. The increase was primarily due to an
increase in staffing and expenses associated with the Company's expansion into
new facilities.
Net interest income (expense), net. Net interest income (expense), net was
an expense of $10,000 in 1995 and income of $148,000 in 1994. This change was
primarily due to greater interest expense incurred in 1995 as a result of
additional capital leases.
Net loss. The net loss was $7,477,000 during 1995 and $5,634,000 during
1994. The increased net loss was a result of increased expenditures to support
the Company's internal research programs, offset in part by revenue from
collaborations in 1995.
22
<PAGE> 24
LIQUIDITY AND CAPITAL RESOURCES
Since its inception, the Company's operations have been funded primarily
through private placements of preferred stock, which have raised approximately
$33.5 million, license fees and sponsored research, which have raised
approximately $5.1 million, and capital lease obligations, which have raised
approximately $2.8 million. The Company has used cash to fund operating losses
of approximately $23.5 million, the investment of approximately $1.9 million in
equipment and leasehold improvements and the repayment of approximately $1.6
million of capital lease obligations. In the years ended December 31, 1995 and
1996 and the three months ended March 31, 1997, the Company's capital
expenditures totaled approximately $40,000, $185,000 and $135,000, respectively.
The Company had no significant commitments as of March 31, 1997 for capital
expenditures and expects to expend approximately $450,000 for leasehold
improvements and capital equipment over the next twelve months. At March 31,
1997, the Company had on hand cash, cash equivalents and marketable securities
of approximately $11.6 million and working capital of approximately $9.0
million.
The Company has entered into sponsored research and consulting agreements
with certain hospitals, academic institutions and consultants, requiring
periodic payments by the Company. Aggregate minimum funding obligations under
these agreements, which include certain cancellation provisions, total
approximately $527,000, which includes funding commitments of approximately
$457,000 and $70,000 in 1997 and 1998, respectively. The Company has also
entered into an agreement to contribute $3.0 million towards funding the
construction and equipping a research center for the TAC. The Company has paid
$1.5 million of the commitment as of March 31, 1997. The additional commitment
is funded in semi-annual installments of $250,000.
In April 1997, the Company and Ilex entered into a joint venture whereby
the parties formed a limited partnership to develop and commercialize LDP-03 for
the treatment of chronic lymphocytic leukemia. The partners are required to make
contributions each time the partnership requires working capital. Leukosite and
Ilex will generally share equally in profits from the sales of LDP-03 and in all
research, development, clinical and commercialization costs. The capital
requirements of the joint venture consist of clinical development and
commercialization costs. Leukosite and Ilex estimate that research, development
and clinical costs will be approximately $10 million over the next two years.
The joint venture expires in 2017, but provides for either company, under
certain circumstances, to purchase the other company's ownership of the joint
venture upon a change in control of such company (as defined therein) or after
October 2, 2000.
The Company believes that the net proceeds of this offering, together with
its existing capital resources, interest income and revenue from the
collaboration agreements, will be sufficient to fund its currently planned
operating expenses and capital requirements through early 2000. However, there
can be no assurance that such funds will be sufficient to meet the Company's
operating expenses and capital requirements during such period. The Company's
actual cash requirements may vary materially from those now planned and will
depend upon numerous factors, including the results of the Company's research
and development and collaboration programs, the timing and results of
preclinical and clinical trials, the timing and costs of obtaining regulatory
approvals, the progress of the milestone and royalty producing activities of the
Company's collaborative partners, the level of resources that the Company
commits to the development of manufacturing, marketing and sales capabilities,
the cost of filing, prosecuting, defending and enforcing patent claims and other
intellectual property rights, the ability of the Company to maintain existing
and establish new collaboration agreements with other companies, the
technological advances and activities of competitors and other factors.
The Company will need to raise substantial additional capital to fund its
operations. The Company intends to seek such additional funding through public
or private financing or collaboration or other arrangements with collaborative
partners. There can be no assurance, however, that additional financing will be
available from any sources or, if available, will be available on acceptable
terms. See "Risk Factors--Substantial Additional Financing Requirements;
Uncertainty of Available Funding."
23
<PAGE> 25
BUSINESS
THE COMPANY
LeukoSite is a leader in the discovery and development of therapeutics
based upon the biology of leukocytes with potential applications in cancer and
inflammatory, autoimmune and viral diseases. The Company's technologies and
expertise in leukocyte biology facilitates the discovery and development of
novel and proprietary drugs that destroy or block the disease-causing actions of
leukocytes. The Company has one product candidate that has completed Phase II
clinical trials, two product candidates that are expected to begin human
clinical trials by early 1998, and seven small molecule drug discovery programs.
In a properly functioning immune system, leukocytes rid the body of
infectious organisms and repair damage to tissues and organs. However,
leukocytes can also cause or exacerbate disease processes when their growth is
uncontrolled, resulting in malignant diseases such as lymphomas and leukemias,
or when they are abnormally recruited into tissues, resulting in autoimmune or
inflammatory diseases. In addition, disease can also result when viruses such as
HIV attach to, invade and destroy leukocytes.
LeukoSite focuses on distinct cell surface molecules found on leukocytes
and their roles in disease. The Company is developing monoclonal antibodies and
small molecule drugs that selectively deplete leukocytes or block specific
leukocyte recruitment pathways controlled by chemokines and their receptors as
well as by integrins and adhesion molecules. LeukoSite believes that these drugs
will have a high degree of specificity and reduced side effects compared to
existing anti-cancer, anti-inflammatory, immunosuppressive and anti-viral
therapies.
The Company expects to initiate late stage clinical trials for its lead
product candidate, LDP-03, in 1998 to support licensure of the product. LDP-03
is a humanized monoclonal antibody to the leukocyte antigen CAMPATH, which was
licensed by the Company after reviewing data from Phase I and II clinical trials
showing activity in the treatment of chronic lymphocytic leukemia ("CLL"). The
Company has entered into a joint venture with Ilex Oncology, Inc. ("Ilex") for
the clinical development and commercialization of LDP-03. Under the terms of the
agreement with Ilex, LeukoSite and Ilex will generally share equally in any
profits from the sales of LDP-03 and in all future research, development,
clinical and commercialization costs. The Company's second product candidate,
LDP-01, is a humanized anti-integrin monoclonal antibody that inhibits early
leukocyte recruitment and inflammation resulting from reperfusion injury. The
Company intends to initiate two Phase I/IIa clinical studies of LDP-01 in the
United Kingdom in early 1998, one for kidney transplantation and a second for
thrombotic stroke. The Company's third product candidate, LDP-02, is a humanized
monoclonal antibody to the (LOGO)4B7 integrin and is being developed for the
treatment of inflammatory bowel disease, such as Crohn's disease and ulcerative
colitis. The Company intends to initiate a Phase I/IIa study of LDP-02 in the
United Kingdom in early 1998.
To date, the Company has also generated six chemokine-receptor drug
discovery targets that are the subject of collaborations with pharmaceutical
companies for small molecule drug discovery and development. The Company has
collaboration agreements with Warner-Lambert Company ("Warner-Lambert"), Roche
Bioscience and Kyowa Hakko Kogyo Co. Ltd. ("Kyowa"). As of March 31, 1997, the
Company had received $5.1 million under these collaborations for research
funding and license fees and will be entitled to receive $16.3 million of
additional funding that is not subject to the achievement of milestones
(assuming each collaboration remains in effect for its full term). In addition,
in the event that a product is successfully developed and commercialized under
each of the collaborations, LeukoSite will be entitled to receive up to $44.3
million in development and commercialization milestone payments, as well as
royalties associated with product sales. As of March 31, 1997, Warner-Lambert
had invested $9.0 million and Roche Finance Ltd had invested $3.0 million in
equity of the Company.
24
<PAGE> 26
BACKGROUND
Overview of Leukocyte and Immune System Biology
The human immune system protects the body against infection by bacteria,
viruses and parasites. Leukocytes are formed in the bone marrow, mature in
lymphatic tissue and are transported throughout the body by the bloodstream.
Endothelial cells, which comprise the inner lining of blood vessels, act as
gatekeepers allowing circulating leukocytes to enter surrounding tissue when
needed. Leukocytes, in a healthy immune response, eliminate pathogens without
damaging host cells.
Leukocyte Maturation. Hematopoietic (blood-forming) stem cells in the bone
marrow produce precursor cells that mature into circulating leukocytes.
Neutrophils, eosinophils and basophils, which are types of mature leukocytes,
are normally formed only in the bone marrow and are stored there until they are
needed. The other types of leukocytes (lymphocytes and monocytes), mature in
other organs, including the lymph nodes, spleen, thymus, tonsils and gut. During
the process of maturation and storage, leukocytes differentiate into more
defined functional subtypes, after which they are released into the circulatory
system. As they mature, leukocytes undergo complex changes including the
appearance and disappearance of molecules or receptors on their outer membrane.
Proteins and other biomolecules produced in the body bind to these receptors
which in turn signal the leukocytes to respond in specific ways. If the
leukocyte maturation process does not occur normally, uncontrolled and rapid
proliferation of certain types of leukocytes may lead to malignant diseases such
as leukemias and lymphomas.
Leukocyte Recruitment. Circulating leukocytes leave the bloodstream and
migrate into tissues via a complex set of pathways and molecular interactions.
This process is a fundamental part of the human immune system and provides a way
for leukocytes to be recruited to areas of infection or damaged tissue. The
sequential steps that lead to the recruitment of leukocytes from the blood
vessel into tissues begin when selectins, expressed by endothelial cells,
momentarily tether passing leukocytes causing them to roll along the vessel
wall. If the leukocytes encounter chemokines, a type of chemical signal
emanating from an inflammation site, receptors on the surface of the tethered
leukocytes will then bind to the chemokines, initiating a series of changes
within the leukocytes. Among the changes is the enhanced activity of adhesion
receptors called integrins. In the final step, the integrins on the surface of
the leukocytes bind to complementary structures called adhesion molecules
located on the vessel wall. Once attached, the leukocytes change shape, squeeze
through the vessel wall and migrate to the area of increased chemokine
concentration at the site of inflammation.
The process of leukocyte recruitment requires precise regulation. It is
essential that the body has exact signals as to when, where and with which type
of leukocyte to respond. In many inflammatory and autoimmune diseases, these
signals operate at the wrong place or time, leading to improper recruitment and
resulting in tissue damage from the release of inflammatory substances, such as
cytokines, growth factors and oxygen radicals.
Chemokines and Chemokine Receptors. Chemokines are a family of proteins
produced in many different tissues. The expression of chemokines is increased in
response to infection or very early stages of inflammation. Chemokine receptors
are members of the G protein-coupled family of receptors located on the outer
membrane of the cell and translate a variety of signals from the outside to the
inside of the cell. Chemokines bind to these chemokine receptors and activate
leukocytes, causing them to migrate toward the source of the chemokine molecule
(that is, movement out of the bloodstream and into tissues). Each subset of
leukocytes (for example, eosinophils, monocytes, lymphocytes and neutrophils)
has distinct types of chemokine receptors that respond to only certain
chemokines. Through this discriminating mechanism, the body can control and
selectively recruit certain types of leukocytes to mediate an inflammatory
process. In addition, certain viruses, such as HIV-1, may use chemokine
receptors as a homing mechanism to bind to and infect leukocytes.
Integrins and Adhesion Molecules. Integrins and adhesion molecules provide
another degree of control over leukocyte recruitment pathways. Integrins are a
family of proteins comprised of a series of
25
<PAGE> 27
alpha and beta chains that bind to distinct receptors, called adhesion
molecules, found on endothelial and other types of cells. Adhesion molecules
attract only those leukocytes that have matching integrin molecules and allow
for the selective transfer of these leukocytes through the endothelial layer
into tissues. A subset of adhesion molecules called addressins is expressed only
on certain tissues in response to infection or damage.
THE LEUKOSITE APPROACH: LEUKOCYTE SPECIFIC DRUGS
LeukoSite is researching and developing drugs to destroy or block the
disease-causing actions of leukocytes. The Company's technology and expertise
provide the platform for the identification of novel and proprietary
anti-cancer, anti-inflammatory and anti-viral drugs.
LeukoSite's goal is to discover and develop effective and safe therapeutic
drugs that target specific types of leukocyte pathways. Most available drugs
that regulate the immune response lack specificity for disease. For example,
steroids not only block inflammation but also suppress a variety of necessary
immunologic functions. Such non-specific drugs may produce profound universal
immunosuppression and can have other side effects. The targets for the Company's
discovery and development programs include chemokines, leukocyte cell surface
molecules (including chemokine receptors and integrins) and adhesion molecules.
This technology provides the basis for the discovery of drugs that work by
destroying specific types of leukocytes or blocking the recruitment of specific
types of leukocytes into diseased tissues.
Selective Depletion of Leukocytes. Therapeutic drugs that can selectively
eliminate certain leukocytes while sparing hematopoietic stem cells may be
useful for the treatment of certain blood cancers and as therapies to reduce
rejection of transplanted bone marrow and organs. For example, LDP-03, a
humanized lymphocyte-depleting monoclonal antibody, is directed against the CD52
surface antigen expressed on lymphocytes but not on hematopoietic stem cells.
Unlike fludarabine and other traditional cytotoxic chemotherapies used to treat
lymphomas and leukemias, LDP-03 does not deplete leukocyte-generating
hematopoietic stem cells.
Selective Blockade of Leukocyte Receptor and Recruitment Pathways. Many
inflammatory and autoimmune diseases may be caused by dysfunctional
chemokine/receptor and integrin/adhesion molecule pathways. LeukoSite has
identified a number of these pathways that appear to cause specific inflammatory
diseases. The technology platform developed at LeukoSite allows it to discover,
clone and characterize novel chemokines, chemokine receptors, integrins and
adhesion molecules for the discovery of disease-specific therapeutics.
STRATEGY
LeukoSite's objective is to exploit its strength in the field of leukocyte
biology to develop, acquire and commercialize proprietary new drugs.
Exploit Expertise in Leukocyte Biology. Based on its understanding of
leukocyte biology and the role of leukocytes in disease, LeukoSite plans to
continue to identify targets and to generate small molecules and monoclonal
antibodies through internal and external programs. The Company, through its
proprietary expertise in leukocyte biology, has one product candidate that has
completed Phase II clinical trials, two product candidates that are expected to
begin human clinical trials by early 1998, and seven small molecule drug
discovery programs. LeukoSite plans to continue to discover, develop and acquire
related products and technologies to supplement its scientific expertise, drug
development capability and product portfolio.
Leverage Corporate Partnerships. LeukoSite has entered into collaboration
agreements with Warner-Lambert, Roche Bioscience and Kyowa. These collaborations
are designed to build LeukoSite's infrastructure and expertise by funding
research at LeukoSite and by giving the Company access to extensive and
complementary small molecule screening libraries and drug development expertise.
In addition, these collaborations are expected to speed discovery and
development of drug
26
<PAGE> 28
candidates through the efforts of dedicated research staffs at the partners'
facilities. The goal of each collaboration is the commercialization of drugs to
treat large patient populations.
Employ Monoclonal Antibodies as Drug Candidates and as Tools. LeukoSite
uses monoclonal antibodies to chemokines, chemokine receptors, integrins and
adhesion molecules to measure the presence of target ligands and receptors in
models of inflammatory and immune system diseases. Monoclonal antibodies that
block target ligands and receptors demonstrate the relevance of leukocyte
pathways in disease and may also become drug candidates. The Company believes
that monoclonal antibodies are well-suited for acute inflammatory indications,
certain cancers and for accessible targets, such as those on the outside of
cells and in the bloodstream. LeukoSite has generated large collections of
monoclonal antibodies to various receptors as part of its research and
development programs. In addition, the Company is currently developing three
humanized monoclonal antibodies (LDP-01, LDP-02 and LDP-03) as therapeutic
products. Moreover, monoclonal antibodies can be used as tools to speed the
development of small molecule drugs. As a result of its work on the monoclonal
antibody LDP-02 for the treatment of inflammatory bowel disease, LeukoSite
identified a key target implicated in the disease and has initiated the b7
integrin receptor small molecule antagonist development program.
Develop Small Molecule Antagonist Drugs. LeukoSite's small molecule
programs utilize proprietary assays to screen large numbers of test compounds
that bind to chemokine or integrin receptors and block their biological
function. The Company has used the libraries of its partners as well as its own
to search for leads. Once a lead is identified, the Company and its
collaborators employ medicinal and combinatorial chemistry to design and
synthesize potent and selective product candidates. In addition, LeukoSite uses
information about the structure of receptors, ligands and compounds in
computer-assisted molecular models to identify the cell surface locations of
these receptors and to assist in the design of lead drug candidates. The Company
has six small molecule discovery programs in screening and lead optimization:
CCR3 Antagonist, MCP-1 Antagonist, IL-8 Antagonist, CCR1/CXCR3 Antagonist, CCR5
Antagonist and b7 Integrin Receptor Antagonist.
Utilize Non-human Primates for Rapid Proof of Principle. Early in the
development process, LeukoSite rigorously tests the pharmacological rationale
for its drugs in progressively complex and relevant models of human disease.
Researchers at the Company administer monoclonal antibodies and small molecule
drugs to non-human primates in established models of inflammatory and autoimmune
disease. Such models validate biological targets, are important indicators of
safety and toxicity profiles, and provide important insight into human
therapeutic applications of potential drugs. LeukoSite's veterinary pathologists
are experienced in the use of monoclonal antibody immunotherapy in non-human
primates.
Minimize Investment in Manufacturing and Development
Infrastructure. LeukoSite's strategy is to dedicate its resources to
leukocyte-based drug discovery and development, an area in which the Company
believes it has a competitive advantage. The Company plans to outsource or
jointly pursue certain high cost activities associated with its drug development
programs, such as manufacturing and clinical development. LeukoSite has a senior
management team in place with experience in planning and managing these
strategic relationships.
In-license Technologically-related Products. The Company intends to
opportunistically in-license products that are based upon leukocyte biology to
supplement its product pipeline. LeukoSite has acquired rights to LDP-03, a
lymphocyte-depleting drug, which has been tested extensively in multiple human
clinical trials in several different indications. Based on its review of the
data, LeukoSite in-licensed LDP-03 and has entered into a joint venture with
Ilex to develop and commercialize LDP-03 for use in the treatment of CLL.
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<PAGE> 29
LEUKOSITE'S DRUG DEVELOPMENT PROGRAMS
LeukoSite currently has three drugs in human clinical or late preclinical
development. These monoclonal antibody programs are based on leukocyte
selectivity and tissue specificity.
<TABLE>
<CAPTION>
COMMERCIALIZATION
DRUG CANDIDATES STATUS RIGHTS
- ----------------------------------- ----------------------------------- ---------------
<S> <C> <C>
Leukocyte Antigens
LDP-03 (ANTI-CAMPATH MAB)
Chronic lymphocytic leukemia Completed Phase II
LeukoSite/Ilex
Joint Venture
Integrin/Adhesion Molecules
LDP-01 (ANTI-b2 MAB)
Kidney transplant Phase I/IIa clinical trials in the
United Kingdom to begin in 1997 LeukoSite(1)
Thrombotic stroke Phase I/IIa clinical trials in the
United Kingdom planned in early LeukoSite(1)
1998(2)
Myocardial infarction Preclinical development completed
LeukoSite(1)
LDP-02 (ANTI-b7 MAB)
Inflammatory bowel disease Preclinical development in
progress(2) LeukoSite(1)
</TABLE>
- ------------------------
(1) LeukoSite currently retains all rights to these programs. The Company may
seek to enter into development and marketing agreements for some or all of
these programs.
(2) A Phase I/IIa clinical trial pursuant to a CTX is expected to commence in
the United Kingdom in early 1998. See "Business--Government Regulation."
LDP-03 (CAMPATH-1H)
LeukoSite's lead product candidate, LDP-03, is a humanized monoclonal
antibody to the leukocyte antigen CAMPATH, which the Company is developing
jointly with Ilex for the treatment of chronic lymphocytic leukemia ("CLL"). The
Company recently licensed LDP-03 from the British Technology Group ("BTG") after
reviewing data from Phase I and II clinical trials conducted by Burroughs
Wellcome ("BW") showing activity in the treatment of patients with CLL. LDP-03
combats CLL by selectively depleting lymphocytes while sparing hematopoietic
stem cells. This selective depletion permits the body to retain needed
hematopoietic stem cells that are the precursors to, and repopulate the blood
with, leukocytes and preserve normal immune function. LDP-03 binds to the
antigen CD52, which is expressed almost exclusively on lymphocytes and which is
not expressed on hematopoietic stem cells, and destroys the lymphocytes. By
attacking the antigen CD52 and its lymphocytes, LDP-03 is more selective than
currently approved drugs for lymphomas and leukemias which indiscriminately
deplete rapidly-dividing cells, including both lymphocytes and hematopoietic
stem cells.
LDP-03 was originally tested by BW under license from BTG for a broad range
of indications, including autoimmune diseases such as rheumatoid arthritis,
non-Hodgkin's lymphoma, CLL and solid organ and bone marrow transplantations. BW
discontinued the trials after the data from rheumatoid arthritis patients
suggested that the degree of lymphocyte depletion was too great for chronic
therapy. In addition, BW's data from non-Hodgkin's lymphoma patients indicated
that there may be increased risk of opportunistic infection and that the drug's
efficacy was insufficient for first line stand-alone therapy. BW notified the
FDA that it had discontinued all development of CAMPATH-1H and that no further
enrollment into the two FDA-authorized Phase I/II CAMPATH-1H clinical trials
would occur. BW informed the FDA that, based on preliminary results from certain
of the non-Hodgkin's lymphoma
28
<PAGE> 30
clinical studies, the drug's toxicity of greatest concern was infection and
there was little improvement in efficacy to offset this concern.
Studies involving 64 of the 75 patients with CLL and related prolymphocytic
leukemia who participated in the BW trials have been publicly reported. Three of
the four studies exclusively address patients who were refractory to, or who had
relapsed, following chemotherapy. All responses were evaluated according to
National Cancer Institute criteria, which define complete remission as the
absence of all clinically detectable disease for at least eight weeks, while a
partial remission is defined as 50% or greater reduction of detectable disease
for at least eight weeks. Major responses include complete and partial
remissions.
In a study of 29 refractory or relapsing patients with CLL published in the
Journal of Clinical Oncology in April 1997 by Osterborg et al., one patient (3%)
had a complete remission and eleven patients (38%) had partial remissions,
representing a total of twelve major responses (41%). Another study of seven
fludarabine-resistant CLL patients published in the British Journal of
Hematology in September 1996 by Dyer et al reported one complete remission (14%)
and two partial remissions (28%) for a total of three major responses (42%). A
thirteen patient study presented at the American Society of Hematology Annual
Meeting in December 1995 by Rai et al in fludarabine-resistant CLL patients
reported three complete remissions (23%) and six partial remissions (46%)
totaling nine major responses (69%). A study of fifteen patients with previously
treated prolymphocytic leukemia, accepted for publication in the Journal of
Clinical Oncology, reports nine patients with complete remissions (60%) and two
patients with partial remissions (13%) totaling eleven patients with major
responses (73%).
CLL patients are presently treated with chlorambucil and fludarabine as
first-line or second-line therapy. Despite this course of treatment, all
patients not dying of other causes eventually relapse. No approved therapy is
available to treat patients who fail therapy with fludarabine. Based on the data
from the clinical trials, the Company believes that LDP-03 may be effective for
symptomatic CLL patients who have failed the current standard of care and second
line therapies. The Company believes that there are approximately 56,000 CLL
patients in the United States, of which fewer than half receive treatment. The
Company estimates that in 1996 approximately 5,000 patients died with CLL.
LeukoSite entered into a joint venture with Ilex Oncology, a drug
development company with expertise in the clinical development and registration
of oncology drugs, for the clinical development and commercialization of LDP-03.
Several members of the senior management of Ilex have had direct experience in
the development of fludarabine for treating CLL before joining Ilex. The joint
venture is currently in negotiations with a contract drug manufacturing company
for the manufacture of material to be used for clinical trials and
commercialization. See "Collaboration Agreements -- Ilex."
Based on the BW Phase I and II clinical trial data from approximately 75
patients with relapsing or refractory CLL treated with LDP-03, the Company and
Ilex expect to file applications with U.S. and European regulatory agencies in
1998 to begin a multi-center late stage clinical trial in 50 to 100 previously
treated CLL patients to support licensure of the product. Patient responses will
be evaluated based on the National Cancer Institute criteria and other
parameters defined by the Company. There can be no assurance that the FDA would
permit the Company to initiate late stage clinical trials for LDP-03 in CLL
patients solely on the basis of the BW Phase I and II clinical trial data.
LDP-01 (anti-b2 mAb)
LeukoSite is developing LDP-01, a humanized monoclonal antibody to the b2
integrin on leukocytes for the prevention of post-ischemic reperfusion injury
such as that resulting from organ transplantation, stroke and myocardial
infarction. The Company believes that LDP-01 blocks the attachment of b2
integrins to their adhesion molecules and limits the recruitment of leukocytes
involved in the inflammatory process at multiple tissue sites. The b2 integrin
receptor on the surface of leukocytes interacts with specific adhesion molecules
on the surface of endothelial cells lining blood vessels. This interaction is
essential for leukocytes to migrate into tissues and organs.
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<PAGE> 31
Upon the reestablishment of blood flow following transplantation of organs
from cadaver donors, leukocytes are recruited to the transplanted organ
resulting in tissue injury, organ dysfunction and potentially graft loss.
Methods that inhibit leukocyte recruitment following ischemic injury, such as
the blockade of b2 integrins, could be therapeutically beneficial to patients
with ischemic disease and to patients receiving organ transplants from cadavers.
The use of LDP-01 in the treatment of kidney transplant patients may result in a
reduction in the time for the transplanted graft to function and may enhance
graft survival. According to the United Network of Organ Sharing ("UNOS"), there
were approximately 11,000 kidney transplants performed in 1996, of which 70%
involved the use of cadaver organs. The Company intends to initiate a Phase
I/IIa clinical trial in 1997 in the United Kingdom to determine the safety,
efficacy and pharmacokinetics of LDP-01 for the reduction of post-ischemic
reperfusion injury and delayed graft function in patients receiving cadaver
kidney transplants. If the Company's anticipated study is supportive, it intends
to pursue an IND filing in the United States.
Stroke is the irreversible loss of brain cells following ischemia, the
interruption of blood flow depriving the brain of blood and oxygen. Further
damage to brain cells occurs as the result of reperfusion injury by leukocytes
when blood flow is reestablished. By inhibiting the recruitment of leukocytes,
LDP-01 may decrease the degree of reperfusion tissue damage and the extent of
the disability, and could significantly reduce the inpatient and rehabilitation
costs associated with this condition. The Company intends to initiate a Phase
I/IIa clinical trial in early 1998 in the United Kingdom to determine the
safety, efficacy and pharmacokinetics of LDP-01 for the reduction of reperfusion
tissue damage associated with ischemic stroke. If the Company's anticipated
study is supportive, it intends to pursue a IND filing in the United States.
The Company has also completed pre-clinical testing of LDP-01 for
myocardial infarction. If the Company's anticipated Phase I/IIa study in stroke
is supportive, the Company will consider pursuing an IND filing for myocardial
infarction in the United States.
Preclinical trials demonstrate that LDP-01 can block attachment of
leukocytes to endothelial cells and inhibit their inflammatory activities. In
two models of inflammation in chimpanzees, LDP-01 blocked the recruitment of
neutrophils, monocytes and lymphocytes and prevented inflammation. LDP-01 has
been administered to three patients in clinical studies sponsored by the
Therapeutic Antibody Centre ("TAC"): two for the treatment of vasculitis, an
inflammation of blood vessels, and one for the treatment of polymyositis, a
severe muscle disease resulting in the weakening of limb and trunk muscles. The
results in these patients provided clinical data that LDP-01 inhibited the
further recruitment of leukocytes into inflamed tissue.
LDP-02 (anti-b7 mAb)
LeukoSite is developing LDP-02, a humanized monoclonal antibody to the a4b7
integrin receptor on leukocytes. LDP-02 is being evaluated for the treatment of
inflammatory bowel disease, which includes ulcerative colitis and Crohn's
disease, chronic disorders characterized by inflammation and ulceration of the
intestines. Ulcerative colitis causes bleeding and inflammation of the mucosal
lining of the colon and rectum, while Crohn's disease is an inflammation that
extends deeper into all layers of the intestinal wall, and frequently involves
both the small and large intestine. Preclinical studies in rodents and non-human
primates have implicated the a4b7 integrin subset of leukocytes as major
contributors to the process of inflammatory bowel disease. LDP-02 is currently
in late preclinical development, and the Company intends to initiate a Phase
I/IIa study in the United Kingdom in early 1998.
The Company evaluated the murine homologue of LDP-02 before it was
humanized and demonstrated pharmacologic activity in three non-human primate
models of inflammatory bowel disease, including the colitic cotton-top tamarin
monkey. The Company believes that this model represents the most clinically
useful model of ulcerative colitis. In this model, when systematically
administered, the murine homologue of LDP-02 was found to be efficacious in
rapidly resolving diarrhea and in inhibiting the localization of leukocytes to
the colonic mucosa.
Current therapy for inflammatory bowel disease includes the administration
of steroids which can broadly suppress the immune system. Published data
indicate that in 1994 there were approximately
30
<PAGE> 32
300,000 Crohn's disease patients and 250,000 ulcerative colitis patients in the
United States. Based on published reports, the total annual medical cost in 1990
in the United States was estimated to be between $1.0 and $2.0 billion for
Crohn's disease patients and between $400 and $600 million for ulcerative
colitis. LeukoSite will seek to develop intravenous and subcutaneous
formulations of LDP-02 for the treatment and management of severe exacerbations
of inflammatory bowel disease.
LEUKOSITE RESEARCH AND DRUG DISCOVERY PROGRAMS
LeukoSite currently has seven research and discovery programs underway.
These chemokine and integrin targeted programs are based on the selective
blockade of specific chemokine, chemokine receptor or integrin controlled
leukocyte pathways or functions.
<TABLE>
<CAPTION>
COLLABORATIVE
DRUG CANDIDATE STATUS PARTNER
- -------------------------------- -------------------------------- --------------------
<S> <C> <C>
Chemokine/Chemokine Receptor
CCR3 ANTAGONIST
Asthma Allergic Small molecule screening and
hypersentitivity lead generation and optimization
Roche Bioscience(1)
MCP-1 ANTAGONIST
Atherosclerosis Rheumatoid Small molecule screening and
arthritis lead generation and optimization
Warner-Lambert(2)
IL-8 ANTAGONIST
Myocardial infarction Small molecule screening and
small molecule and mAb lead Warner-Lambert(2)
generation
CCR1 ANTAGONIST
Rheumatoid arthritis Multiple Small molecule and mAb lead
sclerosis Psoriasis generation and optimization
Kyowa(3)
CXCR3 ANTAGONIST
Rheumatoid arthritis Multiple Small molecule and mAb lead
sclerosis Psoriasis generation and optimization
Kyowa(3)
CCR5 ANTAGONIST
HIV-1 infection and Small molecule screening and
inflammatory diseases lead generation
Warner-Lambert(4)
Integrin/Adhesion Molecules
(Beta)7 INTEGRIN RECEPTOR
ANTAGONIST
Inflammatory bowel disease Small molecule lead optimization --(5)
</TABLE>
- ------------------------------
(1) Roche Bioscience has worldwide exclusive rights under the collaboration
agreement to market products.
(2) Warner-Lambert has worldwide exclusive rights under the collaboration
agreement to market products.
(3) Kyowa has exclusive rights in Asia under the collaboration agreement and
options in the rest of the world to market products related to these
targets.
(4) Warner-Lambert has an option for the exclusive right under the collaboration
agreement to market products in the United States and Europe.
(5) LeukoSite retains all rights to this program.
CCR3 Receptor Antagonist
LeukoSite is engaged in the discovery and development of an orally
available, small molecule antagonist to block eosinophil recruitment and
function for the treatment of asthma and allergies. Data in animal models and in
humans suggest that eosinophils, and their recruitment to the lung and other
tissues and organs, play a significant role in the pathogenesis of asthma and
other allergies. The
31
<PAGE> 33
Company, in connection with several of its academic collaborators, has
identified the principal eosinophil chemokine receptor, CCR3, filed a patent
application on the gene that encodes for the receptor and the therapeutic
applications of it and has developed a program to discover an antagonist to
block the CCR3 receptor and the recruitment of eosinophils to respiratory tract
tissue. The Company believes that a drug which blocks the detrimental effects of
eosinophil recruitment will reduce the inflammation that contributes to asthma
and allergies.
In July 1996, LeukoSite entered into an agreement with Roche Bioscience for
the Company's CCR3 antagonist program. Roche Bioscience is currently screening
its compound library against the Company's targets. LeukoSite is entitled to
receive payments from Roche Bioscience in the form of licensing fees, research
support and milestone payments and royalties on worldwide product sales
resulting from this collaboration. Roche Bioscience will be responsible for and
provide financial support for the preclinical and clinical development of
products resulting from this collaboration and will have worldwide exclusive
rights under the collaboration agreement to market products. See "Collaboration
Agreements--Roche Bioscience."
MCP-1 Receptor Antagonist
LeukoSite is engaged in the discovery and development of an orally
available, small molecule antagonist to the MCP-1 receptor for the treatment of
chronic inflammatory and autoimmune diseases. The chemokine MCP-1 recruits
monocytes and T cells from the bloodstream to tissues. MCP-1 activates monocytes
and T cells by binding to its receptor on the leukocyte cell membranes, often
resulting in damage to surrounding tissues and irretrievable loss of normal
function. The blockade of the MCP-1 interaction with its receptor may be an
effective approach for the treatment of chronic inflammatory and autoimmune
diseases in which monocytes and T cells play key roles. In preclinical studies,
LeukoSite and others have shown that MCP-1 is associated with the inflammatory
processes exhibited in rheumatoid arthritis and atherosclerosis.
LeukoSite entered into a collaboration agreement with Warner-Lambert in
September 1994 to discover and develop small molecule antagonists to MCP-1 and
its receptor. This collaborative effort has identified inhibitors to the MCP-1
receptor which have demonstrated pharmacological activity in animal models of
inflammatory disease. This collaboration entered into a second contractual stage
in April 1996 with the objective of optimizing the pharmacological profile of
these inhibitors and identifying a clinical development candidate.
Warner-Lambert is responsible for the worldwide clinical development of an MCP-1
antagonist derived from the collaboration, and it is anticipated that the
clinical development program will focus on the treatment of atherosclerosis and
rheumatoid arthritis.
Warner-Lambert has worldwide exclusive rights under the collaboration
agreement to develop and market products resulting from the collaboration.
LeukoSite is entitled to receive royalties on product sales. This collaboration
provides for additional sponsored research payments to be made by Warner-Lambert
to LeukoSite and for payments to be made upon the achievement of certain
specified milestones. See "Collaboration Agreements--Warner-Lambert."
IL-8 Receptor Antagonist
LeukoSite is engaged in the discovery and development of an orally
available, small molecule antagonist to the IL-8 chemokine receptor for the
treatment of diseases involving tissue injury that result from post-ischemic
reperfusion injury. Myocardial infarction results when blood flow to a region of
the heart is blocked as a result of a coronary artery becoming occluded. This
blockage results in injury to and death of heart tissue in the affected region.
A significant portion of the tissue injury and death is thought to be caused by
neutrophil-mediated inflammatory damage. IL-8 is a potent and selective
chemokine protein that causes the recruitment and activation of neutrophils,
which are responsible for subsequent inflammation and post-ischemic reperfusion
injury. The Company's program is directed at the discovery and development of
drugs which inhibit the binding of IL-8 to its
32
<PAGE> 34
receptor in order to block the recruitment of neutrophils and to prevent the
resulting inflammation and reperfusion injury.
In July 1995, LeukoSite entered into a collaboration agreement with
Warner-Lambert to discover and optimize lead candidates using LeukoSite's IL-8
receptor-based technology by screening Warner-Lambert's compound library.
Warner-Lambert is responsible for the development and commercialization of
products derived from this collaboration. LeukoSite currently intends to pursue
an IL-8 receptor antagonist for post-ischemic reperfusion tissue injury
resulting from myocardial infarction. Warner-Lambert has worldwide exclusive
rights under the collaboration agreement to develop and market products
resulting from this collaboration. LeukoSite is entitled to receive royalties on
product sales. This collaboration provides for additional sponsored research
payments to be made by Warner-Lambert to LeukoSite and for payments to be made
upon the achievement of certain specified milestones. See "Collaboration
Agreements--Warner-Lambert."
CXCR3 Receptor Antagonist and CCR1 Receptor Antagonist
LeukoSite is engaged in the discovery and development of orally available,
small molecule antagonists and monoclonal antibodies to block the leukocyte
recruitment pathways controlled by chemokine receptors CXCR3 and CCR1. Ligands
for the receptors, specifically the chemokines IP-10 and RANTES, play key roles
in recruiting T cells and monocytes to sites of inflammation. LeukoSite is
studying the role these receptors play in inflammation with a combination of
tools including monoclonal antibodies. Based upon knowledge of the cells which
express these receptors, small molecule antagonists may be of therapeutic value
in the treatment of chronic inflammatory and autoimmune disease.
In April 1997, LeukoSite entered into a collaboration agreement with Kyowa
to discover small molecule antagonists and monoclonal antibody drugs that block
these chemokine receptors. Kyowa has the exclusive rights under the
collaboration agreement to develop and market products resulting from this
collaboration in Asia and an option for rights under the collaboration agreement
in the rest of the world. LeukoSite will be entitled to research support and
milestone payments and future royalties based on product sales. See
"Collaboration Agreements--Kyowa Hakko Kogyo."
CCR5 Receptor Antagonist
LeukoSite is engaged in the discovery and development of an orally
available, small molecule antagonist to the chemokine receptor CCR5. Such a drug
may be useful in the treatment of patients infected with HIV and as a therapy
for certain inflammatory and autoimmune diseases. The CCR5 receptor binds three
different chemokines and is found on lymphocytes and macrophages. The location
of this receptor and its presence on lymphocytes and macrophages suggest that
blocking it would have anti-inflammatory effects. Recent data indicate that
drugs that block CCR5 may have anti-HIV activity. Furthermore, reports of
individuals who are resistant to HIV link a deletion in the CCR5 gene and a lack
of CCR5 expression to their resistance to the disease. LeukoSite and its
collaborators have reported on the molecular mechanism by which the virus binds
to the CCR5 receptor and facilitates the entry of HIV-1 into leukocytes.
In November 1996, LeukoSite entered into a collaboration agreement with
Warner-Lambert to discover and optimize small molecule lead candidates using
LeukoSite's CCR5 receptor-based technology by screening Warner-Lambert's
compound library. LeukoSite currently intends to pursue a CCR5 receptor
antagonist for HIV-1 and a distinct receptor antagonist for chronic
inflammation. Warner-Lambert has an option for the exclusive right under the
collaboration agreement to develop and commercialize products derived from the
collaboration in North America and Europe. In the event that this option is
exercised, LeukoSite will be entitled to receive payments upon the achievement
of milestones. LeukoSite is entitled to receive royalties on product sales.
LeukoSite retains commercialization rights under the collaboration agreement in
Asia.
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Outside its collaboration with Warner-Lambert, the Company has generated
monoclonal antibodies to the CCR5 receptor. These antibodies block strains of
HIV from binding to and infecting human leukocytes. The Company is currently
evaluating these antibodies in preclinical studies to determine future clinical
plans. See "Collaboration Agreements--Warner-Lambert."
b7 Integrin Receptor Small Molecule Antagonist
LeukoSite is engaged in the discovery and development of a small molecule
antagonist to the a4b7 integrin receptor present on gut-homing T lymphocytes.
The goal of this program is to identify a potent orally-active agent for
patients with inflammatory bowel disease. In contrast to LDP-02, which is
intended to treat acute flares of inflammatory bowel disease, daily
administration of the oral b7 integrin receptor antagonist is intended for
patients with mild to moderate inflammatory bowel disease in need of chronic
therapy.
LeukoSite believes that it has a strong rationale for the discovery and
development of small molecule b7 integrin receptor antagonists as a result of
observations that monoclonal antibodies to the ab7 integrin and its receptor
mucosal addressin cell adhesion molecule ("MAdCAM") produced significant
improvements in animal models of inflammatory bowel disease. LeukoSite has made
a significant advance in its program by cloning the human gene for MAdCAM. As a
result of this advance, LeukoSite has obtained important structural information
in the design of active b7 antagonists. The Company screens its own library as
well as libraries from the combinatorial chemistry company, Oxford Asymmetry,
Ltd. in connection with this program. Under the terms of this agreement,
LeukoSite retains all rights under the agreement to commercialize drugs which
result from the program between LeukoSite and Oxford Asymmetry, Ltd. The Company
has developed a high throughput b7:MAdCAM cell-based adhesion assay. Using this
assay to screen compounds, LeukoSite has identified several active compounds and
is investigating the design of optimal drug candidates.
The Company has an agreement with Genzyme Corporation which provides
LeukoSite with access to more than 800,000 compounds to screen in its high
throughput assays. After screening is complete, should there be any active
compounds, Leukosite and Genzyme will negotiate the terms of a collaboration for
the research, development and commercialization of drug candidates.
COLLABORATION AGREEMENTS
As a key part of its business strategy, LeukoSite pursues collaboration
agreements with pharmaceutical companies, hospitals, manufacturers and other
organizations to combine the Company's drug discovery capabilities with the
collaborators' research, drug development, manufacturing, marketing and
financial resources. LeukoSite has existing collaboration agreements with
several pharmaceutical companies, contract manufacturers and medical research
institutions, and intends to continue to seek collaboration agreements with
additional third parties. The Company structures its collaborations around
specified targets, such as chemokines and chemokine receptors or integrins and
adhesion molecules, or around targeted objectives, such as the manufacture of a
certain monoclonal antibody or small molecule. This approach enables LeukoSite
to exploit its drug discovery technologies while retaining flexibility to pursue
additional collaborations.
As of March 31, 1997, LeukoSite had received $5.1 million under these
collaborations for research funding and license fees and will be entitled to
receive $16.3 million of additional funding that is not subject to the
achievement of milestones (assuming each collaboration remains in effect for its
full term). In addition, in the event that a product is successfully developed
and commercialized under each of the Warner-Lambert, Roche Bioscience and Kyowa
collaboration agreements, LeukoSite will be entitled to receive up to $44.3
million in development and commercialization milestone payments, as well as
royalties associated with product sales. As of March 31, 1997, Warner-Lambert
had invested $9.0 million and Roche Finance Ltd. had invested $3.0 million in
equity of the Company.
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LeukoSite's principal existing collaborations are as follows:
Warner-Lambert
LeukoSite has entered into three collaboration agreements with
Warner-Lambert. In September 1994, LeukoSite and Warner-Lambert entered into a
drug discovery collaboration to discover and market small molecule antagonists
to the MCP-1 chemokine and its receptor (the "MCP-1 Agreement"). In July 1995,
LeukoSite and Warner-Lambert entered into a drug discovery collaboration to
discover and market small molecule antagonists to the IL-8 chemokine and its
receptor (the "IL-8 Agreement"). During the research term, Warner-Lambert may
become obligated under both agreements to make milestone payments to the
Company. The IL-8 Agreement and the MCP-1 Agreement are terminable by either
party at any time and for any reason upon six months' written notice. Upon
termination, each party retains a non-exclusive license to use all technology
arising from the respective collaboration, and an exclusive royalty-free license
to make and sell products incorporating such technology. If any product is
successfully commercialized under the collaboration, LeukoSite is entitled to
receive royalties on product sales. In the event that the initial public
offering price is less than $12.30 per share, Warner-Lambert will receive a
credit against such royalties. Assuming an initial public offering price of
$9.00 per share, the approximate amount of such credit would be $2.05 million.
In November 1996, LeukoSite and Warner-Lambert entered into a one-year
exclusive drug discovery collaboration to screen and characterize antagonists to
the CCR5 chemokine receptor (the "CCR5 Agreement"). The CCR5 Agreement
contemplates two phases: the initial research phase, and a second phase which
would involve the negotiation of a new collaboration agreement similar to the
MCP-1 and IL-8 Agreements described above. If a compound is discovered with
antiviral activity that selectively inhibits a CCR5 mechanism, Warner-Lambert
has the option to make a payment to LeukoSite or to terminate the CCR5
Agreement. If Warner-Lambert were to terminate the CCR5 Agreement, the Company
would have exclusive ownership rights with respect to all compounds discovered
thereunder. At the end of the initial term, if the parties do not agree to
continue the collaboration, either party has the right to exploit the research
results, and if either party successfully commercializes a compound derived from
a lead compound identified during the collaboration, it is obligated to pay the
other party a royalty.
Roche Bioscience
In April 1996, LeukoSite entered into a two-year collaboration agreement
with Roche Bioscience to research and discover small molecule antagonists and/or
monoclonal antibodies to the CCR3 receptor and other eosinophil recruitment
mechanisms (the "CCR3 Agreement"). Roche Bioscience is obligated under the CCR3
Agreement to provide funding to the Company to support (i) a team of
scientist-employees of the Company, (ii) humanization of monoclonal antibodies
to CCR3 and (iii) additional research if the parties mutually agree to extend
the CCR3 Agreement to a third year. In conjunction with the CCR3 Agreement, the
parties also entered into a license agreement (the "CCR3 License Agreement"),
whereby Roche Bioscience is granted the exclusive right to make and sell
products developed under the collaboration in exchange for a noncreditable
license fee. The CCR3 License Agreement also provides that milestone payments
shall be made by Roche to LeukoSite for monoclonal antibody products and for
non-monoclonal antibody products, each payment triggered by the successful
achievement by the Company of a discrete phase in the clinical trial of any such
product. In addition, LeukoSite is entitled to receive royalties on product
sales.
Kyowa Hakko Kogyo
In April 1997, LeukoSite entered into a two-year collaboration agreement
with Kyowa to research and discover small molecule antagonists and monoclonal
antibodies to the CCR1 and CXCR3 chemokine receptors (the "CCR1 Agreement").
Under the CCR1 Agreement, Kyowa is obligated to provide to the Company with
research funding payments and an additional payment if Kyowa elects to extend
the term of the agreement for a period beyond its initial term. After the first
year of the
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collaboration, Kyowa may terminate its obligation upon 60 days' notice, upon
which Kyowa's funding obligation to the Company also terminates. In connection
with the CCR1 Agreement, the parties also entered into a licensing agreement
(the "CCR1 License Agreement"), pursuant to which Kyowa retains an exclusive
license to make and sell products developed through the collaboration in Asia.
This exclusive license may be extended worldwide if Kyowa enters into a
sublicense agreement upon specified terms. Until the license becomes worldwide,
the Company retains the exclusive right to make and sell products utilizing
Kyowa-patented technology in geographic regions outside of Asia. Under the CCR1
License Agreement, Kyowa may become obligated to make milestone payments to the
Company based upon the identification of a drug candidate and the stage of such
candidate in clinical trials. Additional milestone payments are triggered if a
second drug target is identified through the collaboration. In addition,
LeukoSite is entitled to receive royalties on product sales.
Ilex
In May 1997, LeukoSite and Ilex entered into a joint venture whereby the
parties formed a limited partnership to develop and commercialize LDP-03 for the
treatment of chronic lymphocytic leukemia, pursuant to an agreement of limited
partnership and a license agreement between the LeukoSite/Ilex partnership and
LeukoSite. The partners are required to make contributions each time the
partnership requires working capital. The development and commercialization
activities of the joint venture will be managed with equal control by each
party. LeukoSite and Ilex will generally share equally in profits from the sales
of LDP-03 and in all research, development, clinical and commercialization
costs. LeukoSite and Ilex estimate that research, development and clinical costs
will be approximately $10 million over the next two years. The joint venture
expires in 2017, but provides for either company, under certain circumstances,
to purchase the other company's ownership of the joint venture upon a change in
control of such company (as defined therein) or after October 2, 2000. In
addition, in the event that one party is unable or unwilling to fulfill its
funding obligations to the joint venture, then in certain circumstances, the
party that funds the joint venture shall gain control of the management of the
joint venture, subject to certain catch-up rights of the other party.
Therapeutic Antibody Centre
In October 1994, LeukoSite, the University of Oxford and the U.K. Medical
Research Council ("MRC") entered into a collaboration agreement to jointly
construct and operate the TAC, a pharmaceutical discovery, testing and
manufacturing center. Under the terms of the collaboration, MRC and LeukoSite
contribute toward funding the cost of staffing, equipment, facility construction
and other operating expenses of the TAC. The Company retains an exclusive
worldwide right to license technology discovered at the TAC in exchange for
royalties payable to the University of Oxford and MRC. The collaboration expires
five years after the TAC is fully operational.
Other Collaboration Agreements
In addition, the Company has collaboration agreements in effect with The
Imperial College of Science, Technology of Medicine, Lynxvale, Ltd., Oxford
Asymmetry, Ltd., the National Heart and Lung Institute, the Theodor Kocher
Institute and the University of Oxford.
PATENTS AND PROPRIETARY RIGHTS
The Company's intellectual property strategy is to protect its processes
and compositions of matter by, among other things, filing patent applications in
the United States and other key markets. LeukoSite has eleven pending U.S.
patent applications and has filed four international patent applications under
the Patent Cooperation Treaty ("PCT"). In addition, LeukoSite has in-licensed
seven U.S. patents, nine U.S. patent applications, three foreign patents and 10
foreign patent applications.
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In addition, LeukoSite has an exclusive license from British Technology
Group Limited ("BTG") under United States and foreign patents and patent
applications, variously covering certain humanized antibodies against the
CAMPATH antigen, pharmaceutical compositions, host cells useful in the
production of such antibodies, processes of producing such antibodies and
medical uses of such antibodies. The Company also has a non-exclusive sublicense
from BTG under additional U.S. and foreign patents and patent applications,
including U.S. patents which cover a method of treating a human suffering from a
disease or disorder, such as a cancer or a T cell-mediated disorder.
The Company's product candidates LDP-01, LDP-02 and LDP-03 are recombinant
humanized, complementarity determining region ("CDR")-grafted, monoclonal
antibodies. The Company is aware that patents have been issued in the United
States to third parties which relate to processes for producing recombinant
antibodies, compositions useful in the production of recombinant antibodies,
CDR-grafted humanized antibodies, processes for producing CDR-grafted humanized
antibodies and compositions useful in the production of CDR-grafted humanized
antibodies. Patents have also been granted to these parties in Europe, but the
European patents have been opposed. The Company may be required to seek licenses
under these patents for its humanized antibody products.
The Company is also aware of patents which have been issued to a third
party in the United States and Europe variously relating to "chimeric"
immunoglobulins and immunoglobulin chains, processes for production of such
chimeric molecules and compositions useful in the production of chimeric
molecules. The European patent has been opposed. Assuming that the European
patent survives in current form, the Company believes that, properly construed,
the United States and European patent claims do not cover the Company's LDP-01,
LDP-02 or LDP-03 product candidates.
The Company is also aware of patents which have been issued to third
parties in the United States and/or Europe variously relating to certain
modified humanized immunoglobulins, methods of producing modified humanized
immunoglobulins, compositions useful in the production of modified humanized
immunoglobulins and methods of using of modified humanized immunoglobulins. The
European patents in these areas have also been opposed. The Company believes
that, properly construed, the U.S. patent claims do not cover the Company's
LDP-01 and LDP-03 product candidates, and that no valid claim of the European
patents covers the Company's LDP-01 and LDP-03 product candidates. The Company
is uncertain about the scope of the claims which have issued in the United
States and is uncertain whether these claims, when properly construed, cover
LDP-02. If it is determined that they do encompass LDP-02, the Company will
likely be required to seek a product license.
The Company is also aware of other third party published applications
relating to altered antibodies, methods of use of altered antibodies and methods
of production of altered antibodies. To the Company's knowledge, neither these
applications nor possible unpublished counterpart applications has proceeded to
grant in Europe or has issued as U.S. patents. There can be no assurance that
the Company will not be required to seek a license to some or all of the patents
which might issue from these patent applications.
The Company may be required to seek or choose to seek licenses to some or
all of these or other patents in order to develop and commercialize certain
product candidates or potential products incorporating the Company's technology
in the United States, Europe and other markets. There can be no assurance that
such licenses, if required, will be available to the Company, or if available,
will be obtainable on commercially acceptable terms, and the failure to obtain
such licenses could have a material adverse effect on the Company. In the
absence of required licenses, the patent owners may obtain an injunction, which
could prevent the manufacture, sale and use of the Company's products, with
material adverse effects on the Company. In addition, assuming such patents are
valid and enforceable, the Company can provide no assurances that, if
enforcement actions are brought by the patent owners against the Company, such
actions would be resolved in the Company's favor. The Company may also choose to
challenge the validity of one or more patents or patent claims. Any such action
or challenge could result in substantial costs to the Company and diversion of
Company
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resources and could have a material adverse effect on the Company. Moreover,
there can be no assurance that the Company would be successful in defending
against an infringement action or in challenging any such patents or patent
claims, and the failure to do so could have a material adverse effect on the
Company. If the Company does not obtain any required licenses, it could
encounter delays in product development while it attempts to design around the
patents, or it could find that the development, manufacture or sale of products
requiring such licenses could be foreclosed.
Patent law, as it relates to inventions in the pharmaceutical and
biotechnology fields, is still evolving and involves complex legal and factual
questions for which legal principles are not firmly established. Moreover,
because (i) patent applications in the United States are maintained in secrecy
until patents issue, (ii) patent applications in certain other countries
generally are not published until more than eighteen months after the earliest
priority date claimed, (iii) publication of technological developments in the
scientific or patent literature often lags behind the date of such developments
and (iv) searches of prior art may not reveal all relevant prior inventions, the
Company cannot be certain that it was the first to invent the subject matter
covered by its patent applications or that it was the first to file patent
applications for such inventions. Accordingly, there can be no assurance that
patents will be granted with respect to any of the Company's pending patent
applications or with respect to any patent applications filed by the Company in
the future. Similarly, the Company cannot be certain that the inventors of the
subject matter covered by applications which the Company has licensed were the
first to invent, or that the applicants of applications licensed by the Company
were the first to file. Accordingly, there can be no assurance that patents will
be granted with respect to any of the Company's pending licensed patent
applications or with respect to any future applications subject to a license.
The commercial success of the Company will depend in part on not infringing
patents or proprietary rights of others. There can be no assurance that the
Company will be able to obtain a license to any third party technology it may
require to conduct its business or that, if obtainable, such technology can be
licensed at a reasonable cost. Failure by the Company to obtain a license to
technology that it may require to utilize its technologies or commercialize its
products may have a material adverse effect on the Company's business, operating
results and financial condition. In some cases, litigation or other proceedings
may be necessary to defend against or assert claims of infringement, to enforce
patents issued to the Company, to protect trade secrets, know-how or other
intellectual property rights owned by the Company, or to determine the scope and
validity of the proprietary rights of third parties. Any potential litigation
could result in substantial costs to and diversion of resources by the Company
and could have a material adverse effect on the Company's business, operating
results and financial condition. There can be no assurance that any of the
Company's issued or licensed patents would ultimately be held valid or that
efforts to assert or defend any of its patents, trade secrets, know-how or other
intellectual property rights would be successful. An adverse outcome in any such
litigation or proceeding could subject the Company to significant liabilities,
require the Company to cease using the subject technology or require the Company
to license the subject technology from the third party, all of which could have
a material adverse effect on the Company's business, financial condition and
results of operations.
Much of the Company's technology and many of its processes are dependent
upon the knowledge, experience and skills, which are not patentable, of key
scientific and technical personnel. To protect its rights to and to maintain the
confidentiality of trade secrets and proprietary information, the Company
requires employees, Scientific Advisory Board members and consultants to execute
confidentiality and invention assignment agreements upon commencement of a
relationship with the Company. These agreements prohibit the disclosure of
confidential information outside the Company and require disclosure and
assignment to the Company of certain ideas, developments, discoveries and
inventions made by employees, advisors and consultants. There can be no
assurance, however, that these agreements will not be breached or that the
Company's trade secrets or proprietary information will not otherwise become
known or developed independently by others.
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GOVERNMENT REGULATION
Overview of FDA Regulations. Non-biological drugs and biological drugs,
including the Company's products under development, are subject to extensive and
rigorous regulation by the federal government, principally the FDA, and by state
and local governments. If these products are marketed abroad, they also are
subject to export requirements and to regulation by foreign governments. The
applicable regulatory clearance process, which must be completed prior to the
commercialization of a product, is lengthy and expensive. There can be no
assurance that the Company will be able to obtain the necessary regulatory
approvals on a timely basis, if at all, for any of its products under
development, and delays in receipt for failure to receive such approvals, the
loss of previously received approvals, or failure to comply with existing or
future regulatory requirements could have a material adverse effect on the
Company's business, financial condition and results of operations.
The FDC Act and the PHS Act govern or influence the development, testing,
manufacture, labeling, storage, approval, advertising, promotion, sale and
distribution of most FDA-regulated products in the United States. Failure to
comply with the applicable FDA regulatory requirements could result in sanctions
being imposed on the Company (or its collaborative partners and contract
manufacturers), including warning letters, fines, product recalls or seizures,
injunctions, refusals to permit products to be imported into or exported out of
the United States, FDA refusal to grant premarket approval of products and/or to
allow the Company to enter into government supply contracts, withdrawals of
previously approved marketing applications and criminal prosecutions.
FDA requirements for the Company's products under development vary
depending upon whether the product is a non-biological drug or biological drug.
Depending on the nature of the product, the Company's products under development
will be regulated as either non-biological drugs under the FDC Act or as
biological drugs under the FDC Act and the PHS Act. The Company believes that
its monoclonal antibody products currently in human clinical or late preclinical
development (i.e., LDP-03, LDP-01 and LDP-02) will be regulated by the FDA as
biological drugs. Because of the early research and development stages of its
small molecule antagonist program, the Company is uncertain as to whether
products under development in its small molecule antagonist program will be
regulated as non-biological drugs or biological drugs.
Regulation of Non-biological Drugs and Biological Drugs. Non-biological
drugs and biological drugs are subject to some of the same laws and regulations.
Ultimately, however, they are approved under different regulatory frameworks,
with non-biological drugs being approved under the FDC Act and biological drugs
being approved under the PHS Act. Product development and approval within either
regulatory framework takes a number of years, involves the expenditure of
substantial resources and is uncertain. Many non-biological drugs and biological
drugs that initially appear promising ultimately do not reach the market because
they are not found to be safe or effective or cannot meet the FDA's other
regulatory requirements. In addition, there can be no assurance that the current
regulatory framework will not change or that additional regulations will not
arise at any stage of the Company's product development that may affect
approval, delay the submission or review of an application or require additional
expenditures by the Company.
The activities required before a new non-biological drug or biological drug
can be marketed in the United States primarily begin with preclinical testing.
Preclinical tests include laboratory evaluation of product chemistry and other
characteristics and animal studies to assess the potential safety and efficacy
of the product as formulated. Many preclinical studies are regulated by the FDA
under the current Good Laboratory Practice ("GLP") regulations. Violations of
these regulations can, in some cases, lead to invalidation of the studies,
requiring such studies to be replicated if the data are to be submitted to the
FDA in support of a marketing application.
The entire body of preclinical development work necessary to administer
investigational non-biological drugs and biological drugs to human volunteers or
patients is summarized in an investigational new drug ("IND") application
submitted to the FDA. FDA regulations provide that human clinical trials may
begin 30 days following submission of an IND application, unless the FDA advises
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otherwise or requests additional information, clarification or additional time
to review the application. There is no assurance that the submission of an IND
will eventually allow a company to commence clinical trials. Once trials have
commenced, the FDA may stop the trials, or particular types of trials, by
placing a "clinical hold" on such trials because of concerns about, for example,
the safety of the product being tested. Such holds can cause substantial delay
and in some cases may require abandonment of a product.
Clinical testing involves the administration of the investigational
non-biological drug or biological drug to healthy human volunteers or to
patients under the supervision of a qualified principal investigator, usually a
physician, pursuant to an FDA reviewed protocol. Each clinical study is
conducted under the auspices of an Institutional Review Board ("IRB") at each of
the institutions at which the study will be conducted. An IRB will consider,
among other things, ethical factors, the safety of human subjects and the
possible liability of the institution. Human clinical trials typically are
conducted in three sequential phases, but the phases may overlap. Phase I trials
consist of testing the product in a small number of patients or normal
volunteers, primarily for safety, in one or more dosages, as well as
characterization of a drug's pharmacokinetic and/or pharmacodynamic profile. In
Phase II, in addition to safety, the efficacy of the product is evaluated in a
patient population. Phase III trials typically involve additional testing for
safety and clinical efficacy in an expanded population at geographically
dispersed sites. A clinical plan, or "protocol," accompanied by the approval of
an IRB, must be submitted to the FDA prior to commencement of each clinical
trial. All patients involved in the clinical trial must provide informed consent
prior to their participation. The FDA may order the temporary or permanent
discontinuance of a clinical trial at any time for a variety of reasons,
particularly if safety concerns exist. These clinical studies must be conducted
in conformance with the FDA's bioresearch monitoring regulations.
A company seeking FDA approval to market a new non-biological drug (in
contrast to biological drug) must file a new drug application ("NDA") with the
FDA pursuant to the FDC Act. In addition to reports of the preclinical and
clinical trials conducted under the FDA-approved IND application, the NDA
includes information pertaining to the preparation of the drug substance,
analytical methods, drug product formulation, detail on the manufacture of
finished products and proposed product packaging and labeling. In addition to
reports of the preclinical and clinical trials conducted under the
FDA-authorized IND application, the marketing application includes evidence of
the product's safety, purity, potency, and efficacy.
The FDA has established procedures designed to expedite the development,
evaluation and marketing of therapies intended to treat persons with cancer,
AIDS or other life-threatening and severely-debilitating illnesses, especially
when no satisfactory alternative therapy exists. Sponsors of such products may
request to meet with the FDA-reviewing officials early in the drug development
process to review and reach agreement on the design of necessary preclinical and
clinical studies. The term "life-threatening" is defined by FDA to mean: (1)
diseases or conditions where the likelihood or death is high unless the course
of the disease is interrupted; and (2) diseases or conditions with potentially
fatal outcomes, where the endpoint of clinical trial analysis is survival.
"Severely-debilitating" is defined by the FDA to mean diseases or conditions
that cause major irreversible morbidity. Treatment of patients with an
experimental non-biological or biological drug also may be allowed under a
Treatment IND before general marketing begins and pending FDA approval. Charging
for an investigation product also may be allowed under a Treatment IND to
recover certain costs of development if various requirements are met. There can
be no assurance that any of the Company's products under development will
qualify for expedited review or for treatment use.
Traditionally, a company seeking FDA approval to market a biological drug
(in contrast to a non-biological drug) is required to file a product license
application ("PLA"), and an establishment license application ("ELA") with the
FDA pursuant to the PHS Act before commercial marketing of a biological drug.
Recently, however, the FDA amended the biological drug regulations to eliminate
the ELA requirements for specified biotechnology and synthetic biological drugs
subject to licensing under the PHS Act, including, but not limited to,
monoclonal antibody products for in vivo use. For
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these specified products, in place of the ELA a company is required to prepare
and submit additional information for inclusion in a single biologics license
application ("BLA"). The Company believes that its monoclonal antibody products
will be subject to licensing under the BLA process, but there can be no
assurance that the FDA will determine that the Company's monoclonal antibody
products meet the agency's criteria for regulation under the BLA process.
Submission of a NDA, PLA, ELA or BLA does not assure FDA approval for
marketing. The application review process generally takes one to three years to
complete, although reviews of non-biological drugs and biological drugs for
life-threatening diseases may be accelerated or expedited. However, the process
may take substantially longer if, among other things, the FDA has questions or
concerns about the safety and/or efficacy of a product.
Since 1992, non-biological and biological drugs have been subject to the
Prescription Drug User Fee Act of 1992 ("PDUFA"). PDUFA requires that companies
submitting marketing applications for such products pay fees in connection with
review of the applications. In return, the FDA has committed to reviewing a
certain percentage of the applications within certain timeframes. For example,
in its Fiscal Year 1996 report on PDUFA, the FDA reported that 95 percent of
PLAs, BLAs and NDAs received in Fiscal Year 1995 were reviewed within 12 months
of application submission. FDA's PDUFA performance goal in Fiscal Year 1996 was
to complete its review of 70 percent of such applications within 12 months. In
Fiscal Year 1997, the FDA has committed to reaching an approval, disapproval or
additional-data-required decision on 90 percent of PLAs, BLAs and NDAs within 12
months of application submission. PDUFA is scheduled to expire on September 30,
1997. Although the Congress is considering legislation to extend PDUFA for an
additional period of time, there can be no assurance that the extension will be
enacted. Failure of the Congress to extend PDUFA or the imposition of other
requirements could have a significant adverse affect on the FDA's timeframe for
reviewing marketing applications.
In general, in order to approve a non-biological or biological drug, the
FDA requires at least two properly conducted, adequate and well-controlled
clinical studies demonstrating efficacy with sufficient levels of statistical
assurance. In the case of approval of a biological drug, one properly conducted,
adequate and well-controlled clinical study may suffice. The FDA, however,
recently proposed a new initiative under which the agency can determine that a
non-biological or biological drug is effective for a new use without requiring
data from two new clinical trials. However, additional information may be
required. For example, the FDA also may request long-term toxicity studies or
other studies relating to product safety or efficacy. Notwithstanding the
submission of such data, the FDA ultimately may decide that the NDA, PLA or BLA
does not satisfy its regulatory criteria for approval and disapprove the
application. Finally, the FDA may require additional clinical tests following
NDA, PLA or BLA approval to confirm safety and efficacy (Phase IV clinical
trials).
In addition, the FDA may, in some circumstances, impose restrictions on the
use of the non-biological drug or biological product that may be difficult and
expensive to administer. Product approval may be withdrawn if compliance with
regulatory requirements are not maintained or if problems occur after the
product reaches the market. The FDA requires reporting of certain safety and
other information that becomes known to a manufacturer of an approved
non-biological drug or biological product.
The product testing and approval process is likely to take a substantial
number of years and involves expenditure of substantial resources. There can be
no assurance that any approval will be granted on a timely basis, or at all. The
FDA also may require postmarket testing and surveillance to monitor the record
of the product and continued compliance with regulatory requirements. Upon
approval, a prescription non-biological drug or biological product may only be
marketed for the approved indications in the approved dosage forms and at the
approved dosage. Adverse experiences with the product must be reported to the
FDA.
Among the requirements for product approval is the requirement that the
prospective manufacturer conform to the FDA's current Good Manufacturing
Practices ("GMP") regulations, as supple-
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mented by the regulations pertaining to biological drugs. In complying with the
GMP regulations, manufacturers must continue to expend time, money and effort in
product record keeping and quality control to assure that the product meets
applicable specifications and other requirements. The FDA periodically inspects
manufacturing facilities in the United States and abroad in order to assure
compliance with applicable GMP requirements. Failure of the Company or the
Company's contract manufacturer to comply with the FDA's GMP regulations or
other FDA regulatory requirements could have a significant adverse effect on the
Company's business, financial condition and results of operations.
Under the Orphan Drug Act, a sponsor of a marketing application may seek to
obtain a seven-year period of marketing exclusivity for a non-biological or
biological drug intended to treat a rare disease or condition (i.e., a disease
or condition that occurs in fewer than 200,000 patients). Before a product can
receive marketing exclusivity associated with orphan product status, it must
receive orphan product designation. If a product is designated as an orphan drug
or biologic by the FDA and it is the first FDA approved application of the
specified indication, the sponsor receives seven years of marketing exclusivity.
The Company intends to seek FDA orphan product designation for LDP-03 for the
treatment of chronic lymphocytic leukemia. Even if such designation is sought,
the FDA may not grant it. Moreover, even if the Company does receive orphan
product designation for LDP-03 or any of its other products under development,
other companies also may receive orphan designation and obtain the FDA marketing
approval before the Company obtains such approval. If another company obtains
marketing approval first and receives seven-year marketing exclusivity, the
Company would not be permitted by the FDA to market the Company's product in the
United States during the exclusivity period. In addition, the Company could
incur substantial costs in asserting any rights to prevent such uses it may have
under the Orphan Drug Act. If the Company receives seven-year marketing
exclusivity, FDA may rescind the period of exclusivity under certain
circumstances, including failure of the Company to assure a sufficient quantity
of the drug.
Foreign requirements. In addition to the applicable FDA requirements, if
the Company attempts to sell its products overseas, the Company will be subject
to foreign regulatory authorities governing clinical trials, approvals and
product sales. Whether or not FDA approval has been obtained, approval of a
product by the comparable regulatory authorities of foreign countries must be
obtained prior to the commencement of marketing of the product in those
countries. The approval process varies from country to country and the time
required may be longer or shorter than that required for FDA approval. The
export of unapproved products also is subject to FDA regulation. Under certain
conditions, however, an unapproved non-biological or biological drug may be
exported to any country if the product complies with the laws of that country
and has valid marketing authorization in Australia, Canada, Israel, Japan, New
Zealand, Switzerland, South Africa, or in any country in the European Union or
the European Economic Area.
In Europe, the clinical trial approval process varies from country to
country, ranging from simple notification of intent to conduct a clinical trial
to a complete and lengthy approval process. The Company's success in obtaining
FDA approval of an IND application does not ensure clinical trial approval in
Europe, which must be pursued individually in each country in which the Company
intends to conduct clinical trials. The clinical trial approval process in the
United Kingdom (also referred to as the CTX process), where the Company intends
to conduct clinical trials beginning in 1997, is a rigidly time-limited process
depending upon acceptance by the regulatory authority in the United Kingdom of
an information summary containing details regarding the chemistry, pharmacy and
toxicology of the drug compressed into a 50-60 page document. Approval by the
regulatory authority in the United Kingdom, which must be given or refused
within 35 days, gives the applicant broad freedom to conduct trials in different
centers within the pre-agreed conditions of a usage guideline.
Unlike the highly individual approach to approval of clinical trials which
varies in Europe from country to country, the product registration system in the
European Union ("EU") combined with those of other European nations have been
harmonized. After 1998, all non-biological and biological products which are to
be marketed in more than one EU member state must be approved either
42
<PAGE> 44
through the centralized or decentralized (mutual recognition) procedure. Use of
the centralized process is compulsory for biotechnology products, such as the
Company's monoclonal antibody products, and is available upon request for other
innovative new products. The centralized procedure involves the submission of an
application to a central authority, the European Agency for the Evaluation of
Medicinal Products ("EMEA") based in London, evaluation of the application by
two of the member states appointed as Rapporteurs and agreement by all other
member states through the decision of a delegate committee, the Committee on
Proprietary Medicinal Products ("CPMP"). The process is rigidly time-limited. In
general, the total time required for product approval ranges between one and two
years. Product approval permits the applicant to commercialize the product with
a single set of indications and contraindications throughout the European
market.
Preconceived attitudes toward acceptable indications for a particular
non-biological or biological drugs may vary among member states and those
indications agreed upon by the CPMP may represent the compromise that could be
agreed upon by all members. Therefore, there can be no assurance that the
indications for use for which the Company initially seeks marketing approval
will be the same as those that are finally approved by the CPMP. In addition,
there can be no assurance that the CPMP will accept the same clinical end points
as the FDA in proving efficacy. Other applicants have found it necessary to
reassess their clinical trial results to satisfy different criteria before they
could obtain a consensus favorable opinion from the CPMP, even though the FDA
already had granted approval for marketing the product in the United States.
There can be no assurance that any application the Company submits to the EMEA
will be approved on a timely basis, or at all, and failure of the Company to
obtain marketing authorization in Europe for any of its products could have a
significant adverse effect on the Company's business, financial condition and
results of operations.
Other Regulations. The Company is subject to numerous federal, state and
local laws and regulations relating to such matters as safe working conditions,
manufacturing practices, environmental protection, fire hazard control, the
experimental use of animals and the disposal of hazardous or potentially
hazardous substances. There can be no assurance that the Company will not be
required to incur significant costs to comply with such laws and regulations in
the future or that such laws or regulations will not have a materially adverse
effect upon the Company's business, financial condition and results of
operations.
MANUFACTURING AND SUPPLY
The Company currently has no manufacturing facilities or staff for clinical
or commercial production of any monoclonal antibodies or small molecule
antagonists. The Company intends to rely initially on third parties to
manufacture certain of its product candidates for development, preclinical and
clinical trials and commercialization, if any. The monoclonal antibodies LDP-01
and LDP-02 will be manufactured for preclinical and early clinical trials in
collaboration with the TAC. The TAC has the capacity to produce these monoclonal
antibodies in sufficient quantity and of sufficient quality to support these
trials. The Company is currently in discussions with a contract manufacturer for
the production of LDP-03 for some or all of the Company's clinical trial
production.
The Company expects that its collaborative partners will manufacture
products for clinical development and commercialization. Under the Company's
collaboration agreements with Warner-Lambert, Roche Bioscience and Kyowa, the
collaborative partners have the exclusive right under the collaboration
agreements to manufacture products that result from their programs.
COMPETITION
The biotechnology and pharmaceutical industries are intensely competitive
and subject to rapid and significant technological change. Competitors of the
Company in the United States and elsewhere are numerous and include, among
others, major multinational pharmaceutical and chemical companies, specialized
biotechnology firms and universities and other research institutions. While the
Company believes that several of the drugs which may result from its research
and development efforts
43
<PAGE> 45
may be utilized in combination with existing drugs to treat specific diseases
(such as LDP-01 used in conjunction with t-PA or heparin and LDP-03 used in
conjunction with or following fludarabine), there can be no assurance that
patients, physicians or manufacturers of such existing drugs will view any of
the drugs that may be developed by the Company as complementary rather than
competitive. Many of the Company's potential competitors have greater financial
and other resources, including larger research and development staffs and more
effective marketing and manufacturing organizations, than the Company or its
collaborative partners. Acquisitions of competing companies and potential
competitors by large pharmaceutical companies or others could enhance the
financial, marketing and other resources available to such competitors. As a
result of academic and government institutions becoming increasingly aware of
the commercial value of their research findings, such institutions are more
likely to enter into exclusive licensing agreements with commercial enterprises,
including competitors of the Company. There can be no assurance that the
Company's competitors will not succeed in developing technologies and drugs that
are more effective or less costly than any which are being developed by the
Company or which would render the Company's technology and future drugs obsolete
or noncompetitive.
In addition, some of the Company's competitors have greater experience than
the Company in conducting preclinical and clinical trials and obtaining FDA and
other regulatory approvals. Accordingly, the Company's competitors may succeed
in obtaining FDA or other regulatory approvals for drug candidates more rapidly
than the Company. Companies that complete clinical trials, obtain required
regulatory agency approvals and commence commercial sale of their drugs before
their competitors may achieve a significant competitive advantage. There can be
no assurance that drugs resulting from the Company's research and development
efforts, or from the joint efforts of the Company and its collaborative
partners, will be able to compete successfully with competitors' existing
products or products under development or that they will obtain regulatory
approval in the United States or elsewhere.
EMPLOYEES
As of June 27, 1997, the Company had 54 full-time employees, of whom 19
hold Ph.D. or M.D. degrees. Of the Company's total work force, 44 are engaged in
research and development activities and 10 are engaged in business development,
finance and administration. None of the Company's employees is represented by a
collective bargaining agreement, nor has the Company experienced work stoppages.
The Company believes that relations with its employees are good.
SCIENTIFIC ADVISORY BOARD
The Company has established a Scientific Advisory Board ("SAB") to advise
on scientific and medical matters. The members of the SAB, collectively, have
considerable experience in the area of immunology and of the principal molecules
and disease targets of interest to the Company. The SAB meets as a group at
least one time per year and individual members meet with LeukoSite on an ad hoc
basis several times per year. All of the Company's SAB members have entered into
consulting agreements with the Company and have either purchased shares of
Common Stock or been granted options to purchase Common Stock.
The members of LeukoSite's SAB are:
Timothy A. Springer, Ph.D. is the Founder of LeukoSite and Chairman of the
SAB. Dr. Springer is the Latham Family Professor, Harvard Medical School,
Department of Pathology and at the Center for Blood Research. He is an expert on
the molecular and cellular pathways involved in leukocyte recruitment and
adhesion. Dr. Springer received his Ph.D. in Biochemistry and Molecular Biology
from Harvard University. In recognition of Dr. Springer's important contribution
to this area of medical science, he was elected to membership in the National
Academy of Sciences.
Eugene C. Butcher, M.D. is the Vice Chairman of the SAB and an Associate
Professor of Pathology at Stanford University Medical Center and a Staff
Physician at the Palo Alto Veterans Association
44
<PAGE> 46
Medical Center. Dr. Butcher's expertise is in the molecular and cellular
processes which are involved in lymphocyte homing and recruitment. He consults
with the Company on scientific matters pertaining to the recruitment of
lymphocytes to mucosal tissue, and in particular the role of SS7 integrins and
mucosal addressin cell adhesion molecules (MAdCAM). Dr. Butcher received his
M.D. from Washington University School of Medicine.
Michael B. Brenner, M.D. is the K. Frank Austen Professor of Medicine at
Harvard Medical School and Brigham and Women's Hospital. Dr. Brenner is an
expert in and consults with the Company on the biology of T cells found in skin
and in the mucosal lining of the gastrointestinal tract. Dr. Brenner received
his M.D. from Vanderbilt University School of Medicine.
Bruce Ganem, Ph.D. is the Franz and Elisabeth Roessler Professor of
Chemistry and Chairman of the Chemistry Department at Cornell University. Dr.
Ganem is a prominent chemist and consults with the Company in the fields of
organic synthesis and natural products chemistry. Dr. Ganem received his Ph.D.
in Organic Chemistry from Columbia University.
Craig Gerard, M.D., Ph.D. is an Associate Professor of Pediatrics at
Harvard Medical School and Children's Hospital/Brigham and Women's Hospital. Dr.
Gerard consults with the Company on the biochemistry, regulation and function of
G protein-coupled chemokine receptors and has a clinical specialty in genetic
lung diseases. Dr. Gerard received his M.D. degree from the Bowman Gray School
of Medicine and his Ph.D. in Chemistry from the University of California at San
Diego.
Martin Hemler, Ph.D. is an Associate Professor of Pathology at Harvard
Medical School and the Dana-Farber Cancer Institute. Dr. Hemler is a leader in
the field of SS1 integrins, molecules on activated leukocytes that are important
in adhesion to the endothelium and to the extracellular matrix and consults with
the Company on its integrin programs. Dr. Hemler received his Ph.D. in
Biological Chemistry from the University of Michigan.
Steven L. Kunkel, Ph.D. is a Professor of Pathology at the University of
Michigan. Dr. Kunkel is an expert on the molecular basis of inflammation and
consults with the Company on its chemokine programs. Dr. Kunkel received his
Ph.D. in Microbiology/Immunology from Kansas University.
Herman Waldmann, M.D., Ph.D., F.R.S. is a Professor of Pathology at the
University of Oxford. Dr. Waldmann is a Fellow of the Royal Society and an
expert on immunological tolerance. He consults with the Company on matters
relating to monoclonal antibodies and their use. Dr. Waldmann received his Ph.D.
in Pharmacology and Therapeutics and his M.D. from Cambridge University.
Timothy Williams, Ph.D. is a Professor of Applied Pharmacology at the
Imperial College of Science, Technology and Medicine. Dr. Williams is widely
known for his work on the molecular and cellular processes of inflammation, and
he consults with the Company on eosinophil recruitment and chemokines. Dr.
Williams received his Ph.D. in Pharmacology from University College, London.
Another key consultant to the Company is:
Daniel Podolsky, M.D. is a Professor of Medicine at Harvard Medical School
and Chairman of Gastroenterology at Massachusetts General Hospital. Dr. Podolsky
is an expert on the clinical management and research of inflammatory bowel
disease and consults with the Company on its inflammatory bowel disease program.
Dr. Podolsky received his M.D. from Harvard University.
FACILITIES
The Company's administrative and research and development facility is
located in Cambridge, Massachusetts. This 23,500 square foot facility is leased
for a term which expires in 1999. An additional 770 square feet of laboratory
and office space will become subject to the lease by December 1, 1997.
45
<PAGE> 47
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The executive officers and directors of the Company, and their ages as of
June 27, 1997, are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------------- --- -------------------------------------------
<S> <C> <C>
Christopher K. Mirabelli, Ph.D............. 42 Chairman of the Board of Directors,
President and Chief Executive Officer
Augustine Lawlor........................... 40 Vice President, Corporate Development and
Chief Financial Officer
Walter Newman, Ph.D........................ 51 Vice President, Research and Discovery
Lee Brettman, M.D.......................... 49 Vice President, Pharmaceutical Development:
Clinical Development and Medical Affairs
Douglas Ringler, V.M.D..................... 40 Vice President, Pharmaceutical Development:
Preclinical Development and Laboratory
Operations
Jay Luly, Ph.D............................. 41 Vice President, Drug Discovery
Catherine Bingham(1)....................... 31 Director
John W. Littlechild(2)..................... 45 Director
Martin Peretz, Ph.D.(2).................... 57 Director
Mark Skaletsky(1).......................... 49 Director
Christopher T. Walsh, Ph.D................. 52 Director
</TABLE>
- ------------------------------
(1) Member of Audit Committee of the Board of Directors.
(2) Member of Compensation Committee of the Board of Directors.
Dr. Mirabelli has served as Chairman of the Board of Directors, President
and Chief Executive Officer since July 1993. Dr. Mirabelli was a founder of Isis
Pharmaceuticals, Inc., a biotechnology company, where he served as Executive
Vice President from 1992 to 1993, Senior Vice President of Research and
Preclinical Development from 1991 to 1992, and Vice President of Research from
1989 to 1991. From 1981 to 1989, Dr. Mirabelli served in various positions at
SmithKline & French Laboratories, most recently as Director of Molecular
Pharmacology. Dr. Mirabelli received his B.S. in Biology from the State
University of New York at Fredonia and his Ph.D. in Pharmacology from Baylor
College of Medicine.
Mr. Lawlor has served as Vice President, Corporate Development and Chief
Financial Officer since February 1997. From 1995 to 1997, he served as Chief
Financial Officer at Alpha-Beta Technology, Inc., a biotechnology company. From
1993 to 1995, Mr. Lawlor served as Chief Financial Officer at BioSurface
Technology, a biotechnology company. From 1989 to 1995, he served as Chief
Financial Officer with Armstrong Pharmaceuticals, Inc., a biotechnology company.
Mr. Lawlor received his B.A. from the University of New Hampshire and his
M.P.P.M. from the Yale School of Organizational Management.
Dr. Newman has served as Vice President, Research and Discovery since June
1996. Dr. Newman served the Company as Senior Director, Research from 1994 to
1996, and as a Director, Research from 1993 to 1994. From 1986 to 1993, he
served as Chief Scientist at Otsuka America Pharmaceuticals, a biotechnology
company, and leader of the Endothelial Cell Biology Group. Dr. Newman received
both his B.A. in Chemistry and his Ph.D. in Immunochemistry from Columbia
University.
Dr. Brettman has served as Vice President of Pharmaceutical Development:
Clinical Development and Medical Affairs since June 1996. From 1995 to 1996, he
served the Company as Senior Director, Clinical Development of the Company. From
1993 to 1995, Dr. Brettman served as Head of Clinical Research at Vertex
Pharmaceuticals, Inc., a biotechnology company. From 1990 to 1993, he served
first
46
<PAGE> 48
as Associate Director of the Anti-Infectives Group at the Robert Wood Johnson
Pharmaceutical Research Institute and then as the Director of Anti-infectives
Research at Schering Plough Company, a pharmaceutical company. Dr. Brettman
received his B.S. in Biology from the Massachusetts Institute of Technology and
his M.D. from Baylor College of Medicine.
Dr. Ringler has served as Vice President of Pharmaceutical Development:
Preclinical Development, Laboratory Operations and Experimental Therapies since
June 1996. Dr. Ringler served the Company as Senior Director, Preclinical
Development from 1994 to 1996, and Director of Experimental Therapeutics from
1993 to 1994. From 1985 to 1993, he served in various positions at Harvard
Medical School, including Associate Professor and Chairman of the Division of
Comparative Pathology. Dr. Ringler received both his B.A. in Biology and his
V.M.D. from the University of Pennsylvania.
Dr. Luly has served as Vice President, Drug Discovery since June 1997. From
1995 to 1997, Dr. Luly served as Director, ImmunoRegulation Research and
research fellow at Abbott Laboratories, a health care company. From 1993 to
1995, Dr. Luly served as senior project leader and research fellow at Abbott
Laboratories. From 1990 to 1993 he served as project leader and associate
research fellow at Abbott Laboratories. Dr. Luly received his B.S. from the
University of Illinois and his Ph.D. in Organic Chemistry from the University of
California, Berkeley.
Ms. Bingham has served as a Director since September 1994. Since 1991, Ms.
Bingham has served as a Partner at Schroder Ventures, a venture capital
management company. Ms. Bingham received her first class degree in Biochemistry
from the University of Oxford and her M.B.A. from Harvard Business School.
Mr. Littlechild has served as a Director since the Company's incorporation.
Since 1992, Mr. Littlechild has served as a general partner of HealthCare
Partners III L.P. and HealthCare Partners IV L.P., the general partner,
respectively, of each of HealthCare Ventures III L.P. and HealthCare Ventures IV
L.P., and as a principal of HealthCare Investment Corporation LLC, a venture
capital management company. He is a member of the Board of Directors of Orthofix
Inc., a medical devices company, Diacrin Inc., a biotechnology company, and
Virus Research Institute, Inc., a biotechnology company. Mr. Littlechild
received his B.Sc. from the University of Manchester and his M.B.A. from
Manchester Business School.
Dr. Peretz has served as a Director since September 1993. Since 1974, Dr.
Peretz has served as the Editor-in-Chief of The New Republic, and has been a
faculty member of the Social Studies Department at Harvard University since
1965. He is Co-Chairman of the Board of Directors of The Street.com, a financial
daily on the World Wide Web. He serves on the Board of Directors of nine mutual
funds managed by the Dreyfus Corporation. Dr. Peretz received his B.A. in
History from Brandeis University and his Ph.D. in Government from Harvard
University.
Mr. Skaletsky has served as a Director since December 1996. Since May 1993,
Mr. Skaletsky has served as President and Chief Executive Officer of GelTex
Pharmaceuticals, Inc., a biotechnology company. Previously, he served as
Chairman and Chief Executive Officer of Enzytech, Inc., and Opta Food
Ingredients, Inc., each a biotechnology company. Mr. Skaletsky also served as
President and Chief Operating Officer of Biogen, Inc., a biotechnology company.
He is a member of the Board of Directors of Isis Pharmaceuticals, Inc., a
biotechnology company. Mr. Skaletsky is currently serving as president of the
Massachusetts Biotechnology Council and a member of the Board of Directors of
the Biotechnology Industry Organization. Mr. Skaletsky received his B.S. in
Finance from Bentley College.
Dr. Walsh has served as a Director since January 1996. Since 1991, Dr.
Walsh has served as Hamilton Kuhn Professor of Biological Chemistry and
Molecular Pharmacology at Harvard Medical School. From 1987 to 1995, he was
Chairman of the Harvard Medical School Biological Chemistry and Molecular
Pharmacology Department. Dr. Walsh received his A.B. in Biology from Harvard
University and his Ph.D. in Life Sciences from Rockefeller University.
47
<PAGE> 49
BOARD OF DIRECTORS
All directors hold their positions until the annual meeting of stockholders
at which their respective successors are elected and qualified. Executive
officers of the Company are elected annually by the Board of Directors and serve
at the discretion of the Board of Directors or until their successors are duly
elected and qualified.
The Board of Directors has appointed an Audit Committee and a Compensation
Committee. The Audit Committee reviews the scope and results of the annual audit
of the Company's financial statements conducted by the Company's independent
accountants, the scope of other services provided by the Company's independent
accountants, proposed changes in the Company's financial and accounting
standards and principles, and the Company's policies and procedures with respect
to its internal accounting, auditing and financial controls, and makes
recommendations to the Board of Directors on the engagement of the independent
accountants, as well as other matters which may come before it or as directed by
the Board of Directors. The Compensation Committee administers the Company's
compensation programs, including the Plan, and performs such other duties as may
from time to time be determined by the Board of Directors.
DIRECTOR COMPENSATION
Dr. Walsh and Mr. Skaletsky each have received $2,500 and a stock option
grant of 9,756 shares of Common Stock as compensation for his service to the
Board of Directors. No other director has received compensation for his or her
service on the Board of Directors.
Following this offering, Non-Employee Directors will receive a fee of
$5,000 for each year of service on the Board of Directors and will be reimbursed
for expenses incurred in connection with their attendance. In addition, each
year, each Non-Employee Director will be granted automatically a stock option
exercisable for 2,000 shares of Common Stock, as described below under "Amended
and Restated 1993 Stock Option Plan."
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<PAGE> 50
EXECUTIVE COMPENSATION
The following table sets forth certain information with respect to the
annual and long-term compensation paid by the Company during the fiscal year
ended December 31, 1996 to the Chief Executive Officer and its other three most
highly compensated executive officers (the "Named Executive Officers") whose
1996 compensation exceeded $100,000:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS(4)
ANNUAL COMPENSATION ------------
------------------------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING
NAME AND PRINCIPAL POSITION SALARY($)(1) BONUS($)(2) COMPENSATION($)(3) OPTIONS(#)
- -------------------------------------- ------------ ----------- ------------------ ------------
<S> <C> <C> <C> <C>
Christopher K. Mirabelli.............. $222,000 $39,960 $8,097 50,914
President, Chief Executive
Officer and Chairman of the Board of
Directors
Walter Newman......................... 140,000 16,800 6,355 38,109
Vice President,
Research and Discovery
Douglas Ringler....................... 115,417 16,100 2,111 43,475
Vice President,
Pharmaceutical Development:
Preclinical Development and
Laboratory Operations
Lee Brettman.......................... 175,000 17,500 6,446 20,426
Vice President,
Pharmaceutical Development:
Clinical Development and
Medical Affairs
</TABLE>
- ------------------------------
(1) Salary includes amounts, if any, deferred pursuant to the Company's 401(k)
Plan, and excludes bonus paid in 1996 for fiscal year 1995.
(2) Bonus amounts were accrued for fiscal 1996, but were not paid until the
first quarter of 1997.
(3) Other Annual Compensation consists of health and life insurance premiums
paid by the Company on behalf of the Named Executive Officer.
(4) The Company has no long-term compensation plan that includes long-term
incentive payments.
49
<PAGE> 51
The following table sets forth certain information with respect to grants
of stock options under the Company's Stock Option Plan to the Named Executive
Officers during the year ended December 31, 1996.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
VALUE AT ASSUMED
INDIVIDUAL GRANTS ANNUAL RATE OF
----------------------------------------------------------- STOCK PRICE
NUMBER PERCENT OF TOTAL APPRECIATION FOR
OF SECURITIES OPTIONS GRANTED OPTIONS TERM(2)
UNDERLYING TO EMPLOYEES IN EXERCISE EXPIRATION -----------------
NAME: OPTIONS(1) FISCAL YEAR PRICE $/SH DATE 5% 10%
- ------------------------------ ------------- ----------------- ---------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Christopher K. Mirabelli...... 36,910 11.38% $5.125 4/22/06 $40,767 $87,792
14,004 4.32 6.15 12/16/06 18,560 39,970
Walter Newman................. 19,436 5.99 5.125 4/22/06 21,466 46,229
18,673 5.76 6.15 12/16/06 24,249 53,297
Douglas Ringler............... 19,200 5.92 5.125 4/22/06 21,206 45,668
24,275 7.48 6.15 12/16/06 32,174 69,287
Lee Brettman.................. 3,620 1.12 5.125 4/22/06 3,999 8,612
16,806 5.18 6.15 12/16/06 22,274 47,968
</TABLE>
- ------------------------------
(1) Represents incentive stock options granted under the Plan to each of the
individuals listed above on April 22, 1996 and December 16, 1996. Each
option becomes exercisable in four equal annual installments, and has a
maximum term of 10 years from the date of grant, subject to earlier
termination in the event of the optionee's cessation of service with the
Company. All of these options are exercisable during the holder's lifetime
only by the holder; they are exercisable by the holder only while the holder
is an employee of the Company and for certain limited periods of time
thereafter in the event of termination of employment.
(2) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. These gains
are based upon assumed appreciation rates of five percent and ten percent in
the fair market value of shares of Common Stock from the fair market value
on the date of grant, which rates are set by the Securities and Exchange
Commission and compounded annually from the date the respective options were
granted to their expiration date. The gains shown are net of option exercise
prices, but do not include deductions for taxes or other expenses associated
with the exercises. Actual gains, if any, are dependent on the performance
of the Common Stock and the date on which the option is exercised. There can
be no assurance that the amounts reflected will be achieved or will
otherwise be indicative of the actual amounts received, if any.
50
<PAGE> 52
The following table sets forth information with respect to (i) the number
of unexercised options held by the Named Executive Officers as of December 31,
1996 and (ii) the value of unexercised in-the-money options (options for which
the fair market value of the Common Stock exceeds the exercise price) as of
December 31, 1996.
OPTION EXERCISES IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES VALUE OPTIONS AT OPTIONS AT
ACQUIRED ON REALIZED DECEMBER 31, 1996(#) DECEMBER 31, 1996($)(1)
NAME EXERCISE(#) ($)(1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- --------------------------- ----------- -------- ------------------------------- --------------------------
<S> <C> <C> <C> <C>
Christopher K. Mirabelli... 10,975 57,371 28,048/87,500 $146,425/$229,083
Walter Newman.............. -- -- 6,097/44,207 31,875/51,797
Douglas Ringler............ 11,402 63,440 0/54,200 0/79,493
Lee Brettman............... -- -- 6,097/38,719 30,750/95,961
</TABLE>
- ------------------------------
(1) Based on the fair market value of the Common Stock as of December 31, 1996,
of $6.15 per share, as determined by the Company's Board of Directors, less
the aggregate exercise price.
AMENDED AND RESTATED 1993 STOCK OPTION PLAN
The Stock Option Plan provides for the grant of options to purchase shares
of Common Stock to officers, employees and directors of and consultants to the
Company. The maximum number of shares of Common Stock that may be issued
pursuant to the Stock Option Plan is 1,500,000. The Stock Option Plan was
adopted by the Board of Directors and the stockholders of the Company on
September 21, 1993. The Stock Option Plan was amended and restated by the Board
of Directors on April 14, 1997, in order to increase the number of shares of
Common Stock to its current level and to provide the rights set forth below,
which amendment was approved by the stockholders of the Company as of June 25,
1997.
The Stock Option Plan will be administered by the Compensation Committee
which is presently comprised of John Littlechild and Martin Peretz. The
Compensation Committee will select participants (other than for the automatic
grants to Non-Employee Directors referred to below) and, in a manner consistent
with the terms of the Stock Option Plan, determine the number and duration of
the options to be granted and the terms and conditions of the option agreements.
In addition, each Non-Employee Director will receive, each year that such person
serves as a director, an option to purchase 2,000 shares of Common Stock at fair
market value on the date of grant. The Compensation Committee has the right to
alter, amend or terminate the Stock Option Plan at any time but any such
alteration, amendment or termination will not adversely affect options
previously granted.
The Stock Option Plan provides for grants of stock options intended to
qualify for preferential tax treatment (the "Incentive Stock Options") under
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), and
nonstatutory stock options that do not qualify for such treatment. All employees
of the Company are eligible for stock options under the Plan in amounts and at
prices determined by the Compensation Committee, provided that, in the case of
Incentive Stock Options, the exercise price will not be less than 100% of the
fair market value of the Common Stock on the date of grant, or not less than
110% of the fair market value of the Common Stock on the grant date if the
optionee owns, directly or indirectly, more than 10% of the total combined
voting power of all classes of stock. No participant in the Stock Option Plan
may in any year be granted stock options with respect to more than 500,000
shares of Common Stock.
Under the Stock Option Plan, the Compensation Committee may establish with
respect to each option granted such vesting provisions as it determines to be
appropriate or advisable. In general, options granted under the Stock Option
Plan have a ten-year term, and such options vest or have
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<PAGE> 53
vested over four-year periods at various rates. Unexercised options
automatically terminate upon the termination of a holder's relationship with the
Company. In addition, the Stock Option Plan includes a provision adjusting the
number of shares of Common Stock available for grant, the number of shares of
Common Stock subject to outstanding awards thereunder and the per share exercise
price thereof in the event of any stock dividend, stock split, recapitalization,
merger or certain other events.
The Stock Option Plan provides that each outstanding option will
immediately become fully exercisable upon a "Change in Control" of the Company,
as defined in the Stock Option Plan. A "Change in Control" includes the
acquisition by any third party (as hereinafter defined), directly or indirectly,
of more than 80% of the Common Stock outstanding at the time, without the prior
approval of the Company's Board of Directors. A "third party" for purposes of
the foregoing means any person other than the Company or a subsidiary or
employee benefit plan or trust maintained by the Company or any of its
subsidiaries together with any of such person's "affiliates" and "associates" as
defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended.
As of June 27, 1997, an aggregate of 967,074 shares of Common Stock were
subject to outstanding stock options granted under the Stock Option Plan. As of
June 27, 1997, options to purchase 254,890 shares of Common Stock were
exercisable at prices ranging from $.04 to $5.95 per share.
1997 EMPLOYEE STOCK PURCHASE PLAN
In April 1997, the Board adopted the 1997 Employee Stock Purchase Plan (the
"Stock Purchase Plan"), which enables eligible employees to acquire shares of
the Company's Common Stock through payroll deductions. The Stock Purchase Plan
is intended to qualify as an "employee stock purchase plan" under Section 423 of
the Code. Offerings under the Stock Purchase Plan are planned to commence on
January 1 and end on December 31 of each year. The initial offering period is
intended to commence upon January 1, 1998 and to end on December 31, 1998,
unless otherwise determined by the Board. During the offering period, an
eligible employee may select a rate of payroll deduction up to 10% of his or her
compensation up to an aggregate total payroll deduction not to exceed $10,000 in
any offering period. The purchase price for the Company's Common Stock purchased
under the Stock Purchase Plan is 85% of the lesser of the fair market value of
the shares on the first day or the last day of the offering period. A total of
150,000 shares of Common Stock have been reserved for issuance under the Stock
Purchase Plan.
401(K) PLAN
The Company has implemented a retirement savings plan (the "401(k) Plan"),
which covers all full-time employees. Pursuant to the 401(k) Plan, an employee
may elect to reduce his or her current compensation by up to 15% (subject to
certain overall dollar limits) and have the amount of such reduction contributed
to the 401(k) Plan. The 401(k) Plan allows employees to make certain tax-
deferred voluntary contributions. The 401(k) Plan is intended to qualify under
Section 401 of the Code, so that contributions by employees, and earned income
thereon, are not taxable to employees until withdrawn from the 401(k) Plan. The
administrator of the 401(k) Plan will invest each employee's account at the
direction of each such employee, who can choose among certain investment
alternatives provided.
EMPLOYMENT AGREEMENTS
The Company has no employment agreements currently in effect between it and
its employees.
COMPENSATION COMMITTEE INTERLOCKS
The Compensation Committee is responsible for determining salaries,
incentives and all other forms of compensation for directors and officers of the
Company. The Compensation Committee also administers various incentive
compensation and benefit plans, including the Stock Option Plan and Stock
Purchase Plan. The members of the Compensation Committee of the Board of
Directors are
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<PAGE> 54
John W. Littlechild and Martin Peretz, neither of whom is an employee of the
Company. Mr. Littlechild is a general partner of the general partner of
HealthCare Ventures, III, L.P., and HealthCare Ventures, IV, L.P., each a
venture fund and a principal stockholder of the Company. Dr. Peretz may be
deemed to beneficially own the shares held by I.S. Partners, L.P., a venture
capital firm and a principal stockholder of the Company. See "Principal
Stockholders" and "Certain Transactions."
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<PAGE> 55
CERTAIN TRANSACTIONS
In June 1994, the Company sold an aggregate of 5,000,000 shares of Series A
Convertible Preferred Stock (convertible into 1,219,512 shares of Common Stock)
at a purchase price of $1.00 per share ($4.10 per share on an as-converted
basis) to a group of existing investors, including HealthCare Ventures III, L.P.
("HCV III"), HealthCare Ventures IV, L.P. ("HCV IV") and I.S. Partners, L.P.
("I.S. Partners").
In September 1994, the Company sold an aggregate of 1,666,667 shares of
Series B Convertible Preferred Stock (convertible into 406,504 shares of Common
Stock) at a purchase price of $1.20 per share ($4.92 per share on an
as-converted basis) to a group of new and existing investors, including Schroder
Ventures International Life Science Fund L.P. 1, Schroder Ventures International
Life Sciences Trust, Schroders Incorporated and I.S. Partners.
In November 1994, the Company entered into a Research, Development and
Marketing Agreement with Warner-Lambert relating to the Company's MCP-1 program.
In connection with such agreement, the Company issued and sold 1,000,000 shares
of Series C Convertible Preferred Stock (convertible into 243,902 shares of
Common Stock) at a purchase price of $3.00 per share ($12.30 per share on an
as-converted basis) to Warner-Lambert Company.
In May 1995, the Series A Common Stock, which was owned by Dr. Springer and
his affiliates, automatically converted pursuant to its terms into 893,782
shares of Common Stock.
In July 1995, the Company entered into a Research, Development and
Marketing Agreement with Warner-Lambert Company relating to the Company's IL-8
program and amended the Research, Development and Marketing Agreement relating
to the MCP-1 program.
In September 1995, the Company sold an aggregate of 1,481,482 shares of
Series D Convertible Preferred Stock (convertible into 361,337 shares of Common
Stock) at a purchase price of $1.35 per share ($5.54 per share on an
as-converted basis) to a group of new and existing investors, including HCV III,
HCV IV, I.S. Partners, Schroder Ventures International Life Science Fund L.P. 1,
Schroder Ventures International Life Sciences Trust, Schroders Incorporated and
Francis H. Spiegel, Jr.
In January 1996, the Company sold 625,000 shares of Series E Convertible
Preferred Stock (convertible into 152,439 shares of Common Stock) at a purchase
price of $4.00 per share ($16.40 per share on an as-converted basis) to
Warner-Lambert.
In February 1996, the Company sold an aggregate of 910,188 shares of Series
F Convertible Preferred Stock (convertible into 221,997 shares of Common Stock)
at a purchase price of $3.00 per share ($12.30 per share on an as-converted
basis) to a group of new and existing investors, including HCV III, HCV IV, I.S.
Partners, Schroder Ventures International Life Science Fund L.P. 1, Schroder
Ventures International Life Sciences Trust, Schroders Incorporated and Lombard
Odier & Cie.
In April 1996, the Company sold 625,000 shares of Series E Convertible
Preferred Stock (convertible into 152,439 shares of Common Stock) at a purchase
price of $4.00 per share ($16.40 per share on an as-converted basis) to
Warner-Lambert.
In June 1996, the Company sold an aggregate of 728,147 shares of Series F
Convertible Preferred Stock (convertible into 194,608 shares of Common Stock) at
a purchase price of $3.00 per share ($12.30 per share on an as converted basis)
to a group of existing investors, including HCV III, HCV IV, I.S. Partners,
Schroder Ventures International Life Science Fund L.P. 1, Schroder Ventures
International Life Sciences Trust, Schroders Incorporated and Lombard Odier &
Cie.
In July 1996, the Company entered into a Research Collaboration and License
Agreement with Roche Bioscience relating to the Company's CCR3 Antagonist
program. In connection with such agreement, Roche Bioscience made a $3.0 million
license fee payment.
In December 1996, the Company sold 857,143 shares of Series G Convertible
Preferred Stock (convertible into 401,142 shares of Common Stock) at a purchase
price of $3.50 per share ($7.47 on an
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<PAGE> 56
as-converted basis) to Roche Finance Ltd. If the initial public offering price
varies within the estimated range, the number of shares of Common Stock issuable
upon the conversion of the Preferred Stock is subject to adjustment from a
maximum of 451,284 shares of Common Stock (in the event that the initial public
offering price is $8.00 per share) to a minimum of 361,027 shares of Common
Stock (in the event that the initial public offering price is $10.00 per share).
The pricing of this offering outside the estimated range will further effect the
number of shares of Common Stock into which the Preferred Stock is convertible.
In January 1997, the Company granted Augustine Lawlor, Vice President,
Corporate Development and Chief Financial Officer, an incentive stock option to
purchase 89,633 shares of Common Stock at an exercise price of $6.15, the fair
market value of the Common Stock on the date of grant.
In March through June 1997, the Company sold an aggregate of 1,102,719
shares of Series G Convertible Preferred Stock (convertible into 493,319 shares
of Common Stock) at a purchase price of $3.50 per share ($6.75 on an
as-converted basis) to a group of new and existing investors, including Schroder
Ventures International Life Sciences Fund L.P. 1, Schroder Ventures
International Life Sciences Trust, Schroders Incorporated and Warner-Lambert. If
the initial public offering price varies within the estimated range, the number
of shares of Common Stock issuable upon the conversion of the Preferred Stock is
subject to adjustment from a maximum of 546,273 shares of Common Stock (in the
event that the initial public offering price is $8.00 per share) to a minimum of
450,956 shares of Common Stock (in the event that the initial public offering
price is $10.00 per share). The pricing of this offering outside the estimated
range will further effect the number of shares of Common Stock into which the
Preferred Stock is convertible.
In June 1997, the Company granted Jay Luly, Vice President, Drug Discovery,
an incentive stock option to purchase 85,366 shares of Common Stock at an
exercise price of $7.18, the fair market value of the Common Stock on the date
of grant.
In June 1997, the Company entered into an agreement with Warner-Lambert
pursuant to which (i) Warner-Lambert terminated all of its equity anti-dilution
rights in connection with Company's initial public offering and (ii)
Warner-Lambert agreed to reduce the number of shares of Common Stock into which
its shares of Series G Preferred Stock would be converted upon consummation of
the Company's initial public offering. In exchange for Warner-Lambert's
agreement to so reduce certain of its equity rights in the Company, the Company
agreed to reduce the amount of certain of the royalties due to the Company by
Warner-Lambert in connection with sales of products developed pursuant to any of
the research collaborations between the Company and Warner-Lambert, and the
Company also agreed in principle to waive its right to co-promote such products
under certain circumstances. In the event that the initial public offering price
is less than $12.30 per share, Warner-Lambert will receive a credit against such
royalties. Assuming an initial public offering price of $9.00 per share, the
approximate amount of such credit would be $2.05 million.
For a description of certain transactions and certain employment and other
arrangements between the Company and certain of its directors and executive
officers, see "Management Director Compensation" and "Executive Compensation."
The Company believes that the securities issued in the transactions
involving the Company described above were sold by the Company at their then
fair market value and that the terms of the transactions described were no less
favorable than the Company could have obtained from unaffiliated third parties.
The Company has adopted a policy, effective following the consummation of
this offering, that all future transactions between the Company and its
officers, directors and affiliates must (i) be approved by a majority of the
disinterested members of the Company's Board of Directors and (ii) be on terms
no less favorable to the Company than could be obtained from unrelated third
parties. In addition, this policy requires that any loans by the Company to its
officers, directors or other affiliates be for bona fide business purposes only.
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<PAGE> 57
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of May 31, 1997, giving effect to the
conversion of all outstanding shares of the Company's Preferred Stock into an
aggregate of 5,087,974 shares of Common Stock by (i) each person known to the
Company to be the beneficial owner of more than 5% of the shares of Common
Stock, (ii) each director of the Company, (iii) each of the Named Executive
Officers and (iv) all current directors and executive officers as a group.
<TABLE>
<CAPTION>
PERCENT OWNED
SHARES ------------------------
BENEFICIALLY BEFORE THE AFTER THE
NAMES AND ADDRESS OF BENEFICIAL OWNER OWNED(1) OFFERING OFFERING
- ----------------------------------------------------------- ------------ ---------- ---------
<S> <C> <C> <C>
Entities Affiliated with HealthCare Investment
Corporation(2)........................................... 1,999,380 32.3% 23.0%
Twin Tower at Metro Park
379 Thornall Street
Edison, New Jersey 08837
Timothy Springer(3)........................................ 901,188 14.6% 10.4%
Center for Blood Research
200 Longwood Avenue
Boston, Massachusetts 02115
I.S. Partners, L.P......................................... 736,330 11.9% 8.5%
c/o Clark Estates
30 Wall Street
New York, New York 10005
Warner-Lambert Company..................................... 618,466 10.0% 7.1%
201 Tabor Road
Morris Plains, New Jersey 07950
Entities Affiliated with Schroder Venture Managers
Inc.(4).................................................. 423,949 6.9% 4.9%
22 Church Street
Hamilton, HMFX
Bermuda
Roche Finance Ltd.......................................... 401,141 6.5% 4.6%
c/o Hoffmann-La Roche, Ltd.
124 Grensacherstrasse
CH-4002 Basel
Switzerland
Lombard Odier & Cie........................................ 400,896 6.5% 4.6%
Toedistrasse 36
CH8027
Zurich, Switzerland
John W. Littlechild(5)..................................... 1,999,380 32.3% 23.0%
Martin Peretz(6)........................................... 736,330 11.9% 8.5%
Catherine Bingham(7)....................................... 423,949 6.9% 4.9%
Christopher K. Mirabelli(8)................................ 164,104 2.6% 1.9%
Christopher T. Walsh....................................... 3,937 * *
Mark Skaletsky............................................. 0 * *
Walter Newman(9)........................................... 38,394 * *
Douglas Ringler(10)........................................ 23,598 * *
Lee Brettman(11)........................................... 7,003 * *
All current directors and executive officers
as a group (11 persons)(12).............................. 3,396,695 54.2% 38.8%
</TABLE>
- ------------------------------
* Less than 1%.
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<PAGE> 58
(1) Beneficial ownership is determined in accordance with Rule 13d-3(d)
promulgated by the Securities and Exchange Commission under the Securities
and Exchange Act of 1934, as amended. Shares of Common Stock issuable
pursuant to options, warrants and convertible securities, to the extent
such securities are currently exercisable or convertible within 60 days of
May 31, 1997, are treated as outstanding for computing the percentage of
the person holding such securities but are not treated as outstanding for
computing the percentage of any other person. Unless otherwise noted, each
person or group identified possesses sole voting and investment power with
respect to shares, subject to community property laws where applicable.
Shares not outstanding but deemed beneficially owned by virtue of the right
of a person or group to acquire them within 60 days are treated as
outstanding only for purposes of determining the number of and percent
owned by such person or group.
(2) Includes shares held by HealthCare Ventures III, L.P. ("HCV III") and
HealthCare Ventures IV, L.P. ("HCV IV").
(3) Includes shares held by Dr. Springer's wife and the Springer Family Trust.
Dr. Springer disclaims beneficial ownership of all shares owned by his wife
and beneficial ownership of the shares owned by the Springer Family Trust
except to the extent of his proportional interest.
(4) Includes shares held by Schroder Ventures International Life Sciences Fund
L.P. 1, Schroder Ventures International Life Sciences Fund L.P. 2, Schroder
Ventures International Life Sciences Trust, Schroders Incorporated,
Schroder Venture Managers Limited as Investment Manager for the Schroder
Ventures International Life Sciences Fund Co-Investment Scheme (together,
the "Schroder Group") and including 74,072 shares of Common Stock that will
be issued upon conversion of the 142,858 shares of Series G Convertible
Preferred Stock purchased by the Schroder Group in June 1997.
(5) Includes shares held by HCV III and HCV IV. Mr. Littlechild, a director of
the Company is a general partner of the general partner of each of HCV III
and HCV IV. Mr. Littlechild shares voting and investment control with
respect to the shares owned by HCV III and HCV IV. Mr. Littlechild may be
deemed to beneficially own the shares held by HCV III and HCV IV although
he disclaims beneficial ownership except to the extent of his proportional
ownership interests.
(6) Includes shares held by I.S. Partners, L.P. Dr. Peretz, a director of the
Company, may be deemed to beneficially own the shares held by I.S. Partners
although he disclaims beneficial ownership except to the extent of his
proportionate ownership interest.
(7) Includes shares held by the Schroder Group. Ms. Bingham may be deemed to
beneficially own the shares held by the Schroder Group although she
disclaims beneficial ownership except to the extent of her proportionate
ownership interest.
(8) Includes 55,569 shares of Common Stock which Dr. Mirabelli has the right to
acquire within 60 days of May 31, 1997 upon the exercise of stock options.
(9) Includes 14,005 shares of Common Stock which Dr. Newman has the right to
acquire within 60 days of May 31, 1997 upon the exercise of stock options.
(10) Includes 3,049 shares of Common Stock which Dr. Ringler has the right to
acquire within 60 days of May 31, 1997 upon the exercise of stock options.
(11) Includes 7,003 shares of Common Stock which Dr. Brettman has the right to
acquire within 60 days of May 31, 1997 upon the exercise of stock options.
(12) Includes 79,626 shares of Common Stock which the directors and officers
have the right to acquire within 60 days of May 31, 1997 upon the exercise
of stock options.
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<PAGE> 59
DESCRIPTION OF CAPITAL STOCK
Upon the completion of this offering, the Company will be authorized to
issue 25,000,000 shares of Common Stock, $0.01 par value per share, of which
8,683,176 shares will be issued and outstanding, and 5,000,000 shares of
undesignated Preferred Stock, $0.01 par value per share, of which no shares will
be issued and outstanding.
COMMON STOCK
Upon the closing of this offering, the Company's Restated Certificate of
Incorporation (the "Restated Certificate of Incorporation") will authorize the
issuance of up to 25,000,000 shares of Common Stock, $0.01 par value per share.
Holders of Common Stock are entitled to one vote for each share held on all
matters submitted to a vote of stockholders and do not have cumulative voting
rights. Accordingly, holders of a majority of the shares of Common Stock
entitled to vote in any election of directors may elect all of the directors
standing for election. Holders of Common Stock are entitled to receive ratably
such dividends, if any, as may be declared by the Board of Directors out of
funds legally available therefor and subject to any preferential dividend rights
of any then outstanding Preferred Stock. Upon the liquidation, dissolution or
winding up of the Company, the holders of Common Stock are entitled to receive
ratably the net assets of the Company available after the payment of all debts
and other liabilities and subject to any liquidation preference of any then
outstanding Preferred Stock. Holders of Common Stock have no preemptive,
subscription, redemption or conversion rights. The outstanding shares of Common
Stock are, and the shares offered by the Company in this offering will be, when
issued and paid for, fully paid and nonassessable.
As of June 27, 1997, there were 6,183,176 shares of Common Stock
outstanding held by 65 stockholders (after giving effect to the automatic
conversion of all outstanding shares of Preferred Stock into an aggregate of
5,087,935 shares of Common Stock effective upon the closing of this offering).
If the initial public offering price varies within the estimated range, the
number of shares of Common Stock issuable upon the conversion of the Preferred
Stock is subject to adjustment from a maximum of 5,191,031 shares of Common
Stock (in the event that the initial public offering price is $8.00 per share)
to a minimum of 5,005,457 shares of Common Stock (in the event that the initial
public offering price is $10.00 per share). The pricing of this offering outside
the estimated range will further effect the number of shares of Common Stock
into which the Preferred Stock is convertible.
PREFERRED STOCK
Upon the closing of this offering, the Restated Certificate will have an
authorized class of undesignated preferred stock consisting of 5,000,000 shares,
$0.01 par value per share. The Board of Directors will be authorized, subject to
any limitations prescribed by law, without further stockholder approval, to
issue from time to time shares of preferred stock in one or more series. Each
such series of preferred stock shall have such number of shares, designations,
preferences, voting powers, qualifications and special or relative rights or
privileges as shall be determined by the Board of Directors, which may include,
among others, dividend rights, voting rights, redemption and sinking fund
provisions, liquidation preferences, conversion rights and preemptive rights.
The rights of the holders of Common Stock will be subject to, and may be
adversely affected by, the rights of holders of any preferred stock that may be
issued in the future. Such rights may include voting and conversion rights which
could adversely affect the holders of Common Stock. Satisfaction of any dividend
preferences of outstanding preferred stock would reduce the amount of funds
available, if any, for the payment of dividends on Common Stock. See "Dividend
Policy." Holders of preferred stock would typically be entitled to receive a
preference payment in the event of a liquidation, dissolution or winding up of
the Company before any payment is made to the holders of Common Stock.
Additionally, the issuance of preferred stock could have the effect of making it
more difficult for a third party to acquire, or of discouraging a third party
from attempting to acquire, a majority of the
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<PAGE> 60
outstanding voting stock of the Company. The Company has no present plans to
issue any shares of preferred stock.
WARRANTS
As of June 27, 1997, there were outstanding warrants exercisable for up to
84,145 shares of Common Stock (after giving effect to the conversion of all
outstanding warrants to purchase shares of the Company's Series A Preferred
Stock into warrants for shares of Common Stock which will occur upon the closing
of this offering). Such warrants have expiration dates of five years from the
closing of this offering and have a weighted average exercise price equal to
$4.10. The holders of the warrants are entitled to certain registration rights
in respect of the shares of Common Stock issuable upon exercise of their
respective warrants. See "Registration Rights."
REGISTRATION RIGHTS
Certain persons and entities have rights with respect to the registration
of Common Stock under the Securities Act. Immediately after the closing of this
offering, those rights will cover approximately 5,981,716 shares of Common Stock
(the "Registrable Shares"). In general, in the event that the Company proposes
to register any shares of Common Stock under the Securities Act for its own
account or the account of other stockholders at any time or times, subject to
certain exceptions, the Company must, upon the written request of a holder of
Registrable Shares, use its best efforts to cause to be registered under the
Securities Act all of the Registrable Shares requested to be registered,
provided, however, that the Company is not required to register Registrable
Securities in excess of the amount, if any, of Common Stock which the principal
underwriter of an underwritten offering shall agree to include in such offering.
The holders of 5,981,716 of the Registrable Shares will also have the right to
require the Company to prepare and file from time to time a registration
statement under the Securities Act with respect to their Registrable Shares,
provided that such holders may not exercise such right more than twice with
respect to a registration statement on Form S-1 or more than two times in any
calendar year with respect to a registration statement on Form S-3. Upon receipt
of any such request from such holders, the Company will be required to use its
best efforts to effect such registration, subject to certain conditions and
limitations.
DELAWARE LAW AND CERTAIN CHARTER AND BY-LAW PROVISIONS
The Company is subject to the provisions of Section 203 of the Delaware
General Corporation Law (the "DGCL"). Subject to certain exceptions, Section 203
prohibits a publicly held Delaware corporation from engaging in a "business
combination" with an "interested stockholder" for a period of three years after
the date of the transaction in which the person became an interested
stockholder, unless the interested stockholder attained such status with the
approval of the Board of Directors or unless the business combination is
approved in a prescribed manner. A "business combination" includes certain
mergers, asset sales and other transactions resulting in a financial benefit to
the interested stockholder. Subject to certain exceptions, an "interested
stockholder" is a person who, together with his or her affiliates and
associates, owns, or within three years prior did own, 15% or more of the
corporation's voting stock.
The Restated Certificate of Incorporation and Amended and Restated By-Laws
(the "By-Laws") provide that, effective upon the consummation of this offering,
any action required or permitted to be taken by the stockholders of the Company
may be taken only at duly called annual or special meetings of the stockholders,
and that special meetings may be called only by the Chairman of the Board of
Directors, the President, a majority of the Board of Directors of the Company or
holders of 20% or more of the then outstanding shares of capital stock of the
Company. These provisions may also discourage another person or entity from
making a tender offer for the Company's Common Stock, because such person or
entity, even if it acquired all or a majority of the outstanding voting
securities of the Company, would be able to take action as a stockholder (such
as electing new directors or approving a merger) only at a duly called
stockholders meeting, and not by written consent.
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<PAGE> 61
The Company's Restated Certificate of Incorporation and By-Laws provided
that, effective upon the consummation of this offering, for nominations for the
Board of Directors or for other business to be properly brought by a stockholder
before a meeting of stockholders, the stockholder must first have given timely
notice thereof in writing to the Secretary of the Company. To be timely, a
notice of nominations or other business to be brought before a stockholders
meeting must be delivered not less than 50 days prior to such stockholders
meeting, provided that in the event that less than 55 days' notice or prior
public disclosure of the date of the meeting is given or made to stockholders, a
notice of nominations or other business to be brought before such stockholders
meeting must be delivered within 7 days following the day on which such notice
of the date of the stockholders meeting was given or such public disclosure was
made. The notice must contain, among other things, certain information about the
stockholder delivering the notice and, as applicable, background information
about each nominee or a description of the proposed business to be brought
before the meeting.
The DGCL provides generally that the affirmative vote of a majority of the
shares entitled to vote on any matter is required to amend a corporation's
certificate of incorporation or by-laws, unless the corporation's certificate of
incorporation or by-laws, as the case may be, requires a greater percentage. The
Company's Restated Certificate of Incorporation requires the affirmative vote of
the holders of at least 75% of the outstanding voting stock of the Company to
amend or repeal any of the foregoing provisions, or to reduce the number of
authorized shares of Common Stock and Preferred Stock. A 75% vote is also
required to amend or repeal any of the foregoing By-Law provisions. Such 75%
stockholder vote would in either case be in addition to any separate class vote
that might in the future be required pursuant to the terms of any Preferred
Stock that might be outstanding at the time any such amendments are submitted to
stockholders. The By-Laws may also be amended or repealed by a majority vote of
the Board of Directors.
The foregoing provisions could have the effect of making it more difficult
for a third party to acquire, or of discouraging a third party from attempting
to acquire control of the Company.
The Company's Restated Certificate of Incorporation contains certain
provisions permitted under the DGCL relating to the liability of directors.
These provisions eliminate a director's personal liability for monetary damages
resulting from a breach of fiduciary duty, except in certain circumstances
involving certain wrongful acts, such as the breach of a director's duty of
loyalty or acts or omissions that involve intentional misconduct or a knowing
violation of law. These provisions do not limit or eliminate the rights of the
Company or any stockholder to seek non-monetary relief, such as an injunction or
rescission, in the event of a breach of a director's fiduciary duty. These
provisions will not alter a director's liability under federal securities laws.
The Company's Restated Certificate of Incorporation and By-Laws also contain
provisions indemnifying the directors and officers of the Company to the fullest
extent permitted by the DGCL. The Company believes that these provisions will
assist the Company in attracting and retaining qualified individuals to serve as
directors.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Company's Common Stock is American
Stock Transfer and Trust Company.
60
<PAGE> 62
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering, the Company will have outstanding
8,683,176 shares of Common Stock (9,058,176 shares if the Underwriters'
over-allotment option is exercised in full). Of these shares, the 2,500,000
shares sold in this offering will be freely tradeable without restriction or
further registration under the Securities Act unless purchased by "affiliates"
of the Company as that term is defined in Rule 144. The remaining 6,183,176
shares outstanding upon completion of this offering will be "restricted
securities" as that term is defined under Rule 144 (the "Restricted Shares").
Sales of Restricted Shares in the public market, or the availability of such
shares for sale, could adversely affect the market price of the Common Stock.
The executive officers, directors, employees and other stockholders of the
Company who beneficially own an aggregate of 6,183,176 shares of Common Stock
outstanding prior to this offering have agreed that they will not, without the
prior written consent of Hambrecht & Quist LLC, offer, sell or otherwise dispose
of any shares of Common Stock, options or warrants to acquire shares of Common
Stock or securities exchangeable for or convertible into shares of Common Stock
owned by them for a period of 180 days after the date of this Prospectus (the
"Lock-Up Period"). See "Underwriting."
Upon expiration of the Lock-Up Period, approximately 659,289 Restricted
Shares held by non-affiliates will be eligible for sale in the public market
without restriction pursuant to Rule 144(k) under the Securities Act and
approximately 3,980,257 Restricted Shares held by affiliates and approximately
417,541 Restricted Shares held by non-affiliates will be so eligible subject to
compliance with the volume limitations of Rule 144 described below. The
remaining 924,629 Restricted Shares may be sold pursuant to Rule 144 only after
they have been fully paid for and held for at least one year from the later of
the date of issuance by the Company or acquisition from an affiliate (which
dates do not occur until after the expiration of the Lock-Up Period).
Beginning 90 days after the date of this Prospectus, certain shares issued
or issuable upon exercise of options granted by the Company prior to the date of
this Prospectus will also be eligible for sale in the public market pursuant to
Rule 701 under the Securities Act. In general, Rule 701 permits resales of
shares issued pursuant to certain compensatory benefit plans and contracts
commencing 90 days after the issuer becomes subject to the reporting
requirements of the Securities and Exchange Act of 1934, as amended, in reliance
upon Rule 144 but without compliance with certain restrictions, including the
holding period requirements, contained in Rule 144. If all the requirements of
Rule 701 are met, upon expiration of the Lock-Up Period an aggregate of 201,460
shares of Common Stock currently outstanding, and an additional 967,074 shares
of Common Stock issuable upon exercise of currently outstanding options will be
eligible for sale pursuant to such rule.
In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) who beneficially owned Restricted Shares for at
least one year, including persons who may be deemed "affiliates" of the Company,
would be entitled to sell within any three-month period a number of shares that
does not exceed the greater of one percent of the number of shares of Common
Stock then outstanding or the average weekly trading volume of the Common Stock
during the four calendar weeks preceding the filing of a Form 144 with respect
to such sale. Sales under Rule 144 are also subject to certain manner of sale
provisions and notice requirements and to the availability of current public
information about the Company. In addition, a person who is not deemed to have
been an affiliate of the Company at any time during the 90 days preceding the
sale, and who has beneficially owned for at least two years the shares proposed
to be sold, would be entitled to sell such shares under Rule 144(k) without
complying with the manner of sale, public information, volume limitation or
notice provisions of Rule 144.
The Company is unable to estimate accurately the number of Restricted
Shares that will be sold under Rule 144 since this will depend in part on the
market price for the Common Stock, the personal circumstances of the sellers and
other factors.
Rule 144A under the Securities Act would permit, subject to certain
conditions, the sale by the current holders of Restricted Shares of all or a
portion of their shares to certain "qualified institutional buyers," as defined
in Rule 144A.
61
<PAGE> 63
The Company intends to file a Form S-8 registration statement under the
Securities Act to register all shares of Common Stock issuable under the Plan.
That registration statement is expected to be filed approximately 180 days after
the date of this Prospectus and is expected to become effective immediately upon
filing. Shares covered by such registration statement will be eligible for
resale in the public market after the effective date of such registration
statements, subject to Rule 144 limitations applicable to affiliates and to the
Lock-Up Period, if applicable.
In addition, upon completion of this offering, the holders of 5,981,716
shares of Common Stock will be entitled to certain rights with respect to
registration of such shares under the Securities Act. Registration of such
shares under the Securities Act would result in such shares becoming freely
tradeable without restriction under the Securities Act (except for shares
purchased by affiliates of the Company) immediately upon the effectiveness of
such registration. See "Description of Capital Stock-Registration Rights."
Prior to this offering, there has been no public market for the Common
Stock and no predictions can be made as to the effect, if any, that public sales
of shares or the availability of shares for sale will have on the market price
prevailing from time to time. Nevertheless, sales of substantial amounts of
Common Stock in the public market, or the perception that such sales could
occur, could have an adverse impact on the market price.
62
<PAGE> 64
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, the
Underwriters named below, through their Representatives, Hambrecht & Quist LLC
and UBS Securities LLC, have severally agreed to purchase from the Company the
following respective number of shares of Common Stock:
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS SHARES
-------------------------------------------------------------------------- ---------
<S> <C>
Hambrecht & Quist LLC.....................................................
UBS Securities LLC........................................................
---------
Total........................................................... 2,500,000
=========
</TABLE>
The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent, including the absence
of any material adverse change in the Company's business and the receipt of
certain certificates, opinions and letters from the Company, its counsel and
independent auditors. The nature of the Underwriters' obligation is such that
they are committed to purchase all shares of Common Stock offered hereby if any
of such shares are purchased.
The Underwriters propose to offer the shares of Common Stock directly to
the public at the initial public offering price set forth on the cover page of
this Prospectus and to certain dealers at such price less a concession not in
excess of $ per share. The Underwriters may allow and such dealers may
reallow a concession not in excess of $ per share to certain other
dealers. After the initial public offering of the shares, the offering price and
other selling terms may be changed by the Representatives of the Underwriters.
The Underwriters have informed the Company that the Underwriters do not intend
to confirm sales of Common Stock offered hereby to accounts over which they
exercise discretionary authority.
The Company has granted the Underwriters an option, exercisable no later
than 30 days after the date of this Prospectus, to purchase up to 375,000
additional shares of Common Stock at the initial public offering price, less the
underwriting discount, set forth on the cover page of this Prospectus. To the
extent that the Underwriters exercise this option, each of the Underwriters will
have a firm commitment to purchase approximately the same percentage thereof
which the number of shares of Common Stock to be purchased by it shown in the
above table bears to the total number of shares of Common Stock offered hereby.
The Company will be obligated, pursuant to the option, to sell such shares to
the Underwriters to the extent the option is exercised. The Underwriters may
exercise such option only to cover over-allotments made in connection with the
sale of shares of Common Stock offered hereby.
Certain persons participating in this offering may overallot or effect
transactions which stabilize, maintain or otherwise affect the market price of
the Common Stock at levels above those which might otherwise prevail in the open
market, including by entering stabilizing bids, effecting syndicate covering
transactions or imposing penalty bids. A stabilizing bid means the placing of
any bid or effecting of any purchase, for the purpose of pegging, fixing or
maintaining the price of the Common Stock. A syndicate covering transaction
means the placing of any bid on behalf of the underwriting syndicate or the
effecting of any purchase to reduce a short position created in connection with
the offering. A penalty bid means an arrangement that permits the Underwriters
to reclaim a selling concession from a syndicate member in connection with the
offering when shares of Common Stock sold by the syndicate member are purchased
in syndicate covering transactions. Such transactions may be effected on the
Nasdaq Stock Market, in the over-the-counter market, or otherwise. Such
stabilizing, if commenced, may be discontinued at any time.
63
<PAGE> 65
The offering of the shares is made for delivery when, as and if accepted by
the Underwriters and subject to prior sale and to withdrawal, cancellation or
modification of the offering without notice. The Underwriters reserve the right
to reject an order for the purchase of shares in whole or in part.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act, and to contribute
to payments the Underwriters may be required to make in respect thereof.
The executive officers, directors, employees and other stockholders of the
Company, who beneficially own an aggregate of 6,183,176 shares of Common Stock
outstanding prior to this offering, have agreed that they will not, without the
prior written consent of Hambrecht & Quist LLC, offer, sell or otherwise dispose
of any shares of Common Stock, options or warrants to acquire shares of Common
Stock or securities exchangeable for or convertible into shares of Common Stock
owned by them during the 180 day period following the date of this Prospectus.
The Company has agreed that it will not, without the prior written consent of
Hambrecht & Quist LLC, offer, sell or otherwise dispose of any shares of Common
Stock, options or warrants to acquire shares of Common Stock during the 180 day
period following the date of this Prospectus, except that the Company may issue
shares upon the exercise of options granted prior to the date hereof, and may
grant additional options under its stock option plans, provided that, without
the prior written consent of Hambrecht & Quist LLC, such additional options
shall not be exercisable during such period.
Prior to the offering, there has been no public market for the Common
Stock. The initial public offering price for the Common Stock will be determined
by negotiation among the Company and the Representatives. Among the factors to
be considered in determining the initial public offering price are prevailing
market and economic conditions, certain financial information of the Company,
market valuation of other companies engaged in activities similar to the
Company, estimates of the business potential and prospects of the Company, the
present state of the Company's business operation, the Company's management and
other factors deemed relevant. The estimated initial public offering price set
forth on the cover page of this Prospectus is subject to change as a result of
market conditions and other factors.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby and certain legal
matters will be passed on for the Company by Bingham, Dana & Gould LLP, Boston,
Massachusetts. Justin P. Morreale, a partner at Bingham, Dana & Gould LLP, is
the Secretary of the Company. Certain legal matters will be passed on for the
Underwriters by Hale and Dorr LLP, Boston, Massachusetts.
EXPERTS
The audited consolidated financial statements of the Company as of December
31, 1995 and 1996 and for each of the three years in the period ended December
31, 1996, have been audited by Arthur Andersen LLP, independent public accounts,
as stated in their report with respect thereto and are included herein in
reliance upon the authority of said firm as experts in giving said reports.
The statements in this Prospectus under the captions "Risk
Factors--Uncertainties Relating to Patents and Proprietary Rights" and
"Business--Patents and Proprietary Rights" have been reviewed and approved by
Hamilton, Brook, Smith & Reynolds, P.C., patent counsel to the Company, as
experts on such matters, and are included herein in reliance upon that review
and approval.
64
<PAGE> 66
ADDITIONAL INFORMATION
A Registration Statement on Form S-1, including amendments thereto,
relating to the Common Stock offered by the Company has been filed with the
Securities and Exchange Commission (the "Commission"), Washington, D.C. 20549.
This Prospectus does not contain all of the information set forth in the
Registration Statement and the exhibits and schedules thereto. Statements
contained in this Prospectus as to the contents of any contract or any other
document referred to are not necessarily complete, and in each instance
reference is made to the copy of such contract or document filed as an exhibit
to the Registration Statement, each such statement being qualified in all
respects by such reference. For further information with respect to the Company
and the Common Stock offered hereby, reference is made to the Registration
Statement and to the exhibits and schedules thereto. A copy of the Registration
Statement may be inspected by anyone without charge at the Commission's
principal office in Washington, D.C., and copies of all or any part thereof may
be obtained from the Public Reference Section of the Commission, 450 Fifth
Street, NW., Washington, DC. 20549, upon payment of certain fees prescribed by
the Commission. The Commission maintains a World Wide Web site that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission. The address of the
Commission's World Wide Web site is http://www.sec.gov.
65
<PAGE> 67
LEUKOSITE, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Public Accountants........................................... F-2
Consolidated Balance Sheets as of December 31, 1995, 1996 and March 31, 1997
(Unaudited)...................................................................... F-3
Consolidated Statements of Operations for the Years Ended December 31, 1994, 1995
and 1996, for the Three Months Ended March 31, 1996 and 1997 (Unaudited) and for
the Period from Inception (May 1, 1992) to March 31, 1997 (Unaudited)............ F-4
Consolidated Statements of Stockholders' Equity (Deficit) for the Period from
Inception (May 1, 1992) to March 31, 1997 (Unaudited)............................ F-5
Consolidated Statements of Cash Flows for the Years Ended December 31, 1994, 1995
and 1996, for the Three Months Ended March 31, 1996 and 1997 (Unaudited) and for
the Period from Inception (May 1, 1992) to March 31, 1997 (Unaudited)............ F-6
Notes to Consolidated Financial Statements......................................... F-7
</TABLE>
F-1
<PAGE> 68
Upon the consummation of the reverse stock split and charter amendment
discussed in Note 9(a), we expect to be in a position to issue the following
report.
Boston, Massachusetts Arthur Andersen LLP
March 4, 1997 (except for the matter
discussed in Note 9(a), as to which the
date is June 23, 1997)
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To LeukoSite, Inc.:
We have audited the accompanying consolidated balance sheets of LeukoSite,
Inc. (a Delaware corporation in the development stage) and subsidiary as of
December 31, 1995 and 1996, and the related consolidated statements of
operations, stockholders' equity (deficit) and cash flows for each of the three
years in the period then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of LeukoSite,
Inc. and subsidiary as of December 31, 1995 and 1996, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1996, in conformity with generally accepted accounting principles.
F-2
<PAGE> 69
LEUKOSITE, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
PRO FORMA
DECEMBER 31, DECEMBER 31, MARCH 31, MARCH 31,
1995 1996 1997 1997
------------ ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents........................... $ 1,734,188 $ 4,430,507 $ 7,609,356 $ 7,609,356
Marketable securities............................... -- 4,953,902 3,966,230 3,966,230
Other current assets................................ 87,509 153,779 123,762 123,762
------------ ------------ ------------ ------------
Total current assets......................... 1,821,697 9,538,188 11,699,348 11,699,348
------------ ------------ ------------ ------------
Property and equipment, at cost:
Laboratory furniture, fixtures and equipment........ 1,867,903 2,209,222 2,307,463 2,307,463
Leasehold improvements.............................. 1,700,025 1,792,989 1,803,706 1,803,706
Office furniture, fixtures and equipment............ 174,061 268,254 294,516 294,516
------------ ------------ ------------ ------------
3,741,989 4,270,465 4,405,685 4,405,685
Less--Accumulated depreciation and amortization..... 1,053,149 1,962,009 2,232,008 2,232,008
------------ ------------ ------------ ------------
2,688,840 2,308,456 2,173,677 2,173,677
Other assets.......................................... 27,526 27,526 27,526 27,526
------------ ------------ ------------ ------------
Total assets................................. $ 4,538,063 $11,874,170 13,900,551 13,900,551
============ ============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable.................................... $ 83,419 $ 118,018 203,869 203,869
Accrued expenses.................................... 647,481 1,044,080 1,247,375 1,247,375
Deferred revenue.................................... -- 261,250 511,250 511,250
Deferred rent, current portion...................... -- 104,357 142,213 142,213
Current portion of capital lease obligations........ 652,090 784,168 607,102 607,102
------------ ------------ ------------ ------------
Total current liabilities.................... 1,382,990 2,311,873 2,711,809 2,711,809
------------ ------------ ------------ ------------
Deferred rent, net of current portion................. 336,231 466,078 405,285 405,285
------------ ------------ ------------ ------------
Capital lease obligations, less current portion....... 1,246,998 763,621 804,342 804,342
------------ ------------ ------------ ------------
Commitments and contingencies (Notes 3, 7, 12 and 14)
Redeemable convertible preferred stock, $.01 par
value--
Authorized--21,667,199 shares
Issued and outstanding--13,148,149 shares at
December 31, 1995, 15,643,627 shares at December
31, 1996, 16,746,346 shares at March 31, 1997 and
no shares pro forma............................... 13,732,798 20,913,405 24,976,911 --
------------ ------------ ------------ ------------
Stockholders' equity (deficit):
Preferred stock $.01 par value--
Authorized--5,000,000 shares
Issued and outstanding--no shares................. -- -- -- --
Convertible preferred stock $.01 par value--
Authorized--2,250,000 shares
Issued and outstanding--1,000,000 shares at
December 31, 1995, 2,250,000 shares at December
31, 1996, 2,250,000 shares at March 31, 1997 and
no shares pro forma............................. 10,000 22,500 22,500 --
Common stock, $.01 par value--
Authorized--25,000,000 shares
Issued and outstanding--1,041,099 shares at
December 31, 1995, 1,086,590 shares at December
31, 1996, 1,094,151 shares at March 31, 1997 and
6,182,086 shares pro forma...................... 10,411 10,866 10,942 61,821
Additional paid-in capital.......................... 3,121,267 8,710,149 8,716,578 33,665,110
Deficit accumulated during the development stage.... (15,302,632) (21,324,322) (23,747,816) (23,747,816)
------------ ------------ ------------ ------------
Total stockholders' equity (deficit)......... (12,160,954) (12,580,807) (14,997,796) 9,979,115
------------ ------------ ------------ ------------
Total liabilities and stockholders' equity
(deficit).................................. $ 4,538,063 $11,874,170 $ 13,900,551 $ 13,900,551
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
<PAGE> 70
LEUKOSITE, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED INCEPTION
YEAR ENDED DECEMBER 31 MARCH 31, (MAY 1, 1992)
--------------------------------------- ------------------------- THROUGH
1994 1995 1996 1996 1997 MARCH 31, 1997
----------- ----------- ----------- ----------- ----------- --------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Revenue:
Collaboration research and
development and license
fees..................... $ -- $ 250,000 $ 3,591,000 $ -- $ 798,590 $ 4,639,590
Government grants........... -- 200,000 82,770 -- 107,172 389,942
----------- ----------- ----------- ----------- ----------- ------------
Total revenues...... -- 450,000 3,673,770 -- 905,762 5,029,532
----------- ----------- ----------- ----------- ----------- ------------
Operating expenses:
Research and development.... 5,055,447 7,051,287 8,502,187 2,022,323 2,781,506 24,971,393
General and
administrative........... 726,084 865,311 1,370,538 215,405 379,112 3,933,392
----------- ----------- ----------- ----------- ----------- ------------
Total operating
expenses.......... 5,781,531 7,916,598 9,872,725 2,237,728 3,160,618 28,904,785
----------- ----------- ----------- ----------- ----------- ------------
Loss from
operations........ (5,781,531) (7,466,598) (6,198,955) (2,237,728) (2,254,856) (23,875,253)
Interest income............... 205,735 219,510 378,924 61,236 118,157 922,326
Interest expense.............. (58,215) (229,665) (201,659) (50,639) (42,795) (550,889)
----------- ----------- ----------- ----------- ----------- ------------
Net loss............ $(5,634,011) $(7,476,753) $(6,021,690) (2,227,131) (2,179,494) $ (23,503,816)
=========== =========== =========== =========== =========== ============
Pro forma net loss per common
share....................... $ (1.04) $ (.35)
=========== ===========
Shares used in computing pro
forma net loss per common
share....................... 5,770,089 6,288,628
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE> 71
LEUKOSITE, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
CONVERTIBLE SERIES A
PREFERRED STOCK COMMON STOCK COMMON STOCK
---------------------- --------------------- --------------------- ADDITIONAL
NUMBER $.01 NUMBER $.01 NUMBER $.01 PAID-IN
OF SHARES PAR VALUE OF SHARES PAR VALUE OF SHARES PAR VALUE CAPITAL
---------- --------- --------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
ISSUANCE OF COMMON STOCK................ -- $ -- -- $ -- 804,878 $ 8,049 $ (7,629)
Net loss.............................. -- -- -- -- -- -- --
--------- ------- -------- ------- --------- ------- ----------
BALANCE, DECEMBER 31, 1992.............. -- -- -- -- 804,878 8,049 (7,629)
Issuance of common stock.............. -- -- -- -- 121,951 1,220 3,780
Conversion of common stock to Series A
common stock........................ -- -- 804,878 8,049 (804,878) (8,049) --
Preferred stock warrants issued in
connection with lease obligations... -- -- -- -- -- -- 35,000
Net loss.............................. -- -- -- -- -- -- --
--------- ------- -------- ------- --------- ------- ----------
BALANCE, DECEMBER 31, 1993.............. -- -- 804,878 8,049 121,951 1,220 31,151
Issuance of Series C convertible
preferred stock, net of issuance
costs of $47,691.................... 1,000,000 10,000 -- -- -- -- 2,942,309
Exercise of stock options............. -- -- -- -- 9,451 94 1,344
Preferred stock warrants issued in
connection with lease obligations... -- -- -- -- -- -- 55,500
Net loss.............................. -- -- -- -- -- -- --
--------- ------- -------- ------- --------- ------- ----------
BALANCE, DECEMBER 31, 1994.............. 1,000,000 10,000 804,878 8,049 131,402 1,314 3,030,304
Conversion of Series A common stock to
common stock........................ -- -- (804,878) (8,049) 893,782 8,938 88,450
Exercise of stock options............. -- -- -- -- 15,915 159 2,513
Net loss.............................. -- -- -- -- -- -- --
--------- ------- -------- ------- --------- ------- ----------
BALANCE, DECEMBER 31, 1995.............. 1,000,000 10,000 -- -- 1,041,099 10,411 3,121,267
Issuance of Series E convertible
preferred stock, net of issuance
costs of $40,434.................... 1,250,000 12,500 -- -- -- -- 4,947,066
Exercise of stock options............. -- -- -- -- 45,491 455 31,816
Value ascribed to guaranteed rate of
return on redeemable convertible
preferred stock..................... -- -- -- -- -- -- 610,000
Net loss.............................. -- -- -- -- -- -- --
--------- ------- -------- ------- --------- ------- ----------
BALANCE, DECEMBER 31, 1996.............. 2,250,000 22,500 -- -- 1,086,590 10,866 8,710,149
Exercise of stock options
(unaudited)......................... -- -- -- -- 7,561 76 6,429
Net loss (unaudited).................. -- -- -- -- -- -- --
Accretion of redeemable preferred
stock dividends (unaudited)......... -- -- -- -- -- -- --
--------- ------- -------- ------- --------- ------- ----------
BALANCE, MARCH 31, 1997 (UNAUDITED)..... 2,250,000 22,500 -- -- 1,094,151 10,942 8,716,578
Conversion of convertible preferred
stock (unaudited)................... (2,250,000) (22,500) -- -- 548,780 5,488 17,012
Conversion of redeemable convertible
preferred stock (unaudited)......... -- -- -- -- 4,539,155 45,391 24,931,520
--------- ------- -------- ------- --------- ------- ----------
PRO FORMA BALANCE, MARCH 31, 1997
(UNAUDITED)........................... -- $ -- -- $ -- 6,182,086 61,821 33,665,110
========= ======= ======== ======= ========= ======= ==========
<CAPTION>
DEFICIT
ACCUMULATED
DURING
DEVELOPMENT
STAGE TOTAL
------------ ------------
<S> <<C> <C>
ISSUANCE OF COMMON STOCK................ $ -- $ 420
Net loss.............................. (128,634) (128,634)
------------ ------------
BALANCE, DECEMBER 31, 1992.............. (128,634) (128,214)
Issuance of common stock.............. -- 5,000
Conversion of common stock to Series A
common stock........................ -- --
Preferred stock warrants issued in
connection with lease obligations... -- 35,000
Net loss.............................. (2,063,234) (2,063,234)
------------ ------------
BALANCE, DECEMBER 31, 1993.............. (2,191,868) (2,151,448)
Issuance of Series C convertible
preferred stock, net of issuance
costs of $47,691.................... -- 2,952,309
Exercise of stock options............. -- 1,438
Preferred stock warrants issued in
connection with lease obligations... -- 55,500
Net loss.............................. (5,634,011) (5,634,011)
------------ ------------
BALANCE, DECEMBER 31, 1994.............. (7,825,879) (4,776,212)
Conversion of Series A common stock to
common stock........................ -- 89,339
Exercise of stock options............. -- 2,672
Net loss.............................. (7,476,753) (7,476,753)
------------ ------------
BALANCE, DECEMBER 31, 1995.............. (15,302,632) (12,160,954)
Issuance of Series E convertible
preferred stock, net of issuance
costs of $40,434.................... -- 4,959,566
Exercise of stock options............. -- 32,271
Value ascribed to guaranteed rate of
return on redeemable convertible
preferred stock..................... -- 610,000
Net loss.............................. (6,021,690) (6,021,690)
------------ ------------
BALANCE, DECEMBER 31, 1996.............. (21,324,322) (12,580,807)
Exercise of stock options
(unaudited)......................... -- 6,505
Net loss (unaudited).................. (2,179,494) (2,179,494)
Accretion of redeemable preferred
stock dividends (unaudited)......... (244,000) (244,000)
------------ ------------
BALANCE, MARCH 31, 1997 (UNAUDITED)..... (23,747,816) (14,997,796)
Conversion of convertible preferred
stock (unaudited)................... -- --
Conversion of redeemable convertible
preferred stock (unaudited)......... -- 24,976,911
------------ ------------
PRO FORMA BALANCE, MARCH 31, 1997
(UNAUDITED)........................... $(23,747,816) 9,979,115
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE> 72
LEUKOSITE, INC.
(A DEVELOPEMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS INCEPTION
YEAR ENDED DECEMBER 31, ENDED MARCH 31, (MAY 1, 1992)
---------------------------------------- ------------------------- THROUGH
1994 1995 1996 1996 1997 MARCH 31, 1997
----------- ----------- ------------ ----------- ----------- --------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss............................ $(5,634,011) $(7,476,753) $ (6,021,690) $(2,227,131) $(2,179,494) $(23,503,816)
Adjustments to reconcile net loss to
net cash used in operating
activities--
Stock compensation expense........ 86,058 3,281 -- -- -- 89,339
Depreciation and amortization..... 261,249 774,146 908,860 212,000 269,999 2,221,784
Changes in operating assets and
liabilities--
Other current assets.......... (124,143) 76,530 (66,270) (34,475) 30,017 (123,762)
Accounts payable and accrued
expenses.................... 1,139,006 (809,953) 431,198 205,353 289,146 2,017,946
Deferred revenue.............. -- -- 261,250 -- 250,000 511,250
Deferred rent................. 27,407 308,824 234,204 59,288 (22,937) 547,498
----------- ----------- ------------ ----------- ----------- ------------
Net cash used in operating
activities.............. (4,244,434) (7,123,925) (4,252,448) (1,784,965) (1,363,269) (18,239,761)
----------- ----------- ------------ ----------- ----------- ------------
Cash flows from investing activities:
(Decrease) increase in marketable
securities........................ (2,000,171) 2,000,171 (4,953,902) -- 987,672 (3,966,230)
Purchases of property and
equipment......................... (974,502) (40,283) (184,549) (15,121) (80,127) (1,866,687)
Decrease (increase) in other
assets............................ 7,500 (436) -- -- -- (27,526)
----------- ----------- ------------ ----------- ----------- ------------
Net cash provided by (used
in) investing
activities.............. (2,967,173) 1,959,452 (5,138,451) (15,121) 907,545 (5,860,443)
----------- ----------- ------------ ----------- ----------- ------------
Cash flows from financing activities:
Principal payments on capital
leases............................ (148,588) (558,280) (695,226) (156,679) (191,438) (1,593,532)
Net proceeds from notes payable..... -- -- -- -- -- 2,086,312
Proceeds from redeemable convertible
preferred stock, net of issuance
costs............................. 6,907,860 1,950,908 7,790,607 2,697,099 3,819,506 23,256,599
Exercise of stock options........... 1,438 2,672 32,271 -- 6,505 48,306
Issuance of convertible preferred
stock, net of issuance costs...... 2,952,309 -- 4,959,566 2,473,643 -- 7,911,875
----------- ----------- ------------ ----------- ----------- ------------
Net cash provided by
financing activities.... 9,713,019 1,395,300 12,087,218 5,014,063 3,634,573 31,709,560
----------- ----------- ------------ ----------- ----------- ------------
Net Increase (Decrease) in Cash and
Cash Equivalents.................... $ 2,501,412 $(3,769,173) $ 2,696,319 $ 3,213,977 $ 3,178,849 $ 7,609,356
Cash and Cash Equivalents, beginning
of period........................... 3,001,949 5,503,361 1,734,188 1,734,188 4,430,507 --
----------- ----------- ------------ ----------- ----------- ------------
Cash and Cash Equivalents, end of
period.............................. $ 5,503,361 $ 1,734,188 $ 4,430,507 $ 4,948,165 $ 7,609,356 $ 7,609,356
=========== =========== ============ =========== =========== ============
Supplemental Cash Flow Information:
Cash paid during the period for
interest.......................... $ 51,887 $ 193,197 $ 201,659 $ 50,639 $ 42,795 $ 519,420
=========== =========== ============ =========== =========== ============
Supplemental Disclosure of Noncash
Investing and Financing Activities:
Property and equipment purchased
under capital lease obligations... $ 1,614,765 $ 435,301 $ 343,927 $ 19,158 $ 55,093 $ 2,778,776
=========== =========== ============ =========== =========== ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
<PAGE> 73
LEUKOSITE, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
(1) THE COMPANY
LeukoSite, Inc. (the "Company") was incorporated on May 1, 1992. The
Company is engaged in the development of a new class of proprietary
immunomodulatory therapeutics for the treatment of inflammatory and autoimmune
diseases.
The Company is in the development stage and is devoting substantially all
of its efforts toward product research and development and raising capital.
Management anticipates that all future revenues will be derived from products
under development or those developed in the future. Principal risks to the
Company include the successful development and marketing of products to obtain
profitable operations, dependence on collaborative partners, the ability to
obtain adequate financing to fund future operations, United States Food and Drug
Administration clearance and regulation, dependence on key individuals and
competition from substitute products and larger companies.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Pro Forma Presentation
The unaudited pro forma consolidated balance sheet as of March 31, 1997
reflects the automatic conversion of all outstanding shares of redeemable
convertible preferred stock and convertible preferred stock into 5,087,935
shares of common stock (assuming an initial public offering price of $9.00 per
share) to occur upon the closing of the Company's proposed initial public
offering.
(b) Interim Financial Statements
The accompanying consolidated balance sheet as of March 31, 1997, the
consolidated statements of operations and cash flows for the three months ended
March 31, 1996 and 1997 and for the period from inception (May 1, 1992) to March
31, 1997 are unaudited, but, in the opinion of management, have been prepared on
a basis substantially consistent with the audited financial statements and
include all adjustments, consisting of only normal recurring adjustments,
necessary for a fair presentation of the results of these interim periods. The
results of the three months ended March 31, 1997 are not necessarily indicative
of the results to be expected for the entire year.
(c) Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
the Company and its wholly owned subsidiary. All material intercompany accounts
and transactions have been eliminated in consolidation.
(d) Cash Equivalents and Marketable Securities
The Company accounts for cash equivalents and marketable securities under
Statement of Financial Accounting Standards (SFAS) No. 115, Accounting for
Certain Investments in Debt and Equity Securities. Under SFAS No. 115,
investments for which the Company has the positive intent and ability to hold to
maturity, consisting of cash equivalents and marketable securities, are reported
at amortized
F-7
<PAGE> 74
LEUKOSITE, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
cost, which approximates fair market value. Cash equivalents are highly liquid
investments with original maturities of less than three months. Marketable
securities consist of government agency securities with original maturities of
greater than three months but less than one year. The average maturity of the
Company's marketable securities was approximately 3.5 months at March 31, 1997.
(e) Depreciation and Amortization
The Company provides for depreciation and amortization using the
straight-line method by charges to operations in amounts estimated to allocate
the cost of property and equipment over their estimated useful lives as follows:
<TABLE>
<CAPTION>
ESTIMATED
ASSET CLASSIFICATION USEFUL LIVES
------------------------------------------------------- -------------
<S> <C>
Laboratory furniture, fixtures and equipment........... 4-5 Years
Leasehold improvements................................. Life of lease
Office furniture, fixtures and equipment............... 4-5 Years
</TABLE>
(f) Revenue Recognition
Substantially all of the Company's revenues are derived from corporate
collaborative research arrangements and government grants. Corporate
collaboration revenues and government grants are recognized on a straight-line
basis over the period of the contract, which approximates when work is performed
and costs are incurred. License fee revenue represents technology transfer fees
received for rights to certain technology of the Company. License fees are
recognized as revenue as earned. Deferred revenue represents payments received
in advance of revenue recognition.
(g) Research and Development
All research and development costs are expensed as incurred. Research and
development expenses in the accompanying consolidated statements of operations
include funded and unfunded expenses.
(h) Disclosure of Fair Value of Financial Instruments
The Company's financial instruments consist mainly of cash and cash
equivalents, marketable securities, accounts payable and redeemable convertible
preferred stock. The carrying amounts of these financial instruments approximate
fair value due to the short-term nature of these instruments.
(i) Pro Forma Net Loss per Common Share
Pro forma net loss per common share is based on the pro forma weighted
average number of common and common equivalent shares outstanding during the
period, assuming the automatic conversion of all outstanding shares of
redeemable convertible preferred stock and convertible preferred stock into
5,087,935 shares of common stock to occur upon the consummation of the Company's
proposed initial public offering. Pursuant to the requirements of the Securities
and Exchange Commission Staff Accounting Bulletin No. 83, common and common
equivalent shares issued during the 12 months immediately prior to the date of
the initial filing of the Company's registration statement have been included in
the calculation of weighted average number of common shares outstanding for all
periods presented using the treasury stock method and the proposed initial
F-8
<PAGE> 75
LEUKOSITE, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
public offering price of $9.00 per share. Historical net loss per share has not
been presented as it is meaningless.
(3) RESEARCH, LICENSE AND CONSULTING AGREEMENTS
The Company has entered into various research, license and consulting
agreements to support its research and development activities. These agreements
generally expire over several years. Certain of such agreements contain
provisions for future royalties to be paid on sales of products developed under
the agreements. The Company also has commitments to fund research and
development under arrangements discussed in Notes 7 and 14.
Future minimum commitments under research, license and consulting
agreements at December 31, 1996 are approximately as follows:
<TABLE>
<S> <C>
1997.............................................. $457,000
1998.............................................. 70,000
</TABLE>
(4) WARNER-LAMBERT AGREEMENTS
The Company and Warner-Lambert Company (Warner) have entered into research,
development and marketing agreements to share expertise in the discovery and
development of compounds that inhibit the action of MCP-1 and IL-8 and to
research and market applications thereof.
The agreement for developing the MCP-1 technology was executed in September
1994 and amended in July 1995 (the MCP-1 Agreement). Under the MCP-1 Agreement,
the Company and Warner are working to screen and select compounds for further
development. In conjunction with the MCP-1 Agreement, Warner agreed to purchase
preferred stock at a predetermined share price and to fund a portion of the
Company's research expenses for the next three years. Warner purchased
$5,000,000 of Series E convertible preferred stock in 1996.
The agreement for developing the IL-8 technology was executed in July 1995
(the IL-8 Agreement). Under the IL-8 Agreement, the Company and Warner are
working to screen and select compounds for further development. In connection
with the IL-8 Agreement, Warner paid the Company $250,000 for the grant of a
license to the technology and made a $1 million equity investment in the Series
G preferred stock in March 1997.
The Company has received research funding of $250,000 and $776,250 in the
years ended December 31, 1995 and 1996, respectively, and $258,750 for the three
months ended March 31, 1997, under the MCP-1 and IL-8 Agreements. The Company
did not receive any funding during 1994. The MCP-1 and IL-8 Agreements also
contain milestone payments payable to the Company beginning upon the designation
of a product candidate for development. The Company has deferred recognizing as
revenue $86,250 of these payments as of December 31, 1996 and March 31, 1997. In
addition, under the MCP-1 and IL-8 Agreements, Warner will pay royalties as a
percentage of sales, as defined, for certain products developed under the
agreements. Warner has waived its antidilution rights relating to the Series C,
E and G preferred stock it holds in exchange for a credit against future
royalties, if any become payable, under the MCP-1 and IL-8 Agreements and the
Kyowa Hakko Kogyo Agreement discussed in Note 6. Assuming an initial public
offering price of $9.00 per share, the approximate amount of such credit is
$2,050,000. The MCP-1 and IL-8 Agreements can be terminated by either party with
six months' written notice or for cause, as defined.
F-9
<PAGE> 76
LEUKOSITE, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
(5) ROCHE BIOSCIENCE AGREEMENT
In July 1996, the Company entered into an agreement with Roche Bioscience
(Roche) for the development of a drug to block the binding of eotoxin. As part
of this agreement, Roche will make payments to the Company in the form of
licensing fees, research support and milestone payments and royalties on
world-wide sales of products resulting from the collaboration. As of December
31, 1996 and March 31, 1997, the Company had received $3,075,000 and $3,600,000,
respectively, in licensing and research support payments from Roche, and is
eligible to receive an additional $12.5 million in research support and research
milestone payments. The Company has deferred recognizing as revenue $175,000 of
the licensing and research support payments received as of December 31, 1996 and
March 31, 1997, respectively. Roche will be responsible for preclinical and
clinical development of products and will have worldwide exclusive rights to
market products.
(6) KYOWA HAKKO KOGYO AGREEMENT
In April 1997, the Company entered into a collaboration agreement with
Kyowa Hakko Kogyo (Kyowa) to discover and develop small molecule antagonists and
monoclonal antibody drugs to CXCR3 and CCR1. Kyowa will have exclusive rights to
develop and market products resulting from this collaboration in Japan and Asia
and has an option for rights in the rest of the world. The Company is entitled
to research support and payments and milestones, as well as royalties based on
net sales, as defined. As of March 31, 1997, the Company has received $250,000
as an initial deposit for research support payments which the Company has
deferred recognizing as revenue.
(7) ILEX AGREEMENT
In May 1997, the Company and Ilex Oncology, Inc. (Ilex) entered into a
joint venture whereby the parties formed a limited partnership to develop and
commercialize LDP-03 for the treatment of chronic lymphocytic leukemia, pursuant
to an agreement of limited partnership and a license agreement between the
Company/Ilex partnership and the Company. The partners are required to make
contributions each time the partnership requires working capital. The
development and commercialization activities of the joint venture will be
managed with equal control by each party. The Company and Ilex will generally
share equally in profits from the sales of LDP-03 and in all future research,
development, clinical and commercialization costs. The Company and Ilex estimate
that research, development and clinical costs will be approximately $10.0
million over the next two years. The joint venture expires in 2017, but provides
for either company, under certain circumstances, to purchase the other company's
ownership of the joint venture upon a change in control of such company (as
defined therein) or after October 2, 2000. In addition, in the event that one
party is unable or unwilling to fulfill its funding obligations to the joint
venture, then in certain circumstances, the party that funds the joint venture
shall gain control of the management of the joint venture, subject to certain
catch-up rights of the other party.
(8) CAPITAL LEASE
In 1993, the Company entered into a master lease agreement for the sale and
leaseback or lease of up to $2,250,000 of laboratory and office equipment and
leasehold improvements. At December 31, 1996, the Company had acquired
approximately $2,130,000 of laboratory and office equipment and leasehold
improvements under the lease agreement. The Company also has an obligation to
purchase $750,000 of leasehold improvements at the expiration of the lease term
for 15% of its original cost. The Company has issued warrants for the purchase
of 210,000 shares of Series A redeemable convertible preferred stock at an
exercise price of $1.00 per share to the lessors under the master lease
agreement (see Note 11(a)).
F-10
<PAGE> 77
LEUKOSITE, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
In 1994, the Company entered into a second master equipment lease agreement
for the lease of up to $750,000 of laboratory and office equipment. At December
31, 1996, the Company had acquired approximately $730,000 of equipment under the
lease. The leased equipment reverts back to the lessor at the end of the lease
term or the Company may purchase all of the equipment for fair market value,
which will not be less than 10% or more than 20% of the cost of the equipment.
On January 18, 1996, this agreement was amended to provide an additional
$300,000 of lease availability. On March 14, 1997, the Company entered into
another lease agreement for the lease of up to $1,200,000 of laboratory and
office equipment of which $450,000 may be utilized for leasehold improvements.
As of March 31, 1997, $1,200,000 is available under this lease commitment.
Future minimum lease payments under these lease agreements at December 31,
1996 are as follows:
<TABLE>
<CAPTION>
AMOUNT
----------
<S> <C>
Year Ending December 31,
1997.............................................. $ 911,796
1998.............................................. 593,201
1999.............................................. 182,368
2000.............................................. 32,285
----------
Total..................................... 1,719,650
Less--Amount representing interest................ 171,861
----------
Present value of future lease payments.... 1,547,789
Less--Amounts due within one year................. 784,168
----------
Amounts due after one year................ $ 763,621
==========
</TABLE>
(9) CAPITAL STOCK
(a) Stock Split and Amendment to Charter
On June 23, 1997, the Company's Board of Directors approved a 1- for-4.10
reverse stock split of the Company's common stock and a change in the par value
of the Company's common stock to $.01 per share to take place upon the
effectiveness of the Company's proposed initial public offering. Accordingly,
all share and per share amounts of common stock for all periods presented have
been retroactively adjusted to reflect the reverse stock split and change in par
value. Upon completion of the Company's initial public offering, the Company
will be authorized to issue 25,000,000 shares of common stock, $.01 par value,
and 5,000,000 shares of preferred stock, $.01 par value.
(b) Series A Common Stock
On May 5, 1995, the Series A common stock automatically converted into
893,782 shares of common stock, which represented approximately 20% of the total
number of shares of common stock then outstanding on a fully-diluted basis. The
Company recognized a compensation charge of $89,339, which represents the fair
market value, as determined by the Company's Board of Directors, of the
additional shares issued on May 5, 1995.
F-11
<PAGE> 78
LEUKOSITE, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
(10) PREFERRED STOCK
(a) Redeemable Convertible Preferred Stock
As of March 31, 1997, the Company's Board of Directors authorized
21,667,199 shares of $.01 par value redeemable convertible preferred stock. As
discussed in Note 9(a), the Company's Board of Directors' approved an amendment
to the Company's charter that changes the authorized capital stock to take place
upon the effectiveness of the Company's proposed initial public offering.
Redeemable convertible preferred stock activity since inception is as
follows:
<TABLE>
<CAPTION>
SERIES A SERIES B SERIES D SERIES F
NUMBER CARRYING NUMBER CARRYING NUMBER CARRYING NUMBER
OF SHARES VALUE OF SHARES VALUE OF SHARES VALUE OF SHARES
---------- ---------- --------- ---------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Issuance of Series A preferred stock,
net of issuance costs of $125,970....... 5,000,000 $4,874,030 -- $ -- -- $ -- --
---------- ---------- --------- ---------- --------- ---------- ---------
Balance, December 31, 1993.............. 5,000,000 4,874,030 -- -- -- -- --
Issuance of Series A preferred stock,
net of issuance costs of $18,769........ 5,000,000 4,981,231 -- -- -- -- --
Issuance of Series B preferred stock,
net of issuance costs of $73,371........ -- -- 1,666,667 1,926,629 -- -- --
---------- ---------- --------- ---------- --------- ---------- ---------
Balance, December 31, 1994.............. 10,000,000 9,855,261 1,666,667 1,926,629 -- -- --
Issuance of Series D preferred stock,
net of issuance costs of $49,093........ -- -- -- -- 1,481,482 1,950,908 --
---------- ---------- --------- ---------- --------- ---------- ---------
Balance, December 31, 1995.............. 10,000,000 9,855,261 1,666,667 1,926,629 1,481,482 1,950,908 --
Issuance of Series F preferred stock,
net of issuance costs of $34,838........ -- -- -- -- -- -- 1,638,335
Issuance of Series G preferred stock,
net of issuance costs of $90,000........ -- -- -- -- -- -- --
Value ascribed to guaranteed rate of
return on redeemable convertible
preferred stock......................... -- -- -- -- -- -- --
---------- ---------- --------- ---------- --------- ---------- ---------
Balance, December 31, 1996.............. 10,000,000 9,855,261 1,666,667 1,926,629 1,481,482 1,950,908 1,638,335
Issuance of Series G preferred stock,
net of issuance costs of $40,000........ -- -- -- -- -- -- --
Accretion of redeemable convertible
preferred stock dividend................ -- -- -- -- -- -- --
---------- ---------- --------- ---------- --------- ---------- ---------
Balance, March 31, 1997................. 10,000,000 $9,855,261 1,666,667 $1,926,629 1,481,482 $1,950,908 1,638,335
========== ========== ========= ========== ========= ========== =========
<CAPTION>
SERIES G
CARRYING NUMBER CARRYING
VALUE OF SHARES VALUE
---------- --------- ----------
<S> <C> <C> <C>
Issuance of Series A preferred stock,
net of issuance costs of $125,970....... $ -- -- $ --
---------- ------- ----------
Balance, December 31, 1993.............. -- -- --
Issuance of Series A preferred stock,
net of issuance costs of $18,769........ -- -- --
Issuance of Series B preferred stock,
net of issuance costs of $73,371........ -- -- --
---------- ------- ----------
Balance, December 31, 1994.............. -- -- --
Issuance of Series D preferred stock,
net of issuance costs of $49,093........ -- -- --
---------- ------- ----------
Balance, December 31, 1995.............. -- -- --
Issuance of Series F preferred stock,
net of issuance costs of $34,838........ 4,880,607 -- --
Issuance of Series G preferred stock,
net of issuance costs of $90,000........ -- 857,143 2,910,000
Value ascribed to guaranteed rate of
return on redeemable convertible
preferred stock......................... -- -- (610,000)
---------- ------- ----------
Balance, December 31, 1996.............. 4,880,607 857,143 2,300,000
Issuance of Series G preferred stock,
net of issuance costs of $40,000........ -- 1,102,719 3,819,506
Accretion of redeemable convertible
preferred stock dividend................ -- -- 244,000
---------- ------- ----------
Balance, March 31, 1997................. $4,880,607 1,959,862 $6,363,506
========== ======= ==========
</TABLE>
F-12
<PAGE> 79
LEUKOSITE, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
The rights and preferences of the redeemable convertible preferred stock
are as follows:
VOTING
Preferred stockholders are entitled to the number of votes equal to the
number of shares of common stock into which each share of preferred stock is
then convertible.
DIVIDENDS
In certain events, including liquidation, dissolution or winding up of the
Company, the holders of Series A, Series B, Series D, Series F, and Series G
redeemable convertible preferred stock are entitled to $1.00, $1.20, $1.35,
$3.00, and $3.50 per share, respectively, plus 10% per annum per share, plus any
declared but unpaid dividends before any distribution may be made to other
stockholders. If the assets of the Company are insufficient to permit payment in
full to the holders of preferred stock, the assets of the Company which are
available for distribution shall be distributed in proportion to the full
preferential amount to which each such holder is entitled. Series A, Series B,
Series D, Series F, and Series G stockholders also are entitled to share ratably
in amounts available for distribution to Series C and Series E convertible
preferred and common stockholders subject to certain defined maximum amounts.
CONVERSION
Conversion is at the option of the holder and is mandatory upon an initial
public offering. Each share of preferred stock is convertible into .24390 share
of common stock at any time, subject to certain antidilutive adjustments. The
number of shares of common stock into which certain outstanding shares of Series
G would be converted into shall be the greater of (i) the Series G minimum
conversion shares and (ii) .24390. The Series G minimum conversion shares is
obtained by dividing the Series G original purchase price by the special
applicable conversion price. The special applicable conversion price shall mean
that if the closing of a designated public offering, as defined, occurs at any
time on or prior to the first anniversary of the original issuance date, an
amount equal to the designated offering price less a twenty-five percent (25%)
discount from such designated public offering price. The discount percentage
increases over time.
The Company also has a separate agreement with certain Series G
shareholders whereby their shares will be converted into common stock based on a
specific return on their original investment, as defined. The Company has
recorded the value attributed to the guaranteed rate of return as additional
paid in capital and will be accreting it as a preferred stock dividend over the
estimated period that the stock is outstanding.
REDEMPTION
At the request of the holders of a majority of each series, the Company
shall redeem up to 25% of the preferred stock commencing on January 1, 1998,
September 1, 1999, September 12, 2000, February 29, 2001 and December 20, 2001
for Series A, Series B, Series D, Series F and Series G, respectively. Each year
thereafter, upon the anniversary of the respective series' redemption date, up
to 25% of the remaining preferred stock may be redeemed, subject to certain
limitations. The redemption price per share for the Series A, Series B, Series
D, Series F and Series G shall be $1.00, $1.20, $1.35, $3.00 and $3.50,
respectively, plus all declared but unpaid dividends thereon.
F-13
<PAGE> 80
LEUKOSITE, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
RIGHT OF FIRST REFUSAL
The Company's Series A, B, D, F and G preferred stockholders have a right
of first refusal to purchase any new securities offered by the Company. In each
case, this right of first refusal terminates upon the closing of an initial
public offering of the Company's common stock.
WARRANTS
In connection with the issuance of the Company's Series G redeemable
convertible preferred stock, the Company granted warrants to purchase up to
7,317 shares of common stock. The total warrants issued and the exercise price
will be determined once the Company completes a designated public offering, as
defined, after December 20, 2000. The warrants shall become exercisable only if
the Company's initial public offering occurs after the fourth anniversary of the
first closing (December 20, 1996). If the Company's initial public offering
occurs on or prior to the fourth anniversary, the warrants shall become null and
void. The warrants are exercisable beginning on the later of (i) the date of the
first public offering, as defined, after December 20, 2000, or (ii) the date of
closing in connection with, or expiration of, the underwriters' overallotment
option in connection with the public offering. The warrants expire on the
earlier of (i) the date of closing of the first designated public offering, as
defined, provided the closing occurs on or prior to December 20, 2000, or (ii)
December 20, 2003.
(b) Convertible Preferred Stock
The Company's convertible preferred stock consists of the following:
In November 1994, the Company sold 1,000,000 shares of Series C convertible
preferred stock, which resulted in proceeds of $3,000,000.
In January 1996, the Company issued 625,000 shares of Series E convertible
preferred stock, which resulted in proceeds of $2,500,000.
In April 1996, the Company sold 625,000 shares of Series E convertible
preferred stock, which resulted in proceeds of $2,500,000.
The rights and preferences of the Company's Series C and Series E
convertible preferred stock are as follows:
VOTING
The Company's Series C and E preferred stockholders are entitled to
the number of votes equal to the number of shares of common stock into
which each share of preferred stock is then convertible.
DIVIDENDS
The Company's Series C and E preferred stockholders are entitled to
receive dividends when and as declared by the Board of Directors.
LIQUIDATION RIGHTS
In certain events, including liquidation, dissolution or winding up of
the Company, the Company's Series C and Series E preferred stockholders are
entitled to $3.00 and $4.00 per share, respectively, plus any declared but
unpaid dividends before any distribution may be made to common
F-14
<PAGE> 81
LEUKOSITE, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
stockholders. The Company's Series A, Series B, Series D and Series F
redeemable convertible preferred stockholders also share ratably in amounts
available for distribution to Series C and Series E convertible preferred
and common stockholders subject to certain defined maximums.
CONVERSION
Each share of the Company's Series C and E preferred stock is
convertible into .24390 share of common stock at any time, subject to
certain antidilutive adjustments. As discussed in Note 4, the Series C and
E stockholders have waived their antidilution rights in exchange for a
credit against future royalties that may become payable to the Company.
(11) STOCK OPTIONS AND WARRANTS
The Company has adopted the 1993 Stock Option Plan (the "Plan") under which
it may grant both incentive stock options and nonstatutory stock options. The
Plan provides for the granting of options to purchase up to 3,916,970 shares of
common stock. As of March 31, 1997, 3,010,636 shares are available for future
grant under the Plan.
During 1993, the Company granted a stock option to purchase 135,000 shares
of Series A redeemable convertible preferred stock at $1.00 per share pursuant
to a stock restriction agreement with a consultant. This option expires on the
earlier of November 2, 2003 or five years from the effective date of the
Company's initial public offering.
The Company had the following common stock option activity from inception
(May 1, 1992) through March 31, 1997:
<TABLE>
<CAPTION>
OPTION
NUMBER OF PRICE WEIGHTED AVERAGE
SHARES PER SHARE EXERCISE PRICE
--------- ----------- ----------------
<S> <C> <C> <C> <C>
Balance, December 31, 1992.................. -- $ -- $ --
Granted................................... 256,707 .04- .62 .45
------- ------------ ------
Balance, December 31, 1993.................. 256,707 .04- .62 .45
Granted................................... 176,917 .04- .94 .90
Exercised................................. (9,451) .04- .62 .16
Canceled.................................. (3,659) .04- .72 .21
------- ------------ ------
Balance, December 31, 1994.................. 420,514 .04- .94 .66
Granted................................... 74,756 1.00- 1.19 1.07
Exercised................................. (15,915) .04- .94 .16
Canceled.................................. (10,579) .04- 1.00 .25
------- ------------ ------
Balance, December 31, 1995.................. 468,776 .04- 1.19 .74
Granted................................... 324,356 1.19- 6.15 5.37
Exercised................................. (45,491) .04- 1.19 .70
Canceled.................................. (15,212) .82- 5.13 2.30
------- ------------ ------
Balance, December 31, 1996.................. 732,429 .04- 6.15 2.75
Granted................................... 103,049 6.15 6.15
Exercised................................. (7,561) .04- 1.19 .86
------- ------------ ------
Balance, March 31, 1997..................... 827,917 $ .04- 6.15 $ 3.20
======= ============ ======
Exercisable March 31, 1997.................. 201,085 $ .04- 5.13 $ .70
======= ============ ======
</TABLE>
F-15
<PAGE> 82
LEUKOSITE, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
Subsequent to March 31, 1997 the Company granted options to purchase
181,121 shares of common stock at an exercise price of $7.18 per share. In
addition certain option holders exercised options to purchase 1,090 shares at
exercise prices ranging from $1.00 to $5.13 per share and options to purchase
40,874 shares were canceled.
In October 1995, the Financial Accounting Standards Board (FASB) issued
SFAS No. 123, Accounting for Stock-Based Compensation. SFAS No. 123 requires the
measurement of the fair value of stock options or warrants to be included in the
statement of operations or disclosed in the notes to financial statements. The
Company has determined that it will continue to account for stock-based
compensation for employees under Accounting Principles Board Opinion No. 25 and
elect the disclosure-only alternative under SFAS No. 123. The Company has
computed the pro forma disclosures required under SFAS No. 123 for options
granted in 1995 and 1996 using the Black-Scholes option pricing model prescribed
by SFAS No. 123. The weighted average assumptions used for the years ended
December 31, 1995 and 1996 are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1995 1996
----------- -----------
<S> <C> <C>
Risk free interest rate................................... 5.63%-7.79% 5.54%-6.83%
Expected dividend yield................................... 0% 0%
Expected life............................................. 7 Years 7 Years
Expected volatility....................................... 35% 35%
</TABLE>
The Black-Scholes option-pricing model was developed for use in estimating
the fair value of traded options which have no vesting restrictions and are
fully transferable. In addition, option-pricing models require the input of
highly subjective assumptions including expected stock price volatility. Because
the Company's employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.
The total value of the options granted during the years ended 1995 and 1996
was computed as approximately $40,000 and $867,000, respectively. Of these
amounts approximately $4,000 and $99,000 would be charged to operations for the
years ended December 31, 1995 and 1996, respectively. The remaining amount would
be amortized over the related vesting periods. The resulting pro forma
compensation expense may not be representative of the amount to be expected in
future years as pro forma compensation expense may vary based upon the number of
options granted.
The pro forma net loss and pro forma net loss per common share presented
below have been computed assuming no tax benefit. The effect of a tax benefit
has not been considered since a substantial portion of the stock options granted
are incentive stock options and the Company does not anticipate a future
deduction associated with the exercise of these stock options. The pro forma
effect of SFAS No. 123 for the years ended December 31, 1995 and 1996 is as
follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------------------------------
1995 1996
--------------------------- ---------------------------
AS REPORTED PRO FORMA AS REPORTED PRO FORMA
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net loss...................... $(7,476,753) $(7,480,575) $(6,021,690) $(6,121,057)
=========== =========== =========== ===========
Pro forma net loss per common
share....................... $ (1.04) $ (1.06)
=========== ===========
</TABLE>
F-16
<PAGE> 83
LEUKOSITE, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
In conjunction with the Company's master lease agreement (see Note 8), the
Company issued warrants for the purchase of 210,000 shares of Series A
redeemable convertible preferred stock at an exercise price of $1.00 per share.
Upon conversion of the Series A redeemable convertible preferred stock into
common stock as discussed in Note 2(a), the warrantholder will be entitled to
purchase 51,220 shares of common stock at an exercise price of $4.10 per share.
The warrants are fully exercisable and expire on December 13, 2003 or five years
from the effective date of an initial public offering of stock by the Company,
whichever occurs first. The value assigned to the warrants, $90,500, is being
accounted for as debt discount and is being amortized over the lease period.
(12) OPERATING LEASE
In December 1994, the Company entered into an operating lease for its
office and research facilities. The lease expires in December 1999 with an
option to renew for two additional five-year terms. The Company has received
certain rent concessions during the initial term of the lease. Rent expense is
being recognized ratably over the term of the lease. Deferred rent included in
the accompanying consolidated balance sheet represents the difference between
cash paid to date and rent expense recognized to date. Rent expense for 1994,
1995 and 1996 amounted to approximately $329,000, $503,000 and $459,000,
respectively. Rent expense for the three months ended March 31, 1996 and 1997
amounted to approximately $112,000 and $131,000, respectively.
Future minimum rental payments at December 31, 1996 are as follows:
<TABLE>
<CAPTION>
AMOUNT
----------
<S> <C>
Year Ending December 31,
1997................................................. $ 592,000
1998................................................. 804,000
1999................................................. 717,000
----------
$2,113,000
==========
</TABLE>
(13) INCOME TAXES
The Company follows the provisions of SFAS No. 109, Accounting for Income
Taxes, whereby a deferred tax asset or liability is measured by the enacted tax
rates that would be in effect when any differences between the financial
statement and tax bases of assets or liabilities reverse. The Company has
elected to defer certain research and development costs as defined in the
Internal Revenue Code. As of December 31, 1996, the Company has available
deferred research and development costs of approximately $15,669,000, net
operating loss carryforwards of approximately $2,433,000 and research and
development credit carryforwards of approximately $500,000 to reduce future
federal income taxes, if any. The net operating loss and credit carryforwards
expire beginning in the year 2007 and are subject to review and possible
adjustment by the Internal Revenue Service. Due to the uncertainty related to
the realization of future tax return benefits of the deferred tax assets, a full
valuation allowance has been provided.
F-17
<PAGE> 84
LEUKOSITE, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
<TABLE>
<CAPTION>
1995 1996
---------- ----------
<S> <C> <C>
Operating loss carryforwards................ $ 94,000 $ 973,000
Tax credit carryforwards.................... 357,000 500,000
Start-up costs.............................. 491,000 465,000
Development costs........................... 5,068,000 6,492,000
Nondeductible accruals...................... 70,000 191,000
Depreciation................................ 273,000 94,000
---------- ----------
6,353,000 8,715,000
Less--Valuation allowance................... 6,353,000 8,715,000
---------- ----------
$ -- $ --
========== ==========
</TABLE>
The United States Tax Reform Act of 1986 contains provisions that may limit
the Company's net operating loss and credit carryforwards available to be used
in any given year in the event of significant changes in the ownership interests
of significant stockholders. The Company has completed numerous financings since
its inception and has incurred ownership changes, as defined in the Tax Reform
Act of 1986. The Company believes that the ownership changes will not
significantly impact its ability to utilize its net operating loss and tax
credit carryforwards.
(14) LEUKOSITE (UK) LIMITED
In 1994, the Company formed a wholly owned subsidiary, LeukoSite Limited
("LeukoSite UK"). LeukoSite UK was incorporated for the purpose of entering into
a research agreement to fund research activity in the United Kingdom. An
agreement has been established whereby LeukoSite UK will contribute $3,000,000
towards funding the construction, equipping and the operations of a research
center in the UK. The Company has paid and charged to operations $1,500,000 of
such commitment as of March 31, 1997, and the balance will be paid in six-month
intervals of $250,000 each. It is expected that the Company will fund most of
the cash requirements of LeukoSite UK.
(15) ACCRUED EXPENSES
Accrued expenses in the accompanying consolidated balance sheets consist of
the following:
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1995 1996 1997
-------- ---------- ----------
<S> <C> <C> <C>
Payroll and payroll related............. $274,898 $ 338,441 $ 163,571
Consulting and contract research........ 153,631 314,595 434,405
Other................................... 218,952 391,044 649,399
-------- ---------- ----------
$647,481 $1,044,080 $1,247,375
======== ========== ==========
</TABLE>
(16) NEW ACCOUNTING STANDARD
In March, 1997, the Financial Accounting Standards Board issued SFAS No.
128, Earnings per Share. SFAS No. 128 is required for fiscal years ending after
December 15, 1997 and early adoption is not permitted. The adoption of SFAS No.
128 is not expected to have a material effect on the Company's net loss per
share.
F-18
<PAGE> 85
============================================================
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY TO ANY PERSON IN ANY JURISDICTION IN WHICH SUCH AN OFFER OR
SOLICITATION WOULD BE UNLAWFUL OR TO ANY PERSON TO WHOM IT IS UNLAWFUL. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY OFFER OR SALE MADE HEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF THE COMPANY OR THAT INFORMATION CONTAINED HEREIN IS CORRECT AS OF
ANY TIME SUBSEQUENT TO THE DATE HEREOF.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary......................... 3
Risk Factors............................... 5
Use of Proceeds............................ 17
Dividend Policy............................ 17
Capitalization............................. 18
Dilution................................... 19
Selected Consolidated Financial Data....... 20
Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................... 21
Business................................... 24
Management................................. 46
Certain Transactions....................... 54
Principal Stockholders..................... 56
Description of Capital Stock............... 58
Shares Eligible for Future Sale............ 61
Underwriting............................... 63
Legal Matters.............................. 64
Experts.................................... 64
Additional Information..................... 65
Index to Financial Statements.............. F-1
</TABLE>
------------------
UNTIL , 1997 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT PARTICIPATING
IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN
ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
============================================================
============================================================
2,500,000 SHARES
[LOGO]
LEUKOSITE, INC.
COMMON STOCK
-------------------
PROSPECTUS
-------------------
HAMBRECHT & QUIST
UBS SECURITIES
, 1997
============================================================
<PAGE> 86
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Expenses of the Registrant in connection with the issuance and distribution
of the securities being registered, other than the underwriting discount and
commissions, are estimated as follows:
<TABLE>
<S> <C>
SEC Registration Fee.................................................... $ 8,713
NASD Fees............................................................... $ 3,375
Nasdaq National Market Listing Fees..................................... $ 43,000
Printing and Engraving Expenses......................................... $ 75,000
*Legal Fees and Expenses................................................ $275,000
*Accountants' Fees and Expenses......................................... $ 75,000
*Expenses of Qualification Under State
Securities Laws, Including Attorneys' Fees......................... $ 10,000
*Transfer Agent and Registrar's Fees.................................... $ 10,000
*Miscellaneous Costs.................................................... $ 99,912
--------
Total.............................................................. $600,000
========
</TABLE>
- ------------------------------
* To be provided by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law empowers a Delaware
corporation to indemnify its officers and directors and certain other persons to
the extent and under the circumstances set forth therein.
The Restated Certificate of Incorporation and the Amended and Restated
By-Laws of the Company, copies of which are filed herein as Exhibit 3.3 and 3.4,
provide for advancement of expenses and indemnification of officers and
directors of the Registrant and certain other persons against liabilities and
expenses incurred by any of them in certain stated proceedings and under certain
stated conditions to the fullest extent permissible under Delaware law.
Section of the Underwriting Agreement between the Registrant and the
Underwriters, a copy of which is filed herein as Exhibit 1.1, will provide for
indemnification by the Registrant of the Underwriters and each person, if any,
who controls any Underwriter, against certain liabilities and expenses, as
stated therein, which may include liabilities under the Securities Act of 1933.
The Underwriting Agreement also provides that the Underwriters shall similarly
indemnify the Registrant, its directors, officers and controlling persons, as
set forth therein.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Described below is information regarding all unregistered securities of the
Company sold by the Company within the past three years. The share and per share
amounts set forth below have been adjusted to reflect the Company's one-for-4.1
reverse Common Stock split to occur prior to the consummation of this offering.
From its incorporation (May 1992) to June 1997, the Company has entered
into stock option agreements with certain employees, officers and consultants to
the Company pursuant to the Company's Amended and Restated 1993 Stock Option
Plan, as amended, covering approximately 1,046,585 shares of its Common Stock,
of which 79,511 shares of Common Stock have been issued by the Company upon
exercise of such stock options. The purchase price under the options is $0.041
to $7.175 based on the fair market value of the Common Stock on the date of
grant. These grants and sales
II-1
<PAGE> 87
were made in reliance upon Rule 701 promulgated under the Securities Act and are
deemed to be exempt transactions as sales of an issuer's securities pursuant to
a written plan or contract relating to the compensation of such individuals and
upon Section 4(2) of the Securities Act as transactions not involving any public
offering.
In June 1994, the Company issued and sold an aggregate of 5,000,000 shares
of Series A Convertible Preferred Stock (convertible into 1,219,512 shares of
Common Stock) at a purchase price of $1.00 per share ($4.10 per share on an
as-converted basis) to HealthCare Ventures III, L.P., HealthCare Ventures IV,
L.P., I.S. Partners, L.P. and Everest Trust. The issuance and sales of such
shares of Series A Convertible Preferred Stock were made in reliance upon Rule
506 of Regulation D promulgated under the Securities Act and Section 4(2) of the
Securities Act.
In September 1994, the Company issued and sold an aggregate of 1,666,667
shares of Series B Convertible Preferred Stock (convertible into 406,504 shares
of Common Stock) at a purchase price of $1.20 per share ($4.92 per share on an
as-converted basis) to Schroder Ventures International Life Science Fund L.P. 1,
Schroder Ventures International Life Science Fund L.P. 2, Schroder Ventures
International Life Sciences Trust, Schroders Incorporated, Schroder Venture
Managers Limited as investment manager for the Schroder Ventures International
Life Sciences Fund Co-Investment Scheme, I.S. Partners, L.P. and Everest Trust.
The issuance and sales of such shares of Series B Convertible Preferred Stock
were made in reliance upon Rule 506 of Regulation D promulgated under the
Securities Act and Section 4(2) of the Securities Act.
In November 1994, the Company issued and sold 1,000,000 shares of Series C
Convertible Preferred Stock (convertible into 243,902 shares of Common Stock) at
a purchase price of $3.00 per share ($12.30 per share on an as-converted basis)
to Warner-Lambert Company. The issuance and sale of such shares of Series C
Convertible Preferred Stock were made in reliance upon Section 4(2) of the
Securities Act.
In September 1995, the Company issued and sold an aggregate of 1,481,482
shares of Series D Convertible Preferred Stock (convertible into 361,337 shares
of Common Stock) at a purchase price of $1.35 per share ($5.54 per share on an
as-converted basis) to HealthCare Ventures III, L.P., HealthCare Ventures IV,
L.P., Schroder Ventures International Life Science Fund L.P. 1, Schroder
Ventures International Life Science Fund L.P. 2, Schroder Ventures International
Life Sciences Trust, Schroders Incorporated, Schroder Venture Managers Limited
as investment manager for the Schroder Ventures International Life Sciences Fund
Co-Investment Scheme, I.S. Partners, L.P., Everest Trust, Hudson Trust and
Francis H. Spiegel, Jr. The issuance and sales of such shares of Series D
Convertible Preferred Stock were made in reliance upon Rule 506 of Regulation D
promulgated under the Securities Act and Section 4(2) of the Securities Act.
In January 1996, the Company issued and sold 625,000 shares of Series E
Convertible Preferred Stock (convertible into 152,439 shares of Common Stock) at
a purchase price of $4.00 per share ($16.40 per share on an as-converted basis)
to Warner-Lambert Company. The issuance and sale of such shares of Series E
Convertible Preferred Stock were made in reliance upon Section 4(2) of the
Securities Act.
In February 1996, the Company issued and sold an aggregate of 910,188
shares of Series F Convertible Preferred Stock (convertible into 221,997 shares
of Common Stock) at a purchase price of $3.00 per share ($12.30 per share on an
as-converted basis) to HealthCare Ventures III, L.P., HealthCare Ventures IV,
L.P., I.S. Partners, L.P., Schroder Ventures International Life Science Fund
L.P. 1, Schroder Ventures International Life Science Fund L.P. 2, Schroder
Ventures International Life Sciences Trust, Schroders Incorporated, Schroder
Venture Managers Limited as investment manager for the Schroder Ventures
International Life Sciences Fund Co-Investment Scheme, I.S. Partners, L.P.,
Everest Trust, Hudson Trust, Francis H. Spiegel, Jr., Christopher T. Walsh and
Lombard Odier & Cie. The issuance and sales of such shares of Series F
Convertible Preferred Stock were made in reliance upon Rule 506 of Regulation D
promulgated under the Securities Act and Section 4(2) of the Securities Act.
II-2
<PAGE> 88
In April 1996, the Company issued and sold 625,000 shares of Series E
Convertible Preferred Stock (convertible into 152,439 shares of Common Stock) at
a purchase price of $4.00 per share ($16.40 per share on an as-converted basis)
to Warner-Lambert Company. The issuance and sale of such shares of Series E
Convertible Preferred Stock were made in reliance upon Section 4(2) of the
Securities Act.
In June 1996, the Company issued and sold an aggregate of 728,147 shares of
Series F Convertible Preferred Stock (convertible into 194,608 shares of Common
Stock) at a purchase price of $3.00 per share ($12.30 per share on an
as-converted basis) to HealthCare Ventures III, L.P., HealthCare Ventures IV,
L.P., I.S. Partners, L.P., Schroder Ventures International Life Science Fund
L.P. 1, Schroder Ventures International Life Science Fund L.P. 2, Schroder
Ventures International Life Sciences Trust, Schroders Incorporated, Schroder
Venture Managers Limited as investment manager for the Schroder Ventures
International Life Sciences Fund Co-Investment Scheme, I.S. Partners, L.P.,
Everest Trust, Hudson Trust, Christopher T. Walsh and Lombard Odier & Cie. The
issuance and sales of such shares of Series F Convertible Preferred Stock were
made in reliance upon Rule 506 of Regulation D promulgated under the Securities
Act and Section 4(2) of the Securities Act.
In December 1996, the Company sold 857,143 shares of Series G Convertible
Preferred Stock (convertible into 401,142 shares of Common Stock) at a purchase
price of $3.50 ($7.47 on an as-converted basis) to Roche Finance Ltd. If the
initial public offering price varies within the estimated range, the number of
shares of Common Stock issuable upon the conversion of the Preferred Stock is
subject to adjustment from a maximum of 451,284 shares of Common Stock (in the
event that the initial public offering price is $8.00 per share) to a minimum of
361,027 shares of Common Stock (in the event that the initial public offering
price is $10.00 per share). The pricing of this offering outside the estimated
range will further effect the number of shares of Common Stock into which the
Preferred Stock is convertible. The issuance and sales of such shares of Series
G Convertible Preferred Stock were made in reliance on Reg. Rule 506 of
Regulation D promulgated under the Securities Act and Section 4(2) of the
Securities Act.
In March through June 1997, the Company sold an aggregate of 1,102,719
shares of Series G Convertible Preferred Stock (convertible into 493,319 shares
of Common Stock) at a purchase price of $3.50 ($6.75 on an as-converted basis)
to a group of new and existing investors, including Schroder Ventures
International Life Sciences Fund L.P. 1, Schroder Ventures International Life
Sciences Fund L.P. 2, Schroder Ventures International Life Sciences Trust,
Schroders Incorporated, Schroder Ventures Managers Limited, as Investment
Manager for the Schroder Ventures International Life Sciences Fund Co-Investment
Scheme, S.R. One, Ltd., New Day Investment Partnership, L.P., WPG Life Sciences
Fund, L.P., WPG Institutional Life Sciences, L.P., Warner-Lambert Company, James
Cramer, Dr. Barbara Schildkrout, The Springer Family Trust and Daniel Kisner. If
the initial public offering price varies within the estimated range, the number
of shares of Common Stock issuable upon the conversion of the Preferred Stock is
subject to adjustment from a maximum of 546,273 shares of Common Stock (in the
event that the initial public offering price is $8.00 per share) to a minimum of
450,956 shares of Common Stock (in the event that the initial public offering
price is $10.00 per share). The pricing of this offering outside the estimated
range will further effect the number of shares of Common Stock into which the
Preferred Stock is convertible. The issuance and sales of such shares of Series
G Convertible Preferred Stock were made in reliance on Reg. Rule 506 of
Regulation D promulgated under the Securities Act and Section 4(e) of the
Securities Act.
No Underwriters were engaged in connection of any of foregoing sales of
securities.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits:
<TABLE>
<CAPTION>
EXHIBITS
- --------
<C> <S>
*1.1 Proposed Form of Underwriting Agreement.
*3.1 Restated Certificate of Incorporation of the Registrant.
</TABLE>
II-3
<PAGE> 89
<TABLE>
<CAPTION>
EXHIBITS
- --------
<C> <S>
3.2 Form of Certificate of Amendment to the Restated Certificate of Incorporation of the
Registrant (to be filed with the State of Delaware prior to the effectiveness of the
Registration Statement).
3.3 Form of Restated Certificate of Incorporation of the Registrant (to be filed with
the State of Delaware upon the closing of the Offering).
3.4 Amended and Restated By-Laws of the Registrant, as amended to date.
*4.1 Specimen certificate for shares of Common Stock.
4.2 Description of Capital Stock (contained in the Restated Certificate of Incorporation
of the Registrant, filed as Exhibit 3.3).
*5 Opinion of Bingham, Dana & Gould LLP, with respect to the legality of the shares
being registered.
+10.1 Consulting Agreement, dated January 22, 1993, between the Registrant and Timothy
Springer.
+10.2 License Agreement, dated June 15, 1993, between the Registrant and the Center for
Blood Research, Inc.
+10.3 License Agreement, dated as of January 2, 1995, between the Registrant and Stanford
University.
+10.4 (a) The Research, Development and Marketing Agreement, dated September 30, 1994,
between the Registrant and Warner-Lambert Company, as amended by First Amendment to
the Research, Development and Marketing Agreement, dated as of July 1, 1995.
(b) The Research, Development and Marketing Agreement, dated July 1, 1995, between
the Registrant and Warner-Lambert Company.
+10.5 License Agreement, dated March 15, 1995, between the Registrant and Lynxvale Ltd.
+10.6 Service Agreement, dated as of March 9, 1995, between the Registrant and MRC
Collaborative Centre.
+10.7 License Agreement, dated March 25, 1996, between the Registrant and Children's
Medical Center Corporation.
+10.8 (a) License Agreement, dated January 31, 1996, between the Registrant and The
Imperial College of Science, Technology & Medicine, Imperial Exploitation Limited.
(b) Research Agreement, dated March 14, 1996, between the Registrant and The
Imperial College of Science, Technology & Medicine, Imperial Exploitation Limited.
+10.9 Research Collaboration and License Agreement, dated July 12, 1996, between the
Registrant and Roche Bioscience.
+10.10 Agreement for the construction and operation of a Therapeutic Antibody Centre within
the University of Oxford, dated October 6, 1994, among the University of Oxford, The
Medical Research Council, the Registrant and LeukoSite Limited.
+10.11 License Agreement between the Registrant and British Technology Group Limited.
+10.12 Letter Agreement, dated September 30, 1996, between the Registrant and The Wellcome
Foundation Limited.
+10.13 Material Release Agreement, dated September 30, 1996, between the Registrant and The
Wellcome Foundation Limited.
+10.14 Letter Agreement, dated October 7, 1996, between the Registrant and Warner-
Lambert/Parke-Davis.
+10.15 Research Collaboration and License Agreement, dated April 24, 1997, between the
Registrant and Kyowa Hakko Kogyo Co. Ltd.
+10.16 Agreement, dated September 25, 1996, between the Registrant and Oxford Asymmetry
Limited.
+10.17 (a) Agreement of Limited Partnership of L&I Partners, L.P.
(b) License Agreement, dated May 2, 1997, between L&I Partners, L.P. and the
Registrant.
10.18 Lease agreement for portion of 215 First Street, Cambridge, MA, dated June 8, 1994,
between the Registrant and Robert A. Jones and K. George Najarian, as Trustees for
Athenaeum Realty Nominee Trust.
10.19 Master Lease Agreement, dated December 13, 1993, between the Registrant and
Comdisco, Inc.
</TABLE>
II-4
<PAGE> 90
<TABLE>
<CAPTION>
EXHIBITS
- --------
<C> <S>
*10.20 Warrant, dated December 13, 1993, between the Registrant and Comdisco, Inc.
10.21 Master Equipment Lease, dated as of October 3, 1994, between the Registrant and
Phoenix Leasing Incorporated.
10.22 Senior Loan and Security Agreement, dated March 14, 1997, between the Registrant and
Phoenix Leasing Incorporated.
10.23 Amended and Restated 1993 Stock Option Plan.
10.24 1997 Employee Stock Purchase Plan
10.25 (a) Series C Convertible Preferred Stock Purchase Agreement, dated as of November 8,
1994, between the Registrant and Warner-Lambert Company.
(b) Series E Convertible Preferred Stock Purchase Agreement, dated as of January 3,
1996, between the Registrant and Warner-Lambert Company.
(c) Amendment, Modification and Conversion Agreement, dated June 26, 1997, between
the Registrant and Warner-Lambert Company.
10.26 Second Amended and Restated Stockholders' Agreement, dated December 20, 1996, by and
among the Registrant and parties signatory thereto, as amended.
11.1 Computation of Income Per Share.
21.1 Subsidiary of the Registrant.
*23.1 Consent of Bingham, Dana & Gould LLP (included in Exhibit 5).
23.2 Consent of Arthur Andersen LLP
23.3 Consent of Hamilton, Brook, Smith & Reynolds, P.C.
24.1 Power of Attorney (included in signature page to Registration Statement).
27.1 Financial Data Schedule.
</TABLE>
- ------------------------------
* To be filed by amendment.
+ Confidential Treatment requested as to certain portions.
(b) Financial Statement Schedules:
All financial statement schedules have been omitted because either they are
not required, are not applicable, or the information is otherwise set forth in
the Financial Statements and notes thereto.
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions described in Item 14 above, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes:
(1) To provide the Underwriters at the closing specified in the
Underwriting Agreement certificates in such denominations and registered in
such names as required by the Underwriters to permit prompt delivery to
each purchaser.
(2) That for purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of prospectus
filed as part of this registration statement in
II-5
<PAGE> 91
reliance upon Rule 430A and contained in a form of prospectus filed by the
registrant pursuant to Rule 424(b)(1) or (4), or 497(h) under the
Securities Act shall be deemed to be part of this registration statement as
of the time it was declared effective.
(3) That for the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
II-6
<PAGE> 92
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Cambridge, Commonwealth
of Massachusetts, on this 27th day of June, 1997.
LEUKOSITE, INC.
By: /s/ CHRISTOPHER K. MIRABELLI
------------------------------------
Christopher K. Mirabelli
Chairman of the Board of Directors,
President and Chief Executive
Officer
POWER OF ATTORNEY
Each person whose signature appears below hereby appoint each of
Christopher K. Mirabelli and Augustine Lawlor severally, acting alone and
without the other, his true and lawful attorney-in-fact with the authority to
execute in the name of each such person, any and all amendments (including
without limitation, post-effective amendments) to this Registration Statement on
Form S-1, to sign any and all additional registration statements relating to the
same offering of securities as this Registration Statement that are filed
pursuant to Rule 462(b) of the Securities Act, and to file such registration
statements with the Securities and Exchange Commission, together with any
exhibits thereto and other documents therewith, necessary or advisable to enable
the registrant to comply with the Securities Act, and any rules, regulations and
requirements of the Securities and Exchange Commission in respect thereof, which
amendments may make such other changes in the Registration Statement as the
aforesaid attorney-in-fact executing the same deems appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ---------------------------------------- ------------------------------------ --------------
<C> <S> <C>
/s/ CHRISTOPHER K. MIRABELLI Chairman of the Board of Directors, June 27, 1997
- ---------------------------------------- President and
Christopher K. Mirabelli Chief Executive Officer
(Principal Executive Officer)
/s/ AUGUSTINE LAWLOR Vice President, Corporate June 27, 1997
- ---------------------------------------- Development and Chief
Augustine Lawlor Financial Officer (Principal
Financial and Accounting
Officer)
Director
- ----------------------------------------
Catherine Bingham
/s/ JOHN W. LITTLECHILD Director June 27, 1997
- ----------------------------------------
John W. Littlechild
/s/ MARTIN PERETZ Director June 27, 1997
- ----------------------------------------
Martin Peretz
/s/ MARK SKALETSKY Director June 27, 1997
- ----------------------------------------
Mark Skaletsky
/s/ DR. CHRISTOPHER T. WALSH Director June 27, 1997
- ----------------------------------------
Dr. Christopher T. Walsh
</TABLE>
II-7
<PAGE> 93
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBITS
- --------
<C> <S>
*1.1 Proposed Form of Underwriting Agreement.
3.1 Restated Certificate of Incorporation of the Registrant.
3.2 Form of Certificate of Amendment to the Restated Certificate of Incorporation of the
Registrant (to be filed with the State of Delaware prior to the effectiveness of the
Registration Statement).
3.3 Form of Restated Certificate of Incorporation of the Registrant (to be filed with
the State of Delaware upon the closing of the Offering).
3.4 Amended and Restated By-Laws of the Registrant, as amended to date.
4.1 Specimen certificate for shares of Common Stock.
4.2 Description of Capital Stock (contained in the Restated Certificate of Incorporation
of the Registrant, filed as Exhibit 3.3).
5 Opinion of Bingham, Dana & Gould LLP, with respect to the legality of the shares
being registered.
+10.1 Consulting Agreement, dated January 22, 1993, between the Registrant and Timothy
Springer.
+10.2 License Agreement, dated June 15, 1993, between the Registrant and the Center for
Blood Research, Inc.
+10.3 License Agreement, dated as of January 2, 1995, between the Registrant and Stanford
University.
+10.4 (a) The Research, Development and Marketing Agreement, dated September 30, 1994,
between the Registrant and Warner-Lambert Company, as amended by First Amendment to
the Research, Development and Marketing Agreement, dated as of July 1, 1995.
(b) The Research, Development and Marketing Agreement, dated July 1, 1995, between
the Registrant and Warner-Lambert Company.
+10.5 License Agreement, dated March 15, 1995, between the Registrant and Lynxvale Ltd.
+10.6 Service Agreement, dated as of March 9, 1995, between the Registrant and MRC
Collaborative Centre.
+10.7 License Agreement, dated March 25, 1996, between the Registrant and Children's
Medical Center Corporation.
+10.8 (a) License Agreement, dated January 31, 1996, between the Registrant and The
Imperial College of Science, Technology & Medicine, Imperial Exploitation Limited.
(b) Research Agreement, dated March 14, 1996, between the Registrant and The
Imperial College of Science, Technology & Medicine, Imperial Exploitation Limited.
+10.9 Research Collaboration and License Agreement, dated July 12, 1996, between the
Registrant and Roche Bioscience.
+10.10 Agreement for the construction and operation of a Therapeutic Antibody Centre within
the University of Oxford, dated October 6, 1994, among the University of Oxford, The
Medical Research Council, the Registrant and LeukoSite Limited.
+10.11 License Agreement, dated , 1997 between the Registrant and British
Technology Group Limited.
+10.12 Letter Agreement, dated September 30, 1996, between the Registrant and The Wellcome
Foundation Limited.
+10.13 Material Release Agreement, dated September 30, 1996, between the Registrant and The
Wellcome Foundation Limited.
+10.14 Letter Agreement, dated October 7, 1996, between the Registrant and Warner-
Lambert/Parke-Davis.
+10.15 Research Collaboration and License Agreement, dated April 24, 1997, between the
Registrant and Kyowa Hakko Kogyo Co. Ltd.
+10.16 Agreement, dated September 25, 1996, between the Registrant and Oxford Asymmetry
Limited.
+10.17 (a) Agreement of Limited Partnership of L&I Partners, L.P.
(b) License Agreement, dated May 2, 1997, between L&I Partners, L.P. and the
Registrant.
</TABLE>
<PAGE> 94
<TABLE>
<CAPTION>
EXHIBITS
- --------
<C> <S>
10.18 Lease agreement for portion of 215 First Street, Cambridge, MA, dated June 8, 1994,
between the Registrant and Robert A. Jones and K. George Najarian, as Trustees for
Athenaeum Realty Nominee Trust.
10.19 Master Lease Agreement, dated December 13, 1993, between the Registrant and
Comdisco, Inc.
10.20 Warrant, dated December 13, 1993, between the Registrant and Comdisco, Inc.
10.21 Master Equipment Lease, dated as of October 3, 1994, between the Registrant and
Phoenix Leasing Incorporated.
10.22 Senior Loan and Security Agreement, dated March 14, 1997, between the Registrant and
Phoenix Leasing Incorporated.
10.23 Amended and Restated 1993 Stock Option Plan.
10.24 1997 Employee Stock Purchase Plan
10.25 (a) Series C Convertible Preferred Stock Purchase Agreement, dated as of November 8,
1994, between the Registrant and Warner-Lambert Company.
(b) Series E Convertible Preferred Stock Purchase Agreement, dated as of January 3,
1996, between the Registrant and Warner-Lambert Company.
10.26 Second Amended and Restated Stockholders' Agreement, dated December 20, 1996, by and
among the Registrant and parties signatory thereto, as amended.
11.1 Computation of Income Per Share.
21.1 Subsidiary of the Registrant.
23.1 Consent of Bingham, Dana & Gould LLP (included in Exhibit 5).
23.2 Consent of Arthur Andersen LLP
23.3 Consent of Hamilton, Brook, Smith & Reynolds, P.C.
24.1 Power of Attorney (included in signature page to Registration Statement).
27.1 Financial Data Schedule.
</TABLE>
- ------------------------------
* To be filed by amendment.
+ Confidential Treatment requested as to certain portions.
<PAGE> 1
EXHIBIT 3.2
CERTIFICATE OF AMENDMENT
TO
RESTATED CERTIFICATE OF INCORPORATION
OF
LEUKOSITE, INC.
LEUKOSITE, INC., a corporation organized and existing under and by virtue
of the General Corporation Law of the State of Delaware (the "Corporation"),
hereby certifies that:
FIRST. The Restated Certificate of Incorporation of the Corporation is
hereby amended by adding a new Part K to Article THIRD thereof, which Part K
shall read in its entirety as follows:
PART K. REVERSE STOCK SPLIT AND CHANGE IN PAR VALUE.
Immediately upon the filing with the Secretary of State of Delaware
of a Certificate of Amendment that, among other things, amends Article
THIRD of the Corporation's Restated Certificate of Incorporation for
purposes of including the provisions of this Part K in said Article THIRD
(the "Effective Time"), a one-for-4.1 reverse stock split of the Common
Stock, as well as a change in the par value per share of the Common Stock
(such reverse stock split and change in par value per share being referred
to herein as the "Reverse Stock Split"), shall become effective such that
each share of Common Stock, $0.0001 par value per share ("Old Par Value
Common Stock"), that is issued and outstanding or held in treasury
immediately prior to the Effective Time shall be automatically combined,
reclassified and changed (without any further act) into 0.2439024 of a
share of fully paid and nonassessable Common Stock, $0.01 par value per
share, of the Corporation ("New Par Value Common Stock"). No fractional
share of New Par Value Common Stock shall be issued to any holder of
record of shares of Old Par Value Common Stock as a result of the Reverse
Stock Split, but in lieu of any fraction of a share which would otherwise
be issuable to any such holder of record, there shall be paid by the
Corporation an amount of cash equal to the pro rata value of such
fractional share. Each stock certificate of the Corporation that
represents shares of Old Par Value Common Stock and that is outstanding
immediately prior to the Effective Time shall immediately after the
Effective Time represent such number of shares of New Par Value Common
Stock as shall be equal to the product obtained by multiplying (i)
0.2439024 by (ii) the number of shares of Old Par Value
<PAGE> 2
-2-
Common Stock shown on the face of such stock certificate, excluding
fractional shares which are subject to cash settlement as provided above.
Within a reasonable time after the Effective Time, notice shall be given
to the shareholders of record of the New Par Value Common Stock
instructing them to surrender those of their stock certificates that
represent, on their face, shares of Old Par Value Common Stock to the
Corporation for cancellation and reissuance of new certificates
representing the number of shares of New Par Value Common Stock to which
such shareholders are entitled after adjustment for the Reverse Stock
Split. The aggregate amount of capital represented by the aggregate number
of shares of Old Par Value Common Stock outstanding immediately prior to
the Effective Time shall be appropriately adjusted to reflect the change
in the aggregate number of shares of New Par Value Common Stock
outstanding immediately after the Effective Time and the change in the par
value as a result of the Reverse Stock Split. From and after the Effective
Time, any reference to, or use of, the term "Common Stock", or any
reference to the par value per share thereof, in the Restated Certificate
of Incorporation shall, notwithstanding anything in the Restated
Certificate of Incorporation to the contrary, be deemed a reference to the
New Par Value Common Stock or the par value per share thereof,
respectively.
SECOND. The Restated Certificate of Incorporation of the Corporation is
hereby amended by adding thereto the following new Articles ELEVENTH, TWELFTH,
THIRTEENTH AND FOURTEENTH:
ELEVENTH. The following provisions are inserted for the management
of the business and for the conduct of the affairs of the Corporation and
for defining and regulating the powers of the Corporation and its
directors and stockholders and are in furtherance and not in limitation of
the powers conferred upon the Corporation by statute:
(a) The Board of Directors shall have the power and authority,
to the full extent permitted or not prohibited by law, and without the
consent of or other action by the stockholders, to authorize or create
mortgage, pledges or other liens or encumbrances upon any or all of the
assets, real, personal or mixed, and franchises of the Corporation,
including after-acquired property, and to exercise all of the powers of
the Corporation in connection therewith.
<PAGE> 3
-3-
(b) From and after the closing (or the first closing) of the
Corporation's initial public offering of Common Stock (the "IPO Closing"),
any vacancies or new directorships in the Board of Directors, including
unfilled vacancies or new directorships resulting from the removal of
directors with or without cause or from any increase in the number of
directors, may be filled only by the vote of a majority of the remaining
directors then in office, although less than a quorum, or by the sole
remaining director; provided, however, that the foregoing provisions set
forth in this paragraph (b) shall be subject to any contrary provisions of
the Delaware General Corporation Law and/or the rights of the holders of
any series of Preferred Stock with respect the filling of vacancies or new
directorships in the Board of Directors.
(c) Directors need not be stockholders of the Corporation.
TWELFTH. Effective from and after the IPO Closing: (i) any action
required or permitted to be taken by the stockholders of the Corporation
may be taken only at a duly called annual or special meeting of the
stockholders, and not by written consent in lieu of such a meeting; and
(ii) subject to the right, if any, of the holders of any series of
Preferred Stock to call special meetings of stockholders of the
Corporation, special meetings of stockholders of the Corporation may be
called only by the Chairman of the Board of Directors, the President, a
majority of the total number of directors which the Corporation would have
if there were no vacancies, or by stockholders of the Corporation holding
shares of voting stock of the Corporation representing at least twenty
percent (20%) of all outstanding shares of voting stock of the
Corporation.
THIRTEENTH. Each person who was or is made a party or is threatened
to be made a party to or is otherwise involved in any action, suit or
proceeding, by reason of being or having been a director or officer of the
Corporation or serving or having served at the request of the Corporation
as a director, trustee, officer, employee or agent of another corporation
or of a partnership, joint venture, trust or other enterprise, including
service with respect to an employee benefit plan, whether the basis of
such proceeding is alleged action or failure to act in an official
capacity as a director, trustee, officer, employee or agent or in any
other capacity while serving as a director, trustee, officer, employee or
agent, shall be indemnified and held harmless by the Corporation to the
fullest extent authorized by the Delaware General Corporation Law, as the
same exists or may hereafter be amended,
<PAGE> 4
-4-
against all expense, liability and loss (including attorneys' fees,
judgments, fines, ERISA excise taxes or penalties and amounts paid in
settlement) reasonably incurred or suffered by such person in connection
therewith, as further provided in the By-Laws.
FOURTEENTH. Effective from and after the IPO Closing, the
affirmative vote of the holders of at least seventy-five percent (75%) of
the outstanding voting stock of the Corporation (in addition to any
separate class vote that may in the future be required pursuant to the
terms of any outstanding Preferred Stock) shall be required (i) to amend
or repeal the provisions of Articles THIRD (to the extent such provisions
relate to the authority of the Board of Directors to issue shares of
Preferred Stock in one or more series, the terms of which may be
determined by the Board of Directors), SIXTH, ELEVENTH, TWELFTH,
THIRTEENTH and FOURTEENTH of the Corporation's Restated Certificate of
Incorporation, as amended from time to time, (ii) to amend, adopt or
repeal the Corporation's By-Laws (provided, however, that the provisions
of this Article FOURTEENTH shall in no way limit the power or authority of
the Board of Directors to amend, adopt or repeal By-Laws), or (iii) to
reduce the number of authorized shares of Common Stock or Preferred
Stock."
THIRD. The amendments to the Corporation's Restated Certificate of
Incorporation were duly adopted in accordance with the provisions of Section 242
of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be signed by its President this _____ day of ____, 1997.
LEUKOSITE, INC.
By______________________________
Christopher K. Mirabelli,
President
<PAGE> 1
EXHIBIT 3.3
RESTATED CERTIFICATE OF INCORPORATION
OF
LEUKOSITE, INC.
LEUKOSITE, INC., a corporation organized and existing under and by virtue
of the General Corporation Law of the State of Delaware (the "Corporation"),
hereby certifies that (i) the original Certificate of Incorporation of the
Corporation was filed by the Corporation with the Secretary of State of Delaware
on May 1, 1992, (ii) this Restated Certificate of Incorporation was duly adopted
in accordance with the provisions of Sections 242 and 245 of the Delaware
General Corporation Law, and (iii) the Restated Certificate of Incorporation
restates, integrates and further amends the Corporation's current Restated
Certificate of Incorporation, as heretofore amended, to read in its entirety as
follows:
FIRST. The name of the Corporation is LEUKOSITE, INC.
SECOND. The address of the Corporation's registered office in the State of
Delaware is 1013 Centre Road, in the City of Wilmington, County of New Castle.
The name of the Corporation's registered agent at such address is Corporation
Service Company.
THIRD. The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
FOURTH. The total number of shares of all classes of stock that the
Corporation shall have authority to issue is 30,000,000, consisting solely of:
25,000,000 shares of common stock, $.01 par value per share ("Common
Stock"); and
5,000,000 shares of preferred stock, $.01 par value per share
("Preferred Stock").
The following is a statement of the powers, designations, preferences,
privileges, and relative, participating, optional, and other special rights of
the Preferred Stock and Common Stock, respectively:
1. PREFERRED STOCK. The Board of Directors is hereby expressly authorized
to provide for, designate and issue, out of the authorized but unissued shares
of Preferred Stock, one or more other series of Preferred Stock, subject to the
terms and conditions set forth herein. Before any shares of any such series are
issued, the Board of Directors shall fix, and hereby is expressly empowered to
fix,
<PAGE> 2
-2-
by resolution or resolutions, the following provisions of the shares of any such
series:
(a) the designation of such series, the number of shares to
constitute such series and the stated value thereof, if different from the par
value thereof;
(b) whether the shares of such series shall have voting rights or
powers, in addition to any voting rights required by law, and, if so, the terms
of such voting rights or powers, which may be full or limited;
(c) the dividends, if any, payable on such series, whether any such
dividends shall be cumulative, and, if so, from what dates, the conditions and
dates upon which such dividends shall be payable, the preference or relation
which such dividends shall bear to the dividends payable on any shares of stock
of any other class or series;
(d) whether the shares of such class or series shall be subject to
redemption by the Corporation, and, if so, the times, prices and other
conditions of such redemption;
(e) the amount or amounts payable with respect to shares of such
class or series upon, and the rights of the holders of such class or series in,
the voluntary or involuntary liquidation, dissolution or winding up, or upon any
distribution of the assets, of the Corporation;
(f) whether the shares of such class or series shall be subject to
the operation of a retirement or sinking fund and, if so, the extent to and
manner in which any such retirement or sinking fund shall be applied to the
purchase or redemption of the shares of such class or series for retirement or
other corporate purposes and the terms and provisions relative to the operation
thereof;
(g) whether the shares of such class or series shall be convertible
into, or exchangeable for, shares of stock of any other class or series of any
other securities and, if so, the price or prices or the rate or rates of
conversion or exchange and the method, if any, of adjusting the same, and any
other terms and conditions of conversion or exchange;
(h) the limitations and restrictions, if any, to be effective while
any shares of such class or series are outstanding upon the payment of dividends
or the making of other distributions on, and upon the purchase, redemption or
other acquisition by the Corporation of, the Common Stock or shares of stock of
any other class or series;
<PAGE> 3
-3-
(i) the conditions or restrictions, if any, to be effective while
any shares of such class or series are outstanding upon the creation of
indebtedness of the Corporation or upon the issue of any additional stock,
including additional shares of such class or series or of any other class or
series; and
(j) any other powers, designations, preferences and relative,
participating, optional or other special rights, and any qualifications,
limitations or restrictions thereof.
The powers, designations, preferences and relative, participating,
optional or other special rights of each series of Preferred Stock, and the
qualifications, limitations or restrictions thereof, if any, may differ from
those of any and all other series at any time outstanding. The Board of
Directors is hereby expressly authorized from time to time to increase (but not
above the total number of authorized shares of Preferred Stock) or decrease (but
not below the number of shares thereof then outstanding) the number of shares of
stock of any series of Preferred Stock designated to any one or more series of
Preferred Stock pursuant to this Section 1. Different series of Preferred Stock
shall not be construed to constitute different classes of stock for purposes of
voting by classes unless expressly so provided in the resolution or resolutions
adopted by the Board of Directors creating or establishing any such series of
Preferred Stock. No resolution, vote, or consent of the holders of the capital
stock of the Corporation shall be required in connection with the creation or
issuance of any shares of any series of Preferred Stock authorized by and
complying with the conditions of this Restated Certificate of Incorporation, the
right to any such resolution, vote, or consent being expressly waived by all
present and future holders of the capital stock of the Corporation.
At such time as no shares of any series of Preferred Stock that may be
issued from time to time remain issued and outstanding, including without
limitation because all of such shares have been converted into shares of Common
Stock in accordance with this Restated Certificate of Incorporation, all
authorized shares of such series of Preferred Stock, automatically and without
further actions, shall be reclassified as authorized but unissued shares of
undesignated Preferred Stock of no particular class or series, and any and all
of such shares may thereafter be issued by the Board of Directors of the Company
in one or more series, and the terms of any such series may be determined by the
Board of Directors, as provided in this Section 1.
<PAGE> 4
-4-
2. COMMON STOCK
2.1. Increase or Decrease in Authorized Number. The number of authorized
shares of Common Stock may be increased or decreased (but not below the combined
number of shares thereof then outstanding) by the affirmative vote of the
holders of the majority of the stock of the Corporation entitled to vote,
irrespective of the provisions of Section 242(b)(2) of the Delaware General
Corporation Law.
2.2. Voting Rights. Except as otherwise required by law, and subject to
the voting rights provided to the holders of any series of Preferred Stock, the
holders of Common Stock shall have full voting rights and powers to vote on all
matters submitted to stockholders of the Corporation for vote, consent or
approval, and each holder of Common Stock shall be entitled to one vote for each
share of Common Stock held of record by such holder.
2.3. Dividend, Liquidation and Other Rights. Each share of Common Stock
issued and outstanding shall be identical in all respects with each other such
share, and no dividends shall be paid on any shares of Common Stock unless the
same dividend is paid on all shares of Common Stock outstanding at the time of
such payment. Except for and subject to those rights expressly granted to the
holders of Preferred Stock and except as may be provided by the laws of the
State of Delaware, the holders of Common Stock shall have all other rights of
stockholders, including, without limitation, (a) the right to receive dividends,
when and as declared by the Board of Directors, out of assets lawfully available
therefor, and (b) in the event of any distribution of assets upon a liquidation
or otherwise, the right to receive ratably and equally all the assets and funds
of the Corporation remaining after the payment to the holders of the Preferred
Stock or of any other class or series of stock ranking senior to the Common
Stock upon liquidation of the specific preferential amounts which they are
entitled to receive upon such liquidation.
FIFTH. The following provisions are inserted for the management of the
business and for the conduct of the affairs of the Corporation and for defining
and regulating the powers of the Corporation and its directors and stockholders
and are in furtherance and not in limitation of the powers conferred upon the
Corporation by statute:
(a) The Board of Directors shall have the power and authority: (1)
to adopt, amend or repeal any or all of the By-Laws of the Corporation,
subject only to such limitations, if any, as may be from time to time
imposed by other provisions of this Restated Certificate of Incorporation,
by law, or by the By-Laws; and (2) to the full extent permitted or not
prohibited by law, and without the consent of or other action by the
stockholders, to authorize or
<PAGE> 5
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create mortgage, pledges or other liens or encumbrances upon any or all of
the assets, real, personal or mixed, and franchises of the Corporation,
including after-acquired property, and to exercise all of the powers of
the Corporation in connection therewith.
(b) Except as the Delaware General Corporation Law may otherwise
require, and subject to the rights of the holders of any series of
Preferred Stock with respect the filling of vacancies or new directorships
in the Board of Directors, any vacancies or new directorships in the Board
of Directors, including unfilled vacancies or new directorships resulting
from the removal of directors with or without cause or from any increase
in the number of directors, may be filled only by the vote of a majority
of the remaining directors then in office, although less than a quorum, or
by the sole remaining director.
(c) Directors need not be stockholders of the Corporation.
SIXTH. No director of the Corporation shall be personally liable to the
Corporation or to any of its stockholders for monetary damages for breach of
fiduciary duty as a director, notwithstanding any provision of law imposing such
liability; provided, however, that, to the extent required from time to time by
applicable law, this Article SIXTH shall not eliminate or limit the liability of
a director, to the extent such liability is provided by applicable law, (i) for
any breach of the director's duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174 of
Title 8 of the Delaware Code, or (iv) for any transactions from which the
director derived an improper personal benefit. No amendment to or repeal of this
Article SIXTH shall apply to or have any effect on the liability or alleged
liability of any director for or with respect to any acts or omissions of such
director occurring prior to the effective date of such amendment or repeal.
SEVENTH. Each person who was or is made a party or is threatened to be
made a party to or is otherwise involved in any action, suit or proceeding, by
reason of being or having been a director or officer of the Corporation or
serving or having served at the request of the Corporation as a director,
trustee, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to an
employee benefit plan, whether the basis of such proceeding is alleged action or
failure to act in an official capacity as a director, trustee, officer, employee
or agent or in any other capacity while serving as a director, trustee, officer,
employee or agent, shall be indemnified and held harmless by the Corporation to
the fullest extent authorized by the Delaware General Corporation Law, as the
same exists or may hereafter be amended, against all expense, liability and loss
(including attorneys' fees, judgments, fines, ERISA
<PAGE> 6
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excise taxes or penalties and amounts paid in settlement) reasonably incurred or
suffered by such person in connection therewith, as further provided in the
By-Laws.
EIGHTH. Whenever a compromise or arrangement is proposed between the
Corporation and its creditors or any class of them and/or between the
Corporation and its stockholders or any class or series of them, any court of
equitable jurisdiction within the State of Delaware may, on the application in a
summary way of the Corporation or of any creditor or stockholder thereof or on
the application of any receiver or receivers appointed for the Corporation under
the provisions of Section 391 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for the 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 or series of stockholders of the Corporation, as the
case may be, to be summoned in such a manner as the said court directs. If a
majority of the number representing three-fourths (3/4ths) in value of the
creditors or class of creditors, and/or of the stockholders or class or series
of stockholders of the Corporation, as the case may be, agree to any compromise
or arrangement and to any reorganization of the Corporation as a consequence of
such compromise or arrangement, the 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 creditors or class of creditors, and/or
stockholders or class or series of stockholders of the Corporation, as the case
may be, and also on the Corporation.
NINTH. Any action required or permitted to be taken by the stockholders of
the Corporation may be taken only at a duly called annual or special meeting of
the stockholders, and not by written consent in lieu of such a meeting. Subject
to the right, if any, of the holders of any series of Preferred Stock to call
special meetings of stockholders of the Corporation, special meetings of
stockholders of the Corporation may be called only by the Chairman of the Board
of Directors, the President, a majority of the total number of directors which
the Corporation would have if there were no vacancies, or by stockholders of the
Corporation holding shares of voting stock of the Corporation representing at
least twenty percent (20%) of all outstanding shares of voting stock of the
Corporation.
TENTH. The affirmative vote of the holders of at least seventy-five
percent (75%) of the outstanding voting stock of the Corporation (in addition to
any separate class vote that may in the future be required pursuant to the terms
of any outstanding Preferred Stock) shall be required (i) to amend or repeal the
provisions of Articles FOURTH (to the extent such provisions relate to the
authority of the Board of Directors to issue shares of Preferred Stock in one or
more series, the terms of which may be determined by the Board of Directors),
FIFTH, SEVENTH, NINTH or TENTH of the Corporation's Restated Certificate of
Incorporation, as
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amended from time to time, (ii) to amend, adopt or repeal the Corporation's
By-Laws (provided, however, that the provisions of this Article TENTH shall in
no way limit the power or authority of the Board of Directors to amend, adopt or
repeal By-Laws), or (iii) to reduce the number of authorized shares of Common
Stock or Preferred Stock.
IN WITNESS WHEREOF, the Corporation has caused this Restated Certificate
of Incorporation to be signed by its President and attested by its Secretary
this _____ day of ________, 1997.
LEUKOSITE, INC.
By____________________________
Christopher K. Mirabelli,
President
ATTEST:
_____________________________
Justin P. Morreale,
Secretary
<PAGE> 1
EXHIBIT 3.4
AMENDED AND RESTATED
BY-LAWS OF
LEUKOSITE, INC.
TABLE OF CONTENTS
Article I. - General. ..............................................1
1.1. Offices. ...............................................1
1.2. Seal. ..................................................1
1.3. Fiscal Year. ...........................................1
Article II. - Stockholders. ........................................1
2.1. Place of Meetings. .....................................1
2.2. Annual Meeting. ........................................1
2.3. Special Meeting. .......................................1
2.4. Notice of Meeting. .....................................2
2.5. Notice of Stockholder Business and Nominations. ........2
2.6. Quorum and Adjournment. ................................4
2.7. Right to Vote; Proxies. ................................5
2.8. Voting. ................................................5
2.9. Inspectors. ............................................5
2.10. Stockholders' List. ...................................6
2.11. No Stockholder Action by Written Consent. .............6
Article III. - Directors. ..........................................6
3.1. General Powers. ........................................6
3.2. Qualifications of Directors. ...........................6
3.3. Number of Directors; Vacancies. ........................6
3.4. Resignation. ...........................................7
3.5. Removal. ...............................................7
3.6. Place of Meetings and Books. ...........................8
3.7. Executive Committee. ...................................8
3.8. Other Committees. ......................................8
3.9. Powers Denied to Committees. ...........................8
3.10. Substitute Committee Member. ..........................9
3.11. Compensation of Directors. ............................9
3.12. Regular Meetings. .....................................9
3.13. Special Meetings. .....................................9
3.14. Quorum. ...............................................10
3.15. Telephonic Participation in Meetings. .................10
3.16. Action by Consent. ....................................10
Article IV. - Officers. ............................................10
4.1. Selection; Statutory Officers. .........................10
4.2. Time of Election. ......................................11
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4.3. Additional Officers. ..................................11
4.4. Terms of Office. ......................................11
4.5. Compensation of Officers. .............................11
4.6. Chairman of the Board. ................................11
4.7. President. ............................................11
4.8. Vice-Presidents. ......................................12
4.9. Treasurer. ............................................12
4.10. Secretary. ............................................12
4.11. Assistant Secretary. ..................................13
4.12. Assistant Treasurer. ..................................13
4.13. Subordinate Officers. .................................13
4.14. Removal. ..............................................13
4.15. Vacancies. ............................................13
Article V. - Stock. ................................................14
5.1. Stock. ................................................14
5.2. Fractional Share Interests. ...........................14
5.3. Transfers of Stock. ...................................15
5.4. Record Date. ..........................................15
5.5. Transfer Agent and Registrar. .........................16
5.6. Dividends. ............................................16
5.7. Lost, Stolen or Destroyed Certificates. ...............16
Article VI. - Miscellaneous Management Provisions. .................16
6.1. Checks, Drafts and Notes. .............................16
6.2. Notices. ..............................................16
6.3. Conflict of Interest. .................................17
6.4. Voting of Securities owned by this Corporation. ........17
6.5. Inspection of Books. ..................................18
Article VII. - Indemnification. ....................................18
7.1. Right to Indemnification. .............................18
7.2. Right of Indemnitee to Bring Suit. ....................19
7.3. Non-Exclusivity of Rights. ............................20
7.4. Insurance. ............................................20
7.5. Indemnification of Employees and Agents of the
Corporation. ..........................................20
Article VIII. - Amendments. ........................................21
8.1. Amendments. ...........................................21
<PAGE> 3
AMENDED AND RESTATED
BY-LAWS OF
LEUKOSITE, INC.
ARTICLE I. - GENERAL.
1.1. OFFICES.
The registered office shall be in the City of Wilmington, County of New
Castle, State of Delaware. The Corporation may also have offices at such other
places both within and without the State of Delaware as the Board of Directors
may from time to time determine or the business of the Corporation may require.
1.2. SEAL.
The seal of the Corporation shall be in the form of a circle and shall
have inscribed thereon the name of the Corporation, the year of its organization
and the words "Corporate Seal, Delaware".
1.3. FISCAL YEAR.
The fiscal year of the Corporation shall be the period from January 1
through December 31.
ARTICLE II. - STOCKHOLDERS.
2.1. PLACE OF MEETINGS.
All meetings of the stockholders shall be held at the office of the
Corporation in Cambridge, Massachusetts except such meetings as the Board of
Directors expressly determine shall be held elsewhere, in which case meetings
may be held upon notice as hereinafter provided at such other place or places
within or without the Commonwealth of Massachusetts as the Board of Directors
shall have determined and as shall be stated in such notice.
2.2. ANNUAL MEETING.
The annual meeting of stockholders of the Corporation shall be held on
such date and at such place and time as may be fixed by resolution of the Board
of Directors and stated in the notice of the meeting. At each annual meeting of
stockholders, the stockholders entitled to vote shall elect such members of the
Board of Directors as are standing for election at such meeting, and shall
transact such other business as may properly be brought before the meeting. At
the annual meeting any business may be transacted, irrespective of whether the
notice calling such meeting shall have contained a reference thereto, except
where notice is required by law, the Corporation's Restated Certificate of
Incorporation, as
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amended and in effect from time to time (the "Restated Certificate of
Incorporation"), or these By-Laws.
2.3. SPECIAL MEETING.
Subject to the rights of the holders of any series of preferred stock of
the Corporation ("Preferred Stock") with respect to calling special meetings of
stockholders of the Corporation, special meetings of the stockholders for any
purpose or purposes may only be called by the Chairman of the Board of
Directors, the President, a majority of the total number of directors which the
Corporation would have if there were no vacancies (the "Whole Board"), or by
stockholders of the Corporation holding shares of voting stock of the
Corporation representing at least twenty percent (20%) of all outstanding shares
of voting stock of the Corporation. Only such business shall be conducted at a
special meeting as shall have been brought before the meeting pursuant to the
Corporation's notice of meeting.
2.4. NOTICE OF MEETING.
Written notice of any meeting of the stockholders stating the place, date
and hour of the meeting shall be given to each stockholder entitled to vote at
such meeting not less than ten nor more than sixty days before the date of the
meeting. Notice need not be given to any stockholder who submits a written
waiver of notice signed by him before or after the time stated therein.
Attendance of a stockholder at a meeting of stockholders shall constitute a
waiver of notice of such meeting, except when the stockholder attends the
meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the stockholders need be specified in any written
waiver of notice. Any previously scheduled meeting of the stockholders may be
postponed, and (unless the Restated Certificate of Incorporation otherwise
provides) any special meeting of the stockholders may be canceled, by resolution
of the Board of Directors upon public notice given prior to the date previously
scheduled for such meeting of stockholders.
2.5. NOTICE OF STOCKHOLDER BUSINESS AND NOMINATIONS.
(a) Nomination of Directors. Only persons who are nominated in
accordance with the procedures set forth in these By-Laws shall be eligible to
serve as directors. Nominations of persons for election to the Board of
Directors of the Corporation may be made at a meeting of stockholders (a) by or
at the direction of the Board of Directors or (b) by any stockholder of the
Corporation who is a stockholder of record at the time of giving of notice for
the election of directors at the meeting and who complies with the notice
procedures set forth in this Section 2.5(a). Such nominations, other than those
made by or at the direction of the Board of Directors, shall be made pursuant to
timely notice in writing to the Secretary of
<PAGE> 5
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the Corporation. To be timely, a stockholder's notice shall be delivered to or
mailed and received at the principal executive offices of the Corporation not
less than 50 days prior to the meeting; provided, however, that in the event
that less than 55 days' notice or prior public disclosure of the date of the
meeting is given or made to stockholders, notice by the stockholder to be timely
must be so received not later than the close of business on the seventh day
following the day on which such notice of the date of the meeting or such public
disclosure was made. Such stockholder's notice shall set forth (a) as to each
person whom the stockholder proposes to nominate for election or reelection as a
director, all information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors, or is otherwise
required, in each case pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended (including such person's written consent to being named
in the proxy statement as a nominee and to serving as a director if elected),
and (b) as to the stockholder giving the notice (i) the name and address, as
they appear on the Corporation's books, of such stockholder and (ii) the class
and number of shares of the Corporation which are beneficially owned by such
stockholder. At the request of the Board of Directors, any person nominated by
the Board of Directors for election as a director shall furnish to the Secretary
of the Corporation that information required to be set forth in a stockholder's
notice of nomination which pertains to the nominee. No person shall be eligible
to serve as a director of the Corporation unless nominated in accordance with
the procedures set forth in this Section 2.5(a). The chairman of the meeting
shall, if the facts warrant, determine and declare to the meeting that a
nomination was not made in accordance with the procedures prescribed by the
By-Laws, and if he should so determine, he shall so declare to the meeting and
the defective nomination shall be disregarded. Notwithstanding the foregoing
provisions of this Section 2.5(a), a stockholder shall also comply with all
applicable requirements of the Securities Exchange Act of 1934, as amended, and
the rules and regulations thereunder with respect to the matters set forth in
this Section 2.5(a).
(b) Notice of Business. At any meeting of the stockholders, only
such business shall be conducted as shall have been brought before the meeting
(a) by or at the direction of the Board of Directors or (b) by any stockholder
of the Corporation who is a stockholder of record at the time of giving of the
notice provided for in this Section 2.5(b), who shall be entitled to vote at
such meeting and who complies with the notice procedures set forth in this
Section 2.5(b). For business to be properly brought before a stockholder meeting
by a stockholder, the stockholder must have given timely notice thereof in
writing to the Secretary of the Corporation. To be timely, a stockholder's
notice must be delivered to or mailed and received at the principal executive
offices of the Corporation not less than 50 days prior to the meeting; provided,
however, that in the event that less than 55 days' notice or prior public
disclosure of the date of the meeting is given or made to stockholders, notice
by the stockholder to be timely must be received no later than the close of
business on the seventh day following the day on which such notice of
<PAGE> 6
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the date of the meeting was mailed or such public disclosure was made. A
stockholder's notice to the Secretary shall set forth as to each matter the
stockholder proposes to bring before the meeting (a) a brief description of the
business desired to be brought before the meeting and the reasons for conducting
such business at the meeting; (b) the name and address, as they appear on the
Corporation's books, of the stockholder proposing such business, (c) the class
and number of shares of the Corporation which are beneficially owned by the
stockholder, and (d) any material interest of the stockholder in such business.
Notwithstanding anything in the By-Laws to the contrary, no business shall be
conducted at a stockholder meeting except (i) in accordance with the procedures
set forth in this Section 2.5(b) or (ii) with respect to nominations of persons
for election as directors of the Corporation, in accordance with the provisions
of Section 2.5(a) hereof. The Chairman of the meeting shall, if the facts
warrant, determine and declare to the meeting that business was not properly
brought before the meeting and in accordance with the provisions of the By-Laws,
and if he should so determine, he shall so declare to the meeting and any such
business not properly brought before the meeting shall not be transacted.
Notwithstanding the foregoing provisions of this Section 2.5(b), a stockholder
shall also comply with all applicable requirements of the Securities Exchange
Act of 1934, as amended, and the rules and regulations thereunder with respect
to the matters set forth in this Section.
2.6. QUORUM AND ADJOURNMENT.
At all meetings of the stockholders, the holders of a majority of the
stock issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum requisite for the transaction of
business except as otherwise provided by law, by the Restated Certificate of
Incorporation or by these By-Laws. The chairman of the meeting or a majority of
the shares so represented may, whether or not there is such a quorum, adjourn
the meeting from time to time without notice other than announcement at the
meeting. If the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting. At such adjourned meeting, at which the requisite amount of
voting stock shall be represented, any business may be transacted which might
have been transacted if the meeting had been held as originally called. The
stockholders present at a duly called meeting at which quorum is present may
continue to transact business until adjournment, notwithstanding the withdrawal
of enough stockholders to leave less than a quorum.
2.7. RIGHT TO VOTE; PROXIES.
Each holder of a share or shares of capital stock of the Corporation
having the right to vote at any meeting shall be entitled to one vote for each
such share of
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stock held by him. Any stockholder entitled to vote at any meeting of
stockholders may vote either in person or by proxy, but no proxy which is dated
more than three years prior to the meeting at which it is offered shall confer
the right to vote thereat unless the proxy provides that it shall be effective
for a longer period. A proxy may be granted by a writing executed by the
stockholder or his authorized officer, director, employee or agent or by
transmission or authorization of transmission of a telegram, cablegram, or other
means of electronic transmission to the person who will be the holder of the
proxy or to a proxy solicitation firm, proxy support service organization or
like agent duly authorized by the person who will be the holder of the proxy to
receive such transmission, subject to the conditions set forth in Section 212 of
the Delaware General Corporation Law, as it may be amended from time to time
(the "Delaware GCL").
2.8. VOTING.
At all meetings of stockholders, except as otherwise expressly provided
for by statute, the Restated Certificate of Incorporation or these By-Laws, (i)
in all matters other than the election of directors, the affirmative vote of a
majority of shares present in person or represented by proxy at the meeting and
entitled to vote on such matter shall be the act of the stockholders and (ii)
directors shall be elected by a plurality of the votes of the shares present in
person or represented by proxy at the meeting and entitled to vote on the
election of directors. Except as otherwise expressly provided by law, the
Restated Certificate of Incorporation or these By-Laws, at all meetings of
stockholders the voting shall be by ballot, each of which shall state the name
of the stockholder voting and the number of shares voted by him, and, if such
ballot be cast by a proxy, it shall also state the name of the proxy. The
chairman of the meeting shall fix and announce at the meeting the date and time
of the opening and the closing of the polls for each matter upon which the
stockholders will vote at a meeting
2.9. INSPECTORS.
The Board of Directors by resolutions shall appoint one or more
inspectors, which inspector or inspectors may include individuals who serve the
Corporation in other capacities, including, without limitation, as officers,
employees, agents or representatives, to act at the meeting of stockholders and
make a written report thereof. One or more persons may be designated as
alternate inspectors to replace any inspector who fails to act. If no inspector
or alternate has been appointed to act or is able to act at a meeting of
stockholders, the chairman of the meeting shall appoint one or more inspectors
to act at the meeting. Each inspector, before discharging his or her duties,
shall take and sign an oath faithfully to execute the duties of inspector with
strict impartiality and according to the best of his or her ability. The
inspectors shall have the duties prescribed by law.
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2.10. STOCKHOLDERS' LIST.
A complete list of the stockholders entitled to vote at any meeting of
stockholders, arranged in alphabetical order and showing the address of each
stockholder, and the number of shares registered in the name of each
stockholder, shall be prepared by the Secretary and filed either at a place
within the city where the meeting is to be held, which place shall be specified
in the notice of the meeting, or, if not so specified, at the place where the
meeting is to be held, at least 10 days before such meeting, and shall at all
times during the usual hours for business, and during the whole time of said
election, be open to the examination of any stockholder for a purpose germane to
the meeting.
2.11. NO STOCKHOLDER ACTION BY WRITTEN CONSENT.
Unless otherwise provided in the Restated Certificate of Incorporation,
and subject to the rights, if any, of the holders of Preferred Stock to take
action by written consent, any action required or permitted to be taken by the
stockholders of the Corporation must be effected at an annual or special meeting
of stockholders of the Corporation and may not be effected by any consent in
writing by such stockholders.
ARTICLE III. - DIRECTORS.
3.1. GENERAL POWERS.
In addition to the powers and authority expressly conferred upon them by
these By-Laws, the Board of Directors may exercise all such powers of the
Corporation and do all such lawful acts and things as are not by statute or by
the Restated Certificate of Incorporation or by these By-Laws directed or
required to be exercised or done by the stockholders.
3.2. QUALIFICATIONS OF DIRECTORS.
A director need not be a stockholder, a citizen of the United States, or a
resident of the State of Delaware.
3.3. NUMBER OF DIRECTORS; VACANCIES.
The number of directors constituting the full Board of Directors shall be
fixed from time to time exclusively pursuant to a resolution adopted by a
majority of the Whole Board of Directors. Members of the Board of Directors
shall hold office until the annual meeting of stockholders following their
election and their respective successors are duly elected and qualified or until
their earlier death, incapacity, resignation, or removal. Except as the Delaware
GCL may otherwise require, and
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Subject to the rights of the holders of any series of Preferred Stock with
respect the filling of vacancies or new directorships in the Board of Directors,
any vacancies or new directorships in the Board of Directors, including unfilled
vacancies or new directorships resulting from the removal of directors with or
without cause or from any increase in the number of directors, may be filled
only by the vote of a majority of the remaining directors then in office,
although less than a quorum, or by the sole remaining director.
3.4. RESIGNATION.
Any director of this Corporation may resign at any time by giving written
notice to the Chairman of the Board, if any, the President or the Secretary of
the Corporation. Such resignation shall take effect at the time specified
therein, at the time of receipt if no time is specified therein or at the time
of acceptance if the effectiveness of such resignation is conditioned upon its
acceptance. Unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
3.5. REMOVAL.
Subject to the rights of the holders of any series of Preferred Stock with
respect the removal of any director elected by the holders of such series and/or
any other series of Preferred Stock, any director or the entire Board of
Directors may be removed from office at any time, with or without cause, by the
affirmative vote of the holders of a majority of the then-outstanding shares
entitled to vote at an election of directors.
3.6. PLACE OF MEETINGS AND BOOKS.
The Board of Directors may hold their meetings and keep the books of the
Corporation outside the State of Delaware, at such places as they may from time
to time determine.
3.7. EXECUTIVE COMMITTEE.
There may be an executive committee of one or more directors designated by
resolution passed by a majority of the Whole Board. The act of a majority of the
members of such committee shall be the act of the committee. Said committee may
meet at stated times or on notice to all by any of their own number, and shall
have and may exercise those powers of the Board of Directors in the management
of the business affairs of the Corporation as are provided by law and may
authorize the seal of the Corporation to be affixed to all papers which may
require it. Vacancies in the membership of the committee shall be filled by the
Board of Directors at a regular meeting or at a special meeting called for that
purpose.
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3.8. OTHER COMMITTEES.
The Board of Directors may also designate one or more committees in
addition to the executive committee, by resolution or resolutions passed by a
majority of the Whole Board; such committee or committees shall consist of one
or more directors of the Corporation, and to the extent provided in the
resolution or resolutions designating them, shall have and may exercise specific
powers of the Board of Directors in the management of the business and affairs
of the Corporation to the extent permitted by statute and shall have power to
authorize the seal of the Corporation to be affixed to all papers which may
require it. Such committee or committees shall have such name or names as may be
determined from time to time by resolution adopted by the Board of Directors.
3.9. POWERS DENIED TO COMMITTEES.
Committees of the Board of Directors shall not, in any event, have any
power or authority to amend the Restated Certificate of Incorporation (except
that a committee may, to the extent authorized in the resolution or resolutions
providing for the issuance of shares adopted by the Board of Directors as
provided in Section 151(a) of the Delaware GCL, fix the designations and any of
the preferences or rights of such shares relating to dividends, redemption,
dissolution, any distribution of assets of the Corporation or the conversion
into, or the exchange of such shares for, shares of any other class or classes
or any other series of the same or any other class or classes of stock of the
Corporation or fix the number of shares of any series of stock or authorize the
increase or decrease of the shares of any series), adopt an agreement of merger
or consolidation, recommend to the stockholders the sale, lease or exchange of
all or substantially all of the Corporation's property and assets, recommend to
the stockholders a dissolution of the Corporation or a revocation of a
dissolution or to amend the By-Laws of the Corporation. Further, no committee of
the Board of Directors shall have the power or authority to declare a dividend,
to authorize the issuance of stock or to adopt a certificate of ownership and
merger pursuant to Section 253 of the Delaware GCL, unless the resolution or
resolutions designating such committee expressly so provides.
3.10. SUBSTITUTE COMMITTEE MEMBER.
In the absence or on the disqualification of a member of a committee, the
member or members thereof 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
such absent or disqualified member. Any committee shall keep regular minutes of
its proceedings and report the same to the Board of Directors as may be required
by the Board of Directors.
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3.11. COMPENSATION OF DIRECTORS.
The Board of Directors shall have the power to fix the compensation of
directors and members of committees of the Board of Directors. The directors may
be paid their expenses, if any, of attendance at each meeting of the Board of
Directors and may be paid a fixed sum for attendance at each meeting of the
Board of Directors and/or a stated annual fee (some or all of which may be paid
in the form of capital stock of the Corporation) as director. No such payment
shall preclude any director from serving the Corporation in any other capacity
and receiving compensation therefor. Members of special or standing committees
may be allowed like compensation for attending committee meetings.
3.12. REGULAR MEETINGS.
A regular meeting of the Board of Directors shall be held without other
notice than this Section 3.12, immediately after, and at the same place as, the
Annual Meeting of Stockholders. The Board of Directors may, by resolutions,
provide the time and place for the holding of additional regular meetings
without other notice than such resolution. Such regular meetings shall be held
at such place within or without the State of Delaware as shall be fixed by the
Board of Directors.
3.13. SPECIAL MEETINGS.
Special meetings of the Board of Directors may be called by the Chairman
of the Board of Directors, if any, or the President, on two (2) days notice to
each director, or such shorter period of time before the meeting as will
nonetheless be sufficient for the convenient assembly of the directors so
notified; special meetings shall be called by the Secretary in like manner and
on like notice, on the written request of two or more directors.
3.14. QUORUM.
At all meetings of the Board of Directors, a majority of the total number
of directors shall be necessary and sufficient to constitute a quorum for the
transaction of business, and the act of a majority of the directors present at
any meeting at which there is a quorum shall be the act of the Board of
Directors, except as may be otherwise specifically permitted or provided by
statute, or by the Restated Certificate of Incorporation, or by these By-Laws.
If at any meeting of the Board of Directors there shall be less than a quorum
present, a majority of those present may adjourn the meeting from time to time
until a quorum is obtained, and no further notice thereof need be given other
than by announcement at said meeting which shall be so adjourned.
<PAGE> 12
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3.15. TELEPHONIC PARTICIPATION IN MEETINGS.
Members of the Board of Directors or any committee designated by such
board may participate in a meeting of the Board of Directors or committee
thereof 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 in a meeting pursuant to this section shall constitute presence in
person at such meeting.
3.16. ACTION BY CONSENT.
Unless otherwise restricted by the Restated Certificate of Incorporation
or these By-Laws, any action required or permitted to be taken at any meeting of
the Board of Directors or of any committee thereof may be taken without a
meeting, if written consent thereto is signed by all members of the Board of
Directors or of such committee, as the case may be, and such written consent is
filed with the minutes of proceedings of the Board of Directors or committee.
ARTICLE IV. - OFFICERS.
4.1. SELECTION; STATUTORY OFFICERS.
The officers of the Corporation shall be chosen by the Board of Directors.
There shall be a President, a Secretary and a Treasurer, and there may be a
Chairman of the Board of Directors, one or more Vice Presidents, one or more
Assistant Secretaries, and one or more Assistant Treasurers, as the Board of
Directors may elect. Any number of offices may be held by the same person,
unless the Restated Certificate of Incorporation or these By-Laws otherwise
provide.
4.2. TIME OF ELECTION.
The officers above named shall be chosen by the Board of Directors at its
first meeting after each annual meeting of stockholders. None of said officers
need be a director.
4.3. ADDITIONAL OFFICERS.
The Board of Directors may appoint such other officers and agents as it
shall deem necessary, who shall hold their offices for such terms and shall
exercise such powers and perform such duties as shall be determined from time to
time by the Board of Directors.
<PAGE> 13
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4.4. TERMS OF OFFICE.
The officers of the Corporation shall hold office until their successors
are chosen and qualify. Any officer elected or appointed by the stockholders may
be removed at any time by the affirmative vote of a majority of the
stockholders. Any vacancy occurring in any office of the Corporation shall be
filled by the Board of Directors.
4.5. COMPENSATION OF OFFICERS.
The Board of Directors (or a duly appointed committee of the Board of
Directors) shall have power to fix the compensation of all officers of the
Corporation.
4.6. CHAIRMAN OF THE BOARD.
The Chairman of the Board of Directors, if any, otherwise the President,
if a director, or such other director as the Board may choose, shall preside at
all meetings of the Board of Directors and of the stockholders of the
Corporation. In the absence of the President, or in the event of the President's
inability or refusal to act, the Chairman of the Board shall perform the duties
and exercise the powers of the President until such vacancy shall be filled in
the manner prescribed by these By-Laws or by law. The Chairman of the Board
shall have such other powers and perform such other duties as may from time to
time be prescribed by the Board of Directors or these By-Laws.
4.7. PRESIDENT.
Unless the Board of Directors otherwise determines, the President shall be
the chief executive officer and head of the Corporation. Unless there is a
Chairman of the Board, the President shall preside at all meetings of directors
and stockholders. Under the supervision of the Board of Directors and of the
executive committee, the President shall have the general control and management
of its business and affairs, subject, however, to the right of the Board of
Directors and of the executive committee to confer any specific power, except
such as may be by statute exclusively conferred on the President, upon any other
officer or officers of the Corporation. The President shall perform and do all
acts and things incident to the position of President and such other duties as
may be assigned to him from time to time by the Board of Directors or the
executive committee.
4.8. VICE-PRESIDENTS.
The Vice-Presidents shall perform such of the duties of the President on
behalf of the Corporation as may be respectively assigned to them from time to
time by the Board of Directors or by the executive committee or by the
President. The Board of Directors or the executive committee may designate one
of the Vice-Presidents as the Executive Vice-President, and in the absence or
inability of the
<PAGE> 14
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President to act, such Executive Vice-President shall have and possess all of
the powers and discharge all of the duties of the President, subject to the
control of the Board of Directors and of the executive committee.
4.9. TREASURER.
The Treasurer shall have the care and custody of all the funds and
securities of the Corporation which may come into his hands as Treasurer, and
the power and authority to endorse checks, drafts and other instruments for the
payment of money for deposit or collection when necessary or proper and to
deposit the same to the credit of the Corporation in such bank or banks or
depository as the Board of Directors or the executive committee, or the officers
or agents to whom the Board of Directors or the executive committee may delegate
such authority, may designate, and he may endorse all commercial documents
requiring endorsements for or on behalf of the Corporation. He may sign all
receipts and vouchers for the payments made to the Corporation. He shall render
an account of his transactions to the Board of Directors or to the executive
committee as often as the Board of Directors or the committee shall require the
same. He shall enter regularly in the books to be kept by him for that purpose
full and adequate account of all moneys received and paid by him on account of
the Corporation. He shall perform all acts incident to the position of
Treasurer, subject to the control of the Board of Directors and of the executive
committee. He shall when requested, pursuant to vote of the Board of Directors
or the executive committee, give a bond to the Corporation conditioned for the
faithful performance of his duties, the expense of which bond shall be borne by
the Corporation.
4.10. SECRETARY.
The Secretary shall keep the minutes of all meetings of the Board of
Directors and of the stockholders; and shall attend to the giving and serving of
all notices of the Corporation. Except as otherwise ordered by the Board of
Directors or the executive committee, the Secretary shall attest the seal of the
Corporation upon all contracts and instruments executed under such seal and
shall affix the seal of the Corporation thereto and to all certificates of
shares of capital stock of the Corporation. The Secretary shall have charge of
the stock certificate book, transfer book and stock ledger, and such other books
and papers as the Board of Directors or the executive committee may direct. He
shall, in general, perform all the duties of Secretary, subject to the control
of the Board of Directors and of the executive committee.
4.11. ASSISTANT SECRETARY.
The Assistant Secretary, or if there be more than one, the assistant
secretaries in the order determined by the Board of Directors (or if there be no
such determination, then in the order of their election) shall, in the absence
of the Secretary or in the event of his inability or refusal to act, perform the
duties and exercise the powers of the Secretary and shall perform such other
duties and have such other powers as the Board of Directors may from time to
time prescribe.
4.12. ASSISTANT TREASURER. The Assistant Treasurer, or if there shall be
more than one, the Assistant Treasurers in the order determined by the Board of
Directors (or if there be no such determination, then in the order of their
election), shall, in the absence of the Treasurer or in the event of his
inability or refusal to act, perform the duties and
<PAGE> 15
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exercise the powers of the Treasurer and shall perform such other duties and
have such other powers as the Board of Directors may from time to time
prescribe.
4.13. SUBORDINATE OFFICERS.
The Board of Directors may select such subordinate officers as it may deem
desirable. Each such officer shall hold office for such period, have such
authority, and perform such duties as the Board of Directors may prescribe. The
Board of Directors may, from time to time, authorize any officer to appoint and
remove subordinate officers and to prescribe the powers and duties thereof.
4.14. REMOVAL.
Any officer elected, or agent appointed, by the Board of Directors may be
removed by the affirmative vote of a majority of the Whole Board whenever, in
their judgment, the best interests of the Corporation would be served thereby.
Any officer or agent appointed by the President may be removed by him whenever,
in his judgment, the best interests of the Corporation would be served thereby.
No elected officer shall have any contractual rights against the Corporation for
compensation by virtue of such election beyond the date of the election of his
successor, his death, his resignation or his removal, whichever event shall
first occur, except as otherwise provided in an employment contract or under an
employee deferred compensation plan.
4.15. VACANCIES.
A newly created elected office and a vacancy in any elected office because
of death, resignation or removal may be filled by the Board of Directors for the
unexpired portion of the term at any meeting of the Board of Directors. Any
vacancy in an office appointed by the President because of death, resignation,
or removal may be filled by the President.
<PAGE> 16
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ARTICLE V. - STOCK.
5.1. STOCK.
Each stockholder shall be entitled to a certificate or certificates of
stock of the Corporation in such form as the Board of Directors may from time to
time prescribe. The certificates of stock of the Corporation shall be numbered
and shall be entered in the books of the Corporation as they are issued. They
shall certify the holder's name and number and class of shares and shall be
signed by both of (i) either the President or a Vice-President, and (ii) any one
of the Treasurer or an Assistant Treasurer or the Secretary or an Assistant
Secretary, and shall be sealed with the corporate seal of the Corporation. If
such certificate is countersigned (l) by a transfer agent other than the
Corporation or its employee, or, (2) by a registrar other than the Corporation
or its employee, the signature of the officers of the Corporation and the
corporate seal may be facsimiles. In case any officer or officers who shall have
signed, or whose facsimile signature or signatures shall have been used on, any
such certificate or certificates shall cease to be such officer or officers of
the Corporation, whether because of death, resignation or otherwise, before such
certificate or certificates shall have been delivered by the Corporation, such
certificate or certificates may nevertheless be adopted by the Corporation and
be issued and delivered as though the person or persons who signed such
certificate or certificates or whose facsimile signature shall have been used
thereon had not ceased to be such officer or officers of the Corporation.
5.2. FRACTIONAL SHARE INTERESTS.
The Corporation may, but shall not be required to, issue fractions of a
share. If the Corporation does not issue fractions of a share, it shall (i)
arrange for the disposition of fractional interests by those entitled thereto,
(ii) pay in cash the fair value of fractions of a share as of the time when
those entitled to receive such fractions are determined, or (iii) issue scrip or
warrants in registered or bearer form which shall entitle the holder to receive
a certificate for a full share upon the surrender of such scrip or warrants
aggregating a full share. A certificate for a fractional share shall, but scrip
or warrants shall not unless otherwise provided therein, entitle the holder to
exercise voting rights, to receive dividends thereon, and to participate in any
of the assets of the Corporation in the event of liquidation. The Board of
Directors may cause scrip or warrants to be issued subject to the conditions
that they shall become void if not exchanged for certificates representing full
shares before a specified date, or subject to the conditions that the shares for
which scrip or warrants are exchangeable may be sold by the Corporation and the
proceeds thereof distributed to the holders of scrip or warrants, or subject to
any other conditions which the Board of Directors may impose.
<PAGE> 17
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5.3. TRANSFERS OF STOCK.
Subject to any transfer restrictions then in force, the shares of stock of
the Corporation shall be transferable only upon its books by the holders thereof
in person or by their duly authorized attorneys or legal representatives and
upon such transfer the old certificates shall be surrendered to the Corporation
by the delivery thereof to the person in charge of the stock and transfer books
and ledgers or to such other person as the directors may designate by whom they
shall be cancelled and new certificates shall thereupon be issued. The
Corporation shall be entitled to treat the holder of record of any share or
shares of stock as the holder in fact thereof and accordingly shall not be bound
to recognize any equitable or other claim to or interest in such share on the
part of any other person whether or not it shall have express or other notice
thereof save as expressly provided by the laws of Delaware.
5.4. RECORD DATE.
For the purpose of determining the stockholders entitled to notice of or
to vote at any meeting of stockholders or any adjournment thereof, or to express
consent to corporate action in writing without a meeting, or entitled to receive
payment of any dividend or other distribution or the allotment of any rights, or
entitled to exercise any rights in respect of any change, conversion, or
exchange of stock or for the purpose of any other lawful action, the Board of
Directors may fix, in advance, a record date, which shall not be more than sixty
(60) days nor less than ten (10) days before the date of such meeting, nor more
than sixty (60) days prior to any other action. If no such record date is fixed
by the Board of Directors, the record date for determining stockholders entitled
to notice of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held; the record date for determining stockholders entitled
to express consent to corporate action in writing without a meeting, when no
prior action by the Board of Directors is necessary, shall be the day on which
the first written consent is expressed; and 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 thereto. A
determination of stockholders of record entitled to notice of or to vote at any
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.
5.5. TRANSFER AGENT AND REGISTRAR.
The Board of Directors may appoint one or more transfer agents or transfer
clerks and one or more registrars and may require all certificates of stock to
bear the signature or signatures of any of them.
<PAGE> 18
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5.6. DIVIDENDS.
(a) Power to Declare. Dividends upon the capital stock of the
Corporation, subject to the provisions of the Restated Certificate of
Incorporation, if any, may be declared by the Board of Directors at any
regular or special meeting, pursuant to law. Dividends may be paid in
cash, in property, in promissory notes or in shares of the capital stock,
subject to the provisions of the Restated Certificate of Incorporation and
the laws of Delaware.
(b) Reserves. Before payment of any dividend, there may be set aside
out of any funds of the Corporation available for dividends such sum or
sums as the directors from time to time, in their absolute discretion,
think proper as a reserve or reserves to meet contingencies, or for
equalizing dividends, or for repairing or maintaining any property of the
Corporation, or for such other purpose as the directors shall think
conducive to the interest of the Corporation, and the directors may modify
or abolish any such reserve in the manner in which it was created.
5.7. LOST, STOLEN OR DESTROYED CERTIFICATES.
No certificates for shares of stock of the Corporation shall be issued in
place of any certificate alleged to have been lost, stolen or destroyed, except
upon production of such evidence of the loss, theft or destruction and upon
indemnification of the Corporation and its agents to such extent and in such
manner as the Board of Directors may from time to time prescribe.
ARTICLE VI. - MISCELLANEOUS MANAGEMENT PROVISIONS.
6.1. CHECKS, DRAFTS AND NOTES.
All checks, drafts or orders for the payment of money, and all notes and
acceptances of the Corporation shall be signed by such officer or officers,
agent or agents as the Board of Directors may designate.
6.2. NOTICES.
(a) Notices to directors may, and notices to stockholders shall, be
in writing and delivered personally or mailed to the directors or
stockholders at their addresses appearing on the books of the Corporation.
Notice by mail shall be deemed to be given at the time when the same shall
be mailed. Notice to directors may also be given by telegram, telecopy or
orally, by telephone or in person.
(b) Whenever any notice is required to be given under the provisions
of the statutes or of the Restated Certificate of Incorporation of the
<PAGE> 19
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Corporation or of these By-Laws, a written waiver of notice, signed by the
person or persons entitled to said notice, whether before or after the
time stated therein or the meeting or action to which such notice relates,
shall be deemed equivalent to notice. Attendance of a person at a meeting
shall constitute a waiver of notice of such meeting except when the person
attends a meeting for the express purpose of objecting, at the beginning
of the meeting, to the transaction of any business because the meeting is
not lawfully called or convened.
6.3. CONFLICT OF INTEREST.
No contract or transaction between the Corporation and one or more of its
directors or officers, or between the Corporation and any other corporation,
partnership, association, or other organization in which one or more of its
directors or officers are directors or officers, or have a financial interest,
shall be void or voidable solely for this reason, or solely because the director
or officer is present at or participates in the meeting of the Board of
Directors or committee thereof which authorized the contract or transaction, or
solely because his or their votes are counted for such purpose, if: (i) 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 of Directors or committee in good faith authorizes the
contract or transaction by the affirmative vote of a majority of the
disinterested directors, even though the disinterested directors be less than a
quorum; or (ii) the material facts as to his relationship or interest and as to
the contract or transaction are disclosed or are known to the stockholders of
the Corporation entitled to vote thereon, and the contract or transaction as
specifically approved in good faith by vote of such stockholders; or (iii) 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 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.
6.4. VOTING OF SECURITIES OWNED BY THIS CORPORATION.
Subject always to the specific directions of the Board of Directors, (i)
any shares or other securities issued by any other corporation and owned or
controlled by this Corporation may be voted in person at any meeting of security
holders of such other corporation by the President of this Corporation if he is
present at such meeting, or in his absence by the Treasurer of this Corporation
if he is present at such meeting, and (ii) whenever, in the judgment of the
President, it is desirable for this Corporation to execute a proxy or written
consent in respect to any shares or other securities issued by any other
corporation and owned by this Corporation, such proxy or consent shall be
executed in the name of this Corporation by the President, without the necessity
of any authorization by the Board of Directors,
<PAGE> 20
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affixation of corporate seal or countersignature or attestation by another
officer, provided that if the President is unable to execute such proxy or
consent by reason of sickness, absence from the United States or other similar
cause, the Treasurer may execute such proxy or consent. Any person or persons
designated in the manner above stated as the proxy or proxies of this
Corporation shall have full right, power and authority to vote the shares or
other securities issued by such other corporation and owned by this Corporation
the same as such shares or other securities might be voted by this Corporation.
6.5. INSPECTION OF BOOKS.
The stockholders of the Corporation, by a majority vote at any meeting of
stockholders duly called, or in case the stockholders shall fail to act, the
Board of Directors shall have power from time to time to determine whether and
to what extent and at what times and places and under what conditions and
regulations the accounts and books of the Corporation (other than the stock
ledger) or any of them, shall be open to inspection of stockholders; and no
stockholder shall have any right to inspect any account or book or document of
the Corporation except as conferred by statute or authorized by the Board of
Directors or by a resolution of the stockholders.
ARTICLE VII. - INDEMNIFICATION.
7.1. RIGHT TO INDEMNIFICATION.
Each person who was or is made a party or is threatened to be made a party
to or is otherwise involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative (a "Proceeding"), by reason of being
or having been a director or officer of the Corporation or serving or having
served at the request of the Corporation as a director, trustee, officer,
employee or agent of another corporation or of a partnership, joint venture,
trust or other enterprise, including service with respect to an employee benefit
plan (an "Indemnitee"), whether the basis of such proceeding is alleged action
or failure to act in an official capacity as a director, trustee, officer,
employee or agent or in any other capacity while serving as a director, trustee,
officer, employee or agent, shall be indemnified and held harmless by the
Corporation to the fullest extent authorized by the Delaware General Corporation
Law, as the same exists or may hereafter be amended (but, in the case of any
such amendment, only to the extent that such amendment permits the Corporation
to provide broader indemnification rights than permitted prior thereto) (as used
in this Article VII, the "Delaware Law"), against all expense, liability and
loss (including attorneys' fees, judgments, fines, ERISA excise taxes or
penalties and amounts paid in settlement) reasonably incurred or suffered by
such Indemnitee in connection therewith and such indemnification shall continue
as to an Indemnitee who has ceased to be a director, trustee, officer, employee
or agent and shall inure to the benefit of the Indemnitee's heirs, executors and
administrators;
<PAGE> 21
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provided, however, that, except as provided in Section 7.2 hereof with respect
to Proceedings to enforce rights to indemnification, the Corporation shall
indemnify any such Indemnitee in connection with a Proceeding (or part thereof)
initiated by such Indemnitee only if such Proceeding (or part thereof) was
authorized by the Board of Directors of the Corporation. The right to
indemnification conferred in this Article VII shall be a contract right and
shall include the right to be paid by the Corporation the expenses (including
attorneys' fees) incurred in defending any such Proceeding in advance of its
final disposition (an "Advancement of Expenses"); provided, however, that, if
the Delaware Law so requires, an Advancement of Expenses incurred by an
Indemnitee shall be made only upon delivery to the Corporation of an undertaking
(an "Undertaking"), by or on behalf of such Indemnitee, to repay all amounts so
advanced if it shall ultimately be determined by final judicial decision from
which there is no further right to appeal (a "Final Adjudication") that such
Indemnitee is not entitled to be indemnified for such expenses under this
Article VII or otherwise.
7.2. RIGHT OF INDEMNITEE TO BRING SUIT.
If a claim under Section 7.1 hereof is not paid in full by the Corporation
within sixty days after a written claim has been received by the Corporation,
except in the case of a claim for an Advancement of Expenses, in which case the
applicable period shall be twenty days, the Indemnitee may at any time
thereafter bring suit against the Corporation to recover the unpaid amount of
the claim. If successful in whole or in part in any such suit, or in a suit
brought by the Corporation to recover an Advancement of Expenses pursuant to the
terms of an Undertaking, the Indemnitee shall be entitled to be paid also the
expense of prosecuting or defending such suit. In (i) any suit brought by the
Indemnitee to enforce a right to indemnification hereunder (but not in a suit
brought by the Indemnitee to enforce a right to an Advancement of Expenses) it
shall be a defense that, and (ii) in any suit by the Corporation to recover an
Advancement of Expenses pursuant to the terms of an Undertaking the Corporation
shall be entitled to recover such expenses upon a Final Adjudication that, the
Indemnitee has not met the applicable standard of conduct set forth in the
Delaware Law. Neither the failure of the Corporation (including its board of
directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such suit that indemnification of the
Indemnitee is proper in the circumstances because the Indemnitee has met the
applicable standard of conduct set forth in the Delaware Law, nor an actual
determination by the Corporation (including its board of directors, independent
legal counsel, or its stockholders) that the Indemnitee has not met such
applicable standard of conduct, shall create a presumption that the Indemnitee
has not met the applicable standard of conduct or, in the case of such a suit
brought by the Indemnitee, be a defense to such suit. In any suit brought by the
Indemnitee to enforce a right to indemnification or to an Advancement of
Expenses hereunder, or by the Corporation to recover an Advancement of Expenses
pursuant to the terms of an Undertaking, the burden of proving that the
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Indemnitee is not entitled to be indemnified, or to such Advancement of
Expenses, under this Article VII or otherwise shall be on the Corporation.
7.3. NON-EXCLUSIVITY OF RIGHTS.
The rights to indemnification and to the Advancement of Expenses conferred
in this Article 7 shall not be exclusive of any other right which any person may
have or hereafter acquire under any statute, the Corporation's Restated
Certificate of Incorporation, By-Law, agreement, vote of stockholders or
disinterested directors or otherwise.
7.4. INSURANCE.
The Corporation may maintain insurance, at its expense, to protect itself
and any director, officer, employee or agent of the Corporation or another
corporation, partnership, joint venture, trust or other enterprise against any
expense, liability or loss, whether or not the Corporation would have the power
to indemnify such person against such expense, liability or loss under this
Article VII or under the Delaware Law.
7.5. INDEMNIFICATION OF EMPLOYEES AND AGENTS OF THE CORPORATION.
The Corporation may, to the extent authorized from time to time by the
Board of Directors, grant rights to indemnification, and to the Advancement of
Expenses, to any employee or agent of the Corporation to the fullest extent of
the provisions of this Article VII with respect to the indemnification and
Advancement of Expenses of directors and officers of the Corporation.
ARTICLE VIII. - AMENDMENTS.
8.1. AMENDMENTS.
Subject always to any limitations imposed by the Corporation's Restated
Certificate of Incorporation, these By-Laws may be altered, amended, or
repealed, or new By-Laws may be adopted, only by (i) the affirmative vote of the
holders of at least three-quarters (75%) of the outstanding voting stock of the
Corporation (in addition to any separate class vote that may be required
pursuant to the terms of any then outstanding preferred stock of the
Corporation), or (ii) by resolution of the Board of Directors duly adopted by
not less than a majority of the directors then constituting the full Board of
Directors.
<PAGE> 1
Exhibit 10.1
CONFIDENTIAL TREATMENT
LEUKON, INC.
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT, entered into as of this 22nd day of January,
1993 (this "Agreement"), is between Leukon, Inc., a Delaware corporation
(hereinafter called the "Company"), and Timothy A. Springer, of Cambridge,
Massachusetts (hereinafter called the "Consultant").
1. Consulting Services.
(a) Subject to and upon the terms and conditions set forth in
this Agreement, the Company hereby retains the Consultant, and the
Consultant hereby agrees, during the term of this Agreement, to serve
as Chairman of the Scientific Advisory Board of the Company and to
provide to the Company such consulting and technical advisory services
as may be required by the Company from time to time. Such services
shall be rendered exclusively to the Company in the healthcare field
except that such services shall not include (i) operational or
managerial responsibilities, (ii) responsibilities, or service as a
member of the Board of Directors of the Company (although Consultant
shall, during the term of this Agreement, receive all notices of
meetings of such Board of Directors and may, at his option, observe at
such meetings), or (iii) Clinical Research as defined in the Harvard
University ("Harvard") Faculty of Medicine Policy on Conflicts of
Interest and Commitment dated March 22, 1990 (the "Harvard Conflicts
Policy"), or (iv) the conduct of research externally that would
ordinarily be conducted within or for Harvard or the Center for Blood
Research, Inc. and/or its for profit subsidiary CBR Laboratory, Inc.,
both hereinafter the "CBR", or (v) research conducted at or utilizing
the resources or facilities of Harvard, the CBR or any other
Harvard-affiliated institution, including such research and services
for third parties through CBR (which may be rendered to commercial, for
profit companies, or others) which, now, or at any time, sponsor, or
have sponsored research, or work with CBR and/or Harvard in the
healthcare field or otherwise.
In rendering consulting services hereunder, the Consultant
shall act solely as an independent contractor and this Agreement shall
not be construed to create any employee/employer relationship between
the Consultant and the Company.
*Confidential treatment requested: material has been omitted and filed
separately with the Commission
<PAGE> 2
-2-
It is understood and agreed that Consultant is an employee of
CBR and has and will have existing and future obligations to CBR,
including rendering services, and assigning rights to certain
inventions, developments and discoveries (whether patentable or not),
which obligations shall not be diminished by anything in this
agreement.
(b) During the term of this Agreement, the Consultant agrees
to ************************************************** to the
performance of consulting services hereunder, including attendance at
meetings of the Company's Scientific Advisory Board; provided, however,
that he shall not be required to devote more time than is permitted by
the policies or regulations of Harvard or the CBR. If such policies or
regulations are amended or later determined to permit less than two
days per month of services hereunder there shall be an appropriate
reduction in the compensation payable to the Consultant hereunder. If
in connection with the performance of the services, the Consultant is
required to travel for over one hour to or from a metropolitan area
where the Consultant does not reside, time spent in travel shall be
considered to be time spent performing services. Services performed by
Consultant as the Chairman of the Scientific Advisory Board in addition
to preparation for and attendance at meetings shall also be considered
to be time spent performing services hereunder.
(c) The Consultant shall provide his consulting services
hereunder at such times and locations as are mutually agreed upon by
the Consultant and the Company; provided, however, that such times and
locations shall not interfere with Consultant's obligations to Harvard
and the CBR, the principal employer of the Consultant.
(d) The Company recognizes that the Consultant's activities
are or will be subject to the rules and regulations of Harvard and the
CBR, now or in the future, and the Company agrees that the Consultant
shall be under no obligation to perform services hereunder if such
performance would conflict with such rules and regulations, or
constitute a Category I activity under the Harvard Conflicts Policy.
The Consultant's obligations under this Agreement shall be subject to
his compliance with such rules and regulations, and, in the event of a
conflict, such rules and regulations shall control. In the event such
rules and regulations shall in the Company's opinion substantially
interfere with the performance of services by the Consultant hereunder,
the Company
*Confidential treatment requested: material has been omitted and filed
separately with the Commission
<PAGE> 3
-3-
may terminate this Agreement upon ninety (90) days notice to the
Consultant. Subject to the obligations of Section 10, the Consultant
shall not be restricted in his ability to publish or formally present
research results, or provide expert commentary on any subject relating
to his activities for Harvard or the CBR.
(e) The Consultant shall not serve on or participate in any
way with respect to the scientific advisory board of any other company
or consult or become an officer or employee of any other for profit
company without the prior written consent of the Board of Directors of
the Company except for such participation or consulting as may be
required by Consultant's obligations to CBR. The Board of Directors may
condition any consent upon a reduction in the Consulting Fee (as
defined below) with respect to any payments received by the Consultant
for such other activities.
2. Freedom to Contract. The Consultant represents that he is free to
enter into this Agreement, he has not made and will not make (except as may be
contemplated by Section 1 (d)) any agreements in conflict with this Agreement,
and he will not disclose to the Company, or use for the Company's benefit, any
trade secrets or confidential information which is the property of any other
party. Without limiting the generality of the foregoing, the Consultant shall
have no obligation to disclose to the Company, and shall not use for the
Company's benefit, any information relating to or arising out of his research
conducted at Harvard or the CBR, or utilizing the funds, personnel, facilities,
materials or other resources of Harvard or the CBR, until such information has
been published; provided, however, that the Consultant shall have an obligation
to disclose to the Company, and shall use for the Company's exclusive benefit,
any and all such information to the extent that the Company shall be legally
entitled to the exclusive use of such information pursuant to any license
granted by Harvard or the CBR to the Company.
3. Compensation.
(a) So long as the Consultant is providing consulting services
to the Company under this Agreement, the Company agrees to pay the
Consultant a consulting fee in the amount of ************** per year
(the "Consulting Fee"), subject to possible adjustment as provided in
this Section, Section 1(b) and (e), payable in equal monthly
installments. The Consulting Fee shall be the exclusive form of
compensation by the Company to the Consultant regarding services
rendered to the Company by the Consultant. Beginning on January 1,
1994, the Consulting Fee shall be adjusted
*Confidential treatment requested: material has been omitted and filed
separately with the Commission
<PAGE> 4
-4-
upward by the same percentage as the percentage increase in the
"Consumer Price Index for Urban Wage Earners and Clerical Workers - for
the City of Boston - All Items - Series A" published by the Bureau of
Labor Statistics, United States Department of Labor, or any index which
may in the future be submitted in place of such index (the "Index"),
from the index figure for the month of January, 1993 to the index for
the month of January, 1994. For each successive year, the Consulting
Fee shall be adjusted in the same manner, that is, by the percentage by
which the Consumer Price Index for January of that year exceeds the
index for the preceding January.
(b) The Company hereby acknowledges that the Consultant has
been rendering consulting services to the Company since August 3, 1992,
and, within ten (10) days of the Effective Date (as defined in Section
6) of this Agreement, agrees to compensate the Consultant for such
consulting services, in accordance with Section 3(a) above, to the same
extent as if the Consultant had rendered such consulting services after
the Effective Date.
(c) The Company will not withhold any tax or Social Security
payments due from the Consultant to any governmental taxing authority.
The Consultant hereby agrees that he will timely pay all taxes and fees
upon the compensation he is paid by the Company.
4. Expenses. The Company shall reimburse the Consultant for any actual
expenses incurred by the Consultant while rendering services under this
Agreement so long as such expenses are reasonable and necessary, appropriately
documented, and, where feasible, approved in advance by the Company.
5. Representation of Consultant. The Consultant hereby represents and
warrants to the Company that he has provided a copy of this Agreement to the CBR
and the CBR has not objected to his entering into and performing this Agreement,
that he will file a copy with Harvard in accordance with the Harvard Conflicts
Policy and that the terms of this Agreement and the services contemplated
hereunder do not conflict with any of the Consultant's current or anticipated
obligations to, or with any of the policies, procedures or regulations of,
Harvard or the CBR.
6. Term. This Agreement shall take effect as of the date hereof (the
"Effective Date") and, unless sooner terminated pursuant to Sections 7 or 1(d)
hereof or renewed as set forth below, shall expire two years from the Effective
Date. Unless either the Company or the Consultant gives
*Confidential treatment requested: material has been omitted and filed
separately with the Commission
<PAGE> 5
-5-
written notice at least sixty (60) days prior to the initial or any successive
expiration date, the term of this Agreement shall be automatically extended for
successive renewal terms of one year each.
7. Termination.
(a) This Agreement (i) shall terminate immediately upon the
Consultant's death, (ii) may be terminated by either the Company or the
Consultant upon the permanent disability of the Consultant by giving
written notice of such termination to the other party and (iii) may be
terminated by the Company by giving written notice to the Consultant if
the Company and CBR do not, within ninety (90) days of the Effective
Date, enter into one or more written license agreements satisfactory to
the Company relating to the technology and inventions of Dr. Springer.
(b) This Agreement may be terminated by the Consultant, by
giving written notice of such termination to the Company, in the event
that HealthCare Investment Corporation ("HealthCare") and/or Dr. Martin
Peretz ("Dr. Peretz"), and/or other investors or designees who may
participate with them, fail to make the first of two $5,000,000.00
installments as contemplated by the terms of that certain Term Sheet,
dated December , 1992, relating to the Company's proposed Convertible
Preferred Stock Financing.
(c) This Agreement may be terminated immediately by the
Company or the Consultant for Cause at any time during the initial term
of this Agreement (or during any renewal term) by giving the other
party written notice of such termination. For purposes of this
Agreement, the meaning of the term "Cause" shall include, but not be
limited to, dishonesty, embezzlement, theft, fraudulent misconduct, any
use of an illegal substance, or any breach of this Agreement which
remains uncured 30 days after the breaching party receives written
notice of such breach from the nonbreaching party. If the Company gives
notice of termination or non-renewal pursuant to Section 6 hereof, it
shall be treated as a termination without Cause (unless the notice of
termination specifically provides that it is a for Cause termination).
If the Consultant terminates this Agreement on account of a material
(uncured) breach by the Company, it shall be treated as a termination
without Cause.
8. Agreement not to Compete. Except as otherwise provided below, during
the term of this Agreement and for a period of one (1) year thereafter, the
Consultant shall not, directly or indirectly, engage or participate in any way
in any business, commercial activity or commercial
*Confidential treatment requested: material has been omitted and filed
separately with the Commission
<PAGE> 6
-6-
enterprise which competes or is competitive with any product, process or service
that (in the case of a termination, at the date of termination) the Company is
researching, developing, marketing, licensing or selling or that the Company is
intending within two (2) years from the date of termination to research,
develop, market, license or sell; provided, however, that nothing in this
Section 8 shall be construed to limit the ability of the Consultant to conduct
research or engage in research-related activities for or administered by Harvard
and the CBR; and provided, however, that the holding by the Consultant of any
investment in the equity of a publicly traded entity (registered under
Section12(g) of the Securities Exchange Act of 1934 and traded on a recognized
national securities exchange or the NASDAQ National Market System) shall not be
deemed to be a violation of this section if such investment does not constitute
over one percent (1%) of all of the equity of such entity. The Consultant also
shall not solicit any other employee, customer, supplier, or franchisee of, or
consultant or adviser to, the Company to terminate such party's relationship
with the Company during the term of this Agreement and for a period of one (1)
year thereafter. The time periods provided for in this section shall be extended
for a period of time in which the Consultant is in violation of any provision of
this section. Notwithstanding anything in this Agreement to the contrary
(including, without limitation, the provisions of Section 13 hereof), the
provisions of this Section 8 shall not be applicable from and after any
termination of this Agreement pursuant to Section 7(b) hereof.
9. Inventions; Assignments. Except to the extent that the Consultant's
employer, Harvard or the CBR now or in the future, may have pre-existing or
superior rights by reason of such employment and/or by agreement, all
inventions, improvements, developments, ideas, names, patents, trademarks,
copyrights, and innovations (including all data and records pertaining thereto),
whether or not reduced to writing, which the Consultant may, either alone or
with others and whether or not during working hours or by the use of facilities
of the Company, originate, make or conceive, at any time during the term of this
Agreement and for a period of twelve (12) months thereafter, and which arise out
of or are based upon any services rendered hereunder and/or any Confidential
Information of the Company shall be the exclusive property of the Company. The
Consultant agrees to give the Company prompt written notice of any such
invention,
*Confidential treatment requested: material has been omitted and filed
separately with the Commission
<PAGE> 7
-7-
improvement, development, idea, name, patent, trademark, copyright or innovation
and agrees to execute such instruments of transfer, assignment, conveyance or
confirmation and such other documents (including, without limitation, patent
applications) as the Company may reasonably request to transfer, confirm and
perfect in the Company all legally protectable rights in any such invention,
improvement, development, idea, name, patent, trademark, copyright or
innovation. By this Agreement the Consultant hereby irrevocably constitutes and
appoints during the period commencing on the Effective Date and ending three
years following the date of termination of the Consultant's services for any
reason the Company as his attorney-in-fact for the purpose of executing, in the
Consultant's name and on his behalf, such instruments or other documents as may
be necessary to transfer, confirm and perfect all rights which the Company may
have or be entitled to assert under this Section 9. In no event, however, shall
the Consultant's obligations hereunder relate to any right, title or interest
the Consultant may have in inventions, discoveries, developments, methods and
processes (whether or not patentable or copyrightable or constituting trade
secrets) conceived, made or discovered by the Consultant (whether alone or with
others) that the Consultant is now or may in the future be legally required to
assign to Harvard or the CBR pursuant to the rules and regulations of Harvard or
the CBR or to assign to third parties in connection with employment by Harvard
or CBR.
10. Confidential Information.
(a) The Consultant acknowledges that all information disclosed
to or acquired by the Consultant relating directly or indirectly to the
present or contemplated business of the Company (including, without
limitation, any information of the Company relating to DNA sequences
and derivatives thereof, assays, vectors, calls, antibodies, other
biological and/or chemical substances, formulations, techniques,
processes, methodology, equipment, data, reports, know-how, technology,
computer software, sources of supply, information regarding patent
position, products, business plans, or customer lists), as well as such
other information as may be designated by the Company as confidential
(all of the foregoing information being hereinafter referred to,
collectively, as "Confidential Information"), is a valuable, special,
and unique asset of the Company and is to be held in trust by the
Consultant for the Company's sole benefit. Without limiting the
generality of the foregoing, the Consultant hereby acknowledges and
agrees that Confidential Information shall include any and all
inventions, know-how, technology, processes, techniques, methodology,
information and intellectual property licensed by one or more written
license agreements to the Company by Harvard and/or the CBR, provided
however that, the restrictions as to non-disclosure and non-use of such
information shall be controlled only by the terms of such license
agreement or agreements. Except as otherwise provided in Section 10(b)
or (c) hereof, the Consultant
*Confidential treatment requested: material has been omitted and filed
separately with the Commission
<PAGE> 8
-8-
shall not, at any time during or after the term of this Agreement, use
for himself or others, or disclose or communicate to any person for any
reason, any Confidential Information without the prior written consent
of the Company; provided, however, that the Consultant may use
Confidential Information with respect to his services hereunder.
(b) The Consultant's obligations under Section 10(a) hereof
not to use, disclose or communicate Confidential Information shall not
apply to any Confidential Information which (i) is or becomes publicly
known under circumstances involving no breach by the Consultant of this
Agreement, (ii) was generally known by the Consultant prior to the date
hereof, (iii) was or is disclosed to the Consultant by a third party
who is not under any obligation of confidentiality to the Company,
and/or (iv) was or is approved for release by written authorization of
an authorized representative of the Company; provided, however, that
clauses (ii) and (iii) above in this Section 10(b) shall in no event
exempt the Consultant from the restrictions imposed by Section 10(a)
hereof on the use, disclosure and communication of Confidential
Information with respect to any Confidential Information which relates
to the subject matter of any license granted to the Company by Harvard
and/or the CBR.
(c) The Consultant agrees to submit to the Company in
sufficient time to enable the Company to ascertain whether a manuscript
to be published (orally or in writing) contains Confidential
Information and/or discloses a potentially patentable invention to
which the Company has rights an early draft of such manuscript if such
manuscript contains information regarding any area of the business or
contemplated business of the Company. The Consultant shall cooperate
with the Company in this respect, and shall delete from the manuscript,
any Confidential Information as requested by the Company and shall
assist the Company as requested by the Company in filing for patent
protection (prior to publication of such manuscript) for any inventions
in and to which the Company has rights. Notwithstanding the foregoing,
the obligations of the Consultant under this Section 10(c) shall not
apply to the publication of information relating to inventions,
discoveries, development, methods and processes that the Consultant is
not required to assign to the Company.
11. Return of Documents. All originals, copies and summaries of
manuals, memoranda, notes, notebooks, records, reports, plans, drawings, and
other documents or items of any kind concerning any matters
*Confidential treatment requested: material has been omitted and filed
separately with the Commission
<PAGE> 9
-9-
affecting or relating to the present or contemplated business of the Company,
whether or not they contain Confidential Information, are and shall continue to
be the property of the Company, and all of such documents or items, other than
material belonging to Harvard or the CBR, in the actual or potential possession
or control of the Consultant shall be delivered to the Company by the Consultant
immediately upon termination of this Agreement.
12. Unique Nature of Agreement; Specific Enforcement. The Company and
the Consultant agree and acknowledge that the rights and obligations set forth
in this Agreement are of a unique and special nature and that the Company is,
therefore, without an adequate legal remedy in the event of the Consultant's
violation of any of the covenants set forth in this Agreement. The Company and
the Consultant agree, therefore, that, in addition to all other rights and
remedies, at law or in equity or otherwise (including termination of the
Consultant's consultancy), that may be available to the Company, each of the
covenants made by the Consultant under this Agreement shall be specifically
enforceable in equity.
13. Survival. The provisions of Sections 8, 9, 10, 11 and 15 hereof
shall survive the termination of this Agreement.
14. Miscellaneous.
14.1. Entire Agreement. This Agreement represents the entire Agreement
of the parties with respect to the arrangements contemplated hereby. No prior
agreement, whether written or oral, shall be construed to change, amend, alter,
repeal or invalidate this Agreement. This Agreement may be amended only by a
written instrument executed in one or more counterparts by the parties.
14.2. Waiver. No consent to or waiver of any breach or default in the
performance of any obligations hereunder shall be deemed or construed to be a
consent to or waiver of any other breach or default in the performance of any of
the same or any other obligations hereunder. Failure on the part of either party
to complain of any act or failure to act of the other party or to declare the
other party in default, irrespective of the duration of such failure, shall not
constitute a waiver of rights hereunder and no waiver hereunder shall be
effective unless it is in writing, executed by the party waiving the breach or
default hereunder.
14.3. Assignment. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns. This
Agreement may be assigned by the Company to a successor
*Confidential treatment requested: material has been omitted and filed
separately with the Commission
<PAGE> 10
-10-
of its business to which this Agreement relates (whether by purchase or
otherwise). The Consultant may not assign or transfer any or all of his rights
or obligations under this Agreement.
14.4. Disputes and Costs. In case of any dispute hereunder, the parties
will submit to the exclusive jurisdiction and venue of any court of competent
jurisdiction sitting in Suffolk County, Massachusetts, and will comply with all
requirements necessary to give such court jurisdiction over the parties and the
controversy. Each party waives any right to a jury trial and to claim or recover
punitive damages.
14.5. Severability. All headings and subdivisions of this Agreement are
for reference only and shall not affect its interpretation. In the event that
any provision of this Agreement should be held unenforceable by a court of
competent jurisdiction, such court is hereby authorized to amend such provision
so as to be enforceable to the fullest extent permitted by law, and all
remaining provisions shall continue in full force without being impaired or
invalidated in any way.
14.6. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Massachusetts.
14.7. Notices. All notices and other communications hereunder shall be
delivered or sent by registered or certified mail, return receipt requested,
hand delivery or confirmed telecopy addressed to each party at the address set
forth below, or to such other address as such party may designate in writing to
the other:
If to the Consultant:
Dr. Timothy A. Springer
The Center for Blood Research
200 Longwood Avenue
Boston, Massachusetts 02115
Fax: 617-278-3232
with a copy simultaneously to:
Winthrop G. Minot, Esq.
Ropes & Gray
One International Place
Boston, Massachusetts 02110
Fax: 617-951-7050
*Confidential treatment requested: material has been omitted and filed
separately with the Commission
<PAGE> 11
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If to the Company:
John W. Littlechild, Vice Chairman
HealthCare Investment Corp.
840 Memorial Drive
Cambridge, Massachusetts 02139
Fax: 617-491-6310
with a copy simultaneously to:
Justin P. Morreale, Esq.
Bingham, Dana & Gould
150 Federal Street
Boston, Massachusetts 02110
Fax: 617-951-8736
15. To the extent permitted by law, the Company shall indemnify and
hold the Consultant harmless from and against expenses (including reasonable
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with any threatened, pending or
completed action, suit or proceeding (whether civil, criminal, administrative or
investigative) to which he becomes a party or is threatened to be made a party
by reason of any status, service, action or failure to act on his part in his
capacity as Chairman of the Scientific Advisory Board of the Company, as a
consultant hereunder to, or an agent or promoter of, or otherwise on behalf of
the Company, whether before or after the date hereof. The Consultant shall not,
without the prior written consent of the Company, settle an action, suit or
proceeding as to which the Company has undertaken to indemnify the Consultant.
The Company shall not unreasonably withhold payment of expenses incurred by the
Consultant in the defense of an action, suit or proceeding subject to this
Section 15 or of amounts paid in settlement of such an action, suit or
proceeding in accordance with this Section 15. Without limiting or expanding the
foregoing, the Company shall indemnify and hold the Consultant harmless from any
expenses (including reasonable attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by him as a result of
product liability claims arising from the use by the Company of any inventions
transferred by the Consultant to the Company or services rendered to the Company
by the Consultant hereunder. The Consultant agrees to promptly notify the
Company of any claim or action subject to the indemnification provisions of this
Section 15 and to cooperate with the Company in the defense thereof. The Company
shall have the right to settle any such claim for which the Consultant is to be
fully indemnified.
*Confidential treatment requested: material has been omitted and filed
separately with the Commission
<PAGE> 12
-12-
The provisions of this Section 15 shall not apply to the extent the Consultant
has been finally determined by a court of competent jurisdiction to have acted
with gross negligence or willful misconduct with respect to the action or
failure to act with respect to which indemnification is being sought hereunder.
IN WITNESS WHEREOF, the parties have signed this Consulting Agreement
as of the date written above as a sealed instrument.
LEUKON, INC.
By:________________________________
Title:
___________________________________
Timothy A. Springer
*Confidential treatment requested: material has been omitted and filed
separately with the Commission
<PAGE> 1
EXHIBIT 10.2
CONFIDENTIAL TREATMENT
LICENSE AGREEMENT
THIS AGREEMENT, effective as of June 15, 1993 (EFFECTIVE DATE) between
the Center for Blood Research, Inc. ("CBR") having a place of business at 800
Huntington Ave., Boston, MA 02115 and Leukon, Inc., a corporation having an
address at c/c HealthCare Investment Corp., 840 Memorial Drive, Cambridge,
Massachusetts 02139 ("LEUKON").
NOW THEREFORE, in consideration of the faithful performance of
the covenants herein contained, the parties hereto agree as follows:
1. DEFINITIONS
1.1 The term "AFFILIATE" as applied to LEUKON shall mean any company or
other legal entity other than LEUKON in whatever country organized, controlling,
controlled by or under common control with LEUKON. The term "control" means at
least a 40% possession, direct or indirect, of the powers to direct or cause the
direction of the management and policies whether through the ownership of voting
securities, by contract or otherwise.
1.2 "IMPROVEMENT INVENTION(S)" shall mean any inventions or discoveries
which names Dr. Timothy Springer as an inventor or co-inventor for which a
patent application owned by CBR is filed within three years from the date of
this Agreement and which enhance, substitute for or are useful with the
products, procedures or processes described in PATENT RIGHTS and which would
infringe any claim of a pending and/or issued patent or patent application which
is
*Confidential treatment requested: material has been omitted and filed
separately with the Commission
<PAGE> 2
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then or may become included in the PATENT RIGHTS, except those as to which CBR
is or in the future may be obligated to license to a third party as a result of
the third party funding Dr. Timothy Springer's research.
1.3 "NET SALES" means the total received by LEUKON from sale, transfer
or use of PRODUCT less***********************************************
*********************************************************************
*********************************************************************
*********************************************************************
*********************************************************************
********************** In the event that a PRODUCT includes, a component which
has therapeutic and prophylactic activity ("Active Component(s)") covered by a
VALID CLAIM of a PATENT RIGHT (Patented Component(s)) and Active Component(s)
not covered by a VALID CLAIM of a PATENT RIGHT (Unpatented Component(s)) (such
PRODUCT being a Combined Product), then NET SALES shall be **********
*********************************************************************
*************************************** If the Patented Component(s) are not
sold separately, then NET SALES upon which a royalty is paid shall be
*********************************************************************
*********************************************************************
*********************************************************************
If a sale is made other than at arm's-length, then NET SALES shall be
calculated on the basis of ******************************************
*********************************************************************
* Confidential treatment requested: material has been omitted and filed
separately with the Commission
<PAGE> 3
-3-
***************************************************************
*********************************************************************
***************************************************
PRODUCT shall be considered "sold" when shipped, transferred, billed
out or invoiced, whichever occurs first.
1.4 "OTHER PRODUCT(S)" means a product or process or service other than
a THERAPEUTIC PRODUCT.
1.5 The term "PATENT RIGHT(s)" shall mean the patent applications of
Appendix A and any United States patent application directed to an IMPROVEMENT
INVENTION and the inventions described and claimed therein and including any
division, continuation, or continuation-in-part thereof and any foreign patent
application or equivalent corresponding thereto and any Letters Patent or the
equivalent thereof issuing thereon or reissue or reexamination or extension
thereof.
1.6 The term "PRODUCT" shall mean any article, composition, apparatus,
substance, chemical, material, method, process or service which is covered by
PATENT RIGHTS, and includes both THERAPEUTIC PRODUCT and OTHER PRODUCT.
1.7 The term "SUBLICENSEE" shall mean any non-AFFILIATE third party
licensed by LEUKON to make, have made, use or sell any product or use any
process under PATENT RIGHTS.
1.8 "THERAPEUTIC PRODUCT" means a product or process or service for the
treatment and/or prevention of a disease.
1.9 The term "VALID CLAIM" shall mean a claim of an issued patent which
has not lapsed or become abandoned or been declared invalid or unenforceable by
a court of competent or an administrative
* Confidential treatment requested: material has been omitted and filed
separately with the Commission
<PAGE> 4
-4-
agency from which no appeal can be or is taken or a claim of a pending patent
application which is maintained in good faith and further provided that the
application, including the pendency of any parent applications which supports
the claim, has not been pending for more than seven years.
1.10 The use herein of the plural shall include the singular, and the
use of the masculine shall include the feminine.
2. LICENSES
2.1(a) CBR hereby grants to LEUKON and LEUKON accepts, subject to the
terms and conditions hereof, a sole and exclusive, worldwide, royalty-bearing
license, in, under and to PATENT RIGHTS, as well as a royalty bearing
non-exclusive license under any IMPROVEMENT INVENTIONS not covered by PATENT
RIGHTS to make, have made, use, sell and have sold PRODUCTS and to use methods
and processes under PRODUCTS. Such license shall include the right to grant
sublicenses thereto. LEUKON may extend such rights and licenses to AFFILIATES
These rights are granted subject to the rights of the U. S. Government under
Public Laws 96-517 and 98-620. All sublicenses shall be subject to CBR's
approval of the entity being sublicensed which approval shall not be
unreasonably withheld. If CBR does not provide a written reasonable objection to
the entity being sublicensed within ten (10) days after notice thereof, such
entity shall be conclusively deemed as having been approved by CBR.
(b) LEUKON agrees to forward to CBR a copy of any and all fully
executed sublicense agreements and any agreements which extend a license
hereunder to AFFILIATES, and further agrees to forward to CBR
* Confidential treatment requested: material has been omitted and filed
separately with the Commission
<PAGE> 5
-5-
annually a copy of such reports received by LEUKON from its SUBLICENSEES during
the preceding twelve (12) month period under the sublicenses as shall be
pertinent to a royalty accounting or an accounting of progress on PRODUCT to the
CBR under said sublicense agreements.
(c) Any PRODUCTS which are subject to obligations under Public Laws
96-517 or 98-620 and which are intended for sale in the United States shall be
manufactured substantially in the United States.
2.2 The above licenses to sell any PRODUCT for which a royalty paid
under this Agreement include the right of LEUKON, AFFILIATES, and SUBLICENSEES
to grant to the purchaser thereof the right to use and/or resell such purchased
PRODUCT without payment of a further royalty under patents licensed herein.
2.3 (omitted)
2.3(a) Taking into account the complexity, and stage of development of
the PRODUCT and the science related thereto, LEUKON shall select and use
reasonable efforts and diligence under the circumstances to research, develop
and then commercialize a selected PRODUCT. The efforts of a SUBLICENSEE,
collaborator and/or an AFFILIATE shall be considered as efforts of LEUKON.
LEUKON shall provide written reports to CBR as to its activities under this
paragraph which reports shall be given to CBR each January 1 and July 1 during
the term of this agreement.
(b) In the event that CBR reasonably believes that LEUKON is not making
reasonable efforts under the circumstances to research, develop and then
commercialize a PRODUCT selected by LEUKON
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pursuant to Paragraph 2.4(a) then CBR shall provide written notice to LEUKON
which specifies CBR's basis for such belief and what additional efforts CBR
believes should be made by LEUKON. Upon receipt of such written notice, CBR and
LEUKON shall enter into good faith negotiations in order to reach mutual
agreement as to what efforts by LEUKON shall satisfy the requirements of this
Paragraph 2.4, and if such mutual agreement is not reached within ninety (90)
days after receipt of such written notice, then the parties agree to submit to
arbitration pursuant to Paragraph 10.9 to determine the efforts which should be
exerted by LEUKON. Thereafter, LEUKON shall exert the efforts determined by the
parties or in such arbitration.
(c) If LEUKON fails to exert the efforts determined by the parties or
in such arbitration, CBR's sole and exclusive remedy for LEUKON's failure to
meet such efforts is ************************************************
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******************************************************** The termination and/or
conversion shall take effect sixty (60) days after written notice by CBR to
LEUKON unless such failure is cured prior to the end of such period.
2.4 CBR acknowledges that LEUKON is in the business of developing,
manufacturing and selling of medical processes and products and nothing in this
Agreement shall be construed as restricting such business or imposing on LEUKON
the duty to market, and/or sell and
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exploit PRODUCT for which royalties are due hereunder to the exclusion of or in
preference to any other product or process.
2.5 LEUKON shall have sole discretion for making all decisions relating
to the commercialization and marketing of PRODUCT.
2.6 If in the calendar year 1998 or any calendar year thereafter LEUKON
and/or its AFFILIATES and/or SUBLICENSEES, and/or collaborators have not
expended at least ******** for such calendar year with respect to research
and/or development of PRODUCT and the total royalties due and payable under this
Agreement for such calendar year are not equal to at least ********, then LEUKON
shall pay CBR the amount by which ********* exceeds such royalties for the
calendar year, which, if due, shall be payable on the last royalty payment date
for such calendar year.
3. ROYALTIES
3.1(a) LEUKON or its AFFILIATES shall pay CBR as a total royalty for
each PRODUCT one of the following:
(1) *********** of the NET SALES of all THERAPEUTIC PRODUCTS and
************** of the NET SALES of all OTHER PRODUCTS sold by
LEUKON or its AFFILIATES, provided that in the country where
the PRODUCT is sold, the PRODUCT is covered by a VALID CLAIM
of a PATENT RIGHT under which LEUKON is licensed by CBR; or
(2) ******************** of royalties (or the value of
consideration provided in lieu of royalties) received by
LEUKON or its AFFILIATES from a SUBLICENSEE for all
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PRODUCTS covered by a VALID CLAIM of a PATENT RIGHT licensed
to LEUKON.
(3) In the event that LEUKON's license is non-exclusive and any
other person or entity is also granted a license under
PATENT RIGHTS at a royalty less than that of this
Agreement, then LEUKON's royalty under this Agreement
shall be reduced to such lower royalty. CBR shall promptly
notify LEUKON of the granting of any such other license and
the royalties thereunder.
(b) Only one royalty shall be due and payable for a specific PRODUCT
and irrespective of the number of patents included within PATENT RIGHTS which
are applicable to such PRODUCT.
3.2 In the event that royalties are to be paid by LEUKON to a party who
is not an AFFILIATE of LEUKON for any PRODUCT ("Other Royalties") for which
royalties are also due to CBR pursuant to Section 3.1, then the royalties to be
paid to CBR by LEUKON pursuant to Section 3.1 shall be reduced by the amount of
such Other Royalties, but in no event shall the royalties under Section 3.1 be
reduced by more than ******************
3.3 LEUKON shall keep, and shall cause each of its AFFILIATES and
SUBLICENSEES to keep, full and accurate books of account containing all
particulars that may be necessary for the purpose of calculating all royalties
payable to CBR. Such books of account shall be kept at their principal place of
business and, with all necessary supporting data shall, during all reasonable
times for the three (3) years next following the end of the calendar year to
which each shall pertain be
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open for inspection by CBR or their designee upon reasonable notice during
normal business hours at CBR's expense for the sole purpose of verifying royalty
statements or compliance with this Agreement.
3.4 With quarterly payments, LEUKON shall deliver to CBR a full and
accurate accounting to include at least the following information:
(a) Quantity of each PRODUCT subject to royalty sold (by country)
by LEUKON, and its AFFILIATES;
(b) Total Net Sales for each PRODUCT subject to royalty (by
country);
(c) Total royalties payable to CBR;
(d) Royalties received from SUBLICENSEES.
3.5 In each year the amount of royalty due shall be calculated
quarterly as of March 31, June 30, September 30 and December 31 and shall be
paid quarterly within the sixty days next following such date, every such
payment shall be supported by the accounting prescribed in Paragraph 3.4 and
shall be made in United States currency. Whenever for the purpose of calculating
royalties conversion from any foreign currency shall be required, such
conversion shall be at the rate of exchange thereafter published in the Wall
Street Journal for the business day closest to the applicable March 31, June 30,
September 30, or December 31, as the case may be.
3.6 If the transfer of or the conversion into United States dollars of
any remittance due hereunder is not lawful or possible in any country, such
remittance shall be made by the deposit thereof in the currency of the country
to the credit and account of CBR or their nominee in any
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commercial bank or trust company located in that country, prompt notice of which
shall be given to CBR.
3.7 Any tax required to be withheld by LEUKON under the laws
of any foreign country for the account of CBR, shall be promptly paid by
LEUKON for and on behalf of CBR to the appropriate governmental
authority, and LEUKON shall use its best efforts to furnish CBR with
proof of payment of such tax. Payments to CBR shall be net of any such
payments of taxes.
4. INFRINGEMENT
4.1 With respect to any PATENT RIGHT under which LEUKON is exclusively
licensed pursuant to this Agreement, LEUKON or its SUBLICENSEE shall have the
right to prosecute in its own name and/or in the name of CBR and at LEUKON's own
total cost and expense (except as provided in Section 4.2) any infringement of
such patent, so long as such license is exclusive at the time of the
commencement of action. Before LEUKON or its SUBLICENSEES commences an action
with respect to any infringement of such patents, LEUKON shall give careful
consideration to the views of CBR. CBR shall have the right to assign PATENT
RIGHTS to LEUKON in the event that LEUKON desires to . initiate an infringement
action with respect to such PATENT RIGHTS, and after such assignment LEUKON
shall remain obligated to make royalty payments as provided in Article 3. In
addition, with respect to any such infringement action initiated by LEUKON in
which LEUKON designates CBR as a party plaintiff, LEUKON shall indemnify CBR
with respect to any costs or counsel fees awarded against CBR in such action.
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4.2 If LEUKON or its SUBLICENSEE elects to commence an action as
described above, LEUKON may reduce the royalty due to CBR earned under the
patent subject to suit by ******** the amount of the expenses and costs of such
action, including attorneys' fees, but in no event shall any royalty be reduced
by more than *****************. In the event that such expenses and costs exceed
the amount of royalties withheld by LEUKON for any calendar year, LEUKON may to
that extent reduce the royalties due to CBR from LEUKON in succeeding calendar
years.
4.3 Recoveries or reimbursements from such action shall first be
applied to reimburse LEUKON for litigation costs not paid from royalties (if
any), and then to reimburse CBR for royalties withheld. Any remaining recoveries
or reimbursements shall be divided between the parties as follows.
(a) (i) If the amount is lost profits, LEUKON shall receive
***************************************************************
***************************************************************
***************************************************************
***************************************************************
**************** and
(ii) CBR shall receive *******************************
***************************************************************
or
(b) As to awards other than lost profits, ************
***************************************************************
4.4 In the event that LEUKON and its SUBLICENSEE, if any, elect not to
exercise their right to prosecute an infringement of the
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PATENT RIGHTS pursuant to the above paragraphs or do not bring an infringement
lawsuit within six months notice from CBR of infringement, CBR may do so at its
own expense, controlling such action and retaining all recoveries therefrom.
4.5 In the event that litigation against LEUKON is initiated by a
third-party charging LEUKON with infringement of a patent of the third party as
a result of the manufacture, use or sale by LEUKON of PRODUCT, LEUKON shall
promptly notify CBR in writing thereof. LEUKON'S costs as to any such defense
shall be fully creditable against running royalties due and payable to CBR under
Paragraph 3.1(a), but in no event shall any royalty be reduced by more than
*********************
5. PATENTS
5.1(a) LEUKON shall reimburse CBR for any patent expenses it has
incurred and will incur in the preparation, filing, prosecution and maintenance
of PATENT RIGHTS. The amount of patent expenses to be reimbursed to CBR for
patent expenses incurred as of the EFFECTIVE DATE shall be **********, plus the
additional unbilled expenses Incurred for filing a PCT application as authorized
by CBR prior to the EFFECTIVE DATE.
(b) CBR shall promptly advise LEUKON in writing of each IMPROVEMENT
INVENTION disclosed to CBR.
(c) CBR shall use best reasonable efforts to file, prosecute and
maintain patent applications and patents which are PATENT RIGHTS at LEUKON's
cost and expense with patent counsel selected by CBR and reasonably acceptable
to LEUKON and shall consult with and request Its patent counsel to keep LEUKON
advised with respect thereto.
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(d) In the event LEUKON is not interested in acquiring rights to
IMPROVEMENT INVENTION or in continuing prosecution or maintenance of any patent
or patent application in PATENT RIGHTS, LEUKON shall advise CBR of such fact in
writing at least one month before CBR, at its own expense may then file,
prosecute, maintain or continue such patent(s) or patent applications in any
country where LEUKON elects not to file, prosecute, maintain or continue and
such patent applications and patents shall not be included with the rights
licensed to LEUKON pursuant to paragraph 2.1 of this Agreement and CBR shall be
free to license such patent to any other party.
5.3 With respect to any PATENT RIGHTS CBR shall instruct its patent
attorneys to provide, each patent application, office action, response to office
action, request for terminal disclaimer, and request for reissue or
reexamination of any patent issuing from such application to LEUKON sufficiently
prior to the filing of such application, response or request to allow for review
and comment by LEUKON.
5.4 CBR shall use reasonable best efforts to prevent any PATENT RIGHTS
licensed to LEUKON under this Agreement from lapsing or becoming abandoned
without the prior written consent of LEUKON.
6. WARRANTIES
6.1 CBR and LEUKON warrants and represents to the other that it owns
all right, title and interest in and to PATENT RIGHTS; has the full right and
authority to enter into this Agreement, and that it is not aware of any
impediment which would inhibit its ability to perform the terms and conditions
imposed on it by this Agreement.
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6.2 CBR covenants, warrants and represents that as of this date, to the
best of its knowledge, it owns all right, title and interest in and to PATENT
RIGHTS; it has the right to grant the licenses and rights granted hereunder;
that the granting of such rights and licenses does not require the consent of a
third party; and that there are no outstanding agreements, assignments or
encumbrances inconsistent with the provisions of this Agreement that it is not
aware of any claim which has been made or threatened with respect to CBR owning
all right, title and interest in PATENT RIGHTS.
6.3 CBR BY THIS AGREEMENT MAKES NO REPRESENTATION OR WARRANTIES AS TO
THE PATENTABILITY AND/OR BREADTH OF THE INVENTIONS AND/OR DISCOVERIES INVOLVED
IN PATENT RIGHTS; THE VALIDITY OF THE PATENT RIGHTS; OR THAT SUCH PATENT RIGHTS
MAY BE EXPLOITED BY LEUKON, ITS AFFILIATES OR SUBLICENSEES WITHOUT INFRINGING
OTHER PATENTS.
6.4 CBR EXPRESSLY DISCLAIMS ANY AND ALL IMPLIED OR EXPRESS WARRANTIES
AND MAKES NO EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR ANY
PARTICULAR PURPOSE OF THE INVENTION, PROCESSES OR PRODUCTS LICENSED UNDER THIS
AGREEMENT.
7. INDEMNIFICATION
7.1(a) LEUKON shall indemnify, defend and hold harmless CBR and its
trustees, officers, medical and professional staff, employees, and agents and
their respective successors, heirs and assigns (the "Indemnitees"), against any
third-party claims, liability, damage, loss, or
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expense (including reasonable attorneys' fees and expenses of litigation)
incurred by or imposed upon the Indemnitees or any one of them in connection
with any third-party claims, suits, actions, demands or judgments (i) arising
out of the design, production, manufacture, sale, use in commerce, lease, or
promotion by LEUKON or by a SUBLICENSEE, AFFILIATE or agent of LEUKON, of any
PRODUCT, process or service relating to, or developed pursuant to, this
Agreement or (ii) arising out of any other activities to be carried out by
LEUKON pursuant to this Agreement;
(b) LEUKON's indemnification under (a) above shall not apply to any
liability, damage, loss or expense to the extent that it is attributable to the
negligent activities or willful misconduct of the Indemnitees;
(c) CBR shall notify LEUKON promptly of any claim or threatened claim
under this Section 7 and shall fully cooperate with all reasonable requests of
LEUKON with respect thereto; and
(d) LEUKON agrees, at its own expense, to provide attorneys reasonably
acceptable to CBR to defend against any actions brought or filed against any
party indemnified hereunder with respect to the subject of indemnity contained
herein, whether or not such actions are rightfully brought and LEUKON shall have
the right to control the defense thereof LEUKON shall have the right to control
the settlement or compromise of any such claim or action to the extent that
LEUKON satisfies such claim or action.
7.2(a) At such time as any PRODUCT is being commercially distributed or
sold (other than for research purposes or for the purpose of obtaining
regulatory approvals) by LEUKON, or by an AFFILIATE,
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SUBLICENSEE or agent of LEUKON (hereinafter "Other Seller"), LEUKON shall itself
or in the alternative shall ensure that Other Seller either (i) at its sole cost
and expense, procure(s) and maintains) comprehensive general liability insurance
in amounts not less than $2,000,000 per incident and $2,000,000 annual aggregate
and naming the Indemnitees as additional insureds or (ii) pay(s) for the
procurement and maintenance by CBR of insurance in the amounts and in the form
set forth in this paragraph. Such comprehensive general liability insurance
shall provide (i) product liability coverage and (ii) broad form contractual
liability coverage for LEUKON's indemnification under Paragraph 7.1 of this
Agreement. LEUKON shall ensure that if LEUKON or the Other Seller elects to
self-insure all or part of the limits described above (including deductibles or
retentions which are in excess of $250,000 annual aggregate) such self-insurance
program must be acceptable to CBR and the Risk Management Foundation. The
minimum amounts of insurance coverage required under this Paragraph 7.2 shall
not be construed to create a limit of LEUKON's liability with respect to its
indemnification under Paragraph 7.1 of this Agreement. At such time, or at any
time LEUKON can request that CBR ascertain whether Risk Management Foundation
has in effect Uniform Indemnification and Insurance Provisions more favorable
than those of this Agreement, in which event LEUKON and CBR shall amend this
Agreement to include such more favorable provisions.
(b) LEUKON shall provide CBR with written evidence of such insurance
upon request of CBR. LEUKON shall provide CBR with written notice of at least
thirty (30) days prior to the cancellation,
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nonrenewal or material change in such insurance; if LEUKON or Other Seller does
not obtain replacement insurance providing comparable coverage within such
thirty (30) day period, LEUKON will agree to suspend sales of all PRODUCTS in
any country for which there is no insurance, or HARVARD shall have the right to
terminate this Agreement effective at the end of such thirty (30) day period by
written notice to LEUKON.
(c) LEUKON shall itself maintain, or shall ensure that Other Seller
maintains or that payments are made for the maintenance by CBR of, as the case
may be, such comprehensive general liability insurance beyond the expiration or
termination of this Agreement during (i) the period that any PRODUCT is being
commercially distributed or sold (other than for research purposes or the
purpose of obtaining regulatory approvals) by Other Seller and (ii) a reasonable
period after the period referred to in (c)(i) above which shall in no event be
less than ten (10) years. The obligations of (c)(ii) above can be satisfied by
the purchase of insurance by LEUKON or a third party which covers claims made
during such period of (c)(ii) above for PRODUCT or PROCESS commercially
distributed or sold by LEUKON or Other Seller during the period referred to in
(c)(i) above.
8. TERMINATION
8.1 Except as otherwise specifically provided herein and unless sooner
terminated pursuant to this Agreement, this Agreement and the licenses and
rights granted thereunder shall remain in full force and
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*********************************************************************
***********************
8.2 LEUKON shall have the right to terminate this Agreement and/or its
license under one or more PATENT RIGHTS in one or more countries upon sixty (60)
days prior written notice.
8.3 Upon material breach of any material provision of this Agreement by
a party to this Agreement, in the event the breach is not cured within sixty
(60) days after written notice to the breaching party by the other party, in
addition to any other remedy it may have, the other party at its sole option may
terminate this Agreement. In the event that LEUKON disputes the termination and
initiates legal proceedings in this respect, this Agreement shall not be
terminated until there is a final decision in such proceedings that this
Agreement has been terminated from which no appeal can be or is taken.
8.4 Upon any termination of this Agreement LEUKON shall have the option
to finish any manufacturing work-in-progress and to sell any completed inventory
of a PRODUCT under the license granted by this Agreement which remains on hand
as of the date of the termination provided that LEUKON pays to CBR the royalties
applicable to said subsequent sales in accordance with the same terms and
conditions as set forth in this Agreement.
8.5 In the event that this Agreement is terminated for any reason
whatsoever, upon the written request of a SUBLICENSEE if such SUBLICENSEE is not
otherwise in default, a sublicense granted under this Agreement shall be
assignable to CBR and CBR and the sublicense shall remain in full force and
effect as a direct license from CBR in
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accordance with the terms and conditions thereof At the request of LEUKON, CBR
agrees to confirm in writing its obligations under this Paragraph to a
SUBLICENSEE.
8.6 Upon termination of this Agreement for any reason, nothing herein
shall be construed to release either party from any obligation that matured
prior to the effective date of such termination.
9. ASSIGNMENT; SUCCESSORS
9.1 This Agreement shall not be assignable by either of the parties
without the prior written consent of the other party (which consent shall not be
unreasonably withheld), except that either party without the consent of the
other may assign this Agreement to an AFFILIATE or to a successor in interest of
all or substantially all of the portion of the business to which this Agreement
relates.
9.2 Subject to the limitations on assignment herein, this Agreement
shall be binding upon and inure to the benefit of said successors in interest
and assigns of LEUKON and CBR. Any such successor or assignee of a party's
interest shall expressly assume in writing the performance of all the terms and
conditions of this Agreement to be performed by said party.
10. PROVISIONS
10.1 The relationship between CBR and LEUKON is that of independent
contractors. CBR and LEUKON are not joint venturers, partners, principal and
agent, master and servant, employer or employee, and have no relationship other
than as independent contracting parties. CBR shall not have the power to bind or
obligate LEUKON in any manner
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Likewise, LEUKON shall have no power to bind or obligate CBR in any manner.
10.2 This Agreement sets forth the entire agreement and understanding
between the parties as to the rights and licenses granted under this Agreement
and supersedes all prior agreements in this respect. There shall be no
amendments or modifications to this Agreement, except by a written document
which is signed by both parties.
10.3 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.
10.4 The headings in this Agreement have been inserted for the
convenience of reference only and are not intended to limit or expand on the
meaning of the language contained in the particular article or section.
10.5 Any delay in enforcing a party's rights under this Agreement or
any waiver as to a particular default or other matter shall not constitute a
waiver of a party's right to the future enforcement of its rights under this
Agreement, excepting only as to an expressed written and signed waiver as to a
particular matter for a particular period of time.
10.6 LEUKON shall not use the name of CBR nor any adaptation thereof in
any advertising, promotional or sales literature with respect to PRODUCT without
prior written consent obtained from CBR, in each case except that LEUKON may
state that it is licensed by CBR under one or more of the patents and/or
applications comprising the PATENT RIGHTS.
10.8 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 (including telefax or personal
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delivery), or (ii) three (3) business days after mailed by certified or
registered mail in the United States malls, postage prepaid and properly
addressed, with return receipt requested. Notices shall be delivered to the
respective parties as indicated:
To LEUKON: Leukon, Inc.
c/o HealthCare Investment Corp.
840 Memorial Drive
Cambridge, MA 02139
Attn: CEO
To CBR: The Center for Blood Research
800 Huntington Avenue
Boston, MA 02115
10.9 Any matter or disagreement under Paragraph 2.3 which this
Agreement specifically specifies is to be resolved by arbitration shall be
submitted to a mutually-selected single arbitrator to so decide any such matter
or disagreement. The arbitrator shall conduct the arbitration in accordance with
the then applicable Rules of the American Arbitration Association, unless the
parties agree otherwise. If the parties are unable to mutually select an
arbitrator, the arbitrator shall be selected In accordance with the procedures
of the American Arbitration Association The decision and award rendered by the
arbitrator shall be final and binding. Judgment upon the award may be entered in
any court having jurisdiction thereof Any arbitration pursuant to this section
shall be held in Boston, MA, or such other place as may be mutually agreed upon
in writing by the parties.
10.10 If any provisions of this Agreement are or become invalid, are
ruled illegal by any court of competent jurisdiction or are deemed unenforceable
under then current applicable law from time to time in
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effect during the term hereof, it is the intention of the parties that the
remainder of this Agreement shall not be affected thereby provided that a
party's rights under this Agreement are not materially affected. It is further
the intention of the parties that in lieu of each such provision which is
invalid, illegal, or unenforceable, there be substituted or added as part of
this Agreement a provision which shall be as similar as possible in economic and
business objectives as intended by the parties to such invalid, illegal or
unenforceable provision. but shall be valid, legal and enforceable. In the event
a party's rights are materially affected as a result of a change in this
Agreement under this Section 10.8 such party may terminate this Agreement.
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IN WITNESS WHEREOF, the parties hereto intending to be bound, have set
their hand and seal.
LEUKON, INC. CENTER FOR BLOOD RESEARCH,
INC.
BY [signature appears here] BY [signature appears here]
--------------------------------------- ------------------------
Fred S. Rosen, M.D.
TITLE TITLE
------------------------------------ -------------------------
President
DATE: DATE
------------------------------------ -------------------------
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<PAGE> 1
EXHIBIT 10.3
CONFIDENTIAL TREATMENT
LICENSE AGREEMENT
Effective as of January 2, 1995 ("Effective Date"), THE BOARD OF TRUSTEES OF THE
LELAND STANFORD JUNIOR UNIVERSITY, a body having corporate powers under the laws
of the State of California ("STANFORD"), and LeukoSite, Inc., a Delaware
corporation, having a principal place of business at 215 First Street,
Cambridge, MA 02142 ("LICENSEE"), agree as follows:
1. BACKGROUND
1.1 STANFORD has certain rights to biological material known as
"'Antibodies to Human B7 integrin ("Biological Material[s]") developed
in the laboratory of Eugene Butcher and described in Stanford Docket
S93-116.
1.2 STANFORD desires to have products of the Biological Material(s)
marketed at the earliest possible time in order that such products may
be available for public use and benefit.
1.3 LICENSEE wishes to acquire a license to said Biological Material(s) to
make, use, and sell Licensed Product(s) in the Licensed Field of Use.
1.4 Biological Material(s) was developed in the course of research
supported by the National Institutes of Health.
2. DEFINITIONS
2.1 "Biological Material(s)" means those materials included in Exhibit A.
This Exhibit may be amended from time to time by mutual consent of
LICENSEE and STANFORD.
2.2 "Licensed Field of Use" means all human therapeutic, prophylactic or
diagnostic uses.
2.3 "Licensed Territory" means worldwide.
2.4 "Licensed Product(s)" means any product in the Licensed Field of Use
containing, derived from, or made using Biological Material(s).
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2.5 "Exclusive" means that STANFORD will not grant other licenses to
Biological Material(s) described in Exhibit A.
2.6 "Non-exclusive" means that after a period of fifteen (15) years
STANFORD may grant other licenses to Biological Material(s) described
in Exhibit A according to paragraph 3.1.
2.7 "Net Sales" means the gross revenue derived by LICENSEE from Licensed
Product(s), less the following items but only insofar as they actually
pertain to the disposition of such Licensed Product(s) by LICENSEE, are
included in such gross revenue, and are separately billed:
*************************************************************
*************************************************
***********************************************************************
*******************************
**************************************
It is recognized that Licensed Products may be sold in combination
'with other Therapeutically Active Substances (hereinafter referred to
as "Combination Products"). "Therapeutically Active" shall mean
biologically active in achieving a clinical therapeutic objective in
concert with, or supplementary to, a Licensed Product. In determining
the Net Sales of Combination Products, Net Sales shall first be
calculated in accordance with the definition of Net Sales in this
Paragraph 2.7 and then multiplied by the percentage value of the
Licensed Product contained in the Combination Product, such percentage
value being the quotient obtained by dividing (a) the current market
value of the Licensed Product by (b) the sum of the separate current
market values of the Licensed Product and the other components which
are contained in the Combination Product. The current market value of
each Therapeutically Active substance and of the Licensed Product shall
be for a quantity comparable to that contained in the Combination
Product and of the same class, purity and potency. When no current
market value is available for a component other than the Licensed
Product of a Combination Product, LICENSEE shall calculate a
hypothetical market value for such component, allocating the same
proportions of costs, overhead and profit as are then allocated to
similar components make by LICENSEE and having a ascertainable market
value. If, however, the parties determine that the above formula does
not adequately and fairly reflect the
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contribution of each component in a particular combination Product,
then the parties shall negotiate in good faith a modification of the
formula for the determination of Net Sales of that Combination Product.
In the event that a Licensed Product is incorporated into a service for
treating or diagnosing a patient, Net Sales for the Licensed Product
for the purpose of determining royalties under this Agreement shall be
based only on the Monetary Value of the Licensed Product used as part
of such service
For purposes of this Section, Monetary Value shall be the price of the
Licensed Product as sold by LICENSEE in arm's length transactions with
third parties, apart from any services for treating or diagnosing a
patient; regardless of whether such Licensed product was produced form
materials which were originally supplied by such third party. If no
such sales have taken place, Monetary Value of Licensed Product shall
be the price at which such Licensed Product would have been sold to a
third party, as agreed to by LICENSEE and STANFORD. If after sixty (60)
days the parties do not agree to such price the parties will submit
such to binding arbitration as set forth in Article 13 of this
Agreement.
2.8 "Sub licensee" means any non-Affiliate third parry licensed by LICENSEE
to make, have made, use or sell any Licensed Product(s).
2.9 "Prior License Agreement" means License Agreement between STANFORD and
LICENSEE, effective date December 9, 1993.
2.10 "Exclusive Period" means the period beginning on the Effective Date and
ending fifteen (15) years thereafter.
3. GRANT
3.1 STANFORD hereby grants, and LICENSEE accepts, a license in the Licensed
Field of Use and Licensed Territory to make, have made and use
Biological Materials, and to make, have made, use, and sell Licensed
Product(s). Said license shall be an Exclusive license during the
Exclusive Period and includes the right "to grant sub license(s) during
the Exclusive Period. Thereafter, said license shall be fully-paid and
Non-exclusive, unless sooner terminated according to Article 11
hereunder.
3.2 STANFORD reserves the right to supply any or all of Biological
Material(s)
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
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<PAGE> 4
to academic research scientists, subject to limitation of use by such
scientists for research purposes and restriction from further
distribution.
4. GOVERNMENT RIGHTS
This Agreement is subject to all of the terms and conditions of Title
35 United States Code Sections 200 through 204, including an obligation
that Licensed Product(s) sold or produced in the United States be
"manufactured substantially in the United States," and LICENSEE agrees
to take all reasonable action necessary on its part as licensee to
enable STANFORD to satisfy its obligation thereunder, relating to
Biological Material(s).
5. ROYALTIES
5.1 LICENSEE agrees to pay to STANFORD ***********************************
************************************* Upon receipt of payment, STANFORD
shall send Biological Material(s) to LICENSEE. Except for a Sub
licensee, LICENSEE shall not transfer Biological Material(s) to any
third party without prior written consent from STANFORD, which consent
shall not be unreasonably withheld or delayed.
5.2 LICENSEE shall pay license maintenance royalties of *******************
***********************************************************************
***************************************************************
Said payments are non refundable except that they are fully creditable
against earned royalties.
5.3 All payments to STANFORD shall be in U.S. Dollars, net of any non-U.S.
taxes.
5.4 In addition, during the Exclusive Period LICENSEE shall pay STANFORD an
earned royalty of ****************** on Net Sales of Licensed
Product(s) sold by LICENSEE if the Licensed Product(s) are for
therapeutic use, and *** ************** on Net Sales of Licensed
Product(s) sold by LICENSEE if the Licensed Product(s) are for
diagnostic use. Earned royalty payments shall be made as follows:
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
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***********************************************************************
***********************************************************************
********************************************************
****************************
5.5 If with respect to any Licensed Product(s) a royalty would be due under
Paragraph 5.4 of this Agreement and also under the Prior License
Agreement, only one royalty payment shall be due. Said royalty shall be
paid as follows: ***************** on Net Sales of Licensed Product(s)
if the Licensed Product(s) are for therapeutic use, and **************
***************************** on Net Sales of Licensed Product(s) if
the Licensed Product(s) are for diagnostic use.
5.6 In the event that royalties are to be paid by LICENSEE to a third party
for Licensed Product(s) for which royalties are also due to STANFORD
pursuant to Paragraphs 5.4 or 5.5 (hereinafter referred to as "Other
Royalties"), then the royalties to be paid to STANFORD by LICENSEE
pursuant to Paragraph 5.4 or 5.5 shall be reduced by the amount of such
Other Royalties, but in no event shall the royalties under Paragraphs
5.4 or 5.5 be **************************************
*******************
6. SUBLICENSE(S)
6.1 LICENSEE may grant sub license(s) during the Exclusive Period, which
sub license(s) may extend beyond the Exclusive Period.
6.2 Any sublicense(s) granted by LICENSEE under this Agreement shall be
subject and subordinate to terms and conditions of this Agreement,
except:
(a) Sub license terms and conditions shall reflect that any
sublicensee(s) shall not further sub license; and
(b) The earned royalty rate specified in the sublicense(s) may be
at higher rates than the rates in this Agreement.
Any such sub license(s) also shall expressly include the provisions of
Articles 7, 8 and 9 for the benefit of STANFORD and provide for the
transfer of all obligations, including the payment of royalties
specified in such sublicense(s),
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
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<PAGE> 6
to STANFORD or its designee, in the event that this Agreement is
terminated. At LICENSEE's request, Stanford agrees to negotiate in good
faith modification of royalties due from sublicensing if such
modification is deemed necessary to further the development of Licensed
Product(s).
6.3 LICENSEE agrees to provide STANFORD a copy of any sub license(s)
granted pursuant to this Article 6.
6.4 Product sales by sub licensees shall be considered to be sales by
LICENSEE under this agreement and LICENSEE shall pay earned royalties
as specified in Paragraph 5.4.
7. ROYALTY REPORTS, PAYMENTS, AND ACCOUNTING
7.1 Earned Royalty Payment and Report - Beginning with the first sale of a
Licensed Product, LICENSEE shall make written reports (even if there
are no sales) and earned royalty payments to STANFORD within sixty (60)
days of the reporting period of Paragraph 5.4 herein. This report shall
state the number, description, and aggregate Net Sales of Licensed
Product(s) during such completed period, and resulting calculation
pursuant to Paragraph 5.4 or 5.5 of earned royalty payment due
STANFORD. Concurrent with the making of each such report, LICENSEE
shall include payment due STANFORD of royalties for the period covered
by such report.
7.2 Accounting - LICENSEE agrees to keep and maintain records for a period
of three (3) years showing the manufacture, sale, use, and other
disposition of products sold or otherwise disposed of under the license
herein granted. Such records will include general ledger records
showing cash receipts and expenses, and records which include
production records, customers, serial numbers and related information
in sufficient detail to enable the royalties payable hereunder by
LICENSEE to be determined. LICENSEE further agrees to permit its books
and records to be examined by STANFORD through an independent certified
accountant from time to time, upon reasonable notice during normal
business hours and no more than once each calendar year, to the extent
necessary to verify reports provided for in Paragraph 7.1. Such
examination is to be made by STANFORD or its designee, at the expense
of STANFORD, except in the event that the results of the audit reveal"
an underreporting of royalties due STANFORD of five percent (5%) or
more, in any calendar year, then the audit costs shall be paid
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
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by LICENSEE.
8. NEGATION OF WARRANTIES
8.1 STANFORD represents that it owns the Biological Materials and has the
right to grant the licenses of this Agreement; it has not entered into
any agreement which is inconsistent with the rights and licenses
granted to LICENSEE under this Agreement.
8.2 Nothing in this Agreement shall be construed as:
(a) A warranty or representation that anything made, used, sold,
or otherwise disposed of under any license granted in this
Agreement is or will be free from infringement of patents,
copyrights, and trademarks of third parties;
(b) Conferring rights to use in advertising, publicity, or
otherwise any trademark or the name of "STANFORD"; or
(c) Granting by implication, estoppel, or otherwise any licenses
or rights under patents of STANFORD.
8.3 Except as expressly set forth in this Agreement, STANFORD MAKES NO
REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND, EITHER EXPRESS
OR IMPLIED. THERE ARE NO EXPRESS OR IMPLIED WARRANTIES OF
MERCHANTIBILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR THAT THE USE OF
THE LICENSED PRODUCT(S) WILL NOT INFRINGE ANY PATENT, COPYRIGHT, OR
TRADEMARK, OR OTHER RIGHTS OR ANY OTHER EXPRESS OR IMPLIED WARRANTIES.
8.4 LICENSEE agrees that nothing in this Agreement grants LICENSEE any
express or implied license or right under or to:
(a) U.S. Patent No. 4,237,224, "Process for Producing Biologically
Functional Molecular Chimeras"; U.S. Patent No. 4,468,464 and
U.S. Patent No. 4,740,470, both entitled, "Biologically
Functional Molecular Chimeras," (collectively known as the
Cohen/Boyer patents) or reissues thereof; or
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
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<PAGE> 8
(b) U.S. Patent 4,656,134, "Amplification of Eucaryotic Genes," or
any patent application corresponding thereto.
9. INDEMNITY
9.1 LICENSEE agrees to indemnify, hold harmless, and defend STANFORD and
Stanford Health Services and their respective trustees, officers,
employees, students, and agents against any and all claims for death,
illness, personal injury, property damage, and improper business
practices arising out of the manufacture, use, sale, or other
disposition of Biological Material or Licensed Product(s) by LICENSEE
or Sublicensee(s), or their customers.
9.2 STANFORD will not be liable for any indirect, special, consequential,
or other damages whatsoever, whether grounded in tort (including
negligence), strict liability, contract or otherwise. STANFORD will not
have any responsibilities or liabilities whatsoever with respect to
Licensed Products(s).
9.3 LICENSEE will at all times comply, through insurance or self-insurance,
with all statutory workers' compensation and employers' liability
requirements covering any and all employees with respect to activities
performed under this Agreement.
9.4 In addition to the foregoing, LICENSEE will maintain for itself or for
STANFORD, during the term of this Agreement and starting as of the time
and as set forth below with respect to Licensed Product(s) or Licensed
Process(es), Comprehensive General Liability Insurance, including
Products Liability Insurance, with reputable and financially secure
insurance carrier(s) to cover the activities of LICENSEE and its
sublicensee(s) under this Agreement. Such insurance will be written to
cover claims incurred, discovered, manifested, or made during or after
the expiration of this Agreement. At STANFORD's request, LICENSEE will
furnish a Certificate of Insurance evidencing primary coverage and
requiring thirty (30) days prior written notice of cancellation or
material change to STANFORD. All such insurance of LICENSEE shall be
primary coverage; insurance of STANFORD "4 or Stanford Health Services
shall be excess and noncontributory. At the time that Licensed
Product(s) or Licensed Process(es) is to be used in humans LICENSEE
shall obtain and maintain insurance having a liability limit in an
amount agreed to by STANFORD and LICENSEE not to exceed Five Million
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
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<PAGE> 9
Dollars ($5,000,000) and will include STANFORD, Stanford Health
Services, their trustees, directors, officers, employees, students, and
agents as additional insureds. The Indemnification by LICENSEE shall
not be limited to their insurance coverage. Additionally, STANFORD
agrees to negotiate in good faith the reduction or elimination of such
insurance coverage as of the time that LICENSEE has a Net Worth which
would be reasonably acceptable for satisfying LICENSEE's
indemnification obligations under this Agreement. At the time of such
negotiations and annually thereafter after entering into such an
agreement LICENSEE shall provide to STANFORD audited financial
statements. As claims or incidents occur, LICENSEE agrees to maintain
or restore the liability limit to the agreed amount.
10. STANFORD NAMES AND MARKS
LICENSEE agrees not to identify STANFORD in any promotional advertising
or other promotional materials to be disseminated to the public or any
portion thereof or to use the name of any STANFORD faculty member,
employee, or student or any trademark, service mark, trade name, or
symbol of STANFORD or the Stanford Health Services, or that is
associated with either of them, without STANFORD's prior written
consent. Nothing in this Article 10 shall prevent LICENSEE from
identifying STANFORD in connection with any financing, filing with a
government agency, or where such identification is required by law,
rule or regulation.
11. TERMINATION
11.1 LICENSEE may terminate this Agreement by giving STANFORD notice in
writing at least ninety (90) days in advance of the Effective Date of
termination provided that LICENSEE shall thereupon cease use and sale
of Biological Material(s) and any Licensed Product(s).
11.2 STANFORD may terminate this Agreement if LICENSEE is in breach of any.
provision hereof; and LICENSEE fails to remedy any such breach within
sixty (60) days after written notice thereof by STANFORD.
11.3 Surviving any termination are:
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
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<PAGE> 10
(a) Any cause of action or claim of LICENSEE or STANFORD, accrued
or to accrue, because of any breach by the other party;
(b) Payment of accrued royalties; and
(c) The provisions of Articles 7, 8 and 9.
11.4 Concurrent with notice of termination by either LICENSEE or STANFORD,
LICENSEE shall destroy all Biological Material(s) and Licensed
Product(s) in its possession, and shall provide written evidence of
said destruction.
11.5 Upon termination of this Agreement LICENSEE, at its option, shall be
entitled to sell any completed inventory of a Licensed Product(s) as if
licensed by this Agreement which remains on hand as of the date of the
termination, so long as LICENSEE pays to STANFORD the royalties
applicable to said subsequent sales in accordance with the same terms
and conditions as set forth in this Agreement.
11.6 In the event that this Agreement and/or the rights and licenses granted
under this Agreement to LICENSEE is terminated, any sub license granted
under this Agreement shall remain in full force and effect as a direct
license between STANFORD and the Sub licensee under the terms and
conditions of the sub license agreement, subject to the Sub licensee
agreeing to be bound to STANFORD under such terms and conditions within
thirty (30) days after STANFORD provides written notice to the Sub
licensee of the termination of LICENSEE's rights and licenses under
this Agreement.
12 ASSIGNMENT
12.1 This Agreement shall not be assignable by either of the parties without
prior written consent of the other party except that LICENSEE, without
the consent of STANFORD, may assign this Agreement to an Affiliate or
to a transferee or a successor in interest of all or substantially all
of the portion of the business to which}Y this Agreement relates.
12.2 Subject to the limitations on assignment herein, this Agreement shall
be binding upon and inure to the benefit of said successors in interest
and assigns of LICENSEE and STANFORD. Any such successor or assignee of
a party's interest shall expressly assume in writing the performance of
all the
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
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<PAGE> 11
terms and conditions of this Agreement to be performed by said party-
13. MISCELLANEOUS
13.1 Arbitration - Any controversy arising under or related to this
Agreement, and any disputed claim by either party against the other
under this Agreement shall be settled by arbitration in accordance with
the Licensing Agreement Arbitration Rules of the American Arbitration
Association.
13.2 Termination Report - LICENSEE also agrees to make a written report to
STANFORD within ninety (90) days after the date of termination of this
Agreement, stating in such report the number, description, and Net
Sales of all products made, sold, or otherwise disposed of and upon
which royalties are payable hereunder but which were not previously
reported to STANFORD.
13.3 Notices - All notices under this Agreement shall be deemed to have been
fully given when done in writing and deposited in the United States
mail, registered or certified, and addressed as follows:
To STANFORD: Office of Technology Licensing
Stanford University
900 Welch Road, Suite 350
Palo Alto, CA 94304-1850
Attention: Director
To LICENSEE: LeukoSite, Inc.
215 First Street
Cambridge, MA 02142
Attention: President
Either party may change its address upon written notice to the other
party.
13.4 None of the terms of this Agreement can be waived except by the written
consent of the party waiving compliance.
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
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<PAGE> 12
13.5 This Agreement shall be governed by the laws of the State of California
applicable to agreements negotiated, executed, and performed wholly
within California.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement in duplicate
originals by their duly authorized officers or representatives.
THE BOARD OF TRUSTEES OF THE LELAND
STANFORD JUNIOR UNIVERSITY
Signature /s/ Katharine Ku
------------------------------
Name: Katharine Ku
------------------------------
Title Director. Technology Licensing
------------------------------
Date January 12, 1995
------------------------------
LEUKOSITE, INC.
Signature /s/ Chris Mirabelli
------------------------------
Name: C.K. Mirabelli
------------------------------
Title: CEO and Chairman
------------------------------
Date: January 20, 1995
------------------------------
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
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<PAGE> 1
Exhibit 10.4(a)
CONFIDENTIAL TREATMENT
RESEARCH, DEVELOPMENT AND MARKETING AGREEMENT
Research, Development and Marketing Agreement, dated as of September
30th, 1994 between LEUKOSITE, INC., a Delaware corporation ("LeukoSite"),
located at 800 Huntington Avenue, Boston, Massachusetts 02115, and
WARNER-LAMBERT COMPANY, a Delaware corporation ("Warner"), located at 201 Tabor
Road, Morris Plains, New Jersey 07950.
WITNESSETH:
WHEREAS, LeukoSite and Warner each has certain expertise in the
discovery and development of compounds that inhibit the action of MCP-1 (the
"Field"); and
WHEREAS, Warner and LeukoSite each wishes to enter into a collaborative
effort to share such expertise, to develop new expertise in the Field, to
research together potential applications thereof and, if successful, to market
certain of such applications (the "Collaboration");
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual promises, covenants and conditions contained herein, LeukoSite and Warner
agree as follows:
ARTICLE A
DEFINITIONS
The following capitalized terms shall have the following meanings for
purposes of this Agreement:
"Affiliate" shall mean any corporation, association or other entity
which directly or indirectly controls, is controlled by or is under common
control with the party in question. As used herein the term "control" means
control with possession of the power to direct, or cause the direction of, the
management and policies of a corporation, association or other entity.
"Background Technology" shall mean individually and collectively Warner
Background Technology and LeukoSite Background Technology.
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 2
2
"Budgeted Detail Effort" shall mean for each party for each calendar
year each party's Selling Percentage of the Budgeted Total Detail Effort, or
with respect to LeukoSite, a lower percentage of the Budgeted Total Detail
Effort elected by LeukoSite for the calendar year pursuant to Section 6.1.
"Budgeted Total Detail Effort" shall mean for each calendar year the
total number of Details for Warner-LeukoSite Product in the Designated
Co-Promotion Territory as budgeted by the Marketing Committee or in the case
where the sales force sells other than through Details, the total selling
efforts of the sales force each party for such calendar year.
"Collaboration Technology" shall mean individually and collectively
Warner Collaboration Technology and LeukoSite Collaboration Technology.
"Co-Promotion Countries" shall mean, subject to Section 6.10, the
United States of America, Mexico, the Commonwealth of Canada and their
respective territories and possessions, including the Commonwealth of Puerto
Rico.
"Cost of Goods" means for experimental, clinical and commercial
supplies of Warner-LeukoSite Product the fully allocated manufacturing cost
(determined in a reasonable manner consistent with Warner's normal internal
accounting practices and in accordance with generally accepted accounting
principles ("GAAP") which includes (i) direct and indirect labor (salaries,
wages and employee benefits); (ii) direct and indirect materials; (iii)
operating costs of building and equipment used in connection with the
manufacture of Warner-LeukoSite Product; (iv) allocated depreciation and repairs
and maintenance; (v) quality and in-process control; (vi) any charges for
obsolescence, out of date product, spoilage, scrap or rework costs; (vii)
royalties paid to third parties (except royalties in respect of rights that a
party hereto currently has an interest in or could have an interest in pursuant
to any currently existing agreements) and (viii) the net cost or credit of any
value added taxes paid with respect to the manufacture of Warner-LeukoSite
Product. To the extent that manufacturing of Warner-LeukoSite Product or any
component thereof is performed for Warner by a third party (which is not an
Affiliate of Warner), amounts paid to such third party in connection with the
manufacturing of Warner-LeukoSite Product or any component thereof shall be
added to the aggregate amount of the applicable hereinabove items (i) through
(viii).
"Designated Co-Promotion Country" shall mean with respect to each
Warner-LeukoSite Product each Co-Promotion Country designated under Section 4.1
as to which LeukoSite retains marketing rights.
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 3
3
"Detail" shall mean a sales presentation by a professional sales
representative to a target physician or other person involved in prescribing or
influencing drug usage of a Warner-LeukoSite Product in which the primary
purpose is to discuss the benefits and features of such Warner-LeukoSite Product
in order to encourage a sale of such Product.
"Detail Effort" shall mean with respect to a party, and for any
calendar year, the actual number of Details given by its sales force for such
calendar year or in the case where the sales force sells other than through
Details the selling efforts of the party performed by its sales force for such
calendar year.
"Development" shall mean the conduct of all preclinical, clinical,
chemical synthesis, formulation, stability, assays and validation, testing and
development in accordance with then current Good Laboratory, Clinical and
Manufacturing Practices or other designated quality standards in connection with
any Development Candidate or Product insofar as the same are reasonably
necessary to obtain marketing approval by the relevant regulatory authorities
for a Product's first approved indication in any country (including studies
required to be performed after approval as a condition of approval) and the
costs of preparation, filing and submission of regulatory filings in Designated
Co-Promotion Countries.
"Development Candidate" shall have the meaning set forth in Section
4.1.
"Development Committee" shall have the meaning set forth in Section
2.3.
"Effective Date" shall mean the date of this Agreement first stated
above.
"FDA" shall mean the United States Food and Drug Administration.
"LeukoSite Background Technology" shall mean all technology,
inventions, information, data, know-how, compounds, materials and substances
(whether or not patented or patentable) which relate to or are potentially
useful as an MCP-1 Inhibitor or is an MCP-1 Inhibitor and/or techniques for the
discovery, screening, design, synthesis, delivery, development, testing, use,
manufacture or sale of MCP-1 Inhibitors which exists as of the Effective Date
which is either owned by LeukoSite or which is licensed to LeukoSite and as to
which LeukoSite has a right to sublicense or otherwise transfer.
"LeukoSite Collaboration Technology" shall mean all technology,
inventions, information, data, know-how, compounds, materials and substances
(whether or not patented or patentable) which is either owned by LeukoSite
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 4
4
(alone or together with Warner) or which is licensed to LeukoSite and as to
which LeukoSite has a right to sublicense or otherwise transfer, and which is
conceived or reduced to practice pursuant to the Stage 1 Research Plan or
pursuant to the Stage 2 Research Plan or pursuant to development of a LeukoSite
Product or a Warner-LeukoSite Product.
"LeukoSite Product" shall have the meaning set forth in Section 4.1.
"LeukoSite's Share of Profit" shall have the meaning set forth in
Section 8.1.
"Management Committee" shall have the meaning set forth in Section 2.1.
"Marketing Committee" shall have the meaning set forth in Section 2.4.
"Marketing Expense" shall mean to the extent approved by the Marketing
Committee all costs and expenses incurred by Warner (including without
limitation, the salaries, commissions, bonuses, transportation, meals, lodging,
benefits and healthcare insurance expenses of appropriate employees) associated
with launch, advertising and sales promotion (including, without limitation,
expenses related to promotional publications, space or time in various media,
direct mail campaigns, samples, if any, advertising agency fees and other
promotional activities), the cost of product samples, Phase IV Studies,
Pharmacoeconomic Studies, Phase V Studies, and any other clinical studies not
reasonably necessary to obtain marketing approval by the relevant regulatory
authorities for a Product's first approved indication in any country, in each
case determined in accordance with Warner's normal internal accounting practices
and GAAP.
"Market Price" shall mean the average exchange closing price for
LeukoSite's Common Stock during the five business days beginning on the day that
work is initiated on the Stage 2 Research Plan or the Revised Stage 1 Research
Plan, as the case may be.
"MCP-1 Inhibitor" means a compound(s) other than an antibody(ies) which
inhibits the action of MCP-1.
"Net Sales" shall mean the gross amount invoiced for sales of a Product
to non-affiliated commercial customers after deduction of the following items:
****************************************************************************
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*********************************
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 5
5
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"Patent Rights" shall mean, with respect to LeukoSite or Warner, all
United States and foreign patents owned in whole or in part or licensed to
LeukoSite or Warner, respectively, as to which a sublicense can be granted, at
any time during the Term of this Agreement, which would be infringed by the
manufacture, use or sale of a Product or which would be infringed by activities
to be performed by the parties under the Stage 1 and/or Stage 2 Research Plan
including all United States and foreign patents and patent applications
(including, without limitation, all reissues, extensions, substitutions,
confirmations, registrations, revalidations, additions, continuations,
continuations-in-part, and divisions thereof). Excluded from "Patent Rights" are
compounds that Warner identifies as having anti-inflammatory activity
independent of LeukoSite.
"Pharmacoeconomic Studies" shall mean clinical studies designed with
the primary intention of developing pharmacoeconomic data.
"Phase IV Studies" shall mean clinical studies designed to enhance
sales for an approved indication, but shall not include Pharmacoeconomic
Studies.
"Phase V Studies" shall mean clinical studies directed for approval of
additional indications, new dosages or other line extensions.
"Products" shall mean Warner Products, LeukoSite Products,
Warner-LeukoSite Products and/or any product derived from or based on Warner
Collaboration Technology as to which LeukoSite has rights under Section 1.4(a),
as applicable.
"Research Cost" shall mean the aggregate amount of costs incurred by
Leuko-Site to perform research under the Stage 2 Research Plan determined in a
reasonable manner and consistent with normal internal accounting practices and
GAAP.
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
"Research Committee" shall have the meaning set forth in Section 2.2.
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 6
6
"Revised Stage 1 Research Plan" shall have the meaning set forth in
Section 1.4(c).
"Sales Cost" with respect to each of Warner and LeukoSite for any
applicable period shall equal the aggregate amount of expenses incurred by such
party for maintaining its sales force (including the costs set forth below) for
Warner-LeukoSite Product in the Designated Co-Promotion Countries. The costs
shall include but not be limited to salary, commissions, bonuses,
transportation, meals, lodging, benefits and health care insurance expenses for
the sales force, and sales force management and support in the Designated
Co-Promotion Countries, all only as it relates to Warner-LeukoSite Product but
specifically excluding any cost or expense included in Marketing Expenses, in
each case determined in accordance with the parties' normal internal cost
accounting practices and GAAP.
"Selling Percentage" with respect to any calendar year shall mean for
LeukoSite ***************** or such lower percentage selected by LeukoSite under
Section 4.2 and for Warner shall mean the difference between one hundred percent
(100%) and LeukoSite's Selling Percentage.
"Stage 1" shall mean the period of research under the Stage 1 Research
Plan, which period terminates as set forth in Section 1.3
"Stage 1 Research Plan" shall mean the research plan attached hereto as
Exhibit 1.
"Stage 2 Research Plan" shall have the meaning set forth in Section
1.4(b) or 1.4(c), whichever is applicable.
"Stage 2 Lead Compound" shall mean a compound that in accordance with
standards established by the Management Committee is sufficiently promising to
warrant termination of Stage 1 and initiation of work under the Stage 2 Research
Plan.
"Term of Co-Promotion" for a Warner-LeukoSite Product shall mean, in
each Designated Co-Promotion Country, the period beginning when such
Warner-LeukoSite Product is first sold in such country and lasting until the
Warner-LeukoSite Product will no longer be sold in the applicable Designated
Co-Promotion Country. For the purpose of this definition only, a
Warner-LeukoSite Product does not include a "generic" form of a Warner-LeukoSite
Product which is not covered by a Patent Right.
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"Term of this Agreement" shall mean from the Effective Date until this
Agreement is terminated pursuant to its terms.
"Term of the Stage 1 Research Collaboration" shall have the meaning set
forth in Section 1.3.
"Total Profit" shall mean with respect to a Warner-LeukoSite Product,
Net Sales minus the sum of (i) the Cost of Goods, (ii) Marketing Expenses and
(iii) the cost of distribution. For the purposes of this definition only,
Warner-LeukoSite Product does not include a "generic" form of a Warner-LeukoSite
Product which is not covered by a Patent Right.
"Warner Background Technology" shall mean all technology, inventions,
information, data, know-how, compounds, materials and substances (whether or not
patented or patentable) which relate to or are potentially useful as an MCP-1
Inhibitor or is an MCP-1 Inhibitor and/or techniques for the discovery,
screening, design, synthesis, delivery, development, testing, use, manufacture
or sale of for MCP-1 Inhibitors which exists as of the Effective Date which is
either owned by Warner or which is licensed to Warner and as to which Warner has
a right to sublicense or otherwise transfer. Excluded from "Warner Background
Technology" is Warner's high volume screening technology and compounds that
Warner identifies as having anti-inflammatory activity independent of LeukoSite.
"Warner Collaboration Technology" shall mean all technology,
inventions, information, data, know-how, compounds and materials, substances
(whether or not patented or patentable) which is either owned by Warner (alone
or together with LeukoSite) or which is licensed to Warner and as to which
Warner has a right to sublicense or otherwise transfer), which is conceived or
reduced to practice pursuant to the Stage 1 Research Plan or Stage 2 Research
Plan or pursuant to development of a Warner Product or Warner-LeukoSite Product.
"Warner LeukoSite-Product" shall have the meaning set forth in Section
4.2.
"Warner Product" shall have the meaning set forth in Section 4.1.
ARTICLE I
RESEARCH PROGRAM
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1.1 Undertaking and Scope. Each party agrees to use its best efforts to
perform the activities detailed in the Stage 1 Research Plan attached hereto as
Exhibit 1 in a professional and timely manner. During Stage 1, LeukoSite will
use its best efforts at its cost (including the cost of any royalties or other
amounts owed to third parties by LeukoSite) to develop and transfer to Warner
(i) a receptor-ligand screen for MCP-1 Inhibitors, and (ii) an MCP-1 triggered
cell based screen for MCP-1 Inhibitors. During Stage 1, Warner will use its best
efforts, utilizing its high volume screening technology, at its cost (including
the cost of any royalties or other amounts owed to third parties by Warner) to
screen substantially all of its compound library with such screens provided by
LeukoSite. Pursuant to the Stage 1 Research Plan, during Stage 1, LeukoSite will
use its best efforts, at its cost, to conduct in vitro and in vivo
characterization of the compounds identified as blocking MCP-1 activity in such
screens.
Notwithstanding the foregoing, Warner may withhold from the
Collaboration any compound that it identifies as possessing anti-inflammatory
activity independent of LeukoSite. Such compounds are excluded from the
Collaboration and Warner may pursue development and marketing of such compounds
independently of this Agreement and LeukoSite.
1.2 Personnel and Resources. Each party agrees to commit the personnel,
facilities, expertise and other resources necessary to perform its obligations
under this Agreement in accordance with its terms; provided, however, that
neither party warrants that the Collaboration will achieve any of the research
objectives contemplated by the parties. Each party agrees to use its best
efforts to assure the complete and prompt exchange of Background Technology,
Collaboration Technology and the results of all activities conducted pursuant to
the Stage 1 Research Plan, the Revised Stage 1 Research Plan and/or the Stage 2
Research Plan. The scientific priorities and direction of the parties'
respective staff under the Stage 1 Research Plan, the Revised Stage 1 Research
Plan and under the Stage 2 Research Plan will be determined by the Management
Committee.
1.3 Term of the Stage 1 Research Collaboration. Activities under the
Stage 1 Research Plan, as the same may be amended or expanded from time to time
but only by mutual agreement of the parties, shall commence as of the Effective
Date and, unless terminated earlier by either party pursuant to the terms of
this Agreement or extended by mutual agreement of the parties, shall end upon
designation by the Management Committee of a Stage 2 Lead Compound, but in no
event will such activities continue after the later of (i) *******************
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being referred to herein as the "Term of the Stage 1 Research Collaboration").
1.4 Stage 2 Collaboration Options. Promptly after termination or
expiration of Stage 1, but in no event later than thirty (30) days thereafter,
Warner will elect to proceed under one of the following options:
a. Option 1. Warner may terminate this Agreement. In such event, Warner
will grant to LeukoSite a perpetual, royalty-free (except as stated in this
Section below), worldwide, exclusive license (with the right to sublicense) in
the Warner Collaboration Technology (including but not limited to any product
which is identified in the Stage 1 Research as a potential inhibitor of the
action of MCP-1 (a "Stage 1 Product") and any Patent Rights based thereon,
solely for use in the field of chemokine modulation. In addition, Warner will
grant a non-exclusive license under Patent Rights not based on Warner
Collaboration Technology to the extent required to exploit Warner Collaboration
Technology and any patent rights based thereon solely for use in the field of
chemokine modulation. Notwithstanding the foregoing, Warner will retain a
perpetual, royalty-free, worldwide interest in Warner Collaboration Technology
and Patent Rights of Warner based thereon to make, use or sell any product or
process (i) for use outside the field of chemokine modulation or (ii) discovered
after the Term of the Stage 1 Research and which is within the field of
chemokine modulation and which is not derived from or based on LeukoSite
Background Technology, provided that in each case such product is not identical
to a product which is being actively pursued by LeukoSite or any one of its
licensees. LeukoSite shall pay Warner a royalty of ************ of worldwide Net
Sales of any Stage 1 Product (or any product which results from research by or
on behalf of LeukoSite directed to such Stage 1 Product or any other compound
provided by Warner to LeukoSite pursuant to the Stage 1 Research) sold by
LeukoSite or its sublicensee and/or any product sold by LeukoSite or its
sublicensee, which is covered by a Warner Patent Right licensed to LeukoSite
under this Section, in each case for the period set forth in Section 5.6(d).
In the event that at any time after exercise of Option 1, Warner
desires to exercise Option 2 with respect to a Stage 1 Product under the terms
and conditions of this Agreement, Warner shall notify LeukoSite in writing, and
if LeukoSite is not actively researching, developing, marketing or selling, such
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Stage 1 Product and has not granted rights to such Stage 1 Product to any third
party, then Option 2 shall be considered to be exercised by Warner.
b. Option 2. Warner and LeukoSite may agree to continue collaborative
research in the Field pursuant to a mutually acceptable expanded research plan
("Stage 2 Research Plan"). Warner will provide funding to LeukoSite for ***** of
LeukoSite's Research Cost of performing work under the Stage 2 Research Plan
from initiation of such work until three years thereafter and 100% of
LeukoSite's Research Cost under the Stage 2 Research Plan after the expiration
of the three-year period, which amount shall be paid quarterly in advance with a
reconciliation at the end of the year such that LeukoSite receives for the
calendar year the applicable percentage of such Research Cost for the calendar
year. In no event will LeukoSite be required to perform (nor shall Warner be
required to fund) activities under the Stage 2 Research Plan which would require
support for more than five (5) persons per year; provided, however, that in all
events LeukoSite will be reimbursed only for work approved by the Management
Committee. Upon the later of (i) January 2, 1996 and (ii) 2 weeks after
initiation of work under the Stage 2 Research Plan, Warner will purchase $5
Million of capital stock (Preferred if at the time of purchase LeukoSite has not
completed its initial public offering (the "IPO"), and Common if the IPO has
been completed by such time), upon terms substantially similar to those of the
Preferred Stock Purchase Agreement dated the date of this Agreement, at (i)
$4.00 per share if at the time of initiation of work under the Stage 2 Research
Plan LeukoSite has not yet completed its IPO or (ii) 125% of the Market Price
for LeukoSite's Common Stock at the time of initiation of work under the Stage 2
Research Plan if at such initiation LeukoSite has completed its IPO. In the
event that any such sale and purchase shall be of shares of Preferred Stock of
LeukoSite, the terms of such shares of Preferred Stock shall be identical to the
terms of LeukoSite's Series C Convertible Preferred Stock, except that (i) such
shares of Preferred Stock shall be from a separate, newly-created series of
Preferred Stock and (ii) unless otherwise agreed to by the parties, the
liquidation preference of such shares of Preferred Stock shall be equal to the
purchase price per share paid by Warner for such shares of Preferred Stock. ***
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If LeukoSite does not initiate research under the Stage 2 Research Plan
(or similar plan of research) or after initiating research under the Stage 2
Research Plan LeukoSite terminates such research and such failure to initiate
research or such termination results other than as a result of a breach by
Warner, in such event, by written notice from Warner to LeukoSite Warner may
terminate LeukoSite's right to participate in such Stage 2 research. If such
right is terminated by Warner in accordance with the preceding sentence, any
compound which is or becomes the subject of the Stage 2 Research Plan (or
similar plan of research) as an MCP-1 Inhibitor (or as an inhibitor for a
chemokine other than MCP-1 pursuant to Option 4) shall become a Warner Product
subject to the terms and conditions of this Agreement.
c. Option 3. Warner and LeukoSite may agree to continue collaborative
research outside of the Field pursuant to a mutually acceptable research plan
("Revised Stage 1 Research Plan"), and the parties will revise this Agreement to
expand the definitions of "Field", "Background Technology", and "Collaboration
Technology" consistent therewith. Upon the later of (i) January 2, 1996 and (ii)
2 weeks after initiation of work under the Revised Stage 1 Research Plan, Warner
will purchase $3 Million of LeukoSite capital stock (Preferred if at the time of
purchase the IPO has not been completed, and common if the IPO has been
completed by such time), upon terms substantially similar to those of the
Preferred Stock Purchase Agreement dated the date of this Agreement, at (i)
$3.00 per share if at the time of initiation of work under the Revised Stage 1
Research Plan LeukoSite has not yet completed its IPO or (ii) 125% of the Market
Price for LeukoSite's Common Stock at the time of initiation of work under the
Revised Stage 1 Research Plan if at such initiation LeukoSite has completed its
IPO. In the event that any such sale and purchase shall be of shares of
Preferred Stock of LeukoSite, the terms of such shares of Preferred Stock shall
be identical to the terms of LeukoSite's Series C Convertible Preferred Stock,
except that (i) such shares of Preferred Stock shall be from a separate,
newly-created series of Preferred Stock and (ii) unless otherwise agreed to by
the parties, the liquidation preference of such shares of Preferred Stock shall
be equal to the purchase price per share paid by Warner for such shares of
Preferred Stock.*******************************************************
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***************************Upon the 18 month anniversary of initiation of work
under the Revised Stage 1 Research Plan pursuant to this "Option 3," Warner
will elect to proceed under "Option 1" (i.e. terminate this Agreement and
license Collaboration Technology to LeukoSite) or under "Option 2" (i.e. expand
Research and purchase $5 million of LeukoSite capital stock.
d. Option 4. In the event that during Stage 1 or Stage 2, a compound
has been identified as an MCP-1 Inhibitor and such compound also has activity as
an inhibitor for a chemokine other than MCP-1, and Warner notifies Leukosite in
writing that Warner desires to optimize that non-MCP-1 activity instead of MCP-1
under Option 2 the parties shall proceed under Option 2 (with appropriate
expansion to the definitions of "Field", Background Technology, Collaboration
Technology and similar terms hereof) with respect to such compound for such
activity unless within thirty (30) days thereafter LeukoSite elects in writing
not to proceed under Option 2. If LeukoSite elects in writing not to continue
with collaborative research with respect thereto (or is prevented from
continuing such collaborative research with respect thereto because of
conflicting third party obligations), in such event, such compound shall become
a Warner Product subject to the terms and conditions of this Agreement, except
that no license is granted by LeukoSite under Section 5.1 to such Warner Product
to the extent that LeukoSite is prohibited from granting licenses under its
Patent Rights which are not Background Technology with respect to such Warner
Product as an inhibitor of a chemokine other than MCP-1 by an agreement with a
third party. As a result of such compound becoming a Warner Product under this
Option 4 upon the later of (i) January 2, 1996 or (ii) two weeks after LeukoSite
elects in writing not to continue such collaborative research Warner will
purchase $1 Million of LeukoSite capital stock (Preferred if at the time of
purchase the IPO has not been completed, and common if the IPO has been
completed by such time), upon terms substantially similar to those of the
Preferred Stock Purchase Agreement dated the date of this Agreement, at (i)
$3.00 per share if at the time of purchase LeukoSite has not yet completed its
IPO or (ii) 125% of the Market Price for LeukoSite's Common Stock at the time of
purchase if at such time of purchase LeukoSite has completed its IPO. In the
event that any such sale and purchase shall be of shares of Preferred Stock of
LeukoSite, the terms of such shares of Preferred Stock shall be identical to the
terms of LeukoSite's Series C Convertible Preferred Stock, except that (i) such
shares of Preferred Stock shall be from a separate, newly-created series of
Preferred Stock and (ii) unless otherwise agreed to by the parties, the
liquidation preference of such shares of Preferred Stock shall be equal to the
purchase price per share paid by Warner for such shares of Preferred Stock. ***
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In the event that Option 2 or Option 3 has been previously exercised
and the stock purchase completed pursuant thereto, Warner shall not be required
to purchase stock pursuant to this Option 4. In addition, if stock is purchased
under this Option 4, and Option 2 or 3 is subsequently exercised, the amount of
stock that Warner will be required to purchase the first time that Warner
exercises such Option 2 or 3 will be reduced by $1,000,000.
1.5 Rights to Background Technology and Collaboration Technology.
Subject to the terms and conditions of this Agreement each party hereby grants
and agrees to grant to the other a non-exclusive, worldwide, royalty-free
license to use such party's Background Technology and Collaboration Technology
for research and development of an MCP-1 Inhibitor under the Stage 1 Research
Plan and under the Stage 2 Research Plan and as to LeukoSite for development of
a LeukoSite Product and as to Warner for development of a Warner Product and/or
Warner-LeukoSite Product. In addition, to the extent permitted by agreements
with third parties, LeukoSite hereby agrees to grant to Warner a non-exclusive,
world-wide, royalty-free license to make and use all data, information and
inventions (whether or not patentable) related to cell based assays developed by
or on behalf of LeukoSite alone or with one or more collaborators, and promptly
to disclose the existence of the same to Warner, for research and development of
an MCP-1 Inhibitor under the Stage 1 Research Plan, under the Stage 2 Research
Plan for development of a Warner Product and/or Warner-LeukoSite Product.
1.6 Collaboration Expenses. Subject to the terms of Section 1.4(b) and
Article IV, each party shall bear the costs and expenses of work done pursuant
to the Collaboration at its laboratories and its affiliated laboratories.
1.7 Exclusivity. Until termination of, or a determination not to
initiate activities under, the Stage 1 Research Plan, the Revised Stage 1
Research Plan and the Stage 2 Research Plan, neither LeukoSite nor Warner will
undertake any research or development of MCP-1 Inhibitors except pursuant to
this
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Agreement. Notwithstanding the foregoing, LeukoSite may undertake research
and development, alone or with one or more third parties, on antibodies against
MCP-1 or its receptor for inhibiting the action of MCP-1 and may undertake
activities alone or with a third party or grant rights to a third party to test
or screen a compound for inhibition of MCP-1 as part of a program to research
and develop a compound as a non-MCP-1 inhibitor and/or may grant rights to a
third party under Background Technology with respect to an MCP-1 inhibitor,
provided that such program and/or such MCP-1 inhibitor is a direct result of
identification of a compound as an inhibitor of a chemokine other than MCP-1.
Until September 30, 1995, LeukoSite agrees not to permit any third party, nor to
use on behalf of any third party, a cell-based, receptor-mediated signal
transduction assay (i.e. a mammalian cell line utilizing a C-C chemokine
receptor coupled to a G-protein linked readout) as a primary screen for the
purpose of identifying a small molecule inhibitor of a C-C chemokine function in
T-cells and/or monocytes.
1.8 Third Party Collaborations. LeukoSite agrees that it will not
assist any third party, nor permit any third party to use any of its technology,
data, information or inventions (whether or not patentable), in connection with
the research, development or commercialization of any compound that has a
similar structure to a compound that at the later of (i) the time of discovery
of such third party's compound or (ii) the date that LeukoSite is to become
first involved in the research or development or commercialization of such third
party compound is the subject of active research, development or
commercialization by Warner or one of its licensees under this Agreement. The
foregoing shall apply only for so long as such compound remains subject to
active research, development, clinical development or commercialization by
Warner or one of its licensees under this Agreement.
ARTICLE II
MANAGEMENT COMMITTEE; RECORDS AND REPORTS
2.1 Management Committee. Promptly after the Effective Date, Warner and
LeukoSite will each appoint 3 representatives to a management committee (the
"Management Committee"). The Warner representatives on such committee will
together have only one vote and the LeukoSite members on such committee will
together have only one vote. The Management Committee will meet promptly after
the Effective Date to prepare such procedures and mechanisms as may be necessary
for the operation of the Management Committee, the Research Committee and the
Development Committee(s) to assure the most efficient conduct of the
Collaboration. Thereafter, the Management Committee will meet
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quarterly or as otherwise mutually agreed. The Management Committee will assure
that agendas and minutes are prepared for each of its meetings. The personnel,
facilities, expertise and other resources of each party to be used in
performance of the Collaboration shall be established by the Management
Committee. The Management Committee will have the authority to designate Stage 2
Lead Compounds and Development Candidates pursuant to Section 4.1 and will have
the other rights and responsibilities specifically set forth in this Agreement.
The Management Committee will have the authority to resolve disputes among the
members of the Research Committee and among the members of any Development
Committee. All actions taken and decisions made by the Management Committee
shall be by unanimous agreement. If the Management Committee fails to reach
unanimous consent on any matter, the matter will be resolved by the senior
officer of Warner's pharmaceutical business with the advice of LeukoSite's
President. A party may change any of its appointments to the Management
Committee at any time upon giving written notice to the other party. The
Management Committee does not itself have the authority to amend this Agreement
in any manner that would require the separate approval of authorized officers of
the respective parties.
2.2 Research Committee. Warner and LeukoSite will each appoint up to 4
representatives to a research committee (the "Research Committee"), which will
oversee the pre-clinical aspects of the Collaboration; except that such
responsibilities will pass to the Development Committee in the case of a
Warner-LeukoSite Product, to Warner in the case of a Warner Product and to
LeukoSite in the case of a LeukoSite Product. The Warner representatives on such
committee will together have only one vote and the LeukoSite members on such
committee will together have only one vote. The Research Committee will meet
quarterly, or more frequently if mutually agreed, and will report to the
Management Committee. Warner's and LeukoSite's initial representatives to the
Research Committee will be appointed by each of them promptly after the
Effective Date. The Research Committee will be responsible for recommending
compounds to be designated Development Candidates. All actions taken and
decisions made by the Research Committee will be by unanimous agreement. The
Management Committee will resolve disputes among the members of the Research
Committee. A party may change any of its appointments to the Research Committee
at any time upon giving written notice to the other party.
2.3 Development Committee. Warner and LeukoSite will each appoint up to
4 representatives to one or more development committees (the "Development
Committee(s)"), which will oversee the pre-clinical and clinical development of
each Warner-LeukoSite Product. A separate Development Committee will be
established for each Warner-LeukoSite Product promptly after a Development
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Candidate is designated a Warner-LeukoSite Product. The Warner representatives
on such committee will together have only one vote and the LeukoSite members on
such committee will together have only one vote. All actions taken and decisions
made by the Development Committee will be by unanimous consent. Warner will have
primary responsibility for interfacing with all regulatory agencies worldwide in
connection with the relevant Warner-LeukoSite Product. LeukoSite will be invited
to attend all regulatory meetings and will be kept fully apprised of all
regulatory interactions. The Management Committee will resolve disputes among
the members of any Development Committee. A party may change any of its
appointments to any Development Committee at any time upon giving written notice
to the other party.
2.4 Marketing Committee. Each party will appoint four members to one or
more marketing committees (the "Marketing Committee(s)"), which will oversee the
marketing and promotion of each Warner-LeukoSite Product in each Designated
Co-Promotion Country. A separate Marketing Committee will be formed for each
Warner-LeukoSite Product promptly after completion of phase II clinical studies
of such Warner-LeukoSite Product. The Warner representatives on such committee
will together have only one vote and the LeukoSite members on such committee
will together have only one vote. Decisions of the Marketing Committee will be
by unanimous consent and disputes relating thereto will be resolved in
accordance with Section 12.4. A party may change any of its appointments to any
Marketing Committee at any time upon giving written notice to the other party.
2.5 Meetings. The Management Committee, the Research Committee, the
Development Committees and the Marketing Committees may meet by telephone or in
person at such times as are agreeable to the members of each such committee.
Attendance at meetings shall be at the respective expense of the participating
parties. Warner and LeukoSite shall alternate the right to determine the
location of each meeting, with LeukoSite determining the location of the first
meeting of each committee. A quorum for the conduct of business at each meeting
shall require the attendance of at least one Warner member and at least one
LeukoSite member.
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ARTICLE III
PATENTS, KNOW-HOW, RIGHTS AND INVENTIONS
3.1 Rights to Inventions. Ownership of Collaboration Technology shall
be determined in accordance with United States laws of inventorship. The owner
(the "Inventor") of any patentable Collaboration Technology (an "Invention")
shall have the right, at its option and expense, to prepare, file and prosecute
worldwide in its own name any patent applications with respect to any Invention
owned by it and to maintain any patents issued. In connection therewith, the
non-Inventor party agrees to cooperate with the Inventor at the Inventor's
expense in the preparation and prosecution of all such patent applications and
in the maintenance of any patents issued. This obligation shall survive the
expiration or termination of this Agreement.
3.2 Joint Inventions. Collaboration Technology jointly invented by
LeukoSite and Warner will be jointly owned by them; however, Warner will have
the rights and responsibilities of the "Inventor" as described in this Article
III in respect of any such patentable, jointly owned Collaboration Technology
and LeukoSite shall have the rights and responsibilities of a non-Inventor
therein. Warner shall pay all expenses in connection with the preparation,
filing and prosecution of patent applications that claim patentable, jointly
owned Collaboration Technology and maintain, enforce and protect all patents
issuing thereon. Warner shall from time to time notify LeukoSite of the amount
of its out-of-pocket expenses in connection with the foregoing and LeukoSite
shall promptly thereafter pay Warner 50% of the out-of-pocket expenses incurred
by Warner. At LeukoSite's option, such payments to Warner may be delayed and to
the extent so delayed, such payments may be credited by Warner against
milestone, royalty or co-promotion payments to be made by Warner to LeukoSite
hereunder, regardless of which Product such payments relate to, but in no event
may any such payment to LeukoSite be reduced by more than 30% as a result of
this provision.
3.3 Protection of Patent Rights. (a) The Inventor shall keep the other
party currently informed of all steps to be taken in the preparation,
prosecution and maintenance of all of its patents and patent applications now or
hereafter existing which claim such Invention and shall furnish the other party
with copies of patents and applications, amendments thereto and other related
correspondence relating to such Invention to and from patent offices and permit
the other party to offer its comments thereon before the Inventor makes a
submission to a patent office which could materially affect the scope or
validity of the patent coverage that may result. The non-Inventor party shall
offer its
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comments promptly. LeukoSite and Warner shall each promptly notify the other of
any infringement and/or unauthorized use of an Invention that comes to its
attention.
(b) The non-Inventor party may request in writing that the Inventor
take specific, reasonable actions to (i) prepare, file or prosecute patent
applications in the United States of America and all other countries of the
world with respect to an Invention, (ii) maintain any patents issued with
respect to an Invention, (iii) protect against abandonment of a patent or
application which claims an Invention or (iv) obtain a discontinuance of an
infringement or unauthorized use of such patent or application. If such actions
are not undertaken within thirty days of the Inventor's receipt of such written
request and timely pursued thereafter, the Inventor shall permit, and the
non-Inventor party at its option and expense may undertake, such actions in the
name and on behalf of the Inventor. The party not undertaking such actions shall
fully cooperate with the other party and shall provide to the other party
whatever documents that may be needed in connection therewith. The party not
undertaking such actions may require a suitable indemnity against all damages,
costs and expenses and impose such other reasonable conditions as such party's
advisors may require.
(c) If either party commences any actions or proceedings (legal or
otherwise) pursuant to this Section, it shall prosecute the same vigorously at
its expense and shall not abandon or compromise them or fail to exercise any
rights of appeal without giving the other party the right to take over their
conduct at its own expense. The party finally conducting legal actions or
proceedings against an alleged infringer or other party shall be entitled to any
damages or costs awarded against such infringer or other party, provided,
however, that if Warner initiates such action to protect a Warner Product or
Warner-LeukoSite Product, then the amount of the award less applicable legal
expenses incurred by Warner will be considered Net Sales of the applicable
Warner or Warner-LeukoSite Product, and if LeukoSite initiates such action to
protect a LeukoSite Product, the amount of the award less applicable legal
expenses incurred by LeukoSite shall be considered Net Sales of the applicable
LeukoSite Product
3.4 Allegations of Infringement by Third Parties. In the event that
Warner or LeukoSite receives notice that any action by either of them under this
Agreement is alleged to be a violation of the patent or other intellectual
property rights of a third party, it shall immediately notify the other party to
this Agreement. The Management Committee shall promptly determine an appropriate
response and course of action. In the case of a Warner-LeukoSite Product Warner
will control any defense, and the costs thereof (including any damages, costs or
expenses resulting from any action) shall be borne by Warner.
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In the case of a Warner Product or a LeukoSite Product the control and costs of
defense (including any damages, costs or expenses resulting from any action)
will be borne by Warner or LeukoSite, respectively.
ARTICLE IV
DESIGNATION OF DEVELOPMENT CANDIDATES AND MARKETING RIGHTS
4.1 Designation of Development Candidate. Each chemokine inhibitor
which is the subject of a Stage 2 Research Plan (including modifications of such
inhibitors), will be designated a "Development Candidate", if ever, upon the
declaration by the Management Committee that such compound satisfies Warner's
then current, internal standards for a "lead compound." LeukoSite shall have the
right to request that the Management Committee designate such a chemokine
inhibitor as a Development Candidate if LeukoSite reasonably believes that there
is sufficient biological and chemical data to initiate pre IND studies in
accordance with Good Laboratory Practices. In the event that such compound is
not designated as a Development Compound by the Management Committee within one
year after such request by LeukoSite, then such compound shall automatically be
designated and shall become a Development Candidate subject to the terms and
conditions of this Agreement. Within one month after designation of a
Development Candidate, Warner will notify LeukoSite in writing whether it elects
to pursue marketing rights in such Development Candidate pursuant to this
Agreement. Forty-five (45) days after Warner provides to LeukoSite in writing
its non-binding, best estimate of the costs for Development of the Development
Candidate, LeukoSite shall notify Warner in writing whether or not LeukoSite
will exercise marketing rights therein in the U.S. and any of the other
Co-Promotion Countries and designate each such other Country. Upon such exercise
of marketing rights by LeukoSite the Development Candidate shall become a
"Warner-LeukoSite Product". If LeukoSite fails to exercise marketing rights
within the stated period the Development Candidate shall become a "Warner
Product". If Warner fails to exercise marketing rights for a Development
Candidate within the stated period, the Development Candidate shall become a
"LeukoSite Product".
4.2 Warner-LeukoSite Product. For each Warner-LeukoSite Product,
pre-clinical and clinical Development thereof will be pursued jointly under the
direction of the Development Committee to the extent necessary or desirable for
regulatory approval in each Designated Co-Promotion Country. The preparation,
filing and prosecution of Investigational New Drug Applications, New Drug
Applications and other regulatory filings required to be filed with the
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 20
20
FDA and its foreign equivalents in regard to any Warner-LeukoSite Product will
be in the name of and at the responsibility of Warner, subject, in the case of
Designated Co-Promotion Countries, to the advice of LeukoSite. The costs
incurred by Warner or LeukoSite (and approved by the Development Committee) in
the preparation, filing and submission of such regulatory filings in Designated
Co-Promotion Countries and all costs of Development related to regulatory
approvals in such countries (not including the costs of Pharmacoeconomic Studies
incurred after initiation of the Term of Co-Promotion, Phase IV Studies, Phase V
Studies or any other clinical studies not reasonably necessary for authorization
by relevant regulatory authorities to sell such Product for its first approved
indication in each country), will be borne *** by Warner and *** by LeukoSite
(whether incurred by Warner or LeukoSite), retroactive to the date the
Warner-LeukoSite Product was designated a Development Candidate. LeukoSite
within its sole discretion at the time of designation of a Development Candidate
as a Warner-LeukoSite Product may elect to pay less than ***************** of
such costs of Development but in no event less than *********************
thereof. LeukoSite may not thereafter change the percentage of Development costs
borne by it without Warner's consent. Neither party warrants that any regulatory
filings will actually be filed or, if filed, will be approved. All such costs
shall be paid/reimbursed on a current basis. Cost of Development shall mean the
following insofar as they are reasonably charged directly to Development of the
Product: salaries, fringe benefits, overtime, chemicals, lab supplies, animals
and other direct charges, all at actual cost plus an overhead allocation of 25%
(cost X 1.25). In addition, costs of Development will also include actual costs
for travel (other than costs relating to committee meetings referred to in
Section 2.5), experimental products (experimental product cost is the actual,
direct cost of manufactured drug for clinical trial and stability purposes),
clinical studies performed by investigators under contract with Warner or
LeukoSite, toxicology studies performed by outsiders under contract with Warner
or LeukoSite and out-of-pocket costs for other outside professional services all
to the extent that the same are approved by the Development Committee and
supported by invoices and actual payments.
4.3 Warner-Product. Subject to Sections 4.5, 4.6 and 4.7 Warner may
pursue Development and commercialization of a Warner Product at its direction.
All costs of Development of a Warner Product will be borne by Warner from the
date of such election.
4.4 LeukoSite Product. LeukoSite may pursue Development and
commercialization of a LeukoSite Product at its direction. All costs of
Development of a LeukoSite Product will be borne by LeukoSite from the date of
such election.
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 21
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4.5 Warner agrees to use at least that level of effort that it employs
for its other products of similar scientific and commercial promise to develop,
obtain regulatory approval for and to market and sell in each country each
Warner Product and each Warner-LeukoSite Product and to continue to market and
sell in each country each Warner Product and each Warner-LeukoSite Product (in
each case by itself or through one or more Affiliates or licensees).
4.6 Warner agrees to promptly notify LeukoSite in writing if at any
time Warner does not intend to continue to: develop and/or obtain regulatory
approval for and/or market and sell any Warner Product or Warner-LeukoSite
Product (in each case by itself or through one or more Affiliates or licensees).
4.7 In the event that Warner does not meet its obligations under
Section 4.5 with respect to any Warner Product or any Warner-LeukoSite Product
in any country(ies) or Warner provides LeukoSite with notice pursuant to Section
4.6 with respect to any Warner-LeukoSite Product or Warner Product with respect
to any country(ies), such Warner Product and/or Warner-LeukoSite Product in such
country(ies), upon written notice from LeukoSite to Warner, shall become a
LeukoSite Product.
4.8 In the event that any Warner Product or Warner-LeukoSite Product
becomes a LeukoSite Product in any country(ies), Warner shall transfer to
LeukoSite any and all information, data, technology and know-how related to the
development, manufacture and sale of such Warner Product and/or Warner LeukoSite
Product. In addition, to the extent allowed by law, Warner shall permit
LeukoSite to refer to and use any regulatory filings and/or information
contained therein to obtain approval for marketing and sale by LeukoSite or its
sublicensees or agents of such Warner and/or Warner-LeukoSite Product and to the
extent permitted by law Warner shall transfer to and/or permit LeukoSite and/or
its agents or sublicensees to operate under any regulatory approval or
regulatory application with respect to such Warner Product and/or
Warner-LeukoSite Product in such country(ies).
4.9 Upon sixty (60) days prior written notice, LeukoSite may terminate
LeukoSite's obligation to fund Development of any Warner-LeukoSite Product in
the Designated Co-Promotion Countries, in which case, upon sending of such
notice, such Warner-LeukoSite Product shall become a Warner Product, provided,
however, that LeukoSite will be obligated to continue its Development efforts
and pay its share of the costs with respect to such Product until the expiration
of such notice period.
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 22
22
4.10 Upon six (6) months prior written notice by Warner to LeukoSite,
Warner may terminate its obligation to pursue a Warner-LeukoSite Product in any
country and upon sending of such notice such Warner-LeukoSite Product shall
become a LeukoSite Product in such country, however, Warner shall be obligated
to continue its Development efforts and pay its share of the costs with respect
to such Warner-LeukoSite Product in such country until the expiration of the
first 60 days of such six (6) month period. At the request of LeukoSite Warner
will continue its Development efforts with respect to such Warner-LeukoSite
Product for the remainder of such six month period, provided that LeukoSite
reimburses Warner for the costs of such effort promptly after Warner invoices
such costs.
4.11 In the event a Warner Product or a Warner-LeukoSite Product
becomes a LeukoSite Product, and for so long as Warner is manufacturing such
product for its own purposes, Warner agrees to manufacture and supply to
LeukoSite such LeukoSite Product to the extent that Warner is able to do so
without adversely affecting its requirements therefor upon terms and conditions
and profit margins which are customary in the industry for a supplier of
products of such type.
4.12 No earlier than one year after a product becomes a LeukoSite
Product, Warner can request in writing that such LeukoSite Product become a
Warner Product, or in the case where such LeukoSite Product was originally a
Warner-LeukoSite Product that such LeukoSite Product become a Warner-LeukoSite
Product, subject to the terms and conditions of this Agreement, and if LeukoSite
is not actively researching, developing, marketing or selling such LeukoSite
Product and has not granted rights thereto to a third party, such LeukoSite
Product shall become a Warner Product or a Warner-LeukoSite Product, as the case
may be, subject to the terms and conditions of this Agreement.
ARTICLE V
LICENSES AND ROYALTIES
5.1 Grant by LeukoSite. Except as provided in Section 1.4(d), LeukoSite
hereby grants and agrees to grant to Warner under the Patent Rights of LeukoSite
and under LeukoSite Collaboration Technology and LeukoSite Background Technology
(i) exclusive, worldwide licenses to the limited extent necessary to make, have
made, use and sell (with the right to sublicense) each Warner Product and each
Warner-LeukoSite Product outside of the Designated Co-Promotion Countries, (ii)
exclusive licenses to the limited extent necessary to
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 23
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make or have made each Warner-LeukoSite Product in the Designated Co-Promotion
Countries and (iii) co-exclusive licenses (non-sublicensable and shared only
with LeukoSite) to the limited extent necessary to use and sell each
Warner-LeukoSite Product in the Designated Co-Promotion Countries pursuant to
the terms of this Agreement.
5.2 Grant by Warner. Warner hereby grants and agrees to grant to
LeukoSite under the Patent Rights of Warner and under Warner Collaboration
Technology and Warner Background Technology (i) exclusive, worldwide licenses to
the limited extent necessary to make, have made, use and sell (with the right to
sublicense) each LeukoSite Product and (ii) co-exclusive licenses
(non-sublicensable and shared only with Warner) to the limited extent necessary
to use and sell each Warner-LeukoSite Product in the Designated Co-Promotion
Countries pursuant to the terms of this Agreement.
5.3 (a) Warner agrees that Warner will not use or grant rights to use
Warner compounds identified as MCP-1 Inhibitors using the screens referred to in
Section 1.1 for an MCP-1 Inhibitor and will not use or grant rights to use
LeukoSite Background Technology or LeukoSite Collaboration Technology except for
(i) activities under the Stage 1 Research Plan, (ii) activities under the
Revised Stage 1 Research Plan, (iii) activities under the Stage 2 Research Plan,
and/or (iv) activities with respect to development, marketing, sale, manufacture
or use of a Warner Product and/or a Warner-LeukoSite Product for which payments
are to be made to LeukoSite under this Agreement.
(b) LeukoSite agrees that LeukoSite will not use or grant rights to use
Warner compounds identified as MCP-1 Inhibitors using the screens referred to in
Section 1.1 as an MCP-1 Inhibitor and will not use or grant rights to use Warner
Background Technology or Warner Collaboration Technology except for (i)
activities under the Stage 1 Research Plan, (ii) activities under the Revised
Stage 1 Research Plan, (iii) activities licensed under the Stage 2 Research
Plan, (iv) activities licensed to LeukoSite pursuant to Section 1.4(a) and/or
(v) activities with respect to development, marketing, sale, manufacture or use
of a LeukoSite Product for which payments are to be made to Warner under this
Agreement.
5.4 Warner and LeukoSite each acknowledges and agrees to the extent
that it is granted a right or license under this Agreement as a sublicensee such
sublicense is subject to the terms and conditions of the agreement under which
the sublicense is granted. Warner or LeukoSite, as a sublicensee, will perform
the obligations (other than payment obligations) which are applicable to a
sublicensee pursuant to the agreement under which the sublicense is granted.
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 24
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No such sublicense shall be granted until LeukoSite has expressly notified
Warner in writing of the obligations of such sublicense and Warner has
acknowledged that it will perform such obligations.
5.5 Manufacturing. (a) Warner will notify LeukoSite if Warner and its
Affiliates elect not to manufacture the active ingredient of any Warner Product
or Warner-LeukoSite Product. In such event, LeukoSite may offer to perform such
manufacturing. Warner, in its reasonable judgment, may elect to have LeukoSite
or a third party perform such manufacturing.
(b) LeukoSite will notify Warner if LeukoSite and its Affiliates elect
not to manufacture the active ingredient of any LeukoSite Product. In such
event, Warner may offer to perform such manufacturing. LeukoSite, in its
reasonable judgment, may elect to have Warner or a third party perform such
manufacturing.
(c) The reasonable judgment of a party choosing a manufacturer shall
include issues such as price, competence, reliability and experience of the
proposed manufacturer.
5.6 Royalties. (a) Warner will pay LeukoSite one of the following
royalties on worldwide Net Sales of Warner Products, whichever is applicable:
(i) If LeukoSite does not timely elect to pursue marketing
rights to the Development Candidate under Section 4.1 or if a Warner-LeukoSite
Product becomes a Warner Product prior to LeukoSite paying its designated share
of Development Costs under Section 4.2 up to and including acceptance by the FDA
of the relevant IND, the applicable royalty rate will be *** of worldwide Net
Sales.
(ii) If LeukoSite pays its designated share of Development
Costs under Section 4.2 up to and including the acceptance by the FDA of the
relevant IND, but thereafter revokes its marketing rights such that the
Warner-LeukoSite Product becomes a Warner Product, the applicable royalty rate
will be ************************************************************************
********************************************************************************
*********************
(iii) If LeukoSite pays its designated share of Development
Costs under Section 4.2 up to and including completion of all Phase II clinical
studies reasonably deemed necessary by the Management Committee for regulatory
approval to market the Product in the United States of America, but thereafter
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 25
25
revokes its marketing rights such that the Warner-LeukoSite Product becomes a
Warner Product, the applicable royalty rate will be ***************************
********************************************************************************
**************************************************************************
********
(iv) For Warner Products, which become Warner Products under
Section 1.4(b) and/or Section 1.4(d), the applicable royalty will be ***********
********************************************************************************
******
(b) Warner will pay LeukoSite the following royalties on Net Sales of
all Warner-LeukoSite Products sold outside of the Designated Co-Promotion
Countries for which LeukoSite has paid its designated share of Development Costs
under Section 4.2 up to and including NDA approval in the United States: *******
********************************************************************************
*******
(c) LeukoSite will pay Warner one of the following royalties on
worldwide Net Sales of LeukoSite Products, whichever is applicable:
(i) The applicable royalty rate will be *** of the worldwide
Net Sales, except as provided in 5.6(c)(ii) below;
(ii) If Warner pays its designated share of Development Costs
under Section 4.2 up to and including filing of the relevant IND, but thereafter
revokes its marketing rights, the applicable royalty rate will be **************
********************************************************************************
**********
(d) The royalties set forth in this Section will be payable on a
Product by Product and country by country basis for a period of ********* from
first commercial sale in a country as part of nationwide introduction of the
Product. If at the expiration of such ************** period, a Product(s) is
sold in a country(ies) and such Product(s) where manufactured, used or sold
infringes a Patent Right, then the royalty shall continue with respect to such
Product(s) in such country(ies) until expiration of such Patent Right.
(e) As used herein, "Annual Net Sales" shall mean Net Sales in a
calendar year.
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 26
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5.7 Currency of Payment. All payments to be made under this Agreement
shall be made in United States dollars in the United States to a bank account
designated by the party to be paid. Royalties earned shall first be determined
in the currency of the country in which they are earned and then converted to
its equivalent in United States currency. The buying rates of exchange for the
currencies involved into the currency of the United States quoted by Citibank
(or its successor in interest) in New York, New York at the close of business on
the last business day of the quarterly period in which the royalties were earned
shall be used to determine any such conversion.
5.8 Payment and Reporting. The royalties due under Section 5.6 shall be
paid quarterly, within sixty (60) days after the close of each calendar quarter,
or earlier if possible (i.e., on or before the last day of each of the months of
May, August, November and February) immediately following each quarterly period
of each year in which such royalties are owed. With each such quarterly payment,
the payor shall furnish the payee a royalty statement (the "Royalty Statement"),
setting forth on a country-by-country basis the total number of units of each
Product made, used and/or sold hereunder for the quarterly period for which the
royalties are due.
5.9 Records. The royalty paying party shall keep accurate books and
accounts of record in connection with the manufacture, use and/or sale by or for
it of all products in sufficient detail to permit accurate determination of all
figures necessary for verification of royalty obligations set forth in this
Article V. Such records shall be maintained for a period of 3 years from the end
of each year in which sales occurred. The payee, at its expense, through a
certified public accountant, shall have the right to access such books and
records for the sole purpose of verifying the Royalty Statements; such access
shall be conducted after reasonable prior notice by the payee to the payor
during the payor's ordinary business hours and shall not be more frequent than
once during each calendar year. Said accountant shall not disclose to the payee
or any other party any information except that which should properly be
contained in a royalty report required under this Agreement. In the event that
there has been an underreporting of royalties of ten percent (10%) or greater
over the full period reviewed by such accountants, then the cost of such
accountants shall be paid by the payor. Any underpaid royalties shall be paid
within thirty (30) days after notice of the underpayment.
5.10 Taxes Withheld. Any income or other tax that one party hereunder,
its Affiliates or sublicensees is required to withhold (the "Withholding Party")
and pay on behalf of the other party hereunder (the "Withheld Party") with
respect to the royalties or other amounts payable under this Agreement shall be
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 27
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deducted from and offset against said royalties or other amounts prior to
remittance to the Withheld Party; provided, however, that in regard to any tax
so deducted, the Withholding Party shall give or cause to be given to the
Withheld Party such assistance as may reasonably be necessary to enable the
Withheld Party to claim exemption therefrom or credit therefor, and in each case
shall furnish the Withheld Party proper evidence of the taxes paid on its
behalf.
5.11 Computation of Royalties. All sales of LeukoSite Products between
LeukoSite and any of its Affiliates and sublicensees with the intent of resale
by such Affiliates and sublicensees shall be disregarded for purposes of
computing royalties under this Article V, but in such instances royalties shall
be payable only upon commercial sales to unlicensed third parties by the
Affiliates and sublicensees. Nothing herein contained shall obligate LeukoSite
to pay Warner more than one royalty on any unit of a LeukoSite Product. All
sales of Warner Products or Warner-LeukoSite Products between Warner and any of
its Affiliates and sublicensees with the intent of resale by such Affiliates and
sublicensees shall be disregarded for purposes of computing royalties under this
Article V, but in such instances royalties shall be payable only upon commercial
sales to unlicensed third parties by the Affiliates and sublicensees. Nothing
herein contained shall obligate Warner to pay LeukoSite more than one royalty on
any unit of a Warner Product or Warner-LeukoSite Products.
5.12 Licenses to Affiliates. Each party shall, at the other party's
request, sign license and/or royalty agreements in respect of Warner Products,
LeukoSite Products or Warner-LeukoSite Products not being co-promoted by the
parties hereunder directly with the other party's Affiliates and sublicensees in
those situations where such agreements would not decrease the amount of
royalties or other amounts which would be owed hereunder. Such agreements shall
contain the same language as contained herein with appropriate changes in
parties and territory. No such license and/or royalty agreement will relieve
Warner or LeukoSite, as the case may be, of its obligations hereunder, and such
party will guarantee the obligations of its Affiliate or sublicensee in any such
agreement. Royalties and other amounts received directly from one party's
Affiliates and sublicensees shall be credited towards such party's obligations
hereunder.
5.13 Milestone Payments.
(a) Warner will pay LeukoSite the following amounts the first time that
each of the following milestones is achieved:
<TABLE>
<S> <C>
(i) Designation of a Development
Candidate as a Warner Product
</TABLE>
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 28
28
<TABLE>
<S> <C> <C>
or a Warner-LeukoSite Product..................................*******
(ii) Acceptance by the FDA of an IND (or its equivalent
in Japan or in each of the
United Kingdom, France, Italy, Germany and Spain
hereinafter such five countries being collectively
"EU") for a Warner Product or a Warner-LeukoSite
Product........................................................*******
(iii) Acceptance for filing by the
FDA of an NDA (or its equivalent in
EU or Japan) for a Warner
Product or a Warner-LeukoSite
Product........................................................*******
(iv) Approval by the FDA of an NDA
(or its equivalent in EU or Japan)
for a Warner Product or a Warner-
LeukoSite Product..............................................*******
(v) Approval by the FDA of an NDA
(or its equivalent in EU
or Japan) for a second Warner Product or
Warner-LeukoSite Product.......................................*******
</TABLE>
(b) LeukoSite will pay Warner ***********************************
*******************************************************
5.14 Pre-existing Milestone/Royalty Obligations. Certain research
activities to be performed hereunder and the manufacture, use or sale of
Products hereunder may require payments to unaffiliated third parties. Such
payments in respect of rights that a party hereto currently has an interest in
or could have an interest in pursuant to any currently existing agreements will
be borne by such party. All other such payments will be borne by (i) Warner in
the case of a Warner Product or a Warner-LeukoSite Product sold outside of the
Designated Co-Promotion Countries, (ii) LeukoSite in the case of a LeukoSite
Product, and (iii) as a "Cost of Goods" in the case of Warner-LeukoSite Products
sold in the Designated Co-Promotion Countries. Each party hereto will disclose
such payment obligations to the other party hereto prior to designation of the
subject compound as a Development Candidate.
ARTICLE VI
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 29
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CO-PROMOTION OF WARNER-LEUKOSITE PRODUCTS
6.1 Marketing and Marketing Plans. Each Warner-LeukoSite Product will
be marketed in each country with one label and will bear one or more trademarks
owned by Warner. Advertising and promotional material in respect of each
Warner-LeukoSite Product in each Designated Co-Promotion Country (including any
Product labeling or packaging inserts to the extent permitted by law and
approved by the Marketing Committee) will include LeukoSite's name and address,
the size and placement of which will be determined by the Marketing Committee.
The Marketing Committee will be responsible for developing and approving
marketing plans and the advertising and other promotional materials to be used
in co-promoting each Warner-LeukoSite Product in each Designated Co-Promotion
Country. Warner will be responsible, with LeukoSite's advice in the case of
Designated Co-Promotion Countries, for seeking acceptance of each
Warner-LeukoSite Product on formularies, if applicable, and for all other
negotiations with managed care organizations and other institutional purchasers.
The Marketing Committee shall coordinate and implement the marketing
and detailing strategies, tactics, joint sales force training program and sales
forecasts, and post-approval clinical studies for Warner-LeukoSite Product, and
Budgeted Total Detail Effort for each calendar year for the Warner-LeukoSite
Product in the Designated Co-Promotion Countries (hereinafter, collectively, the
"Business Plan").
The Marketing Committee shall develop a Business Plan for each calendar
year in which Warner-LeukoSite Product will be sold in the Designated
Co-Promotion Countries.
The annual Business Plan shall contain the responsibilities of each
party and shall establish the Budgeted Detail Effort for each party for the
subsequent calendar year; provided, however, that in each calendar year
LeukoSite shall not be required to accept (without LeukoSite's consent) nor
shall it be entitled to undertake (without Warner's consent) a Budgeted Detail
Effort greater than its Selling Percentage of the Budgeted Total Detail Effort.
The Marketing Committee shall also establish a semi-annual or annual forecast of
(i) Marketing Expenses and; (ii) the number and position of Details and specific
professionals to be targeted by the Details (broken down on a monthly or
quarterly basis) to be made by each party's sales force during such calendar
year.
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 30
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For each calendar year, within thirty (30) days after establishment of
the Budgeted Total Detail Effort for the calendar year, LeukoSite by written
notice and within its sole discretion, may elect a Budgeted Detail Effort for
such calendar year which is less than LeukoSite's Selling Percentage of the
Budgeted Total Detail Effort and the Budgeted Detail Effort of LeukoSite for the
calendar year shall be decreased in accordance with such election with, at
Warner's option (i) a corresponding increase in the Budgeted Detail Effort of
Warner (ii) a corresponding decrease in the Budgeted Total Detail Effort or
(iii) a combination of (i) and (ii). In addition, in the event LeukoSite elects
such a reduced Budgeted Detail Effort, LeukoSite shall pay to Warner the
increased Sales Cost incurred by Warner to the extent that the Budgeted Detail
Effort for Warner is increased to greater than Warner's percentage of the
Budgeted Total Detail Effort prior to such election by LeukoSite. Such increased
Sales Cost shall be determined by dividing the total Sales Cost of Warner by the
Detail Effort for Warner for the calendar year and multiplying such number by
the difference between the Budgeted Detail Effort of LeukoSite and the Detail
Effort of LeukoSite for the calendar year.
Either party may in any calendar year make Details in excess of the
Budgeted Detail Effort without the written agreement of the other. However,
absent such agreement, a party shall not receive compensation for such excess
Details.
Each party shall keep track of the number and position of Details by
its representatives in accordance with its normal internal reporting procedures.
Within thirty (30) days after the last day of each calendar month, each party
shall submit to the other party, a report with respect to the number of Details
performed by such party's representatives during such calendar month. At the
request of either party, but not more than once a year by such party, a special
external audit of the Detail effort of both parties with respect to
Warner-LeukoSite Product shall be performed, the cost of which shall be paid by
the requesting party; provided if such external audit reveals that in any
calendar year the non-requesting party performed less than ninety percent (90%)
(after taking into account the offset described in the immediately following
proviso) of the Details that such non-requesting party reported to the
requesting party as being performed in such calendar year such that there is a
shortfall in excess of ten percent (10%), then such non-requesting party shall
reimburse the requesting party for the full cost of such audit; provided further
that if in any calendar year the audit reveals that both parties failed to
perform one hundred percent (100%) of the Details that each such party reported
to the other party as being performed in such year, then the requesting party's
percentage point shortfall shall be subtracted from the non-requesting party's
percentage point
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 31
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shortfall for purposes of making the calculation in the immediately preceding
proviso.
The Marketing Committee shall develop the training program for the
respective sales forces. The parties agree to utilize such training program to
assure a consistent, focused promotional strategy and message. Under the
supervision of the Marketing Committee, each party shall train its own field
sales force. Warner shall be responsible for all costs associated with training
the field forces of both parties in accordance with such training program,
including costs of materials, expenses, launch meetings and ongoing training and
shall reimburse LeukoSite for its costs and expenses associated therewith. All
of Warner's costs associated with training the field forces of both parties
(including the amount reimbursed to LeukoSite) shall be deemed Marketing
Expenses.
In the event a decision is made by the Marketing Committee to sample
the Warner-LeukoSite Product, Warner shall supply all samples for use in
connection with the sampling of Warner-LeukoSite Product. The Marketing
Committee shall develop a sampling strategy. Such samples shall be considered
and treated as Marketing Expenses.
6.2 Promotional Materials. LeukoSite may disseminate only those
promotional and advertising materials for Warner-LeukoSite Products that have
been provided or approved for use by the Marketing Committee. Warner shall
supply LeukoSite quantities of promotional materials needed by LeukoSite to
exercise its co-promotion rights under this Agreement. LeukoSite shall not, and
shall cause its employees, representatives and agents not, to make any claims or
representations in respect of the Warner-LeukoSite Products that have not been
approved by Warner.
6.3 No Delegation. Each party may use only its own employees or the
employees of one or more of its subsidiaries in the course of marketing
Warner-LeukoSite Products in the Designated Co-Promotion Countries under this
Agreement.
6.4 Returns. Warner shall be responsible for handling all returns
relating to Warner-LeukoSite Products. Any Warner-LeukoSite Product returned to
LeukoSite shall be shipped by it to the address designated by Warner with
shipping costs authorized by Warner to be paid by Warner.
6.5 Orders. All customer orders for Warner-LeukoSite Products shall be
received and executed in each country by Warner. LeukoSite shall transmit any
such orders that it receives to Warner no later than the following business day.
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 32
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6.6 Samples. Each of the parties will keep accurate records as to the
distribution of samples, and comply with all applicable laws, rules and
regulations dealing with the distribution of samples.
6.7 Completion of Sales. All sales of Warner-LeukoSite Products will be
completed, distributed, accounted for, billed and booked by Warner at prices
established by Warner, provided, however, that Warner will not grant a
preference to or otherwise favor other products of Warner over Warner-LeukoSite
Products or Warner Products based on the fact LeukoSite is entitled to royalties
or a share of Co-promotion rights.
6.8 Exchange of Marketing Information. From time-to-time Warner will
develop call lists, schedules and other appropriate information for the purpose
of determining the physicians and other persons involved in the drug purchase
decision-making process to whom LeukoSite and Warner will Detail each
Warner-LeukoSite Product in the Designated Co-Promotion Countries. The parties
agree to cooperate in finding an inexpensive and expeditious way to provide a
call list and other information indicating the identity of those physicians and
other persons involved in the decision-making process regarding the purchase of
pharmaceuticals. The parties will establish a method of confirming when Details
have been made in the Designated Co-Promotion Countries so that, among other
things, LeukoSite's and Warner's Detail Effort can be calculated.
6.9 Termination of Co-Promotion Countries. LeukoSite may, upon one
month written notice, remove one or more countries from the Designated
Co-Promotion Countries. In such event, LeukoSite will no longer have any rights
to co-promote the Warner-LeukoSite Product in such country, but instead will be
entitled to receive the royalty referred to in Section 5.6 in respect of Net
Sales in such country.
6.10 During the Term of Co-Promotion for the Designated Co-Promotion
Countries, Warner shall be responsible for:
(i) manufacturing (or having manufactured), packaging,
labeling, warehousing and distributing Warner-LeukoSite Product.
(ii) maintaining, as reasonably possible and based on the
business judgment of the Marketing Committee, such inventory and stock levels of
raw materials, packaging components and finished Warner-LeukoSite Product as are
required to maintain an appropriate customer service level.
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 33
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(iii) providing adequate samples, training materials,
territory sales reports and promotional materials for both parties' field sales
forces.
(iv) providing customer service activities and medical
information services.
6.11 Warner warrants that any Warner-LeukoSite Product manufactured by
Warner or a third party (i) shall be manufactured for sale in the Designated
Co-Promotion Countries in conformance with all applicable federal, state and
local statutes, ordinances and regulations (including, without limitation, the
Federal Food Drug and Cosmetic Act (FD&C) and the regulations thereunder such as
current good manufacturing practices), as the same may be amended from time to
time, (ii) at the time of shipment by Warner shall not be adulterated or
misbranded within the meaning of the FD&C, and (iii) at the time of shipment by
Warner shall not be a product which would violate any section of the FD&C if
introduced into interstate commerce.
6.12 LeukoSite and Warner shall not have any right with respect to
co-promotion in a Designated Co-Promotion Country of a "generic" form of a
Warner-LeukoSite Product which is not covered by a Patent Right.
ARTICLE VII
FDA
7.1 Side Effects. Each party shall advise the other as promptly as
reasonably practical by telefax or overnight delivery service addressed to the
attention of its Vice President, International Regulatory Affairs and Drug
Safety and Surveillance (or, in LeukoSite's case, the party with similar
responsibilities), of any unexpected side effect, adverse reaction or injury
which has been brought to that party's attention at any place and which is
alleged to have been caused by a Warner-LeukoSite Product. Warner shall have all
rights and responsibility timely to report such side effects, adverse reaction
or injury to regulatory authorities and others as appropriate.
7.2 Regulatory and other Inquiries. Upon being contacted by the FDA or
any drug regulatory agency for any regulatory purpose pertaining to this
Agreement or to a Warner-LeukoSite Product, LeukoSite and Warner shall
immediately notify and consult with one another and Warner shall provide a
response as it deems appropriate. Warner shall have sole right and
responsibility for responding to all inquiries to Warner or LeukoSite regarding
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 34
34
the benefits, side effects and other characteristics of Warner-LeukoSite
Products.
7.3 Product Recall. In the event that Warner or LeukoSite determines
that an event, incident or circumstance has occurred which may result in the
need for a recall or other removal of any Warner-LeukoSite Product, or any lot
or lots thereof, from the market in any Designated Co-Promotion Country, it
shall advise and consult with the other party with respect thereto. Warner shall
make the final determination to recall or otherwise remove the Warner-LeukoSite
Product or any lot or lots thereof from the market. Warner and LeukoSite shall
share the costs and expenses of such recall or removal in each Designated
Co-Promotion Country, including without limitation expenses and other costs or
obligations to third parties, the cost and expense of notifying customers and
costs and expenses associated with shipment of the recalled Product from a
customer to either Warner or LeukoSite. Such costs shall be shared in proportion
to their average shares of Total Profit during the two years preceding the
giving of notice of recall to customers.
ARTICLE VIII
DETERMINATION OF CO-PROMOTION PAYMENTS
8.1 Determination of LeukoSite's Compensation. LeukoSite's share of
profit ("LeukoSite's Share of Profit") in respect of sales of each
Warner-LeukoSite Product in a Designated Co-Promotion Country will equal Total
Profit actually received in respect of sales in such country multiplied by
************ **** in respect of such country or such lower percentage selected
by LeukoSite pursuant to Section 4.2, or such percentage as provided in Section
8.4(b).
8.2 Payment and Reporting. Within thirty (30) days after the close of
each calendar quarter, or earlier if possible, during the Term of Co-Promotion
in each Designated Co-Promotion Country (i.e. on or before the last day of each
of the months of June, September, December and March), Warner shall furnish to
LeukoSite a statement (the "Profit Statement") setting forth, on a country by
country basis, Total Profit of each Warner-LeukoSite Product, and all data on
which those figures were based and the calculations used in determining them. If
LeukoSite's Share of Profit is a positive number, Warner will submit such amount
to LeukoSite with the Profit Statement. If LeukoSite's Share of Profit is a
negative number, LeukoSite will submit such amount to Warner within 30 days of
its receipt of such Profit Statement. If the Term of Co-Promotion in a
particular Co-Promotion Country ends during an accounting quarter, the amounts
due hereunder shall be based upon an appropriate proration. Warner
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 35
35
will provide LeukoSite monthly sales reports in respect of sales of
Warner-LeukoSite Products in each relevant Co-Promotion Country if and when they
become available. Such reports may contain estimated data and will not be
binding for any purpose whatsoever.
8.3 Records. Warner and LeukoSite shall each keep accurate books and
accounts of record in connection with the manufacture, use and/or sale by or for
it of the Warner-LeukoSite Products in sufficient detail to permit accurate
determination of all figures necessary for verification of compensation
hereunder. Warner and LeukoSite shall maintain such records for a period of
three (3) years after the end of the year in which they were generated. At such
party's expense, a party, through a certified public accountant, shall have the
right to access the books and records of the other party for the sole purpose of
verifying such statements; such access shall be conducted after reasonable prior
written notice to the party, during ordinary business hours and not more
frequently than once during each calendar year.
8.4(a) In the event that in any calendar year, a party performs at
least sixty percent (60%) of its Budgeted Detail Effort for the calendar year
but does not perform at least ninety percent (90%) of its Budgeted Detail Effort
for the calendar year and the other party does perform at least ninety percent
(90%) of its Budgeted Detail Effort for the calendar year, then such party shall
pay to the other party an amount equal to the increased Sales Cost incurred by
the other party as a result of the party's shortfall in its Budgeted Detail
Effort. Such increased Sales Cost shall be determined by dividing the total
Sales Cost of the other party for the calendar year by the Detail Effort for the
other party for the calendar year and multiplying such number by the difference
between the Budgeted Detail Effort for the deficient party for the calendar year
and the Detail Effort for the deficient party for the calendar year. If both
parties perform less than ninety percent (90%) of their Budgeted Detail Effort
then the shortfall in the Detail Effort of each party shall be calculated and
the difference between them shall also be calculated. The party with the greater
shortfall shall pay the increased Sales Cost to the other party as calculated
above based on the difference between the respective shortfalls. The amount owed
under this Section shall be paid within sixty (60) days after the end of the
calendar year.
(b) In the event that in any calendar year, a party performs less than
sixty percent (60%) of its Budgeted Detail Effort for the calendar year and the
other party performs at least ninety percent (90%) of its Budgeted Detail Effort
for the calendar year, if such party is LeukoSite, LeukoSite's Share of Profit
shall be decreased and if such party is Warner, LeukoSite's Share of Profit
shall be increased, with LeukoSite's Share of Profit (i) in the case where
LeukoSite is
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 36
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such party being the actual Detail Effort of LeukoSite for the calendar year
divided by the Budgeted Total Detail Effort for the calendar year multiplied by
the Total Profit and (ii) in the case where Warner is such party, being the
Total Profit multiplied by a fraction where such fraction is the difference
between one (1) and a fraction having as a numerator Warner's actual Detail
Effort for the calendar year and as a denominator the Budgeted Total Detail
Effort for the calendar year.
ARTICLE IX
CONFIDENTIALITY
9.1 Confidentiality. (a) Except as specifically permitted hereunder,
each party hereby agrees to hold in confidence and not use on behalf of others
(or on behalf of itself outside the Collaboration) all data, samples, technical
and economic information (including the economic terms hereof),
commercialization, clinical and research strategies and know-how provided by the
other party (the "Disclosing Party") during the Term of this Agreement and all
data, results and information developed pursuant to the Collaboration and owned
solely by the other party (collectively the "Confidential Information"), except
that the term "Confidential Information" shall not include:
(i) Information that is or becomes part of the public domain through no
fault of the non-Disclosing Party or its Affiliates; and
(ii) Information that is obtained after the date hereof by the
non-Disclosing Party or one of its Affiliates from any third party that is
lawfully in possession of such Confidential Information and not in violation of
any contractual or legal obligation to the Disclosing Party with respect to such
Confidential Information; and
(iii) Information that is known to the non-Disclosing Party prior to
disclosure by the Disclosing Party, as evidenced by the non-Disclosing Party's
written records; and
(iv) Information that is necessary or advantageous to both parties to
be disclosed to any governmental authorities or pursuant to any regulatory
filings, provided that in such case the non-Disclosing Party notifies the
Disclosing Party reasonably in advance of such disclosure and cooperates with
the Disclosing Party to minimize the scope and content of such disclosure; and
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 37
37
(v) Information that is required to be disclosed pursuant to any
relevant law or regulation or under order of a court of competent jurisdiction,
provided that in such case the non-Disclosing Party notifies the Disclosing
Party reasonably in advance of such disclosure and cooperates with the
Disclosing Party to minimize the scope and content of such disclosure.
(b) The obligations of this Section 9.1 shall survive for five years
following the expiration or termination of this Agreement except to the extent
required by any obligations of confidentiality to a third party that are
disclosed to the non-disclosing party prior to termination of this Agreement.
9.2 Publicity. All publicity, press releases and other announcements
relating to this Agreement or the transactions contemplated hereby shall be
reviewed in advance by and subject to the approval of both parties; except that
such review and approvals shall not be required for any announcement that
discloses the existence of this Agreement without disclosing any of its material
terms. Notwithstanding the foregoing, to the extent required by applicable law,
rule or regulation or in connection with filings with regulatory agencies or the
offering of securities, including but not limited to the SEC, a party may file
this Agreement and/or disclose the contents of this Agreement without the
approval of the other party, provided that the other party is provided with the
opportunity to review and comment on such disclosure and further provided that
such disclosure shall be limited to the minimum amount of information and
distribution required by such law, rule, regulation or filing.
9.3 Publication. The parties shall cooperate in appropriate publication
of the results of research and development work performed pursuant to this
Agreement, but subject to the predominating interest to obtain patent protection
for any patentable subject matter. To this end, it is agreed that prior to any
public disclosure of any such results, the party proposing disclosure shall send
the other party a copy of the information to be disclosed, and shall allow the
other party 15 days from the date of receipt in which to determine whether the
information to be disclosed contains subject matter for which patent protection
should be sought prior to disclosure. If notification is not received during the
15 day period, the party proposing disclosure shall be free to proceed with the
disclosure. If due to a valid business reason or a belief by the nondisclosing
party that the disclosure contains subject matter for which a patentable
invention should be sought, then prior to the expiration of the 15 day period,
the nondisclosing party shall so notify the disclosing party, who shall then
delay public disclosure of the information for an additional period of up to 2
months to permit the preparation and filing of a patent application on the
subject matter to be disclosed or other action to be taken. The party proposing
disclosure shall
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 38
38
thereafter be free to publish or disclose the information. The determination of
authorship for any paper shall be in accordance with accepted scientific
practice. Nothing in this Section will be construed to allow either party to
disclose the Confidential Information of the other party in any publication or
other disclosure without the express written consent of such other party.
ARTICLE X
REPRESENTATIONS AND WARRANTIES
10.1 Legal Authority. Each party represents and warrants to the other
that it has the legal power, authority and right to enter into this Agreement
and to perform its respective obligations set forth herein.
10.2 No Conflicts. Each party represents and warrants that as of the
date of this Agreement it is not a party to any agreement or arrangement with
any third party or under any obligation or restriction, including pursuant to
its Certificate of Incorporation or By-Laws, which in any way limits or
conflicts with its ability to fulfill any of its obligations under this
Agreement.
10.3 Others Bound. Each party represents and warrants that anyone
performing services under this Agreement on its behalf shall be bound by all of
the conditions of this Agreement.
10.4 Survival. The foregoing representations and warranties shall
survive the execution, delivery and performance of this Agreement,
notwithstanding any investigation by or on behalf of either party.
10.5 Disclaimer. Except as otherwise expressly stated herein, Warner
hereby disclaims any warranty expressed or implied as to any LeukoSite Product
manufactured by or for, used, sold or placed in commerce by or on behalf of
LeukoSite. Except as otherwise expressly stated herein, LeukoSite hereby
disclaims any warranty expressed or implied as to any Warner Product and/or any
Warner-LeukoSite Product manufactured by or for, used, sold or placed in
commerce by or on behalf of Warner in a Non-Designated Co-Promotion Country.
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 39
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ARTICLE XI
TERMINATION
11.1 Termination. In the event of a material breach of the provisions
of this Agreement described below, the breaching party shall have ninety days
after receipt of written notice from the non-breaching party to cure such
breach, which period shall be sixty (60) days in the case of a failure to make a
payment when due.
(a) In the event of an uncured material breach of Article I, the
non-breaching party may terminate this Agreement.
(b) In the event of an uncured material breach of Article V by Warner
in regard to a Warner Product or Warner-LeukoSite Product, LeukoSite may
immediately (i) terminate the licenses granted by it pursuant to Section 5.1 in
respect of such Product and (ii) require Warner to grant LeukoSite an exclusive
(even as to Warner), worldwide license under the Patent Rights, Background
Technology and Collaboration Technology relating to such Product and owned or
controlled by Warner to the extent necessary to make, have made, use or sell
such Product. In such event such Warner Product or Warner-LeukoSite Product
shall be a LeukoSite Product for the purposes of this Agreement.
(c) In the event of an uncured material breach of Article V by
LeukoSite in regard to a LeukoSite Product, Warner may immediately (i) terminate
the licenses granted by it pursuant to Section 5.2 in respect of such Product
and (ii) require LeukoSite to grant Warner an exclusive (even as to LeukoSite),
worldwide license under the Patent Rights, Background Technology and
Collaboration Technology to the extent necessary to make, have made, use or sell
such Product. Such LeukoSite Product shall be a Warner Product for the purposes
of this Agreement.
(d) In the event of an uncured material breach of Article VI or VIII by
Warner in regard to a Warner-LeukoSite Product, LeukoSite may immediately (i)
terminate the licenses granted by it pursuant to Section 5.1 in respect of such
Product and (ii) require Warner to grant it an exclusive (even as to Warner),
worldwide license under the Patent Rights, Background Technology and
Collaboration Technology to the extent necessary to make, have made, use or sell
such Product. In such event, such Product will be a LeukoSite Product for
purposes of this Agreement.
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 40
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(e) In the event of an uncured material breach of Article VI or a
payment provision of Article VIII or of Section 4.2 by Leukosite with respect to
a Warner-LeukoSite Product, Warner may immediately terminate the marketing
rights of Leukosite with respect to such Warner-Leukosite Product.
11.2 Effect of Bankruptcy. If either party files a voluntary petition
in bankruptcy, is adjudicated a bankrupt, makes a general assignment for the
benefit of creditors, admits in writing that it is insolvent or fails to
discharge within 15 days an involuntary petition in bankruptcy filed against it,
then (a) this Agreement shall immediately terminate and (b) the licenses granted
to such party hereunder shall immediately terminate.
11.3 Termination By Either Party Other Than For Cause. ***********
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11.4 Remedies. In the event of any breach of any provision of this
Agreement, in addition to the termination rights set forth herein, each party
shall have all other rights and remedies at law or equity to enforce this
Agreement.
ARTICLE XII
GENERAL PROVISIONS
12.1 Indemnification. Warner and LeukoSite each agrees to indemnify and
hold harmless the other party and its Affiliates and their respective employees,
agents, officers, directors and permitted assigns (such party's "Indemnified
Group") from and against any claims, judgments, expenses (including reasonable
attorneys' fees), damages and awards (collectively a "Claim") arising out of or
resulting from (i) its negligence or misconduct in regard to any Product, (ii) a
breach of any of its representations or warranties hereunder or (iii) the
manufacture, use or sale of a Warner Product or a Warner-LeukoSite Product (in
the case of Warner) or a LeukoSite Product (in the case of LeukoSite), except to
the extent that such Claim arises out of or results from the negligence or
misconduct of a party seeking to be indemnified and held harmless or the
negligence or misconduct of a member of such party's Indemnified Group. An
indemnified party shall promptly give notice to the indemnifying party of any
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 41
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information from which it should reasonably conclude an incident has occurred
that could give rise to a Claim, and in the event a Claim is made or a suit is
brought, all indemnified parties shall assist the indemnifying party and
cooperate in the gathering of information with respect to the time, place, and
circumstances and in obtaining the names and addresses of any injured parties
and available witnesses. The failure to give the notice referred to in the
preceding sentence shall not relieve a party of its indemnification obligations,
except to the extent such failure prejudices the ability of the indemnifying
party to defend against such claim. No indemnified party shall, except at its
own cost, voluntarily make any payment or incur any expense in connection with
any such Claim or suit without the prior written consent of the indemnifying
party. Each indemnified party shall permit the indemnifying party to assume the
defense of any claim. The obligations set forth in this Section shall survive
the expiration or termination of this Agreement.
12.2 Assignment/Change of Control. (a) This Agreement is not assignable
by either party without the prior written consent of the other party. To the
extent that assignment is permitted this Agreement shall be binding upon and
inure to the benefit of the parties' successors, legal representatives and
assigns. Notwithstanding the foregoing, (i) Warner may assign this Agreement to
any of its subsidiaries or any entity succeeding to a majority of its
Parke-Davis business or substantially all of the business to which this
Agreement is related and (ii) LeukoSite may assign this Agreement to any of its
subsidiaries or to any entity succeeding to substantially all of its
pharmaceutical business or substantially all of the business to which this
Agreement is directed. In no event will any assignment relieve the assigning
party of its obligations hereunder. No assignment shall take effect until the
assignee notifies the non-assigning party of such assignment and the assignee
agrees to be bound by all the terms, conditions and obligations of this
Agreement.
(b) In the event of (i) a merger, consolidation, plan of exchange or
other reorganization of LeukoSite in which LeukoSite is not the surviving party
and the surviving party is an entity which does not presently control or is not
presently under common control with LeukoSite and such surviving entity is in
the pharmaceutical industry and has total annual sales at such time in excess of
$500 million, or any other transaction or series of transactions that result in
an entity (together with such entity's Affiliates) controlling LeukoSite and
such entity does not presently control or is not presently under common control
with LeukoSite and such surviving entity is in the pharmaceutical industry and
has total annual sales at such time in excess of $500 million or (ii) the
assignment by LeukoSite of this Agreement to any entity succeeding to
substantially all of LeukoSite's pharmaceutical business or substantially all of
the business to
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 42
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which this Agreement is related and such entity is an entity which does not
presently control or is not presently under common control with LeukoSite and
such entity is in the pharmaceutical industry and has total annual sales in
excess of $500 million, then Warner may terminate LeukoSite's right to
co-promote all Warner-LeukoSite Products hereunder. In such event, LeukoSite or
the surviving entity, or the assignee, as the case may be, will be entitled to
receive (or obligated to pay) LeukoSite's Share of Profit of each
Warner-LeukoSite Product in the Designated Co-Promotion Countries, except that
in calculating Total Profit, the Selling Expenses of Warner shall also be
deducted from Net Sales.
12.3 Non-Waiver. The waiver by either of the parties of any breach of
any provision hereof by the other party shall not be construed to be a waiver of
any succeeding breach of such provision or a waiver of the provision itself.
12.4 Submission to Senior Officers for Dispute Resolution. The parties
recognize that the collaborative research program under this Agreement and the
development and commercialization of Development Candidates will require the
resolution of certain issues in the future. In the event the Management
Committee or any Marketing Committee is unable to resolve a dispute under this
Agreement or come to unanimous agreement on terms mutually acceptable to both
parties, either party may have the dispute referred to the senior officer of
Warner's pharmaceutical business for good faith resolution. Such senior officer
shall confer with LeukoSite's President prior to resolving such dispute. The
resolution of the dispute pursuant to this Section shall be final and binding on
the parties.
12.5 Governing Law. This Agreement shall be construed and interpreted
in accordance with the laws of the Commonwealth of Massachusetts, other than
those provisions governing conflicts of law.
12.6 Partial Invalidity. If and to the extent that any court or
tribunal of competent jurisdiction holds any of the terms or provisions of this
Agreement, or the application thereof to any circumstances, to be invalid or
unenforceable in a final nonappealable order, the parties shall use their best
efforts to reform the portions of this Agreement declared invalid to realize the
intent of the parties as fully as practicable, and the remainder of this
Agreement and the application of such invalid term or provision to circumstances
other than those as to which it is held invalid or unenforceable shall not be
affected thereby, and each of the remaining terms and provisions of this
Agreement shall remain valid and enforceable to the fullest extent of the law.
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 43
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12.7 Notice. Any notice to be given to a party under or in connection
with this Agreement shall be in writing and shall be (i) personally delivered,
(ii) delivered by a internationally recognized overnight courier or (iii)
delivered by certified mail, postage prepaid, return receipt requested to the
party at the address set forth below for such party:
<TABLE>
<S> <C>
To Warner: To LeukoSite:
Senior Vice President, Christopher K. Mirabelli,
Research and Development Ph.D.
Parke-Davis Pharmaceutical Chairman of the Board and
Research, Chief Executive Officer
Warner-Lambert Company LeukoSite, Inc.
2800 Plymouth Road 800 Huntington Avenue
Ann Arbor, MI 48105 Boston, MA 02115
with a copy to: with a copy to:
Vice President and Elliot Olstein, Esq.
General Counsel Carella, Byrne, Bain, Gilfillan,
Warner-Lambert Company Cecchi, Stewart & Olstein
201 Tabor Road 6 Becker Farm Road
Morris Plains, NJ 07950 Roseland, NJ 07068
</TABLE>
or to such other address as to which the party has given notice thereof. Such
notices shall be deemed given upon receipt.
12.8 SAB Attendance. During the Term of this Agreement, Warner will be
entitled to have a representative attend (but not vote at) all meetings of
LeukoSite's Scientific Advisory Board ("SAB"). Warner will be provided notices,
meeting minutes and all material made available to SAB members generally at the
same time as such SAB members. Warner will recuse itself from that portion of
any meeting, and will not be provided material related to, confidential
information of third parties who object to Warner's inclusion. Prior to
attending any such SAB meeting, Warner will sign a confidentiality agreement by
which Warner will agree to maintain in confidence all information, data and
materials received as a result of such attendance and not to use same for any
research, development, manufacture or sale of any product or process (except to
the extent permitted by this Agreement).
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 44
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12.9 Headings. The headings appearing herein have been inserted solely
for the convenience of the parties hereto and shall not affect the construction,
meaning or interpretation of this Agreement or any of its terms and conditions.
12.10 No Implied Licenses or Warranties. No right or license under any
patent application, issued patent, know-how or other proprietary information is
granted or shall be granted by implication. All such rights or licenses are or
shall be granted only as expressly provided in the terms of this Agreement.
Neither party warrants the success of any clinical or other studies undertaken
by it.
12.11 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, nor shall it create any liability, if the same shall arise from
any cause or causes beyond the reasonable control of the affected party,
including, but not limited to, the following, which for purposes of this
Agreement shall be regarded as beyond the control of the party in question: 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; invasion; strikes; and lockouts or the like;
provided that the party so affected shall use its best efforts to avoid or
remove such causes or nonperformance and shall continue performance hereunder
with the utmost dispatch whenever such causes are removed.
12.12 Survival. The representations and warranties contained in this
Agreement as well as those rights and/or obligations contained in the terms of
this Agreement which by their intent or meaning have validity beyond the term of
this Agreement shall survive the termination or expiration of this Agreement.
12.13 Entire Agreement. This Agreement, together with the Preferred
Stock Purchase Agreement dated the date hereof, constitute the entire
understanding between the parties with respect to the subject matter contained
herein and supersede any and all prior agreements, understandings and
arrangements whether oral or written between the parties relating to the subject
matter hereof.
12.14 Amendments. No amendment, change, modification or alteration of
the terms and conditions of this Agreement shall be binding upon either party
unless in writing and signed by the party to be charged.
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 45
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12.15 Independent Contractors. It is understood that both parties
hereto are independent contractors and engage in the operation of their own
respective businesses, and neither party hereto is to be considered the agent or
partner of the other party for any purpose whatsoever. Neither party has any
authority to enter into any contracts or assume any obligations for the other
party or make any warranties or representations on behalf of the other party.
12.16 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original and both of which together shall
constitute one and the same instrument.
12.17 In the event that there is a conflict between the text of this
Agreement and Exhibit 1, the text of this Agreement shall control.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the date first above written.
LEUKOSITE, INC. WARNER-LAMBERT COMPANY
By:[signature appears here] By:[signature appears here]
Name: Name:
Title: Title:
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 46
CONFIDENTIAL TREATMENT
FIRST AMENDMENT
TO RESEARCH, DEVELOPMENT AND MARKETING AGREEMENT
First Amendment dated as of July 1, 1995 ("Amendment") to the Research,
Development and Marketing Agreement dated as of September 30, 1994 (the
"Agreement") between LEUKOSITE, INC., a Delaware corporation ("LeukoSite"), and
WARNER-LAMBERT COMPANY, a Delaware corporation ("Warner").
W I T N E S S E T H:
WHEREAS, LeukoSite and Warner wish to amend the Agreement as set forth
herein,
NOW, THEREFORE, the parties hereby agree as follows:
1. Definitions. Capitalized terms used but not defined herein shall
have the meanings set forth in the Agreement. The following definition is hereby
added to Article A of the Agreement:
"'IL-8 Agreement' shall mean the Research, Development and
Marketing Agreement dated as of July 1, 1995 between LeukoSite and Warner."
In addition, the following definitions are hereby revised as follows:
"Co-Promotion Countries". The reference to "Section 6.10"
found in the definition of Co-Promotion Countries is hereby changed to "Section
6.09".
"Market Price". The language ", or the five business days
preceding Warner's stock purchase under Section 1.4(d)" is hereby inserted after
the phrase "Revised Stage 1 Research Plan" found in the definition of Market
Price.
"Net Sales". The language "*********************************
********************************************" found in the definition of Net
Sales is hereby deleted and replaced by the language "************************
********************************************************************************
*********************".
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 47
47
2. Stock Purchase. Warner agrees to purchase $********************
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3. Section 1.3. The following language found in Section 1.3 is hereby
deleted:
", *******************************************************
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*******************************************************************************
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****************".
Such deleted language is hereby replaced with the phrase "*****************
**********************".
4. Section 1.4(a). The following sentence is hereby added following the
third sentence of Section 1.4(a):
"The licenses granted in the preceding two sentences shall not
include any Warner Collaboration Technology (as defined herein), Patent Rights
(as defined herein) or other patent rights insofar as any of the same are also
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 48
48
"Warner Collaboration Technology" (as defined in the IL-8 Agreement) or "Patent
Rights" (as defined in the IL-8 Agreement) and licensed to LeukoSite under the
IL-8 Agreement unless and until the IL-8 Agreement is terminated pursuant to
Section 1.4(a) thereof."
5. Section 1.4(d). The following sentence is added as a new paragraph
at the end of Section 1.4(d) of the Agreement:
"Notwithstanding the foregoing, this Section 1.4(d)
shall not apply to inhibitors of IL-8. In the event that Warner identifies a
compound hereunder that it wishes to optimize for IL-8 activity, it shall do so
pursuant to the IL-8 Agreement."
6. Section 1.4(e). The following new Section is hereby added to the
Agreement:
"1.4(e). "Equity Reduction. The total dollar amount of
LeukoSite capital stock that Warner may be required to purchase (*************
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7. Section 1.5. The language "the Stage 1 Research Plan, under the
Stage 2 Research Plan for development of a Warner Product" found in the final
sentence of Section 1.5 is hereby deleted and replaced by the language "the
Stage 1 Research Plan or the Stage 2 Research Plan, or for development of a
Warner Product".
8. Section 1.7. The word "LeukoSite" is hereby inserted before the
phrase "Background Technology" in the second sentence of Section 1.7.
9. Split Protection Clarification. The parenthetical "***********
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********** 1.4(d)."
10. Price Protection Clarification. The language "****************
******************************************************************" is hereby
deleted and replaced with the phrase "***********************************
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* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 49
49
******* in each of the following places: (i) the final sentence of the first
paragraph of Section 1.4(b), (ii) the penultimate sentence of Section 1.4(c) and
(iii) the final sentence of the first paragraph of Section 1.4(d). In addition,
the parties hereby make the same deletion in Section 3.2 of the Series C
Preferred Stock Purchase Agreement dated November 8, 1994 by and among the
parties, and hereby replace it with the language ************************** per
************************************************************************* and
***************************.
11. Section 1.7. The language "grant rights to a third party under
Background Technology" found in the final sentence of Section 1.7 is hereby
deleted and replaced with the language "grant rights to a third party under
LeukoSite Background Technology".
12. Section 3.2. The language "payments to be made by Warner to
LeukoSite hereunder, regardless of which Product such payments relate to," found
in the final sentence of Section 3.2 is hereby deleted and replaced with the
language "payments to be made by Warner to LeukoSite hereunder or pursuant to
the IL-8 Agreement, regardless of which Product (as defined herein or in the
IL-8 Agreement) such payments relate to".
IN WITNESS WHEREOF, the parties have signed this Amendment as of the
first date set forth above.
WARNER-LAMBERT COMPANY
By: [signature appears here]
------------------------
Name:
Title:
LEUKOSITE, INC.
By: [signature appears here]
-------------------------
Name:
Title:
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 50
50
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 1
EXHIBIT 10.4 (b)
CONFIDENTIAL TREATMENT
RESEARCH, DEVELOPMENT AND MARKETING AGREEMENT
Research, Development and Marketing Agreement, dated as of July 1, 1995
between LEUKOSITE, INC., a Delaware corporation ("LeukoSite"), located at 215
First Street, Cambridge, MA 02142, and WARNER-LAMBERT COMPANY, a Delaware
corporation ("Warner"), located at 201 Tabor Road, Morris Plains, New Jersey
07950.
WITNESSETH:
WHEREAS, LeukoSite and Warner each has certain expertise in the
discovery and development of compounds that inhibit the action of IL-8 (the
"Field"); and
WHEREAS, Warner and LeukoSite each wishes to enter into a collaborative
effort to share such expertise, to develop new expertise in the Field, to
research together potential applications thereof and, if successful. to market
certain of such applications (the "Collaboration");
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual promises, covenants and conditions contained herein, LeukoSite and Warner
agree as follows:
ARTICLE A
DEFINITIONS
The following capitalized terms shall have the following meanings for
purposes of this Agreement:
"Affiliate" shall mean any corporation, association or other entity
which directly or indirectly controls, is controlled by or is under common
control with the party in question. As used herein the term "control" means
control with possession of the power to direct, or cause the direction of. the
management and policies of a corporation, association or other entity.
"Background Technology" shall mean individually and collectively Warner
Background Technology and LeukoSite Background Technology.
"Budgeted Detail Effort" shall mean for each party for each calendar
year each party's Selling Percentage of the Budgeted Total Detail Effort, or
with respect to LeukoSite, a lower percentage of the Budgeted Total Detail
Effort elected by LeukoSite for the calendar year pursuant to Section 6. 1.
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 2
2
"Budgeted Total Detail Effort" shall mean for each calendar year the
total number of Details for Warner-LeukoSite Product in the Designated
Co-Promotion Territory as budgeted by the Marketing Committee or in the case
where the sales force sells other than through Details, the total selling
efforts of the sales force of each party for such calendar year.
"Collaboration Technology" shall mean individually and collectively
Warner Collaboration Technology and LeukoSite Collaboration Technology.
"Co-Promotion Countries" shall mean, subject to Section 6.9, the United
States of America, Mexico, the Commonwealth of Canada and their respective
territories and possessions, including the Commonwealth of Puerto Rico.
"Cost of Goods" means for experimental, clinical and commercial
supplies of Warner-LeukoSite Product the fully allocated manufacturing cost
(determined in a reasonable manner consistent with Warner's normal internal
accounting practices and in accordance with generally accepted accounting
principles ("GAAF)) which includes (i) direct and indirect labor (salaries,
wages and employee benefits); (ii) direct and indirect materials; (iii)
operating costs of building and equipment used in connection with the
manufacture of Warner-LeukoSite Product; (iv) allocated depreciation and repairs
and maintenance; (v) quality and in-process control; (vi) any charges for
obsolescence, out of date product, spoilage, scrap or rework costs; (vii)
royalties paid to third parties (except royalties in respect of rights that a
party hereto currently has an interest in or could have an interest in pursuant
to any currently existing agreements) and (viii) the net cost or credit of any
value added taxes paid with respect to the manufacture of Warner-LeukoSite
Product. To the extent that manufacturing of Warner-LeukoSite Product or any
component thereof is performed for Warner by a third party (which is not an
Affiliate of Warner), amounts paid to such third parry in connection with the
manufacturing of Warner-LeukoSite Product or any component thereof shall be
added to the aggregate amount of the applicable hereinabove items (i) through
(viii).
"Designated Co-Promotion" Country' shall mean with respect to each
Warner-LeukoSite Product each Co-Promotion Country designated under Section 4.1
as to which LeukoSite retains marketing rights.
"Detail" shall mean a sales presentation by a professional sales
representative to a target physician or other person involved in prescribing or
influencing drug usage of a Warner-LeukoSite Product in
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 3
3
which the primary purpose is to discuss the benefits and features of such
Warner-LeukoSite Product in order to encourage a sale of such Product.
"Detail Effort" shall mean with respect to a party, and for any
calendar year, the actual number of Details given by its sales force for such
calendar year or in the case where the sales force sells other than through
Details the selling efforts of the party performed by its sales force for such
calendar year.
"Development" shall mean the conduct of all preclinical, clinical,
chemical synthesis, formulation, stability, assays and validation, testing and
development in accordance with then current Good Laboratory, Clinical and
Manufacturing Practices or other designated quality standards in connection with
any Development Candidate or Product insofar as the same are reasonably
necessary to obtain marketing approval by the relevant regulatory authorities
for a Product's first approved indication in any country (including studies
required to be performed after approval as a condition of approval) and the
costs of preparation, filing and submission of regulatory filings in Designated
Co-Promotion Countries.
"Development" Candidate" shall have the meaning set forth in Section 4.
1.
"Development Committee" shall have the meaning set forth in Section
2.3.
"Effective Date" shall mean the date of this Agreement first stated
above.
"FDA" shall mean the United States Food and Drug Administration.
"IL-8 Inhibitor" shall mean a compounds) other than antibody(ies) which
inhibits the action of IL-8.
"LeukoSite Background Technology" shall mean all technology,
inventions, information, data, know-how, compounds, materials and substances
(whether or not patented or patentable) which relate to or are potentially
useful as an IL-8 Inhibitor or is an IL-8 Inhibitor and/or techniques for the
discovery, screening, design, synthesis, delivery, development, testing, use,
manufacture or sale of IL-8 Inhibitors which exists as of the Effective Date
which is either -Owned by LeukoSite or which is licensed to LeukoSite and as to
which LeukoSite has a right to sublicense or otherwise transfer.
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 4
4
"LeukoSite Collaboration Technology" shall mean all technology,
inventions, information, data, know-how, compounds, materials and substances
(whether or not patented or patentable) which is either owned by LeukoSite
(alone or together with Warner) or which is licensed to LeukoSite and as to
which LeukoSite has a right to sublicense or otherwise transfer, and which is
conceived or reduced to practice pursuant to the Stage 1 Research Plan or
pursuant to the Stage 2 Research Plan or pursuant to development of a LeukoSite
Product or a Warner-LeukoSite Product.
"LeukoSite Product" shall have the meaning set forth in Section 4.1.
"LeukoSite's Share of Profit" shall have the meaning set forth in
Section 8.1.
"Management Committee" shall have the meaning set forth in Section 2.1.
"Marketing Committee" shall have the meaning, set forth in Section 2.4.
"Marketing Expense" shall mean to the extent approved by the Marketing
Committee all costs and expenses incurred by Warner (including without
limitation. the salaries, commissions, bonuses, transportation. meals, lodging,
benefits and healthcare insurance expenses of appropriate employees) associated
with launch, advertising and sales promotion (including, without limitation,
expenses related to promotional publications, space or time in various media,
direct mail campaigns, samples, if any, advertising agency fees and other
promotional activities), the cost of product samples, Phase IV Studies,
Phamacoeconomic Studies, Phase V Studies, and any other clinical studies not
reasonably necessary to obtain marketing approval by the relevant regulatory
authorities for a Product's first approved indication in any country, in each
case determined in accordance with Warner's normal internal accounting practices
and GAAP.
"Market Price" shall mean the average exchange closing price for
LeukoSite's Common Stock during the five business days beginning, on the day
that work is initiated on the Stage 2 Research Plan or the five (5) business
days preceeding Warner's stock purchase under Section 1.4(c), as the case may
be.
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 5
5
"MCP-1 Agreement" shall mean the Research, Development and Marketing
Agreement, dated as of September 30, 1994 between LeukoSite and Warner.
"Net Sales" shall mean the gross amount invoiced for sales of a Product
to non-affiliated commercial customers after deduction of the following items:
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"Patent Rights" shall mean, with respect to LeukoSite or Warner, all
United States and foreign patents owned in whole or in part or licensed to
LeukoSite or Warner, respectively, as to which a sublicense can be granted, at
any time during the Term of this Agreement, which would be infringed by the
manufacture, use or sale of a Product or which would be infringed by activities
to be performed by the parties under the Stage 1 and/or Stage 2 Research Plan
including all United States and foreign patents and patent applications
(including, without limitation, all reissues, extensions, substitutions,
confirmations, registrations, revalidations, additions, continuations,
continuations-in-part, and divisions thereof). Excluded from 'Patent Rights" are
compounds that Warner identifies as having anti-inflammatory activity
independent of LeukoSite.
"Pharmacoeconomic Studies" shall mean clinical studies designed with
the primary intention of developing pharmacoeconomic data.
"Phase IV Studies" shall mean clinical studies designed to enhance
sales for an approved indication, but shall not include Pharmacoeconomic
Studies.
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 6
6
"Phase V Studies" shall mean clinical studies directed for approval of
additional indications, new dosages or other line extensions.
"Products" shall mean Warner Products, LeukoSite Products,
Warner-LeukoSite Products and/or any product derived from or based on Warner
Collaboration Technology as to which LeukoSite has rights under Section 1.4(a),
as applicable.
"Research Cost" shall mean the aggregate amount of costs incurred by
LeukoSite to perform research under the Stage 2 Research Plan determined in a
reasonable manner and consistent with normal internal accounting practices and
GAAP.
"Research" Committee" shall have the meaning set forth in Section 2.2.
"Sales Cost" with respect to each of Warner and LeukoSite for any
applicable period shall equal the aggregate amount of expenses incurred by such
party for maintaining its sales force (including the costs set forth below) for
Warner-LeukoSite Product in the Designated Co-Promotion Countries. The costs
shall include but not be limited to salary, commissions, bonuses.
transportation, meals, lodging, benefits and health care insurance expenses for
the sales force, and sales force management and support in the Designated
Co-Promotion Countries, all only as it relates to Warner-LeukoSite Product but
specifically excluding any cost or expense included in Marketing Expenses, in
each case determined in accordance with the parties' normal internal cost
accounting practices and GAAP.
"Selling Percentage" with respect to any calendar year shall mean for
LeukoSite **************** or such lower percentage selected by LeukoSite under
Section 4.2 and for Warner shall mean the difference between one hundred percent
(100%) and LeukoSite's Selling Percentage.
"Stage 1" shall mean the period of research under the Stage I Research
Plan, which period terminates as set forth in Section 1.3
"Stage 1 Research Plan" shall mean the research plan attached hereto as
Exhibit 1.
"Stage 2 Research Plan" shall have the meaning set forth in Section
1.4(b).
"Stage 2 Lead Compound" shall mean a compound that in accordance with
standards established by the Management Committee is
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 7
7
sufficiently promising to warrant termination of Stage 1 and initiation of work
under the Stage 2 Research Plan.
"Term of Co-Promotion" for a Warner-LeukoSite Product shall mean, in
each Designated Co-Promotion Country, the period beginning when such
Warner-LeukoSite Product is first sold in such country and lasting until the
Warner-LeukoSite Product will no longer be sold in the applicable Designated
Co-Promotion Country. For the purpose of this definition only, a
Warner-LeukoSite Product does not include a "generic" form of a Warner-LeukoSite
Product which is not covered by a Patent Right.
"Term of this Agreement" shall mean from the Effective Date until this
Agreement is terminated pursuant to its terms.
"Term of the Stage 1 Research Collaboration" shall have the meaning set
forth in Section 1.3.
"Total Profit" shall mean with respect to a Warner-LeukoSite Product,
Net Sales minus the sum of (i) the Cost of Goods, (ii) Marketing Expenses and
(iii) the cost of distribution. For the purposes of this definition only,
Warner-LeukoSite Product does not include a "generic" form of a Warner-LeukoSite
Product which is not covered by a Patent Right.
"Warner Background Technology" shall mean all technology, inventions,
information, data, know-how, compounds, materials and substances (whether or not
patented or patentable) which relate to or are potentially useful as an IL-8
Inhibitor or is an IL-8 Inhibitor and/or techniques for the discovery,
screening, design, synthesis, delivery, development, testing, use, manufacture
or sale of IL-8 Inhibitors which exists as of the Effective Date which is either
owned by Warner or which is licensed to Warner and as to which Warner has a
right to sublicense or otherwise transfer. Excluded from "Warner Background
Technology" is Warner's high volume screening technology and compounds that
Warner identifies as having anti-inflammatory activity independent of LeukoSite.
"Warner Collaboration Technology" shall mean all technology,
inventions, information, dam, know-how, compounds, materials and substances
(whether or not patented or patentable) which is either owned by Warner (alone
or together with LeukoSite) or which is licensed to Warner and as to which
Warner has a right to sublicense or otherwise transfer), which is conceived or
reduced to practice pursuant to the Stage 1 Research Plan or Stage 2 Research
Plan or pursuant to development of a Warner Product or Warner-LeukoSite Product.
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 8
8
"Warner-LeukoSite Product" shall have the meaning set forth in Section
4.1.
"Warner Product" shall have the meaning set forth in Section 4.1.
ARTICLE I
RESEARCH PROGRAM
1.1 Undertaking and Scope. Each party agrees to use its best efforts to
perform the activities detailed in the Stage I Research Plan attached hereto as
Exhibit 1 in a professional and timely manner. During Stage 1, LeukoSite will
use its best efforts at its cost (including the cost of any royalties or other
amounts owed to third parties by LeukoSite) to develop and transfer to Warner a
receptor-ligand screen for IL-8 Inhibitors and (ii) cells containing an IL-8
receptor useful in creating an IL-8 triggered cell based screen for IL-8
Inhibitors. During Stage 1, Warner will use its best efforts, utilizing its high
volume screening technology, at its cost (including the cost of any royalties or
other amounts owed to third parties by Warner) to screen substantially all of
its compound library with such screen provided by LeukoSite. Pursuant to the
Stage 1 Research Plan, during Stage 1, LeukoSite will use its best efforts, at
its cost, to conduct in vitro and in vivo characterization of the compounds
identified as blocking IL-8 activity in such-screen.
Notwithstanding the foregoing, Warner may withhold from the
Collaboration any compound that it identifies as possessing anti-inflammatory
activity independent of LeukoSite. Such compounds are excluded from the
Collaboration and Warner may pursue development and marketing of such compounds
independently of this Agreement and LeukoSite.
1.2 Personnel and Resources. Each party agrees to commit the personnel,
facilities, expertise and other resources necessary to perform its obligations
under this Agreement in accordance with its terms; provided, however, that
neither party warrants that the Collaboration will achieve any of the research
objectives contemplated by the parties. Each party agrees to use its best
efforts to assure the complete and prompt exchange of Background Technology,
Collaboration Technology and the results of all activities conducted pursuant to
the Stage 1 Research Plan, the Revised Stage 1 Research Plan and/or the Stage 2
Research Plan. The scientific priorities and direction of the parties'
respective staff under the Stage 1 Research Plan, the Revised Stage 1 Research
Plan and under the Stage 2 Research Plan will be determined by the Management
Committee.
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 9
9
1.3 Term of the Stage 1 Research Collaboration. Activities under the
Stage 1 Research Plan, as the same may be amended or expanded from time to time
but only by mutual agreement of the parties, shall commence as of the Effective
Date and, unless terminated earlier by either party pursuant to the terms of
this Agreement or extended by mutual agreement of the parties, shall end upon
designation by the Management Committee of a Stage 2 Lead Compound, but in no
event will such activities continue after the later of *************************
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********************************(such period being referred to herein as the
"Term of the Stage 1 Research Collaboration").
1.4 Stage 2 Collaboration Options. Promptly after termination or
expiration of Stage 1, but in no event later than thirty (30) days thereafter,
Warner will elect to proceed under one of the following options:
a. Option 1. Warner may terminate this Agreement. In such event, Warner
will grant to LeukoSite a perpetual, royalty-free (except as stated in this
Section below), worldwide, exclusive license (with the right to sublicense) in
the Warner Collaboration Technology (including but not limited to any product
which is identified in the Stage 1 Research as a potential inhibitor of the
action of IL-8 (a "Stage 1 Product")) and any Patent Rights based thereon,
solely for use in the field of chemokine modulation. In addition, Warner will
grant a non-exclusive license under Patent Rights not based on Warner
Collaboration Technology to the extent required to exploit Warner Collaboration
Technology and any patent rights based thereon solely for use in the field of
chemokine modulation. The licenses granted in the preceding two sentences shall
not include any Warner Collaboration Technology (as defined herein), Patent
Rights (as defined herein) or other patent rights insofar as any of the same are
also "Warner Collaboration Technology" (as defined in the MCP-1 Agreement) or
"Patent Rights" (as defined in the MCP-1 Agreement) and licensed to LeukoSite
under the MCP-1 Agreement unless and until the MCP-1 Agreement is terminated
pursuant to Section 1.4(a) thereof. Notwithstanding the foregoing, Warner will
retain a perpetual, royalty-free, worldwide interest in Warner Collaboration
Technology and Patent Rights of Warner based thereon to make, use or sell any
product or process (i) for use outside the field of chemokine modulation or (ii)
discovered after the Term of the Stage 1 Research and which is within the field
of chemokine modulation and which is not derived from or based on LeukoSite
Background Technology, provided that in each case such product is not identical
to a product which is being actively pursued by LeukoSite or any one of its
licensees. LeukoSite shall pay Warner a
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 10
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royalty of ************ of worldwide Net Sales of (i) any Stage 1 Product (or
any product which results from research by or on behalf of LeukoSite directed to
such Stage 1 Product or any other compound provided by Warner to LeukoSite
pursuant to the Stage 1 Research) sold by LeukoSite or its sublicensee and (ii)
any product sold by LeukoSite or its sublicensee that is covered by a Warner
Patent Right licensed to LeukoSite under this Section, in each case for the
period set forth in Section 5.6(d).
In the event that at any time after exercise of Option 1, Warner
desires to exercise Option 2 with respect to a Stage 1 Product under the terms
and conditions of this Agreement, Warner shall notify LeukoSite in writing, and
if LeukoSite is not actively researching, developing, marketing or selling, such
Stage 1 Product and has not granted rights to such Stage 1 Product to any third
party, then Option 2 shall be considered to be exercised by Warner.
b. Option 2. Warner and LeukoSite may agree to continue collaborative research
in the Field pursuant-to a mutually acceptable expanded research plan ("Stage 2
Research Plan'). Warner will provide funding to LeukoSite for ***% of
LeukoSite's Research Cost of performing work under the Stage 2 Research Plan
from initiation of such work until three years thereafter and 100% of
LeukoSite's Research Cost under the Stage 2 Research Plan after the expiration
of the three-year period, which amount shall be paid quarterly in advance with a
reconciliation at the end of the year such that LeukoSite receives for the
calendar year the applicable percentage of such Research Cost for the calendar
year. In no event will LeukoSite be required to perform (nor shall Warner be
required to fund) activities under the Stage 2 Research Plan which would require
support for more than five (5) persons per year: provided, however, that in all
events LeukoSite will be reimbursed only for work approved by the Management
Committee. Upon the later of (i) January 3, 1997 and (ii) 2 weeks after
initiation of work under the Stage 2 Research Plan, Warner will purchase $1
Million of capital stock (Preferred if at the time of purchase LeukoSite has not
completed its initial public offering (the "IPO"), and Common if the IPO has
been completed by such time), upon terms substantially similar to those of the
Preferred Stock Purchase Agreement dated November 8, 1994 at (i) $5.00 per share
(subject to adjustment from and after the date hereof upon each stock dividend,
stock split, reverse stock split or other similar event if at the time of
initiation of work under the Stage 2 Research Plan LeukoSite has not yet
completed its IPO or (ii) 125% of the Market Price for LeukoSite's Common Stock
at the time of initiation of work under the Stage 2 Research Plan if at such
initiation LeukoSite has completed its IPO. In the event that any such sale and
purchase shall be of shares of Preferred Stock of LeukoSite, the terms of such
shares of Preferred Stock shall be identical to the terms of
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 11
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LeukoSite's Series C Convertible Preferred Stock, except that (i) such shares of
Preferred Stock shall be from a separate, newly-created series of Preferred
Stock and (ii) unless otherwise agreed to by the parties, the liquidation
preference of such shares of Preferred Stock shall be equal to the purchase
price per share paid by Warner for such shares of Preferred Stock. *********
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If LeukoSite does not initiate research under the Stage 2 Research Plan
(or similar plan of research) or after initiating research under the Stage 2
Research Plan LeukoSite terminates such research and such failure to initiate
research or such termination results other than as a result of a breach by
Warner, in such event, by written notice from Warner to LeukoSite, Warner may
terminate LeukoSite's right to participate in such Stage 2 research. If such
right is terminated by Warner in accordance with the preceding sentence, any
compound which is or becomes the subject of the Stage 2 Research Plan (or
similar plan of research) as an IL-8 Inhibitor (or as an inhibitor for a
chemokine other than IL-8 pursuant to Option 3) shall become a Warner Product
subject to the terms and conditions of this Agreement.
c. Option 3. In the event that during Stage 1 or Stage 2, a compound
has been identified as an IL-8 Inhibitor and such compound also has activity as
an inhibitor for a chemokine other than IL-8, and Warner notifies Leukosite in
writing that Warner desires to optimize that non-IL-8 activity instead of IL-8
under Option 2 the parties shall proceed under Option 2 (with appropriate
expansion to the definitions of "Field", "Background Technology", "Collaboration
Technology" and similar terms hereof) with respect to such compound for such
activity unless within thirty (30) days thereafter LeukoSite elects in writing
not to proceed under Option 2. If LeukoSite elects in writing not to continue
with collaborative research with respect thereto (or is prevented from
continuing such collaborative research with respect thereto because of
conflicting third party obligations), in such event, such compound shall
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 12
12
become a Warner Product subject to the terms and conditions of this Agreement,
except that no license is granted by LeukoSite under Section 5.1 to such Warner
Product to the extent that LeukoSite is prohibited from granting licenses under
its Patent Rights which are not Background Technology with respect to such
Warner Product as an inhibitor of a chemokine other than IL-8 by an agreement
with a third party. As a result of such compound becoming a Warner Product under
this Option 3 upon the later of (i) January 3, 1997 or (ii) two weeks after
LeukoSite elects in writing not to continue such collaborative research Warner
will purchase $1 Million of LeukoSite capital stock (Preferred if at the time of
purchase the IPO has not been completed, and common if the IPO has been
completed by such time), upon terms substantially similar to those of the
Preferred Stock Purchase Agreement dated November 8, 1994, at (i) $5.00 per
share (subject to adjustment from and after the date hereof upon each stock
dividend, stock split, reverse stock split or other similar event) if at the
time of purchase LeukoSite has not yet completed its IPO or (ii) 125% of the
Market Price for LeukoSite's Common Stock at the time of purchase if at such
time of purchase LeukoSite has completed its IPO. In the event that any such
sale and purchase shall be of shares of Preferred Stock of LeukoSite, the terms
of such shares of Preferred Stock shall be identical to the terms of LeukoSite's
Series C Convertible Preferred Stock, except that (i) such shares of Preferred
Stock shall be from a separate, newly-created series of Preferred Stock and (ii)
unless otherwise agreed to by the parties, the liquidation preference of such
shares of Preferred Stock shall be equal to the purchase price per share paid by
Warner for such shares of Preferred Stock. ********************************
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In the event that Option 2 has been previously exercised and the stock
purchase completed pursuant thereto, Warner shall not be required to purchase
stock pursuant to this Option 3. In addition, if stock is purchased under this
Option 3, and Option 2 is subsequently exercised, the amount of stock that
Warner will be required to purchase the first time that Warner exercises such
Option 2 will be reduced by $1,000,000.
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 13
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Notwithstanding the foregoing, this Section 1.4(c) shall not apply to
inhibitors of MCP-1. In the event that Warner identifies a compound hereunder
that it wishes to optimize for MCP-1 activity, it shall do so pursuant to the
MCP-1 Agreement.
1.5 Rights to Background Technology and Collaboration Technology.
Subject to the terms and conditions of this Agreement each party hereby grants
and agrees to grant to the other a non-exclusive, worldwide, royalty-free
license to use such party's Background Technology and Collaboration Technology
for research and development of an IL-8 Inhibitor under the Stage 1 Research
Plan and under the Stage 2 Research Plan and as to LeukoSite for development of
a LeukoSite Product and as to Warner for development of a Warner Product and/or
Warner-LeukoSite Product. In addition, to the extent permitted by agreements
with third parties, LeukoSite hereby agrees to grant to Warner a non-exclusive,
world-wide, royalty-free license to make and use all data, information and
inventions (whether or not patentable) related to cell based assays developed by
or on behalf of LeukoSite alone or with one or more collaborators, and promptly
to disclose the existence of the same to Warner, for research and development of
an IL-8 Inhibitor under the Stage 1 Research Plan or the Stage 2 Research Plan
or for development of a Warner Product and/or Warner-LeukoSite Product.
1.6 Collaboration Expenses. Subject to the terms of Section 1.4(b) and
Article IV, each party shall bear the costs and expenses of work done pursuant
to the Collaboration at its laboratories and its affiliated laboratories.
1.7 Exclusivity. Until termination of, or a determination not to
initiate activities under, the Stage 1 Research Plan, and the Stage 2 Research
Plan, neither LeukoSite nor Warner will undertake any research or development of
IL-8 Inhibitors except pursuant to this Agreement. Notwithstanding the
foregoing, LeukoSite may undertake research and development, alone or with one
or more third parties, on antibodies against IL-8 or its receptor for inhibiting
the action of IL-8 and may undertake activities alone or with a third party or
grant rights to a third party to test or screen a compound for inhibition of
IL-8 as part of a program to research and develop a compound as a non-IL-8
inhibitor and/or may grant rights to a third party under LeukoSite Background
Technology with respect to an IL-8 inhibitor, provided that such program and/or
such IL-8 inhibitor is a direct result of identification of a compound as an
inhibitor of a chemokine other than IL-8.
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 14
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1.8 Third Party Collaborations. LeukoSite agrees that it will not
assist any third party, nor permit any third party to use any of its technology,
data, information or inventions (whether or not patentable), in connection with
the research, development or commercialization of any compound that has a
similar structure to a compound that at the later of (i) the time of discovery
of such third party's compound or (ii) the date that LeukoSite is to become
first involved in the research or development or commercialization of such third
party compound is the subject of active research, development or
commercialization by Warner or one of its licensees under this Agreement. The
foregoing shall apply only for so long as such compound remains subject to
active research, development, clinical development or commercialization by
Warner or one of its licensees under this Agreement.
ARTICLE II
MANAGEMENT COMMITTEE; RECORDS AND REPORTS
2.1 Management Committee. Promptly after the Effective Date, Warner and
LeukoSite will each appoint 3 representatives to a management committee (the
"Management Committee"). The Warner representatives on such committee will
together have only one vote and the LeukoSite members on such committee will
together have only one vote. The Management Committee will meet promptly after
the Effective Date to prepare such procedures and mechanisms as may be necessary
for the operation of the Management Committee, the Research Committee and the
Development Committee(s) to assure the most efficient conduct of the
Collaboration. Thereafter, the Management Committee will meet quarterly or as
otherwise mutually agreed. The Management Committee will assure that agendas and
minutes are prepared for each of its meetings. The personnel, facilities,
expertise and other resources of each party to be used in performance of the
Collaboration shall be established by the Management Committee. The Management
Committee will have the authority to designate Stage 2 Lead Compounds and
Development Candidates pursuant to Section 4.1 and will have the other rights
and responsibilities specifically set forth in this Agreement. The Management
Committee will have the authority to resolve disputes among the members of the
Research Committee and among the members of any Development Committee. All
actions taken and decisions made by the Management Committee shall be by
unanimous agreement. If the Management Committee fails to reach unanimous
consent on any matter, the matter will be resolved by the senior officer of
Warner's pharmaceutical business with the advice of LeukoSite's President. A
party may change any of its appointments to the Management Committee at any time
upon giving
<PAGE> 15
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written notice to the other party. The Management Committee does not itself have
the authority to amend this Agreement in any manner that would require the
separate approval of authorized officers of the respective parties.
2.2 Research Committee. Warner and LeukoSite will each appoint up to 4
representatives to a research committee (the "Research Committee"), which will
oversee the pre-clinical aspects of the Collaboration; except that such
responsibilities will pass to the Development Committee in the case of a
Warner-LeukoSite Product, to Warner in the case of a Warner Product and to
LeukoSite in the case of a LeukoSite Product. The Warner representatives on such
committee will together have only one vote and the LeukoSite members on such
committee will together have only one vote. The Research Committee will meet
quarterly, or more frequently if mutually agreed, and will report to the
Management Committee. Warner's and LeukoSite's initial representatives to the
Research Committee will be appointed by each of them promptly after the
Effective Date. The Research Committee will be responsible for recommending
compounds to be designated Development Candidates. All actions taken and
decisions made by the Research Committee will be by unanimous agreement. The
Management Committee will resolve disputes among the members of the Research
Committee. A party may change any of its appointments to the Research Committee
at any time upon giving written notice to the other party.
2.3 Development Committee. Warner and LeukoSite will each appoint up to
4 representatives to one or more development committees (the "Development
Committee(s)"), which will oversee the pre-clinical and clinical development of
each Warner-LeukoSite Product. A separate Development Committee will be
established for each Warner-LeukoSite Product promptly after a Development
Candidate is designated a Warner-LeukoSite Product. The Warner representatives
on such committee will together have only one vote and the LeukoSite members on
such committee will together have only one vote. All actions taken and decisions
made by the Development Committee will be by unanimous consent. Warner will have
primary responsibility for interfacing with all regulatory agencies worldwide in
connection with the relevant Warner-LeukoSite Product. LeukoSite will be invited
to attend all regulatory meetings and will be kept fully apprised of all
regulatory interactions. The Management Committee will resolve disputes among
the members of any Development Committee. A party may change any of its
appointments to any Development Committee at any time upon giving written notice
to the other party.
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 16
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2.4 Marketing Committee. Each party will appoint four members to one or
more marketing committees (the "Marketing Committee(s)"), which will oversee the
marketing and promotion of each Warner-LeukoSite Product in each Designated
Co-Promotion Country. A separate Marketing Committee will be formed for each
Warner-LeukoSite Product promptly after completion of phase II clinical studies
of such Warner-LeukoSite Product. The Warner representatives on such committee
will together have only one vote and the LeukoSite members on such committee
will together have only one vote. Decisions of the Marketing Committee will be
by unanimous consent and disputes relating thereto will be resolved in
accordance with Section 12.4. A party may change any of its appointments to any
Marketing Committee at any time upon giving written notice to the other party.
2.5 Meetings. The Management Committee, the Research Committee, the
Development Committees and the Marketing Committees may meet by telephone or in
person at such times as are agreeable to the members of each such committee.
Attendance at meetings shall be at the respective expense of the participating
parties. Warner and LeukoSite shall alternate the right to determine the
location of each meeting, with LeukoSite determining the location of the first
meeting of each committee. A quorum for the conduct of business at each meeting
shall require the attendance of at least one Warner member and at least one
LeukoSite member.
ARTICLE III
PATENTS, KNOW-HOW, RIGHTS AND INVENTIONS
3.1 Rights to Inventions. Ownership of Collaboration Technology shall
be determined in accordance with United States laws of inventorship. The owner
(the "Inventor") of any patentable Collaboration Technology (an "Invention")
shall have the right, at its option and expense, to prepare, file and prosecute
worldwide in its own name any patent applications with respect to any Invention
owned by it and to maintain any patents issued. In connection therewith, the
non-Inventor party agrees to cooperate with the Inventor at the Inventor's
expense in the preparation and prosecution of all such patent applications and
in the maintenance of any patents issued.
This obligation shall survive the expiration or termination of this Agreement.
3.2 Joint Inventions. Collaboration Technology jointly invented by
LeukoSite and Warner will be jointly owned by them; however, Warner will have
the rights and responsibilities of the "Inventor" as described in this
<PAGE> 17
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Article III in respect of any such patentable, jointly owned Collaboration
Technology and LeukoSite shall have the rights and responsibilities of a
non-Inventor therein. Warner shall pay all expenses in connection with the
preparation, filing and prosecution of patent applications that claim
patentable, jointly owned Collaboration Technology and maintain, enforce and
protect all patents issuing thereon. Warner shall from time to time notify
LeukoSite of the amount of its out-of-pocket expenses in connection with the
foregoing and LeukoSite shall promptly thereafter pay Warner 50% of the
out-of-pocket expenses incurred by Warner. At LeukoSite's option, such payments
to Warner may be delayed and to the extent so delayed, such payments may be
credited by Warner against milestone, royalty or co-promotion payments to be
made by Warner to LeukoSite hereunder or pursuant to the MCP-1 Agreement,
regardless of which Product (as defined herein and/or in the MCP-1 Agreement)
such payments relate to, but in no event may any such payment to LeukoSite be
reduced by more than 30% as a result of this provision.
3.3 Protection of Patent Rights. (a) The Inventor shall keep the other
party currently informed of all steps to be taken in the preparation,
prosecution and maintenance of all of its patents and patent applications now or
hereafter existing which claim such Invention and shall furnish the other party
with copies of patents and applications, amendments thereto and other related
correspondence relating to such Invention to and from patent offices and permit
the other party to offer its comments thereon before the Inventor makes a
submission to a patent office which could materially affect the scope or
validity of the patent coverage that may result. The non-Inventor party shall
offer its comments promptly. LeukoSite and Warner shall each promptly notify the
other of any infringement and/or unauthorized use of an Invention that comes to
its attention.
(b) The non-Inventor party may request in writing that the Inventor
take specific, reasonable actions to (i) prepare, file or prosecute patent
applications in the United States of America and all other countries of the
world with respect to an Invention, (ii) maintain any patents issued with
respect to an Invention, (iii) protect against abandonment of a patent or
application which claims an Invention or (iv) obtain a discontinuance of an
infringement or unauthorized use of such patent or application. If such actions
are not undertaken within thirty days of the Inventor's receipt of such written
request and timely pursued thereafter, the Inventor shall permit, and the
non-Inventor party at its option and expense may undertake, such actions in the
name and on behalf of the Inventor. The party not undertaking such actions shall
fully
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 18
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cooperate with the other party and shall provide to the other party whatever
documents that may be needed in connection therewith. The party not undertaking
such actions may require a suitable indemnity against all damages, costs and
expenses and impose such other reasonable conditions as such party's advisors
may require.
(c) If either party commences any actions or proceedings (legal or
otherwise) pursuant to this Section, it shall prosecute the same vigorously at
its expense and shall not abandon or compromise them or fail to exercise any
rights of appeal without giving the other party the right to take over their
conduct at its own expense. The party finally conducting legal actions or
proceedings against an alleged infringer or other party shall be entitled to any
damages or costs awarded against such infringer or other party, provided,
however, that if Warner initiates such action to protect a Warner Product or
Warner-LeukoSite Product, then the amount of the award less applicable legal
expenses incurred by Warner will be considered Net Sales of the applicable
Warner or Warner-LeukoSite Product, and if LeukoSite initiates such action to
protect a LeukoSite Product, the amount of the award less applicable legal
expenses incurred by LeukoSite shall be considered Net Sales of the applicable
LeukoSite Product.
3.4 Allegations of Infringement by Third Parties. In the event that
Warner or LeukoSite receives notice that any action by either of them under this
Agreement is alleged to be a violation of the patent or other intellectual
property rights of a third party, it shall immediately notify the other party to
this Agreement. The Management Committee shall promptly determine an appropriate
response and course of action. In the case of a Warner-LeukoSite Product Warner
will control any defense, and the costs thereof (including any damages, costs or
expenses resulting from any action) shall be borne by Warner. In the case of a
Warner Product or a LeukoSite Product the control and costs of defense
(including any damages, costs or expenses resulting from any action) will be
borne by Warner or LeukoSite, respectively.
ARTICLE IV
DESIGNATION OF DEVELOPMENT CANDIDATES AND
MARKETING RIGHTS
4.1 Designation of Development Candidate. Each chemokine inhibitor
which is the subject of a Stage 2 Research Plan (including modifications of such
inhibitors), will be designated a "Development Candidate", if ever, upon the
declaration by the Management Committee
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 19
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that such compound satisfies Warner's then current, internal standards for a
"lead compound." LeukoSite shall have the right to request that the Management
Committee designate such a chemokine inhibitor as a Development Candidate if
LeukoSite reasonably believes that there is sufficient biological and chemical
data to initiate pre IND studies in accordance with Good Laboratory Practices.
In the event that such compound is not designated as a Development Compound by
the Management Committee within one year after such request by LeukoSite, then
such compound shall automatically be designated and shall become a Development
Candidate subject to the terms and conditions of this Agreement. Within one
month after designation of a Development Candidate, Warner will notify LeukoSite
in writing whether it elects to pursue marketing rights in such Development
Candidate pursuant to this Agreement. Forty-five (45) days after Warner provides
to LeukoSite in writing its non-binding, best estimate of the costs for
Development of the Development Candidate, LeukoSite shall notify Warner in
writing whether or not LeukoSite will exercise marketing rights therein in the
U.S. and any of the other Co-Promotion Countries and designate each such other
Country. Upon such exercise of marketing rights by LeukoSite the Development
Candidate shall become a "Warner-LeukoSite Product". If LeukoSite fails to
exercise marketing rights within the stated period the Development Candidate
shall become a "Warner Product". If Warner fails to exercise marketing rights
for a Development Candidate within the stated period, the Development Candidate
shall become a "LeukoSite Product".
4.2 Warner-LeukoSite Product. For each Warner-LeukoSite Product,
pre-clinical and clinical Development thereof will be pursued jointly under the
direction of the Development Committee to the extent necessary or desirable for
regulatory approval in each Designated Co-Promotion Country. The preparation,
filing and prosecution of Investigational New Drug Applications, New Drug
Applications and other regulatory filings required to be filed with the FDA and
its foreign equivalents in regard to any Warner-LeukoSite Product will be in the
name of and at the responsibility of Warner, subject, in the case of Designated
Co-Promotion Countries, to the advice of LeukoSite. The costs incurred by Warner
or LeukoSite (and approved by the Development Committee) in the preparation,
filing and submission of such regulatory filings in Designated Co-Promotion
Countries and all costs of Development related to regulatory approvals in such
countries (not including the costs of Pharmacoeconomic Studies incurred after
initiation of the Term of Co-Promotion, Phase IV Studies, Phase V Studies or any
other clinical studies not reasonably necessary for authorization by relevant
regulatory authorities to sell such Product for its first approved
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 20
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indication in each country), will be borne *** by Warner and *** by LeukoSite
(whether incurred by Warner or LeukoSite), retroactive to the date the
Warner-LeukoSite Product was designated a Development Candidate. LeukoSite
within its sole discretion at the time of designation of a Development Candidate
as a Warner-LeukoSite Product may elect to pay less than ***************** of
such costs of Development but in no event less than ***********************
thereof. LeukoSite may not thereafter change the percentage of Development costs
borne by it without Warner's consent. Neither party warrants that any regulatory
filings will actually be filed or, if filed, will be approved. All such costs
shall be paid/reimbursed on a current basis. Cost of Development shall mean the
following insofar as they are reasonably charged directly to Development of the
Product: salaries, fringe benefits, overtime, chemicals, lab supplies, animals
and other direct charges, all at actual cost plus an overhead allocation of 25%
(cost X 1.25). In addition, costs of Development will also include actual costs
for travel (other than costs relating to committee meetings referred to in
Section 2.5), experimental products (experimental product cost is the actual,
direct cost of manufactured drug for clinical trial and stability purposes),
clinical studies performed by investigators under contract with Warner or
LeukoSite, toxicology studies performed by outsiders under contract with Warner
or LeukoSite and out-of-pocket costs for other outside professional services all
to the extent that the same are approved by the Development Committee and
supported by invoices and actual payments.
4.3 Warner Product. Subject to Sections 4.5, 4.6 and 4.7 Warner may
pursue Development and commercialization of a Warner Product at its direction.
All costs of Development of a Warner Product will be borne by Warner from the
date of such election.
4.4 LeukoSite Product. LeukoSite may pursue Development and
commercialization of a LeukoSite Product at its direction. All costs of
Development of a LeukoSite Product will be borne by LeukoSite from the date of
such election.
4.5 Warner agrees to use at least that level of effort that it employs
for its other products of similar scientific and commercial promise to develop,
obtain regulatory approval for and to market and sell in each country each
Warner Product and each Warner-LeukoSite Product and to continue to market and
sell in each country each Warner Product and each Warner-LeukoSite Product (in
each case by itself or through one or more Affiliates or licensees).
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
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4.6 Warner agrees to promptly notify LeukoSite in writing if at any
time Warner does not intend to continue to: develop and/or obtain regulatory
approval for and/or market and sell any Warner Product or Warner-LeukoSite
Product (in each case by itself or through one or more Affiliates or licensees).
4.7 In the event that Warner does not meet its obligations under
Section 4.5 with respect to any Warner Product or any Warner-LeukoSite Product
in any country(ies) or Warner provides LeukoSite with notice pursuant to Section
4.6 with respect to any Warner-LeukoSite Product or Warner Product with respect
to any country(ies), such Warner Product and/or Warner-LeukoSite Product in such
country(ies), upon written notice from LeukoSite to Warner, shall become a
LeukoSite Product.
4.8 In the event that any Warner Product or Warner-LeukoSite Product
becomes a LeukoSite Product in any country(ies), Warner shall transfer to
LeukoSite any and all information, data, technology and know-how related to the
development, manufacture and sale of such Warner Product and/or Warner LeukoSite
Product. In addition, to the extent allowed by law, Warner shall permit
LeukoSite to refer to and use any regulatory filings and/or information
contained therein to obtain approval for marketing and sale by LeukoSite or its
sublicensees or agents of such Warner and/or Warner-LeukoSite Product and to the
extent permitted by law Warner shall transfer to and/or permit LeukoSite and/or
its agents or sublicensees to operate under any regulatory approval or
regulatory application with respect to such Warner Product and/or
Warner-LeukoSite Product in such country(ies).
4.9 Upon sixty (60) days prior written notice, LeukoSite may terminate
LeukoSite's obligation to fund Development of any Warner-LeukoSite Product in
the Designated Co-Promotion Countries, in which case, upon sending of such
notice, such Warner-LeukoSite Product shall become a Warner Product, provided,
however, that LeukoSite will be obligated to continue its Development efforts
and pay its share of the costs with respect to such Product until the expiration
of such notice period.
4.10 Upon six (6) months prior written notice by Warner to LeukoSite,
Warner may terminate its obligation to pursue a Warner-LeukoSite Product in any
country and upon sending of such notice such Warner-LeukoSite Product shall
become a LeukoSite Product in such country, however, Warner shall be obligated
to continue its Development efforts and pay its share of the costs with respect
to such Warner-LeukoSite Product in such country until the expiration of the
first 60 days of such six (6) month period. At the request of LeukoSite Warner
will
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 22
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continue its Development efforts with respect to such Warner-LeukoSite
Product for the remainder of such six month period, provided that LeukoSite
reimburses Warner for the costs of such effort promptly after Warner invoices
such costs.
4.11 In the event a Warner Product or a Warner-LeukoSite Product
becomes a LeukoSite Product, and for so long as Warner is manufacturing such
product for its own purposes, Warner agrees to manufacture and supply to
LeukoSite such LeukoSite Product to the extent that Warner is able to do so
without adversely affecting its requirements therefor upon terms and conditions
and profit margins which are customary in the industry for a supplier of
products of such type.
4.12 No earlier than one year after a product becomes a LeukoSite
Product, Warner can request in writing that such LeukoSite Product become a
Warner Product, or in the case where such LeukoSite Product was originally a
Warner-LeukoSite Product that such LeukoSite Product become a Warner-LeukoSite
Product, subject to the terms and conditions of this Agreement, and if LeukoSite
is not actively researching, developing, marketing or selling such LeukoSite
Product and has not granted rights thereto to a third party, such LeukoSite
Product shall become a Warner Product or a Warner-LeukoSite Product, as the case
may be, subject to the terms and conditions of this Agreement.
ARTICLE V
LICENSES AND ROYALTIES
5.1 Grant by LeukoSite. Except as provided in Section 1.4(c), LeukoSite
hereby grants and agrees to grant to Warner under the Patent Rights of LeukoSite
and under LeukoSite Collaboration Technology and LeukoSite Background Technology
(i) exclusive, worldwide licenses to the limited extent necessary to make, have
made, use and sell (with the right to sublicense) each Warner Product and each
Warner-LeukoSite Product outside of the Designated Co-Promotion Countries, (ii)
exclusive licenses to the limited extent necessary to make or have made each
Warner-LeukoSite Product in the Designated Co-Promotion Countries and (iii)
co-exclusive licenses (non-sublicensable and shared only with LeukoSite) to the
limited extent necessary to use and sell each Warner-LeukoSite Product in the
Designated Co-Promotion Countries pursuant to the terms of this Agreement.
5.2 Grant by Warner. Warner hereby grants and agrees to grant to
LeukoSite under the Patent Rights of Warner and under Warner
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
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Collaboration Technology and Warner Background Technology (i) exclusive,
worldwide licenses to the limited extent necessary to make, have made, use and
sell (with the right to sublicense) each LeukoSite Product and (ii) co-exclusive
licenses (non-sublicensable and shared only with Warner) to the limited extent
necessary to use and sell each Warner-LeukoSite Product in the Designated
Co-Promotion Countries pursuant to the terms of this Agreement.
5.3 (a) Warner agrees that Warner will not use or grant rights to use
Warner compounds identified as IL-8 Inhibitors using the screens referred to in
Section 1.1 for an IL-8 Inhibitor and will not use or grant rights to use
LeukoSite Background Technology or LeukoSite Collaboration Technology except for
(i) activities under the Stage 1 Research Plan, (ii) activities under the Stage
2 Research Plan, and/or (iii) activities with respect to development, marketing,
sale, manufacture or use of a Warner Product and/or a Warner-LeukoSite Product
for which payments are to be made to LeukoSite under this Agreement.
(b) LeukoSite agrees that LeukoSite will not use or grant rights to use
Warner compounds identified as IL-8 Inhibitors using the screens referred to in
Section 1.1 as an IL-8 Inhibitor and will not use or grant rights to use Warner
Background Technology or Warner Collaboration Technology except for (i)
activities under the Stage 1 Research Plan, (ii) activities licensed under the
Stage 2 Research Plan, (iii) activities licensed to LeukoSite pursuant to
Section 1.4(a) and/or (iv) activities with respect to development, marketing,
sale, manufacture or use of a LeukoSite Product for which payments are to be
made to Warner under this Agreement.
5.4 Warner and LeukoSite each acknowledges and agrees to the extent
that it is granted a right or license under this Agreement as a sublicensee such
sublicense is subject to the terms and conditions of the agreement under which
the sublicense is granted. Warner or LeukoSite, as a sublicensee, will perform
the obligations (other than payment obligations) which are applicable to a
sublicensee pursuant to the agreement under which the sublicense is granted. No
such sublicense shall be granted until LeukoSite has expressly notified Warner
in writing of the obligations of such sublicense and Warner has acknowledged
that it will perform such obligations.
5.5 Manufacturing. (a) Warner will notify LeukoSite if Warner and its
Affiliates elect not to manufacture the active ingredient of any Warner Product
or Warner-LeukoSite Product. In such event, LeukoSite may
* Confidential treatment requested; material has been omitted and filed
separately with the Commission.
<PAGE> 24
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offer to perform such manufacturing. Warner, in its reasonable judgment, may
elect to have LeukoSite or a third party perform such manufacturing.
(b) LeukoSite will notify Warner if LeukoSite and its Affiliates elect
not to manufacture the active ingredient of any LeukoSite Product. In such
event, Warner may offer to perform such manufacturing. LeukoSite, in its
reasonable judgment, may elect to have Warner or a third party perform such
manufacturing.
(c) The reasonable judgment of a party choosing a manufacturer shall
include issues such as price, competence, reliability and experience of the
proposed manufacturer.
5.6 Royalties and Other Compensation. (a) Warner will pay LeukoSite one
of the following royalties on worldwide Net Sales of Warner Products, whichever
is applicable:
(i) If LeukoSite does not timely elect to pursue marketing rights to
the Development Candidate under Section 4.1 or if a Warner-LeukoSite Product
becomes a Warner Product prior to LeukoSite paying its designated share of
Development Costs under Section 4.2 up to and including acceptance by the FDA of
the relevant IND, the applicable royalty rate will be *** of worldwide Net
Sales.
(ii) If LeukoSite pays its designated share of Development Costs under
Section 4.2 up to and including the acceptance by the FDA of the relevant IND,
but thereafter revokes its marketing rights such that the Warner-LeukoSite
Product becomes a Warner Product, the applicable royalty rate will be
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(iii) If LeukoSite pays its designated share of Development Costs under
Section 4.2 up to and including completion of all Phase II clinical studies
reasonably deemed necessary by the Management Committee for regulatory approval
to market the Product in the United States of America, but thereafter revokes
its marketing rights such that the Warner-LeukoSite Product becomes a Warner
Product, the applicable royalty rate will be
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(iv) For Warner Products, which become Warner Products under Section
1.4(b) and/or Section 1.4(c), the applicable royalty will be ******
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 25
25
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(b) Warner will pay LeukoSite the following royalties on Net Sales of
all Warner-LeukoSite Products sold outside of the Designated Co-Promotion
Countries for which LeukoSite has paid its designated share of Development Costs
under Section 4.2 up to and including NDA approval in the United States:
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(c) LeukoSite will pay Warner one of the following royalties on
worldwide Net Sales of LeukoSite Products, whichever is applicable:
(i) The applicable royalty rate will be *** of the worldwide Net
Sales, except as provided in 5.6(c)(ii) below;
(ii) If Warner pays its designated share of Development Costs under
Section 4.2 up to and including filing of the relevant IND, but thereafter
revokes its marketing rights, the applicable royalty rate will be
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******************************************
(d) The royalties set forth in this Section will be payable on a
Product by Product and country by country basis for a period of ******** from
first commercial sale in a country as part of nationwide introduction of the
Product. If at the expiration of such *********************** period, a
Product(s) is sold in a country(ies) and such Product(s) where manufactured,
used or sold infringes a Patent Right, then the royalty shall continue with
respect to such Product(s) in such country(ies) until expiration of such Patent
Right.
(e) As used herein, "Annual Net Sales" shall mean Net Sales in a
calendar year.
(f) In addition to royalties, Warner shall pay to LeukoSite the sum of
******* upon execution of this Agreement.
5.7 Currency of Payment. All payments to be made under this Agreement
shall be made in United States dollars in the United States to a bank account
designated by the party to be paid. Royalties earned shall first be determined
in the currency of the country in which they are earned and then converted to
its equivalent in United States currency. The buying rates of exchange for the
currencies involved into the currency of the United States quoted by Citibank
(or its successor in interest) in
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 26
26
New York, New York at the close of business on the last business day of the
quarterly period in which the royalties were earned shall be used to determine
any such conversion.
5.8 Payment and Reporting. The royalties due under Section 5.6 shall be
paid quarterly, within sixty (60) days after the close of each calendar quarter,
or earlier if possible (i.e., on or before the last day of each of the months of
May, August, November and February) immediately following each quarterly period
of each year in which such royalties are owed. With each such quarterly payment,
the payor shall furnish the payee a royalty statement (the "Royalty Statement"),
setting forth on a country-by-country basis the total number of units of each
Product made, used and/or sold hereunder for the quarterly period for which the
royalties are due.
5.9 Records. The royalty paying party shall keep accurate books and
accounts of record in connection with the manufacture, use and/or sale by or for
it of all products in sufficient detail to permit accurate determination of all
figures necessary for verification of royalty obligations set forth in this
Article V. Such records shall be maintained for a period of 3 years from the end
of each year in which sales occurred. The payee, at its expense, through a
certified public accountant, shall have the right to access such books and
records for the sole purpose of verifying the Royalty Statements; such access
shall be conducted after reasonable prior notice by the payee to the payor
during the payor's ordinary business hours and shall not be more frequent than
once during each calendar year. Said accountant shall not disclose to the payee
or any other party any information except that which should properly be
contained in a royalty report required under this Agreement. In the event that
there has been an underreporting of royalties of ten percent (10%) or greater
over the full period reviewed by such accountants, then the cost of such
accountants shall be paid by the payor. Any underpaid royalties shall be paid
within thirty (30) days after notice of the underpayment.
5.10 Taxes Withheld. Any income or other tax that one party hereunder,
its Affiliates or sublicensees is required to withhold (the "Withholding Party")
and pay on behalf of the other party hereunder (the "Withheld Party") with
respect to the royalties or other amounts payable under this Agreement shall be
deducted from and offset against said royalties or other amounts prior to
remittance to the Withheld Party; provided, however, that in regard to any tax
so deducted, the Withholding Party shall give or cause to be given to the
Withheld Party such assistance as may reasonably be necessary to enable the
Withheld Party
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 27
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to claim exemption therefrom or credit therefor, and in each case shall furnish
the Withheld Party proper evidence of the taxes paid on its behalf.
5.11 Computation of Royalties. All sales of LeukoSite Products between
LeukoSite and any of its Affiliates and sublicensees with the intent of resale
by such Affiliates and sublicensees shall be disregarded for purposes of
computing royalties under this Article V, but in such instances royalties shall
be payable only upon commercial sales to unlicensed third parties by the
Affiliates and sublicensees. Nothing herein contained shall obligate LeukoSite
to pay Warner more than one royalty on any unit of a LeukoSite Product. All
sales of Warner Products or Warner-LeukoSite Products between Warner and any of
its Affiliates and sublicensees with the intent of resale by such Affiliates and
sublicensees shall be disregarded for purposes of computing royalties under this
Article V, but in such instances royalties shall be payable only upon commercial
sales to unlicensed third parties by the Affiliates and sublicensees. Nothing
herein contained shall obligate Warner to pay LeukoSite more than one royalty on
any unit of a Warner Product or Warner-LeukoSite Products.
5.12 Licenses to Affiliates. Each party shall, at the other party's
request, sign license and/or royalty agreements in respect of Warner Products,
LeukoSite Products or Warner-LeukoSite Products not being co-promoted by the
parties hereunder directly with the other party's Affiliates and sublicensees in
those situations where such agreements would not decrease the amount of
royalties or other amounts which would be owed hereunder. Such agreements shall
contain the same language as contained herein with appropriate changes in
parties and territory. No such license and/or royalty agreement will relieve
Warner or LeukoSite, as the case may be, of its obligations hereunder, and such
party will guarantee the obligations of its Affiliate or sublicensee in any such
agreement. Royalties and other amounts received directly from one party's
Affiliates and sublicensees shall be credited towards such party's obligations
hereunder.
5.13 Milestone Payments.
(a) Warner will pay LeukoSite the following amounts the first time that
each of the following milestones is achieved:
(i) Designation of a Development
Candidate as a Warner Product
or a Warner-LeukoSite Product.................*******
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 28
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(ii) Acceptance by the FDA of an IND (or its equivalent
in Japan or in each of the
United Kingdom, France, Italy, Germany and Spain
hereinafter such five countries being collectively
"EU") for a Warner Product or a Warner-LeukoSite
Product..................................................*******
(iii) Acceptance for filing by the
FDA of an NDA (or its equivalent in
EU or Japan) for a Warner
Product or a Warner-LeukoSite
Product..................................................*******
(iv) Approval by the FDA of an NDA
(or its equivalent in EU or Japan)
for a Warner Product or a Warner-
LeukoSite Product........................................*******
(v) Approval by the FDA of an NDA
(or its equivalent in EU
or Japan) for a second Warner Product or
Warner-LeukoSite Product .................................*******
(b) LeukoSite will pay Warner **************************************
********************************************************************************
***********
5.14 Pre-existing Milestone/Royalty Obligations. Certain research
activities to be performed hereunder and the manufacture, use or sale of
Products hereunder may require payments to unaffiliated third parties. Such
payments in respect of rights that a party hereto currently has an interest in
or could have an interest in pursuant to any currently existing agreements will
be borne by such party. All other such payments will be borne by (i) Warner in
the case of a Warner Product or a Warner-LeukoSite Product sold outside of the
Designated Co-Promotion Countries, (ii) LeukoSite in the case of a LeukoSite
Product, and (iii) as a "Cost of Goods" in the case of Warner-LeukoSite Products
sold in the Designated Co-Promotion Countries. Each party hereto will disclose
such payment obligations to the other party hereto prior to designation of the
subject compound as a Development Candidate.
ARTICLE VI
CO-PROMOTION OF WARNER-LEUKOSITE PRODUCTS
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 29
29
6.1 Marketing and Marketing Plans. Each Warner-LeukoSite Product will
be marketed in each country with one label and will bear one or more trademarks
owned by Warner. Advertising and promotional material in respect of each
Warner-LeukoSite Product in each Designated Co-Promotion Country (including any
Product labeling or packaging inserts to the extent permitted by law and
approved by the Marketing Committee) will include LeukoSite's name and address,
the size and placement of which will be determined by the Marketing Committee.
The Marketing Committee will be responsible for developing and approving
marketing plans and the advertising and other promotional materials to be used
in co-promoting each Warner-LeukoSite Product in each Designated Co-Promotion
Country. Warner will be responsible, with LeukoSite's advice in the case of
Designated Co-Promotion Countries, for seeking acceptance of each
Warner-LeukoSite Product on formularies, if applicable, and for all other
negotiations with managed care organizations and other institutional purchasers.
The Marketing Committee shall coordinate and implement the marketing
and detailing strategies, tactics, joint sales force training program and sales
forecasts, and post-approval clinical studies for Warner-LeukoSite Product, and
Budgeted Total Detail Effort for each calendar year for the Warner-LeukoSite
Product in the Designated Co-Promotion Countries (hereinafter, collectively, the
"Business Plan").
The Marketing Committee shall develop a Business Plan for each calendar
year in which Warner-LeukoSite Product will be sold in the Designated
Co-Promotion Countries.
The annual Business Plan shall contain the responsibilities of each
party and shall establish the Budgeted Detail Effort for each party for the
subsequent calendar year; provided, however, that in each calendar year
LeukoSite shall not be required to accept (without LeukoSite's consent) nor
shall it be entitled to undertake (without Warner's consent) a Budgeted Detail
Effort greater than its Selling Percentage of the Budgeted Total Detail Effort.
The Marketing Committee shall also establish a semi-annual or annual forecast of
(i) Marketing Expenses and; (ii) the number and position of Details and specific
professionals to be targeted by the Details (broken down on a monthly or
quarterly basis) to be made by each party's sales force during such calendar
year.
For each calendar year, within thirty (30) days after establishment of
the Budgeted Total Detail Effort for the calendar year, LeukoSite by written
notice and within its sole discretion, may elect a Budgeted Detail
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 30
30
Effort for such calendar year which is less than LeukoSite's Selling Percentage
of the Budgeted Total Detail Effort and the Budgeted Detail Effort of LeukoSite
for the calendar year shall be decreased in accordance with such election with,
at Warner's option (i) a corresponding increase in the Budgeted Detail Effort of
Warner (ii) a corresponding decrease in the Budgeted Total Detail Effort or
(iii) a combination of (i) and (ii). In addition, in the event LeukoSite elects
such a reduced Budgeted Detail Effort, LeukoSite shall pay to Warner the
increased Sales Cost incurred by Warner to the extent that the Budgeted Detail
Effort for Warner is increased to greater than Warner's percentage of the
Budgeted Total Detail Effort prior to such election by LeukoSite. Such increased
Sales Cost shall be determined by dividing the total Sales Cost of Warner by the
Detail Effort for Warner for the calendar year and multiplying such number by
the difference between the Budgeted Detail Effort of LeukoSite and the Detail
Effort of LeukoSite for the calendar year.
Either party may in any calendar year make Details in excess of the
Budgeted Detail Effort without the written agreement of the other. However,
absent such agreement, a party shall not receive compensation for such excess
Details.
Each party shall keep track of the number and position of Details by
its representatives in accordance with its normal internal reporting procedures.
Within thirty (30) days after the last day of each calendar month, each party
shall submit to the other party, a report with respect to the number of Details
performed by such party's representatives during such calendar month. At the
request of either party, but not more than once a year by such party, a special
external audit of the Detail effort of both parties with respect to
Warner-LeukoSite Product shall be performed, the cost of which shall be paid by
the requesting party; provided if such external audit reveals that in any
calendar year the non-requesting party performed less than ninety percent (90%)
(after taking into account the offset described in the immediately following
proviso) of the Details that such non-requesting party reported to the
requesting party as being performed in such calendar year such that there is a
shortfall in excess of ten percent (10%), then such non-requesting party shall
reimburse the requesting party for the full cost of such audit; provided further
that if in any calendar year the audit reveals that both parties failed to
perform one hundred percent (100%) of the Details that each such party reported
to the other party as being performed in such year, then the requesting party's
percentage point shortfall shall be subtracted from the non-requesting party's
percentage point shortfall for purposes of making the calculation in the
immediately preceding proviso.
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 31
31
The Marketing Committee shall develop the training program for the
respective sales forces. The parties agree to utilize such training program to
assure a consistent, focused promotional strategy and message. Under the
supervision of the Marketing Committee, each party shall train its own field
sales force. Warner shall be responsible for all costs associated with training
the field forces of both parties in accordance with such training program,
including costs of materials, expenses, launch meetings and ongoing training and
shall reimburse LeukoSite for its costs and expenses associated therewith. All
of Warner's costs associated with training the field forces of both parties
(including the amount reimbursed to LeukoSite) shall be deemed Marketing
Expenses.
In the event a decision is made by the Marketing Committee to sample
the Warner-LeukoSite Product, Warner shall supply all samples for use in
connection with the sampling of Warner-LeukoSite Product. The Marketing
Committee shall develop a sampling strategy. Such samples shall be considered
and treated as Marketing Expenses.
6.2 Promotional Materials. LeukoSite may disseminate only those
promotional and advertising materials for Warner-LeukoSite Products that have
been provided or approved for use by the Marketing Committee. Warner shall
supply LeukoSite quantities of promotional materials needed by LeukoSite to
exercise its co-promotion rights under this Agreement. LeukoSite shall not, and
shall cause its employees, representatives and agents not, to make any claims or
representations in respect of the Warner-LeukoSite Products that have not been
approved by Warner.
6.3 No Delegation. Each party may use only its own employees or the
employees of one or more of its subsidiaries in the course of marketing
Warner-LeukoSite Products in the Designated Co-Promotion Countries under this
Agreement.
6.4 Returns. Warner shall be responsible for handling all returns
relating to Warner-LeukoSite Products. Any Warner-LeukoSite Product returned to
LeukoSite shall be shipped by it to the address designated by Warner with
shipping costs authorized by Warner to be paid by Warner.
6.5 Orders. All customer orders for Warner-LeukoSite Products shall be
received and executed in each country by Warner. LeukoSite shall transmit any
such orders that it receives to Warner no later than the following business day.
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 32
32
6.6 Samples. Each of the parties will keep accurate records as to the
distribution of samples, and comply with all applicable laws, rules and
regulations dealing with the distribution of samples.
6.7 Completion of Sales. All sales of Warner-LeukoSite Products will be
completed, distributed, accounted for, billed and booked by Warner at prices
established by Warner, provided, however, that Warner will not grant a
preference to or otherwise favor other products of Warner over Warner-LeukoSite
Products or Warner Products based on the fact LeukoSite is entitled to royalties
or a share of Co-promotion rights.
6.8 Exchange of Marketing Information. From time-to-time Warner will
develop call lists, schedules and other appropriate information for the purpose
of determining the physicians and other persons involved in the drug purchase
decision-making process to whom LeukoSite and Warner will Detail each
Warner-LeukoSite Product in the Designated Co-Promotion Countries. The parties
agree to cooperate in finding an inexpensive and expeditious way to provide a
call list and other information indicating the identity of those physicians and
other persons involved in the decision-making process regarding the purchase of
pharmaceuticals. The parties will establish a method of confirming when Details
have been made in the Designated Co-Promotion Countries so that, among other
things, LeukoSite's and Warner's Detail Effort can be calculated.
6.9 Termination of Co-Promotion Countries. LeukoSite may, upon one
month written notice, remove one or more countries from the Designated
Co-Promotion Countries. In such event, LeukoSite will no longer have any rights
to co-promote the Warner-LeukoSite Product in such country, but instead will be
entitled to receive the royalty referred to in Section 5.6 in respect of Net
Sales in such country.
6.10 During the Term of Co-Promotion for the Designated Co-Promotion
Countries, Warner shall be responsible for:
(i) manufacturing (or having manufactured), packaging, labeling,
warehousing and distributing Warner-LeukoSite Product.
(ii) maintaining, as reasonably possible and based on the business
judgment of the Marketing Committee, such inventory and stock levels of raw
materials, packaging components and finished Warner-LeukoSite Product as are
required to maintain an appropriate customer service level.
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 33
33
(iii) providing adequate samples, training materials, territory
sales reports and promotional materials for both parties' field sales forces.
(iv) providing customer service activities and medical information
services .
6.11 Warner warrants that any Warner-LeukoSite Product manufactured by
Warner or a third party (i) shall be manufactured for sale in the Designated
Co-Promotion Countries in conformance with all applicable federal, state and
local statutes, ordinances and regulations (including, without limitation, the
Federal Food, Drug, and Cosmetic Act (FD&C) and the regulations thereunder such
as current good manufacturing practices), as the same may be amended from time
to time, (ii) at the time of shipment by Warner shall not be adulterated or
misbranded within the meaning of the FD&C, and (iii) at the time of shipment by
Warner shall not be a product which would violate any section of the FD&C if
introduced into interstate commerce.
6.12 LeukoSite and Warner shall not have any right with respect to
co-promotion in a Designated Co-Promotion Country of a "generic" form of a
Warner-LeukoSite Product which is not covered by a Patent Right.
ARTICLE VII
FDA
7.1 Side Effects. Each party shall advise the other as promptly as
reasonably practical by telefax or overnight delivery service addressed to the
attention of its Vice President, International Regulatory Affairs and Drug
Safety and Surveillance (or, in LeukoSite's case, the party with similar
responsibilities), of any unexpected side effect, adverse reaction or injury
which has been brought to that party's attention at any place and which is
alleged to have been caused by a Warner-LeukoSite Product. Warner shall have all
rights and responsibility timely to report such side effects, adverse reaction
or injury to regulatory authorities and others as appropriate.
7.2 Regulatory and other Inquiries. Upon being contacted by the FDA or
any drug regulatory agency for any regulatory purpose pertaining to this
Agreement or to a Warner-LeukoSite Product, LeukoSite and Warner shall
immediately notify and consult with one another and Warner shall provide a
response as it deems appropriate. Warner shall have sole right and
responsibility for responding to all inquiries to Warner
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 34
34
or LeukoSite regarding the benefits, side effects and other characteristics of
Warner-LeukoSite Products.
7.3 Product Recall. In the event that Warner or LeukoSite determines
that an event, incident or circumstance has occurred which may result in the
need for a recall or other removal of any Warner-LeukoSite Product, or any lot
or lots thereof, from the market in any Designated Co-Promotion Country, it
shall advise and consult with the other party with respect thereto. Warner shall
make the final determination to recall or otherwise remove the Warner-LeukoSite
Product or any lot or lots thereof from the market. Warner and LeukoSite shall
share the costs and expenses of such recall or removal in each Designated
Co-Promotion Country, including without limitation expenses and other costs or
obligations to third parties, the cost and expense of notifying customers and
costs and expenses associated with shipment of the recalled Product from a
customer to either Warner or LeukoSite. Such costs shall be shared in proportion
to their average shares of Total Profit during the two years preceding the
giving of notice of recall to customers.
ARTICLE VIII
DETERMINATION OF CO-PROMOTION PAYMENTS
8.1 Determination of LeukoSite's Compensation. LeukoSite's share of
profit ("LeukoSite's Share of Profit") in respect of sales of each
Warner-LeukoSite Product in a Designated Co-Promotion Country will equal Total
Profit actually received in respect of sales in such country multiplied by
************* in respect of such country or such lower percentage selected by
LeukoSite pursuant to Section 4.2, or such percentage as provided in Section
8.4(b).
8.2 Payment and Reporting. Within thirty (30) days after the close of
each calendar quarter, or earlier if possible, during the Term of Co-Promotion
in each Designated Co-Promotion Country (i.e. on or before the last day of each
of the months of June, September, December and March), Warner shall furnish to
LeukoSite a statement (the "Profit Statement") setting forth, on a country by
country basis, Total Profit of each Warner-LeukoSite Product, and all data on
which those figures were based and the calculations used in determining them. If
LeukoSite's Share of Profit is a positive number, Warner will submit such amount
to LeukoSite with the Profit Statement. If LeukoSite's Share of Profit is a
negative number, LeukoSite will submit such amount to Warner within 30 days of
its receipt of such Profit Statement. If the Term of Co-Promotion in a
particular Co-Promotion Country ends during an accounting quarter,
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 35
35
the amounts due hereunder shall be based upon an appropriate proration. Warner
will provide LeukoSite monthly sales reports in respect of sales of
Warner-LeukoSite Products in each relevant Co-Promotion Country if and when they
become available. Such reports may contain estimated data and will not be
binding for any purpose whatsoever.
8.3 Records. Warner and LeukoSite shall each keep accurate books and
accounts of record in connection with the manufacture, use and/or sale by or for
it of the Warner-LeukoSite Products in sufficient detail to permit accurate
determination of all figures necessary for verification of compensation
hereunder. Warner and LeukoSite shall maintain such records for a period of
three (3) years after the end of the year in which they were generated. At such
party's expense, a party, through a certified public accountant, shall have the
right to access the books and records of the other party for the sole purpose of
verifying such statements; such access shall be conducted after reasonable prior
written notice to the party, during ordinary business hours and not more
frequently than once during each calendar year.
8.4(a) In the event that in any calendar year, a party performs at
least sixty percent (60%) of its Budgeted Detail Effort for the calendar year
but does not perform at least ninety percent (90%) of its Budgeted Detail Effort
for the calendar year and the other party does perform at least ninety percent
(90%) of its Budgeted Detail Effort for the calendar year, then such party shall
pay to the other party an amount equal to the increased Sales Cost incurred by
the other party as a result of the party's shortfall in its Budgeted Detail
Effort. Such increased Sales Cost shall be determined by dividing the total
Sales Cost of the other party for the calendar year by the Detail Effort for the
other party for the calendar year and multiplying such number by the difference
between the Budgeted Detail Effort for the deficient party for the calendar year
and the Detail Effort for the deficient party for the calendar year. If both
parties perform less than ninety percent (90%) of their Budgeted Detail Effort
then the shortfall in the Detail Effort of each party shall be calculated and
the difference between them shall also be calculated. The party with the greater
shortfall shall pay the increased Sales Cost to the other party as calculated
above based on the difference between the respective shortfalls. The amount owed
under this Section shall be paid within sixty (60) days after the end of the
calendar year.
(b) In the event that in any calendar year, a party performs less than
sixty percent (60%) of its Budgeted Detail Effort for the calendar year and the
other party performs at least ninety percent (90%) of its Budgeted Detail Effort
for the calendar year, if such party is LeukoSite,
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 36
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LeukoSite's Share of Profit shall be decreased and if such party is Warner,
LeukoSite's Share of Profit shall be increased, with LeukoSite's Share of Profit
(i) in the case where LeukoSite is such party being the actual Detail Effort of
LeukoSite for the calendar year divided by the Budgeted Total Detail Effort for
the calendar year multiplied by the Total Profit and (ii) in the case where
Warner is such party, being the Total Profit multiplied by a fraction where such
fraction is the difference between one (1) and a fraction having as a numerator
Warner's actual Detail Effort for the calendar year and as a denominator the
Budgeted Total Detail Effort for the calendar year.
ARTICLE IX
CONFIDENTIALITY
9.1 Confidentiality. (a) Except as specifically permitted hereunder,
each party hereby agrees to hold in confidence and not use on behalf of others
(or on behalf of itself outside the Collaboration) all data, samples, technical
and economic information (including the economic terms hereof),
commercialization, clinical and research strategies and know-how provided by the
other party (the "Disclosing Party") during the Term of this Agreement and all
data, results and information developed pursuant to the Collaboration and owned
solely by the other party (collectively the "Confidential Information"), except
that the term "Confidential Information" shall not include:
(i) Information that is or becomes part of the public domain through no
fault of the non-Disclosing Party or its Affiliates; and
(ii) Information that is obtained after the date hereof by the
non-Disclosing Party or one of its Affiliates from any third party that is
lawfully in possession of such Confidential Information and not in violation of
any contractual or legal obligation to the Disclosing Party with respect to such
Confidential Information; and
(iii) Information that is known to the non-Disclosing Party prior to
disclosure by the Disclosing Party, as evidenced by the non-Disclosing Party's
written records; and
(iv) Information that is necessary or advantageous to both parties to
be disclosed to any governmental authorities or pursuant to any regulatory
filings, provided that in such case the non-Disclosing Party notifies the
Disclosing Party reasonably in advance of such disclosure and
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 37
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cooperates with the Disclosing Party to minimize the scope and content of such
disclosure; and
(v) Information that is required to be disclosed pursuant to any
relevant law or regulation or under order of a court of competent jurisdiction,
provided that in such case the non-Disclosing Party notifies the Disclosing
Party reasonably in advance of such disclosure and cooperates with the
Disclosing Party to minimize the scope and content of such disclosure.
(b) The obligations of this Section 9.1 shall survive for five years
following the expiration or termination of this Agreement except to the extent
required by any obligations of confidentiality to a third party that are
disclosed to the non-disclosing party prior to termination of this Agreement.
9.2 Publicity. All publicity, press releases and other announcements
relating to this Agreement or the transactions contemplated hereby shall be
reviewed in advance by and subject to the approval of both parties; except that
such review and approvals shall not be required for any announcement that
discloses the existence of this Agreement without disclosing any of its material
terms. Notwithstanding the foregoing, to the extent required by applicable law,
rule or regulation or in connection with filings with regulatory agencies or the
offering of securities, including but not limited to the SEC, a party may file
this Agreement and/or disclose the contents of this Agreement without the
approval of the other party, provided that the other party is provided with the
opportunity to review and comment on such disclosure and further provided that
such disclosure shall be limited to the minimum amount of information and
distribution required by such law, rule, regulation or filing.
9.3 Publication. The parties shall cooperate in appropriate publication
of the results of research and development work performed pursuant to this
Agreement, but subject to the predominating interest to obtain patent protection
for any patentable subject matter. To this end, it is agreed that prior to any
public disclosure of any such results, the party proposing disclosure shall send
the other party a copy of the information to be disclosed, and shall allow the
other party 15 days from the date of receipt in which to determine whether the
information to be disclosed contains subject matter for which patent protection
should be sought prior to disclosure. If notification is not received during the
15 day period, the party proposing disclosure shall be free to proceed with the
disclosure. If due to a valid business reason or a belief by the nondisclosing
party that
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 38
38
the disclosure contains subject matter for which a patentable invention should
be sought, then prior to the expiration of the 15 day period, the nondisclosing
party shall so notify the disclosing party, who shall then delay public
disclosure of the information for an additional period of up to 2 months to
permit the preparation and filing of a patent application on the subject matter
to be disclosed or other action to be taken. The party proposing disclosure
shall thereafter be free to publish or disclose the information. The
determination of authorship for any paper shall be in accordance with accepted
scientific practice. Nothing in this Section will be construed to allow either
party to disclose the Confidential Information of the other party in any
publication or other disclosure without the express written consent of such
other party.
ARTICLE X
REPRESENTATIONS AND WARRANTIES
10.1 Legal Authority. Each party represents and warrants to the other
that it has the legal power, authority and right to enter into this Agreement
and to perform its respective obligations set forth herein.
10.2 No Conflicts. Each party represents and warrants that as of the
date of this Agreement it is not a party to any agreement or arrangement with
any third party or under any obligation or restriction, including pursuant to
its Certificate of Incorporation or By-Laws, which in any way limits or
conflicts with its ability to fulfill any of its obligations under this
Agreement.
10.3 Others Bound. Each party represents and warrants that anyone
performing services under this Agreement on its behalf shall be bound by all of
the conditions of this Agreement.
10.4 Survival. The foregoing representations and warranties shall
survive the execution, delivery and performance of this Agreement,
notwithstanding any investigation by or on behalf of either party.
10.5 Disclaimer. Except as otherwise expressly stated herein, Warner
hereby disclaims any warranty expressed or implied as to any LeukoSite Product
manufactured by or for, used, sold or placed in commerce by or on behalf of
LeukoSite. Except as otherwise expressly stated herein, LeukoSite hereby
disclaims any warranty expressed or implied as to any Warner Product and/or any
Warner-LeukoSite Product manufactured by or for, used, sold or placed in
commerce by or on behalf of Warner in a Non-Designated Co-Promotion Country.
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 39
39
ARTICLE XI
TERMINATION
11.1 Termination. In the event of a material breach of the provisions
of this Agreement described below, the breaching party shall have ninety days
after receipt of written notice from the non-breaching party to cure such
breach, which period shall be sixty (60) days in the case of a failure to make a
payment when due.
(a) In the event of an uncured material breach of Article I, the
non-breaching party may terminate this Agreement.
(b) In the event of an uncured material breach of Article V by Warner
in regard to a Warner Product or Warner-LeukoSite Product, LeukoSite may
immediately (i) terminate the licenses granted by it pursuant to Section 5.1 in
respect of such Product and (ii) require Warner to grant LeukoSite an exclusive
(even as to Warner), worldwide license under the Patent Rights, Background
Technology and Collaboration Technology relating to such Product and owned or
controlled by Warner to the extent necessary to make, have made, use or sell
such Product. In such event such Warner Product or Warner-LeukoSite Product
shall be a LeukoSite Product for the purposes of this Agreement.
(c) In the event of an uncured material breach of Article V by
LeukoSite in regard to a LeukoSite Product, Warner may immediately (i) terminate
the licenses granted by it pursuant to Section 5.2 in respect of such Product
and (ii) require LeukoSite to grant Warner an exclusive (even as to LeukoSite),
worldwide license under the Patent Rights, Background Technology and
Collaboration Technology to the extent necessary to make, have made, use or sell
such Product. Such LeukoSite Product shall be a Warner Product for the purposes
of this Agreement.
(d) In the event of an uncured material breach of Article VI or VIII by
Warner in regard to a Warner-LeukoSite Product, LeukoSite may immediately (i)
terminate the licenses granted by it pursuant to Section 5.1 in respect of such
Product and (ii) require Warner to grant it an exclusive (even as to Warner),
worldwide license under the Patent Rights, Background Technology and
Collaboration Technology to the extent necessary to make, have made, use or sell
such Product. In such event, such Product will be a LeukoSite Product for
purposes of this Agreement.
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 40
40
(e) In the event of an uncured material breach of Article VI or a
payment provision of Article VIII or of Section 4.2 by Leukosite with respect to
a Warner-LeukoSite Product, Warner may immediately terminate the marketing
rights of Leukosite with respect to such Warner-Leukosite Product.
11.2 Effect of Bankruptcy. If either party files a voluntary petition
in bankruptcy, is adjudicated a bankrupt, makes a general assignment for the
benefit of creditors, admits in writing that it is insolvent or fails to
discharge within 15 days an involuntary petition in bankruptcy filed against it,
then (a) this Agreement shall immediately terminate and (b) the licenses granted
to such party hereunder shall immediately terminate.
11.3 Termination By Either Party Other Than For Cause. ********
************************************************************************
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11.4 Remedies. In the event of any breach of any provision of this
Agreement, in addition to the termination rights set forth herein, each party
shall have all other rights and remedies at law or equity to enforce this
Agreement.
ARTICLE XII
GENERAL PROVISIONS
12.1 Indemnification. Warner and LeukoSite each agrees to indemnify and
hold harmless the other party and its Affiliates and their respective employees,
agents, officers, directors and permitted assigns (such party's "Indemnified
Group") from and against any claims, judgments, expenses (including reasonable
attorneys' fees), damages and awards (collectively a "Claim") arising out of or
resulting from (i) its negligence or misconduct in regard to any Product, (ii) a
breach of any of its representations or warranties hereunder or (iii) the
manufacture, use or sale of a Warner Product or a Warner-LeukoSite Product (in
the case of Warner) or a LeukoSite Product (in the case of LeukoSite), except to
the extent that such Claim arises out of or results from the negligence or
misconduct of a party seeking to be indemnified and held harmless or the
negligence or misconduct of a member of such party's Indemnified Group. An
indemnified party shall promptly give notice to the indemnifying party
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 41
41
of any information from which it should reasonably conclude an incident has
occurred that could give rise to a Claim, and in the event a Claim is made or a
suit is brought, all indemnified parties shall assist the indemnifying party and
cooperate in the gathering of information with respect to the time, place, and
circumstances and in obtaining the names and addresses of any injured parties
and available witnesses. The failure to give the notice referred to in the
preceding sentence shall not relieve a party of its indemnification obligations,
except to the extent such failure prejudices the ability of the indemnifying
party to defend against such claim. No indemnified party shall, except at its
own cost, voluntarily make any payment or incur any expense in connection with
any such Claim or suit without the prior written consent of the indemnifying
party. Each indemnified party shall permit the indemnifying party to assume the
defense of any claim. The obligations set forth in this Section shall survive
the expiration or termination of this Agreement.
12.2 Assignment/Change of Control. (a) This Agreement is not assignable
by either party without the prior written consent of the other party. To the
extent that assignment is permitted this Agreement shall be binding upon and
inure to the benefit of the parties' successors, legal representatives and
assigns. Notwithstanding the foregoing, (i) Warner may assign this Agreement to
any of its subsidiaries or any entity succeeding to a majority of its
Parke-Davis business or substantially all of the business to which this
Agreement is related and (ii) LeukoSite may assign this Agreement to any of its
subsidiaries or to any entity succeeding to substantially all of its
pharmaceutical business or substantially all of the business to which this
Agreement is directed. In no event will any assignment relieve the assigning
party of its obligations hereunder. No assignment shall take effect until the
assignee notifies the non-assigning party of such assignment and the assignee
agrees to be bound by all the terms, conditions and obligations of this
Agreement.
(b) In the event of (i) a merger, consolidation, plan of exchange or
other reorganization of LeukoSite in which LeukoSite is not the surviving party
and the surviving party is an entity which does not presently control or is not
presently under common control with LeukoSite and such surviving entity is in
the pharmaceutical industry and has total annual sales at such time in excess of
$500 million, or any other transaction or series of transactions that result in
an entity (together with such entity's Affiliates) controlling LeukoSite and
such entity does not presently control or is not presently under common control
with LeukoSite and such surviving entity is in the pharmaceutical industry and
has total annual sales at such time in excess of $500 million or (ii) the
assignment by LeukoSite of this Agreement to any entity succeeding to
substantially all
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 42
42
of LeukoSite's pharmaceutical business or substantially all of the business to
which this Agreement is related and such entity is an entity which does not
presently control or is not presently under common control with LeukoSite and
such entity is in the pharmaceutical industry and has total annual sales in
excess of $500 million, then Warner may terminate LeukoSite's right to
co-promote all Warner-LeukoSite Products hereunder. In such event, LeukoSite or
the surviving entity, or the assignee, as the case may be, will be entitled to
receive (or obligated to pay) LeukoSite's Share of Profit of each
Warner-LeukoSite Product in the Designated Co-Promotion Countries, except that
in calculating Total Profit, the Selling Expenses of Warner shall also be
deducted from Net Sales.
12.3 Non-Waiver. The waiver by either of the parties of any breach of
any provision hereof by the other party shall not be construed to be a waiver of
any succeeding breach of such provision or a waiver of the provision itself.
12.4 Submission to Senior Officers for Dispute Resolution. The parties
recognize that the collaborative research program under this Agreement and the
development and commercialization of Development Candidates will require the
resolution of certain issues in the future. In the event the Management
Committee or any Marketing Committee is unable to resolve a dispute under this
Agreement or come to unanimous agreement on terms mutually acceptable to both
parties, either party may have the dispute referred to the senior officer of
Warner's pharmaceutical business for good faith resolution. Such senior officer
shall confer with LeukoSite's President prior to resolving such dispute. The
resolution of the dispute pursuant to this Section shall be final and binding on
the parties.
12.5 Governing Law. This Agreement shall be construed and interpreted
in accordance with the laws of the Commonwealth of Massachusetts, other than
those provisions governing conflicts of law.
12.6 Partial Invalidity. If and to the extent that any court or
tribunal of competent jurisdiction holds any of the terms or provisions of this
Agreement, or the application thereof to any circumstances, to be invalid or
unenforceable in a final nonappealable order, the parties shall use their best
efforts to reform the portions of this Agreement declared invalid to realize the
intent of the parties as fully as practicable, and the remainder of this
Agreement and the application of such invalid term or provision to circumstances
other than those as to which it is held invalid or unenforceable shall not be
affected thereby, and each of the remaining
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 43
43
terms and provisions of this Agreement shall remain valid and enforceable to the
fullest extent of the law.
12.7 Notice. Any notice to be given to a party under or in connection
with this Agreement shall be in writing and shall be (i) personally delivered,
(ii) delivered by a internationally recognized overnight courier or (iii)
delivered by certified mail, postage prepaid, return receipt requested to the
party at the address set forth below for such party:
To Warner: To LeukoSite:
Senior Vice President, Christopher K. Mirabelli, Ph.D.
Research and Development Chairman of the Board and
Parke-Davis Pharmaceutical Chief Executive Officer
Research, LeukoSite, Inc.
Warner-Lambert Company 215 First Street
2800 Plymouth Road Cambridge, MA 02142
Ann Arbor, MI 48105
with a copy to: with a copy to:
Vice President and Elliot Olstein, Esq.
General Counsel Carella, Byrne, Bain, Gilfillan,
Warner-Lambert Company Cecchi, Stewart & Olstein
201 Tabor Road 6 Becker Farm Road
Morris Plains, NJ 07950 Roseland, NJ 07068
or to such other address as to which the party has given notice thereof. Such
notices shall be deemed given upon receipt.
12.8 SAB Attendance. During the Term of this Agreement, Warner will be
entitled to have a representative attend (but not vote at) all meetings of
LeukoSite's Scientific Advisory Board ("SAB"). Warner will be provided notices,
meeting minutes and all material made available to SAB members generally at the
same time as such SAB members. Warner will recuse itself from that portion of
any meeting, and will not be provided material related to, confidential
information of third parties who object to Warner's inclusion. Prior to
attending any such SAB meeting, Warner will sign a confidentiality agreement by
which Warner will agree to maintain in confidence all information, data and
materials received as a result of such attendance and not to use same for any
research, development, manufacture or sale of any product or process (except to
the extent permitted by this Agreement).
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 44
44
12.9 Headings. The headings appearing herein have been inserted solely
for the convenience of the parties hereto and shall not affect the construction,
meaning or interpretation of this Agreement or any of its terms and conditions.
12.10 No Implied Licenses or Warranties. No right or license under any
patent application, issued patent, know-how or other proprietary information is
granted or shall be granted by implication. All such rights or licenses are or
shall be granted only as expressly provided in the terms of this Agreement.
Neither party warrants the success of any clinical or other studies undertaken
by it.
12.11 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, nor shall it create any liability, if the same shall arise from
any cause or causes beyond the reasonable control of the affected party,
including, but not limited to, the following, which for purposes of this
Agreement shall be regarded as beyond the control of the party in question: 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; invasion; strikes; and lockouts or the like;
provided that the party so affected shall use its best efforts to avoid or
remove such causes or nonperformance and shall continue performance hereunder
with the utmost dispatch whenever such causes are removed.
12.12 Survival. The representations and warranties contained in this
Agreement as well as those rights and/or obligations contained in the terms of
this Agreement which by their intent or meaning have validity beyond the term of
this Agreement shall survive the termination or expiration of this Agreement.
12.13 Entire Agreement. This Agreement, together with the Preferred
Stock Purchase Agreement dated the date hereof, constitute the entire
understanding between the parties with respect to the subject matter contained
herein and supersede any and all prior agreements, understandings and
arrangements whether oral or written between the parties relating to the subject
matter hereof.
12.14 Amendments. No amendment, change, modification or alteration of
the terms and conditions of this Agreement shall be binding upon either party
unless in writing and signed by the party to be charged.
<PAGE> 45
45
12.15 Independent Contractors. It is understood that both parties
hereto are independent contractors and engage in the operation of their own
respective businesses, and neither party hereto is to be considered the agent or
partner of the other party for any purpose whatsoever. Neither party has any
authority to enter into any contracts or assume any obligations for the other
party or make any warranties or representations on behalf of the other party.
12.16 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original and both of which together shall
constitute one and the same instrument.
12.17 In the event that there is a conflict between the text of this
Agreement and Exhibit 1, the text of this Agreement shall control.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the date first above written.
LEUKOSITE, INC. WARNER-LAMBERT COMPANY
By: [signature appears here] By: [signature appears here]
----------------------- ----------------------
Name: Name:
Title: Title:
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 1
EXHIBIT 10.5
CONFIDENTIAL TREATMENT
LICENSE AGREEMENT
This Agreement is effective March 15, 1995 EFFECTIVE DATE") by and between
Lynxvale Ltd., having an address at the Old Schools, Cambridge CB2, ITS, England
("LYNXVALE"). and LeukoSite, Inc., a Corporation having offices at 213 First
Street, Cambridge, MA 02142, USA ("LEUKOSITE").
WHEREAS, LEUKOSITE desires to obtain exclusive rights and licenses to
intellectual property relating to monoclonal antibodies developed in the
laboratory of Dr. Herman Waldmann at the University of Cambridge and to which
LYNXVALE has acquired rights; and
WHEREAS, LYNXVALE is willing to grant the exclusive rights and licenses
desired by LEUKOSITE.
NOW THEREFORE in consideration of the mutual promises and other good and
valuable consideration, the panties agree as follows:
SECTION 1 - DEFINITIONS.
The terms used in this Agreement have the following meaning:
1.1 The term "AFFILIATE" as applied to LEUKOSITE shall mean any company or
other legal entity other than LEUKOSITE in whatever country organized,
controlling, or controlled by LEUKOSITE. The term "control" means possession,
direct and indirect of the power to direct or cause the direction of the
management and policies whether through the ownership of voting securities, by
contract or otherwise.
1.2 The term "ANTIBODY(IES)" shall mean any and all antibodies and
fragments or portions thereof, including but not limited to,********************
********************************************************************************
************ and fragments and portions thereof.
1.3 The term "CELL LINE" shall mean any cell line which produces an
ANTIBODY
1.4 "INFORMATION" shall mean any data, formulas, process information or
other information applicable to LICENSED SUBJECT MATTER known to LYNXVALE
through an INVESTIGATOR on the EFFECTIVE DATE and in and to which LYNXVALE
and/or INVESTIGATOR has a transferable right.
1.5 The term "INVESTIGATOR" means PRINCIPAL INVESTIGATOR, any other member
of the University of Cambridge professional staff, graduate
* Confidential treatment requested: material has been omitted and
filed separately with the Commission.
<PAGE> 2
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student, undergraduate student, or employee of the University of Cambridge who
worked under the primary direction or supervision of PRINCIPAL INVESTIGATOR.
1.6 The term "LICENSED SUBJECT MATTER" shall mean the following ANTIBODY
which is owned by LYNXVALE and/or to which LYNXVALE has a transferable right:
*******, and all other ANTIBODIES to which LEUKOSITE has exercised its option
under Section 2.1(b) and the CELL LINES which produce such ANTIBODIES.
1.7 The term "MATERIAL" shall mean any material or substance (other than
LICENSED SUBJECT MATTER) which is discovered, produced or derived by an
INVESTIGATOR and related to LICENSED SUBJECT MATTER and is in possession of
LYNXVALE through an INVESTIGATOR on the EFFECTIVE DATE and in and to which
LYNXVALE and/or an INVESTIGATOR has a transferable right.
1.8 "NET SALES PRICE" means the total received by LEUKOSITE or its
AFFILIATES, or its SUBLICENSEES from sale of PRODUCT, less *******************
******************************************************************************
******************************************************************************
******************************************************************************
****************************************
PRODUCT shall be considered "sold" when billed out or invoiced.
1.9 The term "PATENT RIGHT(S)" shall mean any patent application and
patent anywhere in the world including, but not limited to, those set forth in
Appendix A and any division, continuation, or continuation-in-part thereof and
any reissue or extension thereof, insofar as it contains one or more claims to
LICENSED SUBJECT MATTER, INFORMATION, or MATERIALS.
1.10 The term "PRINCIPAL INVESTIGATOR" shall mean Herman Waldmann, Ph.D.
1.11 The term PRODUCT" shall mean any article, composition, apparatus,
substance, chemical, material, method, process or service which incorporates or
utilizes LICENSED SUBJECT MATTER, MATERIALS and/or INFORMATION, or the
manufacture, import, sale or use of which is covered by PATENT RIGHTS.
1.12 The term "SUBLICENSEE" shall mean any now AFFILIATE third party
licensed by LEUKOSITE to make, have made, import, use or sell any PRODUCT under
PATENT RIGHTS.
* Confidential treatment requested: material has been omitted and
filed separately with the Commission.
<PAGE> 3
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1.13 The term "VALID CLAIM" shall mean a claim of an issued patent which
has not lapsed or become abandoned or been declared invalid or unenforceable by
a court of competent jurisdiction or an administrative agency from which no
appeal can be or is taken.
1.14 The use herein of the plural shall include the singular, and the use
of the masculine shall include the feminine.
SECTION 2- GRANTS.
2.1(a) LYNXVALE hereby grants to LEUKOSITE and LEUKOSITE hereby accepts
from LYNXVALE a world-wide and exclusive royalty bearing right and license under
PATENT RIGHTS, INFORMATION, MATERIALS and LICENSED SUBJECT MATTER to make, have
made, use and sell or have sold on its behalf PRODUCT, including the right to
sub license third parties. LEUKOSITE shall have the right to extend such license
to its AFFILIATES, who shall be bound by the same terms and obligations as set
forth herein.
(b) LEUKOSITE shall have an exclusive option to obtain a worldwide
sole and exclusive right and license under the terms and conditions set forth
herein with respect to the following ANTIBODIES and the CELL LINES which produce
such ANTIBODIES which are owned by LYNXVALE and/or to which LYNXVALE has a
transferable right: **********************************************************
******************************************************************************
******************************************************************************
******************************************************************************
******************************************************************************
******************************************************************************
LEUKOSITE may exercise this option at any time during the ************ period
following the EFFECTIVE DATE, provided that if during said ************ period
LYNXVALE notifies LEUKOSITE that it has received a bona fide offer to license
any of the foregoing ANTIBODIES or CELL LINES. LEUKOSITE shall have
************************** from such notification to exercise its option
hereunder. LYNXVALE shall, upon request, provide LEUKOSITE with documentary
evidence of such offer. In the event LEUKOSITE fails to exercise its option
within the aforesaid *******************, LYNXVALE may license the specifically
requested ANTIBODIES and/or CELL LINES to the third party requesting such
license on terms which are not more favorable to the third party than as set
forth hereunder.
(c) LYNXVALE shall, as soon as practical after the EFFECTIVE DATE,
provide to LEUKOSITE any and all CELL LINES which are LICENSED SUBJECT MATTER
and all INFORMATION applicable to LICENSED SUBJECT MATTER.
* Confidential treatment requested: material has been omitted and
filed separately with the Commission.
<PAGE> 4
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2.2 LEUKOSITE agrees to forward to LYNXVALE a copy of any and all fully
executed sublicense agreements.
2.3 The above licenses to sell any PRODUCT includes the right of
LEUKOSITE, its AFFILIATES, and SUBLICENSEES to grant to the purchaser thereof
the right to use and/or resell such purchased PRODUCT without payment of any
other royalty hereunder.
2.4 (a) Taking into account the complexity, and stage of development of
PRODUCTS and the science related thereto, LEUKOSITE shall use reasonable efforts
under the circumstances to research, develop and then commercialize a PRODUCT
which is LICENSED SUBJECT MATTER and shall keep LYNXVALE reasonably informed of
its efforts in this respect. The efforts of a SUBLICENSEE and/or an AFFILIATE
shall be considered as efforts of LEUKOSITE.
(b) In the event that LYNXVALE reasonably believes that LEUKOSITE is not
making reasonable efforts under the circumstances to research, develop and then
commercialize PRODUCTS pursuant to Paragraph 2.4(a) then LYNXVALE shall provide
written notice to LEUKOSITE which specifies LYNXVALE's basis for such belief and
what additional efforts LYNXVALE believes should be made by LEUKOSITE. Upon
receipt of such written notice, LYNXVALE and LEUKOSITE shall enter into good
faith negotiations in order to reach mutual agreement as to what efforts by
LEUKOSITE shall satisfy the requirements of this Paragraph 2.4, and if such
mutual agreement is not reached within ninety (90) days after receipt of such
written notice, then the parties agree to submit to arbitration pursuant to
Paragraph 10.2 10 determine the efforts which should be exerted by LEUKOSITE. In
such arbitration, in determining the efforts which should be exerted, the
arbitrator shall consider efforts exerted by LEUKOSITE up to the point of
arbitration, the current stage of technical development of the PRODUCT, the
resources and manpower available to LEUKOSITE; the potential market; and
regulatory and technical problems. Thereafter, LEUKOSITE shall exert the efforts
determined by the panties or in such arbitration.
(c) If LEUKOSITE fails to exert the efforts determined by the panties or
in such arbitration with respect to a PRODUCT, LYNXVALE's sole and exclusive
remedy for LEUKOSITE's failure to meet such efforts is for the licenses and
rights granted hereunder for the PRODUCT to be converted from an exclusive right
and license to a non-exclusive right and license at a royalty rate equal to
************** the royalty rate due for an exclusive license hereunder.
2.5 Subject to Section 2.4, LEUKOSITE shall have sole discretion for
making all decisions relating to the commercialization and marketing of PRODUCT-
* Confidential treatment requested: material has been omitted and
filed separately with the Commission.
<PAGE> 5
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SECTION 3 - PATENTS
3.1 After the EFFECTIVE DATE of this Agreement, LEUKOSITE shall bear the
cost and expense for the filing. prosecution and maintenance of any PATENT
RIGHTS under which LEUKOSITE retains an exclusive license hereunder.
3.2 With respect to any PATENT RIGHTS licensed to LEUKOSITE, each patent
application, office action, response to office action, request for terminal
disclaimer, and request for reissue or reexamination of any patent issuing from
such application shall be provided to LEUKOSITE sufficiently prior to the filing
of such application, response or request to allow for review and comment by
LEUKOSITE.
SECTION 4. ROYALTIES.
4.1(a) For each PRODUCT sold by LEUKOSITE or its AFFILIATES or
SUBLICENSEES LEUKOSITE shall pay LYNXVALE one of the following royalties:
(1) A royalty of ********************* of the NET SALES PRICE of
PRODUCTS (other than PRODUCTS which are diagnostic products or
service) so long as in each case the PRODUCT, where sold shall
infringe a VALID CLAIM of any PATENT RIGHT which is licensed
exclusively to LEUKOSITE in such country, or
(2) A royalty of ******** **************** of the NET SALES
PRICE of PRODUCTS which are diagnostic products or services so
long as in each case the PRODUCT. where sold shall. infringe a
VALID CLAIM of any PATENT RIGHT which is licensed exclusively to
LEUKOSITE in such country; or
(3) **************************** of all royalties and lump sum
payments creditable against royalties received from a SUBLICENSEE
based on the sale in a country by the SUBLlCENSEE of a PRODUCT which
infringes a VALID CLAIM of a PATENT RIGHT exclusively licensed to
LEUKOSITE in such country,
(b) In the event that a PRODUCT includes both component(s) covered by a
VALID CLAIM of a PATENT RIGHT ("Patented Component(s)") and active component(s)
not covered by a VALID CLAIM of a PATENT RIGHT ("Unpatented Component(s)) (such
PRODUCT being a "Combined Product"), then NET SALES PRICE shall be
***************************************************************
* Confidential treatment requested: material has been omitted and
filed separately with the Commission.
<PAGE> 6
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******************************************************************************
****************************************** If the Patented Component(s) are not
sold separately, then NET SALES PRICE upon which a royalty is paid shall be ****
******************************************************************************
******************************************************************************
************************************************
4.2 In the event that royalties are to be paid by LEUKOSITE to a party who
is not an AFFILIATE of LEUKOSITE for PRODUCT for which royalties are also due to
LYNXVALE pursuant to Paragraph 4.1 ("Other Royalties"), then the royalties to be
paid to LYNXVALE by LEUKOSITE pursuant to Paragraph 4.1 shall be
**********************************************************************
******************************************************************************
*****
4.3 LEUKOSITE shall keep, and shall cause each of its AFFILIATES and
SUBLICENSEES to keep, full and accurate books of account containing all
particulars that may be necessary for the purpose of calculating all royalties
payable to LYNXVALE. Such books of account shall be kept at their principal
place of business and, with all necessary supporting data shall, for the three
(3) years next following the end of the calendar year to which each shall
pertain, be open for inspection by LYNXVALE or its designee upon reasonable
notice during normal business hours at LYNXVALE's expense for the sole purpose
of verifying royalty statements or compliance with this Agreement, but in no
event more than once in each calendar year. All information and data offered
shall be used only for the purpose of verifying royalties and shall be treated
as LEUKOSITE confidential information and may not be disclosed to anyone nor
used for any purpose other than as set forth herein. In the event that such
inspection uncovers an underpayment of royalties of ten percent (10%) or more
for any one year period, LEUKOSITE shall bear the cost of such inspection.
4.4 With each semi-annual payment, LEUKOSITE shall deliver to LYNXVALE a
full and accurate accounting to include at least the following information:
(a) Quantity of each PRODUCT subject to royalty sold (by country) by
LEUKOSITE, and its AFFILIATES;
(b) Total receipts for each PRODUCT subject to royalty (by country);
(c) Total royalties payable to LYNXVALE
(d) Royalties received from SUBLICENSEES.
4.5 In each year the amount of royalty due shall be calculated
semi-annually as of June 30 and December 31 (each as being the last day of an
"ACCOUNTING PERIOD") and shall be paid semi-annually within the sixty days
* Confidential treatment requested: material has been omitted and
filed separately with the Commission.
<PAGE> 7
-7-
next following such date, every such payment shall be supported by the
accounting prescribed in Paragraph 4.4 and shall be made in United States
currency. Whenever for the purpose of calculating royalties conversion from any
foreign currency shall be required, such conversion shall be at the rate of
exchange thereafter published in the Wall Street Journal for the last business
day of the applicable ACCOUNTING PERIOD, as the case may be.
4.6 If the transfer of or the conversion into United States Dollar
Equivalent of any remittance due hereunder is not lawful or possible in any
country, such remittance shall be made by the deposit thereof in the currency of
the country to the credit and account of LYNXVALE or its nominee in any
commercial bank or trust company located in that country, prompt notice of which
shall be given to LYNXVALE, LYNXVALE shall be advised in writing in advance by
LEUKOSITE and provide to LEUKOSITE a nominee, if so desired.
4.7 Any tax required to be withheld by LEUKOSITE under the laws of any
country for the account of LYNXVALE, shall be promptly paid by LEUKOSITE for and
on behalf of LYNXVALE to the appropriate governmental authority, and LEUKOSITE
shall use its best efforts to furnish LYNXVALE with proof of payment of such
tax. Any such tax actually paid on LYNXVALE's behalf shall be deducted from
royalty payments due LYNXVALE.
4.8 Only one royalty shall be due and payable to LYNXVALE for the
manufacture, use and sale of a PRODUCT irrespective of the number of patents or
claims thereof which cover the manufacture, use and sale of such PRODUCT.
SECTION 5 - INFRINGEMENT AND NONASSERTION.
5.1(a) If any of the PATENT RIGHTS under which LEUKOSITE is the licensee
is infringed by a third party, LEUKOSITE shall have the right and option but not
the obligation to bring an action for infringement, at its expense, against such
third party in the name of LYNXVALE and/or in the name of LEUKOSITE, and to join
LYNXVALE as a party plaintiff if required. LEUKOSITE shall promptly notify
LYNXVALE of any such infringement and shall keep LYNXVALE informed as to the
prosecution of any action for such infringement. No settlement, consent judgment
or other voluntary final disposition of the suit which adversely affects PATENT
RIGHTS may be entered into without the consent of LYNXVALE, which consent shall
not unreasonably be withheld or delayed.
(b) In the event that LEUKOSITE shall undertake the enforcement and/or
defense of the PATENT RIGHTS by litigation, LEUKOSITE may withhold up to
****************** of the royalties otherwise thereafter due LYNXVALE hereunder
and apply the same toward reimbursement of its expenses, including reasonable
attorneys' fees, in connection therewith. Any recovery of damages by LEUKOSITE
for any such suit shall be applied First in satisfaction of any unreimbursed
expenses and legal fees of LEUKOSITE relating to the suit, and next toward
reimbursement of LYNXVALE
* Confidential treatment requested: material has been omitted and
filed separately with the Commission.
<PAGE> 8
-8-
for any royalties withheld and applied pursuant to this Section 5. The balance
remaining from any such recovery shall be considered NET SALES PRICE for which a
royalty shall be paid to LYNXVALE pursuant to Paragraph 4.1.
5.2 In the event that LEUKOSITE elects not to pursue an action for
infringement, upon written notice to LYNXVALE by LEUKOSITE that an unlicensed
third party is an infringer of a VALID CLAIM of PATENT RIGHTS licensed to
LEUKOSITE, LYNXVALE shall have the right and option, but not the obligation at
its cost and expense to initiate infringement litigation and to retain any
recovered damages.
5.3 In the event that litigation against LEUKOSITE is initiated by a
third-party charging LEUKOSITE with infringement of a patent of the third party
as a result of the manufacture, use or sale by LEUKOSITE of PRODUCT covered by
PATENT RIGHTS, LEUKOSITE shall promptly notify LYNXVALE in writing thereof.
LEUKOSITE's costs as to any such defense shall be creditable against any and all
payments due and payable to LYNXVALE under Paragraph 4.1 of this Agreement but
no royalty payment after taking into consideration any such credit under this
Paragraph 5.3 shall be reduced by more than*****************
5.4 In the event of a judgment in any suit in which a court of competent
jurisdiction rules that the manufacture, use or sale by LEUKOSITE of PRODUCT
covered by a PATENT RIGHT has infringed on a third-party's patent requiring
LEUKOSITE to pay damages or a royalty to said third party, or in the event of a
settlement of such suit requiring damages or royalty payments to be made,
payments due to LYNXVALE under Paragraph 4.1 of this Agreement arising from the
applicable PRODUCT shall be correspondingly reduced **************** of the
amounts due under the requirement of such judgment or under the terms of such
settlement. In no case, however, shall the royalty payment after taking into
consideration any such reduction under this Paragraph 5.4 be reduced by more
than *************
5.5 LYNXVALE or any person or entity licensed by LYNXVALE)([VALE shall not
assert a patent or patent application of LYNXVALE against LEUKOSITE or its
AFFILIATES or SUBLICENSEES or their customers with respect to any PRODUCT for
which royalties are payable under the Agreement.
5.6 In any infringement suit either party may institute to enforce the
PATENT RIGHTS pursuant to this Agreement, the other party hereto shall, at the
request of the party initiating such suit, cooperate in all respects and, to the
extent possible, have its employees testify when requested and make available
relevant records, papers, information, samples, specimens, and the like. All
reasonable out-of-pocket costs incurred in connection with rendering cooperation
shall be paid by
* Confidential treatment requested: material has been omitted and
filed separately with the Commission.
<PAGE> 9
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the party requesting such cooperates.
SECTION 6 - WARRANTIES AND COVENANTS.
6.1 Each of LYNXVALE and LEUKOSITE 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 which would inhibit its ability to perform the
terms and conditions imposed on it by this Agreement.
6.2 LYNXVALE warrants and represents that to the best of its knowledge,
information and belief, it owns all right, tide and interest in and to LICENSED
SUBJECT MATTER, INFORMATION, MATERIALS and PATENT RIGHTS; it has the right to
grant the rights granted hereunder; that the granting of such rights does not
require the consent of a third party; and that there are and will be no
outstanding agreements, assignments or encumbrances inconsistent with the
provisions of this Agreement.
6.3 LYNXVALE covenants not to supply LICENSED SUBJECT MATTER, INFORMATION
and MATERIALS to any third party except as permitted by LEUKOSITE (which
permission shall not be unreasonably withheld) and shall not use same in humans
without the consent of LEUKOSITE. LEUKOSITE hereby consents to the distribution
of certain antibodies for research purposes only by Serotec which are supplied
by LYNXVALE under the License Agreement between them in effect on the EFFECTIVE
DATE.
SECTION 7 - INDEMNIFICATION.
7.1 Each party shall notify the other of any claim, lawsuit or other
proceeding related to PRODUCT, PATENT RIGHTS, MATERIALS, LICENSED SUBJECT MATTER
or INFORMATION. LEUKOSITE agrees that it will defend, indemnify and hold
harmless LYNXVALE and the University of Cambridge and their faculty members,
researchers, employees, officers, trustees and agents and each of them (the
"Indemnified Parties") from and against any and all third party claims, causes
of action and costs (including attorney's fees) of any nature made or lawsuits
or other proceedings filed or otherwise instituted against the Indemnified
Parties arising out of the design, manufacture, sale or use of PRODUCT by
LEUKOSITE or its licensees licensed hereunder except to the extent of the
negligence or willful misconduct of an Indemnified Party. LEUKOSITE will also
assume responsibility for all costs and expenses related to such claims and
lawsuits for which it is obligated to indemnify the Indemnified Parties pursuant
to this Paragraph 6.1 including, but not limited to, the payment of all
attorney's fees and costs of litigation or other defenses. LEUKOSITE shall have
the right to control the defense, settlement or compromise of any such claim.
* Confidential treatment requested: material has been omitted and
filed separately with the Commission.
<PAGE> 10
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SECTION 8 - ASSIGNMENT; SUCCESSORS.
8.1 This Agreement shall not be assignable by either of the parties
without the prior written consent of the other party (which consent shall not be
unreasonably withheld or delayed), except that LEUKOSITE without the consent of
LYNXVALE may assign this Agreement to an AFFILIATE or to a successor in interest
or transferee of all or substantially all of the portion of the business to
which this Agreement relates.
8.2 Subject to the limitations on assignment herein, this Agreement shall
be binding upon and inure to the benefit of said successors in interest and
assigns of LEUKOSITE and LYNXVALE. Any such successor or assignee of a party's
interest shall expressly assume in writing the performance of all the terms and
conditions of this Agreement to be performed by said party.
SECTION 9 - TERMINATION.
9.1 Except as otherwise specifically provided herein and unless sooner
terminated pursuant to Paragraph 9.2 or 9.3 of this Agreement, this Agreement
and the licenses and rights granted thereunder shall remain in full force and
effect until********************************************************************
************************************************
9.2 LEUKOSITE shall have the right to terminate this Agreement or any or
all of its licenses under one or more PATENT RIGHTS in one or more countries
upon sixty (60) days prior written notice.
9.3(a) Subject to Section 9.3(b), upon material breach of any material
provisions of this Agreement by either party to this Agreement, in the event the
breach is not cured within sixty (60) days after written notice to the breaching
party by the other party, in addition to any other remedy it may have, the other
party at its sole option may terminate this Agreement, provided that such other
party is not then in breach of this agreement In the event that a party in
breach disputes such termination and institutes legal action with respect
thereto, the Agreement shall not be terminated until there is a final court
decision in this respect from which no appeal can be or is taken.
(b) In the event that LYNXVALE is in breach of any material provision of
this Agreement, in the event that the breach is not cured within sixty (60) days
of written notice to LYNXVALE by LEUKOSITE, in addition to any other remedy it
may have, LEUKOSITE may withhold any payment due to LYNXVALE under this
* Confidential treatment requested: material has been omitted and
filed separately with the Commission.
<PAGE> 11
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Agreement until such breach is cured such withholding of payments by LEUKOSITE
shall not constitute a breach of this Agreement.
9.4 Upon any termination of this Agreement LEUKOSITE shall have the option
but not the obligation to finish any work-in-progress and to sell any completed
inventory of a PRODUCT covered by this Agreement which remains on hand as of the
date of the termination, so long as LEUKOSITE pays to LYNXVALE the royalties
applicable to said subsequent sales in accordance with the same terms and
conditions as set forth in this Agreement.
9.5 In the event that the licenses granted to LEUKOSITE under this
Agreement are terminated, any granted sub-licenses shall remain in full force
and effect, provided that the SUBLICENSEE is not then in breach of its
sub-license agreement and the SUBLICENSEE agrees to be bound to LYNXVALE as a
licensor under the terms and conditions of the sub-license agreement. LYNXVALE,
upon request, shall acknowledge the applicability of this provision to a
SUBLICENSEE.
9.6 The obligations of Sections 6 and 7 and Paragraphs 9,4, 9.5, 9.6 and
9.7 shall survive any termination of this Agreement.
9.7 Upon termination of this Agreement for any reason, nothing herein
shall be construed to release either party from any obligation that matured
prior to the effective date of such termination.
SECTION 10 - GENERAL PROVISIONS.
10.1 The relationship between LYNXVALE and LEUKOSITE is that of
independent contractors. LYNXVALE and LEUKOSITE are not joint venturers,
partners, principal and agent, master and servant, employer or employee, and
have no relationship other than as independent contracting parties. LYNXVALE
shall have no power to bind or obligate LEUKOSITE in any manner. Likewise,
LEUKOSITE shall have no power to bind or obligate LYNXVALE in any manner.
10.2 Any matter or disagreement under Paragraph 2.4 which this Agreement
specifically specifies is to be resolved by arbitration shall be submitted to a
mutually selected single arbitrator to so decide any such matter or
disagreement. The arbitrator shall conduct the arbitration in accordance with
the Rules of the International Chamber of Commerce, unless the parties agree
otherwise. If the parties are unable to mutually select an arbitrator, the
arbitrator shall be selected in accordance with the procedures of the
International Chamber of Commerce. The decision and award rendered by the
arbitrator shall be final and binding. Judgment upon the award may be entered in
any court having jurisdiction thereof. Any arbitration pursuant to this section
requested by LYNXVALE shall be held in Boston, Mass. USA, and any arbitration
requested by LEUKOSITE shall be
* Confidential treatment requested: material has been omitted and
filed separately with the Commission.
<PAGE> 12
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held in London, England or such other place as may be mutually agreed upon in
writing by the parties.
10.3 This Agreement sets forth the entire agreement and understanding
between the parties as to the subject matter thereof and supersedes all prior
agreements in this respect. There shall be no amendments or modifications to
this Agreement, except by a written document which is signed by both parties.
10.4 This Agreement shall be construed and enforced in accordance with the
law of England, without reference to its choice of law principles.
10.5 The headings in this Agreement have been inserted for the convenience
of reference only and are not intended to limit or expand on the meaning of the
language contained in the particular article or section.
10.6 Any delay in enforcing a party's rights under this Agreement or any
waiver as to a particular default or other matter shall not constitute a waiver
of a party's right to the future enforcement of its rights under this Agreement,
excepting only as to an expressed written and signed waiver as to a particular
matter for a particular period of time.
10.7 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, or (iii) by facsimile as confirmed by certified or registered
mail. Notices shall be delivered to the respective parties as indicated or any
other address designated by a party to the other party in writing under the
notice provisions of this Section 10.7:
To LEUKOSITE: LEUKOSITE, INC.
215 First Street
Cambridge, MA 02142
Copy to: Elliot M. Olstein, Esq.
Carella, Byrne, Bain, Gilfillan,
Cecchi, Stewart & Olstein
6 Becker Farm Road
Roseland, N.J. 07068
* Confidential treatment requested: material has been omitted and
filed separately with the Commission.
<PAGE> 13
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To LYNXVALE: LYNXVALE LTD.
20 Trumpington St.
Cambridge CB2, 1QA
United Kingdom
10.8 LEUKOSITE shall not use the name of LYNXVALE or the University of
Cambridge or of any staff member, employee student or any adaptation thereof in
any advertising, promotional or sales literature without the prior written
approval of LYNXVALE.
10.9 in the event a court or governmental agency of competent jurisdiction
holds any provision of this Agreement to be invalid, such holding shall have no
effect on the remaining provisions of this Agreement, and they shall continue in
full force and effect. Upon such holding, the parties shall, within a reasonable
period of time, determine whether the severed provision(s) detrimentally and
materially affect the obligations or performance of either or both parties. If
so affected, the parties shall, within a reasonable period of time, negotiate in
good faith to modify this Agreement to relieve such effects. If such
negotiations do not result in mutually agreeable modification to this Agreement,
either effected party may terminate this Agreement upon providing the other
party with thirty (30) days written notice of such termination.
10.10 This Agreement shall not create any rights including without
limitation third-party beneficiary rights, in any person or entity not a party
to this Agreement.
10.11 This Agreement may be signed in two or more counterparts, each such
counterpart shall be deemed an original and together shall constitute one and
the same Agreement.
* Confidential treatment requested: material has been omitted and
filed separately with the Commission.
<PAGE> 14
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IN WITNESS WHEREOF, the parties have executed this Agreement in two or
more counterparts, each as an original and all together as one instrument as of
the date set forth above.
LYNXVALE: LYNXVALE LTD.
By: /s/ R.C. Jennings
-----------------
Name: R.C. Jennings
Title: Director
LEUKOSITE: LEUKOSITE, INC.
By: /s/ Chris Mirabelli
-------------------
Name: C.K. Mirabelli
Title CEO And Chairman
I, Herman Waldmann, Ph.D., have read this Agreement in its entirety and I
understand and consent to the terms herein.
/s/ Herman Waldman
------------------
HERMAN WALDMANN
* Confidential treatment requested: material has been omitted and
filed separately with the Commission.
<PAGE> 1
EXHIBIT 10.6
CONFIDENTIAL TREATMENT
SERVICE AGREEMENT
This SERVICE AGREEMENT is entered into as of this ninth day of March,
1995, by and between LeukoSite, Inc., a corporation organised the laws of the
State of Delaware, with principal offices at 215 First St., Cambridge,
Massachusetts, MA 02142, USA (hereinafter "LeukoSite") and MRC Collaborative
Centre, a company incorporated under the laws of England whose registered office
is situated at 1-3 Burtonhole Lane, London NW7 1AD U.K. ("MRC CC").
WHEREAS, LeukoSite is interested in having MRC CC perform certain
services for LeukoSite in connection with antibody humanization;
WHEREAS, MRC CC has the expertise and facilities and is willing
to perform such services for LeukoSite;
NOW THEREFORE, the parties mutually agree as follows:
1. Services
From time to time at the request of LeukoSite, MRC CC shall provide
antibody humanization services and deliver to LeukoSite any resulting
cell lines, constructs, sequencing information and other information
and data requested (collectively, the "Services") in accordance with
the Description of Services and Budget for such Services attached
hereto and made a part hereof as Appendix A, or any other such
description and budget subsequently agreed to by the parties. MRC CC
will use its best endeavours to complete such Services in a timely
fashion and in accordance with all applicable laws, regulations and
professional standards prevailing in the UK.
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 2
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2. Term
This Agreement will commence on the date hereof and shall continue in
effect for a period of one year, subject to earlier termination in
accordance with the provisions of this Section. The Agreement may be
renewed upon mutual agreement of the parties. Either party may
terminate this Agreement upon ten (10) days' written notice to the
other party in the event of default by the other party of its
obligations under this Agreement, unless such default is cured within
such ten (10) day period. *************************************
***************************************************************
****** Notwithstanding anything herein to the contrary, Sections 4, 5,
7 and 8 hereof shall survive expiration or termination of this
Agreement for any reason.
3. Payment
Payment for Services shall be as set forth in Appendix A . Amounts so
due shall be payable by LeukoSite within thirty (30) days of receipt of
an invoice from MRC CC upon completion of the corresponding Services.
MRC CC shall be responsible for all other expenses incurred by it in
fulfilling its obligations hereunder. In the event of early termination
by LeukoSite for any reason, LeukoSite shall pay MRC CC for Services
completed hereunder and, in respect of Services not completed by MRC CC
at the date of termination, for expenses committed to perform such
Services to the date of termination.
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 3
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4. Confidential Information
MRC CC agrees to treat any materials ("Materials)" and any confidential
or proprietary information obtained from LeukoSite or generated or
created by MRC CC in the course of performing Services under this
Agreement, including the results of the Services in so far as the
foregoing relates to the subject matter of the work contemplated or
that subsequently agreed to under the terms of this Agreement and
anything derived therefrom, (collectively, the "Information") as the
confidential and exclusive property of LeukoSite, and agrees not to
disclose any of the Information or disclose or distribute any Material
to any third party without first obtaining the written consent of
LeukoSite. MRC CC agrees that it will use any Information and any
Materials only for purposes of providing Services to LeukoSite
hereunder and for no other purpose without the written consent of
LeukoSite. MRC CC further agrees to take all practicable steps to
ensure that the Information and Materials will not be used by its
directors, officers or employees, except on like terms of
confidentiality as aforesaid, and will be kept fully-private and
confidential by them.
The above provisions of confidentiality shall not apply to that part of
the Information obtained from LeukoSite which MRC CC is able to
demonstrate by documentary evidence;
(a) was fully in MRC CC's possession prior or receipt from
LeukoSite; or
(b) was in the public domain at the time of receipt from
LeukoSite; or
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 4
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(c) became part of the public domain through no default of MRC CC,
its directors, officers or employees; or
(d) was lawfully received by MRC CC from some third party having a
right of further disclosure.
MRC CC agrees that, at LeukoSite's request, it shall return to
LeukoSite all parts of the Information provided by LeukoSite in
documentary form and any unused Materials and will return or destroy
any copies thereof made by MRC CC, its directors, officers or
employees, except that MRC CC may retain one copy of the Information in
its legal files, subject to the continuing obligation of nondisclosure
and nonuse hereunder.
Neither anything herein contained nor any delivery of Information or a
Material to one party shall be deemed to grant to that party any rights
or licenses under any patent applications or patents or under any
know-how, technology or inventions of the other.
5. Publicity
Except as required by law, neither party shall use the name of the
other party, nor of any employee of the other party, in connection with
any publicity, without the prior written approval of the other party.
6. Independent Contractor
LeukoSite and MRC CC are independent parties and nothing in this
Agreement is intended or shall be deemed to create a partnership,
agency, employer/employee or joint venture relationship between
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 5
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the parties or between either party and any employee or agent of
the other party.
7. Intellectual Property
At LeukoSite's request, MRC CC shall assign to LeukoSite all of MRC
CC's rights to, and interests in Information including, but not limited
to, antibody designs and any antibodies derived therefrom based upon
any murine antibodies or complete , DNA sequences thereof provided by
LeukoSite to MRC CC(collectively, "Murine Antibodies"). MRC CC further
agrees to assist LeukoSite in applying for patents for such antibodies
and antibody designs by providing any and all design specifications and
documentation for the work which MRC CC performs and other reasonable
assistance as appropriate.
Notwithstanding the foregoing, (i) MRC CC reserves all of its rights
with respect to antibody engineering techniques and know-how used in
performing the Services hereunder and (ii) LeukoSite retains all of its
rights to Murine Antibodies and to all antibody designs and all
antibodies derived therefrom under the terms of this Agreement.
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 6
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8. Limitations
MRC CC makes no warranties, expressed or implied, as to any matter
whatsoever, including without limitations, the ownership,
merchantability, of fitness for a particular purpose of the results of
Services performed hereunder.
9. Notices
Any notices to be given hereunder shall be in writing and sent to the
address below by telecopy, with originals to follow immediately
thereafter by overnight mail or by first class mail, and shall be
effective upon receipt of the telecopy.
If to LeukoSite:
LeukoSite Inc.
215 First St.
Cambridge, MA 02142 U.S.A.
Attention: Director of Research
Tel. No: +1 (617) 621-9350
Fax No: +1 (617) 621-9349
If to MRC CC:
MRC Collaborative Centre
1 - 3 Burtonhole Lane
Mill Hill
London NW7 1AD
U.K.
Attention: Commercial Director
Tel. No: +44 (81) 906-3811
Fax No: +44 (81) 906-1394
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 7
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10. Entire Agreement
This Agreement sets forth the entire agreement of the parties with
respect to the subject matter contained herein, and may not to modified
or amended except by a written agreement executed by the parties.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
through their duly authorized representatives.
MRC COLLABORATIVE CENTRE LEUKOSITE, INC.
By: /s/ [signature appears here] By: /s/ Chris Mirabelli
-------------------------------- -------------------------
Title: Commercial Director Title: CEO and Chairman
---------------------------- ----------------------
Date: 11th April, 1995 Date: 9 March 1995
-------------------------------- -------------------------
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 1
Exhibit 10.7
CONFIDENTIAL TREATMENT
CHILDREN'S MEDICAL CENTER CORPORATION- LEUKOSITE, INC.
LICENSE AGREEMENT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PREAMBLE
ARTICLES:
<S> <C>
I DEFINITIONS...........................................................
II GRANT
III DUE DILIGENCE.........................................................
IV PAYMENTS
V PATENT PROSECUTION....................................................
VI INFRINGEMENT..........................................................
VII PRODUCT LIABILITY.....................................................
VIII EXPORT CONTROLS.......................................................
IX NON-USE OF NAMES......................................................
X ASSIGNMENTS...........................................................
XI ARBITRATION...........................................................
XII TERMINATION...........................................................
XIII PAYMENTS, NOTICES AND OTHER...........................................
COMMUNICATIONS........................................................
XIV MISCELLANEOUS PROVISIONS..............................................
</TABLE>
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 2
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This Agreement is made and entered into this 25th day of March, 1996
(the Effective Date), by and between CHILDREN'S MEDICAL CENTER CORPORATION, a
corporation duly organized and existing under the laws of the Commonwealth of
Massachusetts and having its principal office at 300 Longwood Avenue, Boston,
Massachusetts, 02115, U.S.A. (hereinafter referred to as CMCC), and LeukoSite,
Inc. a corporation duly organized under the laws of Delaware and having its
principal office at 215 First Street, Cambridge, MA (hereinafter referred to as
LICENSEE).
WITNESSETH
WHEREAS, CMCC is either the owner or co-owner with Brigham and Women's
Hospital of 75 Francis Street, Boston, MA 02115 (hereinafter referred to as BWH)
and/or LICENSEE of certain "Patent Rights" (as later defined herein) relating to
inventions resulting from research funded by LICENSEE;
WHEREAS, CMCC has the right to grant licenses under said Patent Rights,
(subject only to a royalty-free, nonexclusive license heretofore granted to the
United States Government);
WHEREAS, CMCC and BWH desire to have the Patent Rights utilized in the
public interest and is willing to grant a license thereunder;
WHEREAS, LICENSEE has represented to CMCC, to induce CMCC to enter into
this Agreement, that LICENSEE is capable of the development, production,
manufacture, marketing and sale of products similar to the "Licensed Product(s)"
(as later defined herein) and/or the use of the "Licensed Process(es)" (as later
defined herein) and that it shall commit itself to a thorough and diligent
program of exploiting the Patent Rights so that public utilization shall result
therefrom; and
WHEREAS, LICENSEE desires to obtain a license under the Patent Rights
upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein, the parties hereto agree as follows:
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 3
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ARTICLE I -- DEFINITIONS
For the purpose of this Agreement, the following words and phrases
shall have the following meanings:
1.1 "LICENSEE" shall mean LeukoSite, Inc. and any Subsidiary of LeukoSite, Inc.
1.2 "Subsidiary" shall mean any corporation, company or other entity more than
fifty percent (50%) of whose voting stock is owned or controlled directly or
indirectly by LeukoSite, Inc.
1.3 "Patent Rights" shall mean all of the following CMCC intellectual property
rights by ownership and BWH rights conveyed by agency granted to CMCC by
agreement (Appendix A):
a. The United States and foreign patents and/or patent applications
listed in Appendix B;
b. United States and foreign patents issued from the applications
listed in Appendix B and from divisionals and continuations of these
applications;
c. Claims of U.S. and foreign continuation-in-part applications, and of
the resulting patents, which are directed to subject matter specifically
described in the U.S. and foreign applications listed in Appendix B;
d. Claims of all later filed foreign patent applications, and of the
resulting patents, which are directed to subject matter specifically described
in the United States patent and/or patent applications described in (a), (b), or
(c) above;
e. Any reissues and reexaminations of United States patents described
in (a), (b), (c), or (d) above.
1.4 A "Licensed Product" shall mean any product or part thereof which:
a. Is covered in whole or in part by an issued, unexpired claim or a
pending claim contained in the Patent Rights in any country.
b. Is manufactured by using a process which is covered in whole or in
part by an issued, unexpired claim or a pending claim contained in the Patent
Rights in any country.
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 4
-4-
1.5 A "Licensed Process" shall mean any process which is covered in whole or in
part by an issued, unexpired claim or a pending claim contained in the Patent
Rights in any country.
1.6 "Net Sales Price" shall mean LICENSEE's gross billings for Licensed Products
produced hereunder less the sum of the following:
***************************************************************
***********************************************************************
***************************
***********************************************************************
***************************
*********************************************
**************************
No deductions shall be made for commissions paid to individuals whether
they be with independent sales agencies or regularly employed by LICENSEE and on
its payroll, or for cost of collections. Licensed Products shall be considered
"sold" when billed out or invoiced.
1.7 "Field of Use" shall mean diagnostic and therapeutic products for the
diagnosis or treatment of human disease.
1.8 "Information" shall mean any data and information necessary or useful to
make, have made, use, lease and sell Licensed Products and to practice Licensed
Processes for the Field of Use to which CMCC has a transferable right on the
Effective Date.
ARTICLE II -- GRANT
2.1 a) CMCC hereby grants to LICENSEE the exclusive worldwide right and license
to make, have made, use, lease, offer for sale, and/or sell the Licensed
Products, and to practice the Licensed Processes for the Field of Use under
Patent Rights to the end of the term for which the Patent Rights are granted
unless sooner terminated according to the terms hereof; provided however, CMCC
and BWH shall retain a royalty-free, nonexclusive, irrevocable license to
practice the Patent Rights for noncommercial research purposes only and provided
further that
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 5
-5-
LICENSEE may continue to make, have made, use, offer for sale, and/or sell
Licensed Products and Licensed Processes in the Field of Use without any further
obligation to CMCC after expiration of the term for which Patent Rights are
granted.
b) LICENSEE shall have the right to use Information to make, have made,
use, offer for sale, and/or sell Licensed Products and to practice Licensed
Processes for the Field of Use and CMCC will not license any party exclusively
with respect thereto.
2.2 Notwithstanding anything above to the contrary, the license granted
hereunder shall be subject to the rights of the United States government, if
any, under Public Laws 96-517, 97-226, and 98-620, codified at 35 U.S.C. sec.
200-212 and any regulations promulgated thereunder.
2.3 LICENSEE agrees that the manufacture of Licensed Products leased or sold in
the United States shall be in compliance with 35 U.S.C. 204.
2.4 In order to establish exclusivity for LICENSEE, CMCC hereby agrees that it
shall not grant any other license to make, have made, use, lease, offer for
sale, and/or sell Licensed Products or to utilize Licensed Processes for the
Field of Use during the period of time in which this Agreement is in effect.
2.5 LICENSEE shall have the right to enter into sublicensing agreements for the
rights, privileges, and licenses granted hereunder. Such sublicenses will remain
in full force and effect upon the expiration of LICENSEE's rights granted herein
as a direct license between sublicensee and CMCC, provided that the sublicensee
execute a licensing agreement with CMCC and providing the sublicensee assert in
writing to CMCC prior to the expiration of LICENSEE's rights granted hereunder
that it has the capability to perform under the license and is willing to assume
all of the obligations of LICENSEE under this agreement.
2.6 LICENSEE hereby agrees that every sublicensing agreement to which it shall
be a party and which shall relate to the rights, privileges and license granted
hereunder shall contain a statement setting forth the date upon which LICENSEE's
exclusive rights, privileges and license hereunder shall terminate.
2.7 LICENSEE agrees that any sublicense granted by it shall provide that the
obligations to CMCC of Articles II, VI, VII, VIII, IX, X, XI, XII,
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 6
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and XIV of this Agreement shall be binding upon the sublicensee as if it were a
party to this Agreement. LICENSEE further agrees to attach copies of these
Articles to sublicense agreements.
2.8 LICENSEE agrees to forward to CMCC a copy of any and all fully executed
sublicense agreements.
2.9 The license granted hereunder shall not be construed to confer any rights
upon LICENSEE by implication, estoppel or otherwise as to any technology not
specifically set forth herein.
ARTICLE III -- DUE DILIGENCE
3.1 LICENSEE shall use its best efforts, within reason, to bring one or more
Licensed Products or Licensed Processes to market through a thorough, and
diligent program for exploitation of the Patent Rights. ***********************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
3.2 In the event that CMCC believes that LICENSEE is not in compliance with
Article 3.1 above, CMCC shall notify LICENSEE in writing of its belief and
recommend additional efforts to be undertaken by LICENSEE. Upon receipt of such
notice, CMCC and LICENSEE shall enter a good faith negotiation to determine the
efforts LICENSEE shall undertake to achieve compliance under 3.1 and if such
agreement is not reached within ninety (90) days of receipt of such notice, any
differences between the parties shall be resolved under Article XII. If LICENSEE
fails to exert the efforts determined by negotiation or arbitration, CMCC to a
material breach of this Agreement and CMCC's sole and exclusive remedy shall be
for the license granted hereunder to be converted from and exclusive right to a
nonexclusive right and license.
3.3 CMCC acknowledges that LICENSEE is in the business of developing products
and nothing in this Agreement shall be construed as imposing on LICENSEE the
duty to market or sell Licensed Product(s). Further, CMCC acknowledges that
LICENSEE shall have the sole
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 7
-7-
responsibility for making all decisions relating to the commercialization and
marketing of Licensed Product(s).
ARTICLE IV -- PAYMENTS
4.1 For the rights, privileges and license granted hereunder, LICENSEE shall pay
to CMCC in the manner hereinafter provided to the end of the term of the Patent
Rights or until this Agreement shall be terminated as hereinafter provided:
a. A license fee equal to *************************** which shall be
deemed earned and due immediately upon the execution of this Agreement.
b. A license maintenance payment equal to ******************* which
shall be due on each of the ten (10) subsequent anniversaries of the Effective
Date. When the tenth payment is made, the license granted herein shall be fully
paid up.
c. Where sublicenses have been granted, LICENSEE shall pay to CMCC an
additional payment equal to ************************ within thirty (30) days of
the execution of each sublicense.
4.2 Payments shall be paid in United States dollars in Boston, Massachusetts.
ARTICLE V -- PATENT PROSECUTION
5.1 LICENSEE shall apply for, seek prompt issuance of, and maintain during the
term of this Agreement the Patent Rights set forth in Appendix B in countries of
its selection. The prosecution, filing and maintenance of all Patent Rights
shall be the primary responsibility of LICENSEE; provided, however, CMCC shall
have reasonable opportunities to advise LICENSEE and shall cooperate with
LICENSEE in such prosecution, filing and maintenance.
5.2 If LICENSEE decides to abandon efforts to obtain patent rights for any
Patent Right in any country, LICENSEE shall so notify CMCC at least one month
prior to the date upon which action is required to prevent abandonment of such
rights, Thereafter, LICENSEE's license for that Patent Right in the affect
country shall terminate and Hospital shall have
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 8
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the right to assume responsibility for the continued prosecution of such patent
rights at CMCC's expense.
ARTICLE VI -- INFRINGEMENT
6.1 LICENSEE shall inform CMCC promptly in writing of any alleged infringement
of the Patent Rights by a third party and of any available evidence thereof.
6.2 During the term of this Agreement, LICENSEE shall have the right, but shall
not be obligated, to prosecute at its own expense any such infringements of the
Patent Rights and, in furtherance of such right, LICENSEE hereby agrees that
CMCC may join LICENSEE as a party plaintiff in any such suit, without expense to
CMCC. The total cost of any such infringement action commenced or defended
solely by LICENSEE shall be borne by LICENSEE and LICENSEE shall keep any
recovery or damages for past infringement derived therefrom.
6.3 If within six (6) months after having been notified of any alleged
infringement, LICENSEE shall have been unsuccessful in persuading the alleged
infringer to desist and shall not have brought and shall not be diligently
prosecuting an infringement action, or if LICENSEE shall notify CMCC at any time
prior thereto of its intention not to bring suit against any alleged infringer,
then, and in those events only, CMCC shall have the right, but shall not be
obligated, to prosecute at its own expense any infringement of the Patent
Rights, and CMCC may, for such purposes, use the name of LICENSEE as party
plaintiff. No settlement, consent judgment or other voluntary final disposition
of the suit may be entered into without the consent of LICENSEE, which consent
shall not unreasonably be withheld.
6.4 In the event that a declaratory judgment action alleging invalidity or
non-infringement of any of the Patent Rights shall be brought against LICENSEE,
CMCC, at its option, shall have the right, within thirty (30) days after
commencement of such action, to intervene and share in the defense of the action
at its own expense.
6.5 In any infringement suit as either party may institute to enforce the Patent
Rights pursuant to this Agreement, the other party hereto shall, at the request
and the expense of the party initiating such suit, cooperate in all respects
and, to the extent possible, have its employees testify when requested and make
available relevant records, papers, information, samples, specimens, and the
like.
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 9
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6.6 LICENSEE, during the period of this Agreement, shall have the sole right in
accordance with the terms and conditions herein to sublicense any alleged
infringer for the Field of Use for future use of the Patent Rights.
ARTICLE VII -- INDEMNIFICATION, PRODUCT LIABILITY AND
INSURANCE
7.1. Indemnification
a. LICENSEE shall indemnify, defend and hold harmless CMCC, BWH, and
their trustees, officers, medical and professional staff, employees, and agents
and their respective successors, heirs and assigns (the "Indemnitees"), against
any liability, damage, loss or expense (including reasonable attorney's fees and
expenses of litigation) incurred by or imposed upon the Indemnitees or any one
of them in connection with any claims, suits, actions, demands or judgments
arising out of any theory of product liability (including, but not limited to,
actions in the form of tort, warranty, or strict liability) concerning any
product, process or service made, used or sold by LICENSEE pursuant to any right
or license granted under this Agreement.
b. LICENSEE's indemnification under (a) above shall not apply to any
liability, damage, loss or expense to the extent that it is directly
attributable to the negligent activities, reckless misconduct or intentional
misconduct of the Indemnitees.
c. LICENSEE agrees, at its own expense, to provide attorneys reasonably
acceptable to CMCC to defend against any actions brought or filed against any
party indemnified hereunder with respect to the subject of indemnity contained
herein, whether or not such actions are rightfully brought.
d. This Section 7.1 shall survive expiration or termination of this
Agreement.
7.2. Insurance
a. Beginning at the time as any such product, process or service is
being commercially distributed or sold (other than for the purpose of obtaining
regulatory approvals) by LICENSEE or by a sublicensee, affiliate or agent of
LICENSEE, LICENSEE or sublicensee shall, at its
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 10
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sole cost and expense, procure and maintain comprehensive general liability
insurance in amounts not less than $2,000,000 per incident and $2,000,000 annual
aggregate and naming the Indemnitees as additional insureds. Such comprehensive
general liability insurance shall provide (i) product liability coverage and
(ii) broad form contractual liability coverage for LICENSEE's or sublicensee's
indemnification under Section 7.1 of this Agreement. If LICENSEE or sublicensee
elects to self-insure all or part of the limits described above (including
deductibles or retentions which are in excess of $250,000 annual aggregate) such
self-insurance program must be acceptable to CMCC and the Risk Management
Foundation of the Harvard Medical Institutions, Inc. The minimum amount of
insurance coverage required under this Section 7.2 shall not be construed to
create a limit of LICENSEE's liability with respect to its indemnification under
Section 7.1 of this Agreement.
b. LICENSEE or sublicensee shall provide CMCC with written evidence of
such insurance upon request of CMCC. LICENSEE or sublicensee shall provide CMCC
with written notice at lease fifteen (15) days prior to the cancellation or
non-renewal in such insurance; if LICENSEE or sublicensee does not obtain
replacement insurance providing comparable coverage within such fifteen (15) day
period, CMCC shall have the right to terminate this Agreement effective at the
end of such fifteen (15) day period without notice of any additional waiting
periods.
c. LICENSEE or sublicensee shall maintain such comprehensive general
liability insurance during (i) the period that any such product, process or
service is being commercially distributed or sold (other than for the purpose of
obtaining regulatory approvals by LICENSEE or by a sublicensee, affiliate or
agent of LICENSEE and (ii) a reasonable period after the period referred to in
(c) (i) above which in no event shall be less than five (5) years.
d. This Section 7.2 shall survive expiration or termination of this
Agreement.
ARTICLE VIII -- EXPORT CONTROLS
It is understood that CMCC is subject to United States laws and
regulations controlling the export of technical data, computer software,
laboratory prototypes and other commodities (including the Arms Export Control
Act, as amended and the Export Administration Act of 1979), and that its
obligations hereunder are contingent on compliance with
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 11
-11-
applicable United States export laws and regulations. The transfer of certain
technical data and commodities may require a license from the cognizant agency
of the United States Government and/or written assurances by LICENSEE that
LICENSEE shall not export data or commodities to certain foreign countries
without prior approval of such agency. CMCC neither represents that a license
shall not be required nor that, if required, it shall be issued.
ARTICLE IX -- NON-USE OF NAMES
LICENSEE shall not use the names of the Children's Medical Center
Corporation, Brigham and Women's Hospital, nor of any of its employees, nor any
adaptation thereof, in any advertising, promotional or sales literature without
prior written consent obtained from CMCC in each case except that LICENSEE may
state that it is licensed by CMCC under one or more of the patents and/or
applications comprising the Patent Rights, and LICENSEE may comply with
disclosure requirements of all applicable laws relating to its business,
including United States and state security laws.
ARTICLE X -- ASSIGNMENT
This Agreement is not assignable and any attempt to do so shall be
void. However, in the event LICENSEE merges with another entity, is acquired by
another entity, or sells all or substantially all of its assets related to the
Patent Rights to another entity, LICENSEE may assign its rights and obligations
hereunder to, in the event of a merger or acquisition, the surviving entity, and
in the event of a sale, the acquiring entity, without Hospital's consent so long
as: (i) LICENSEE is not then in breach of this Agreement; (ii) the proposed
assignee has a net worth at least equivalent to the net worth LICENSEE had as of
the date of this Agreement; (iii) the proposed assignee has available resources
and sufficient scientific, business and other expertise to satisfy LICENSEE's
obligations hereunder; (iv) LICENSEE provides written notice of the assignment
to Hospital, together with documentation sufficient to demonstrate the
requirements set forth in subparagraphs (i) through (iii) above, at least thirty
(30) days prior to the effective date of the proposed assignment; and (v)
Hospital receives from the proposed assignee, in writing, at least thirty (30)
days prior to the effective date of the assignment: (aa) reaffirmation of the
terms of this Agreement; (bb) an agreement to be bound by the terms of this
Agreement; and (cc) an
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 12
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agreement to perform the obligations of LICENSEE under this Agreement.
ARTICLE XI -- ARBITRATION
11.1 Any and all claims, disputes or controversies arising under, out of, or in
connection with this Agreement, which have not been resolved by good faith
negotiations between the parties, shall be resolved by final and binding
arbitration in Boston, Massachusetts, under arbitration rules of the American
Arbitration Association then obtaining. The arbitrators shall have no power to
add to, subtract from or modify any of the terms or conditions of this
Agreement. Any award rendered in such arbitration may be enforced by either
party in either the courts of the Commonwealth of Massachusetts or in the United
States District Court for the District of Massachusetts, to whose jurisdiction
for such purposes CMCC and LICENSEE each hereby irrevocably consents and
submits.
11.2 Notwithstanding the foregoing, nothing in this Article shall be construed
to waive any rights or timely performance of any obligations existing under this
Agreement.
ARTICLE XII -- TERMINATION
12.1 If LICENSEE shall cease to carry on its business, this Agreement shall
terminate upon notice by CMCC.
12.2 Should LICENSEE fail to pay CMCC payments due and payable hereunder, CMCC
shall have the right to terminate this Agreement on thirty (30) days' notice,
unless LICENSEE shall pay CMCC within the thirty (30) day period, all such
payments and interest due and payable. Upon the expiration of the thirty (30)
day period, if LICENSEE shall not have paid all such payments and interest due
and payable, the rights, privileges and license granted hereunder shall
terminate.
12.3 Upon any material breach or default of this Agreement by LICENSEE, other
than those occurrences set out in Paragraphs 12.1 and 12.2 hereinabove, which
shall always take precedence in that order over any material breach or default
referred to in this Paragraph 12.3, CMCC shall have the right to terminate this
Agreement and the rights, privileges and license granted hereunder by ninety
(90) days' notice to LICENSEE. Such termination shall become effective unless
LICENSEE
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 13
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shall have cured any such breach or default prior to the expiration of the
ninety (90) day period.
12.4 LICENSEE shall have the right to terminate this Agreement in its entirety
or on a country-by-country basis at any time on six (6) months' notice to CMCC,
and upon payment of all amounts due CMCC through the effective date of
termination. In the event LICENSEE notifies CMCC of its intent to terminate in
any particular country, the parties will discuss LICENSEE's reasons for such
termination. After such discussion and in the event of termination all rights in
said country shall revert to CMCC.
12.5 Upon termination of this Agreement for any reason, nothing herein shall be
construed to release either party from any obligation that matured prior to the
effective date of such termination. LICENSEE and any sublicensee thereof may,
however, after the effective date of such termination, sell all Licensed
Products, and complete Licensed Products in the process of manufacture at the
time of such termination and sell the same, provided that LICENSEE shall pay to
CMCC the payments thereon as required by Article IV of this Agreement.
12.6 Upon termination of this Agreement for any reason during the exclusive
period, any sublicensee not then in default shall have the right to seek a
license from CMCC.
ARTICLE XIII -- PAYMENTS, NOTICES, AND OTHER COMMUNICATIONS
Any payment, notice or other communication pursuant to this Agreement
shall be sufficiently made or given on the date of the mailing if sent to such
party by certified first class mail, postage prepaid, addressed to it at its
address below or as it shall designate by written notice given to the other
party:
In the case of CMCC:
Director, Technology Transfer
Office of Research Administration
Children's Hospital
300 Longwood Avenue
Boston, MA 02115
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 14
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In the case of LICENSEE:
LeukoSite, Inc.
215 First Street
Cambridge, MA 02142
Attn: CEO
ARTICLE XIV -- MISCELLANEOUS PROVISIONS
14.1 This Agreement shall be construed, governed, interpreted and applied in
accordance with the laws of the Commonwealth of Massachusetts, U.S.A., except
that questions affecting the construction and effect of any patent shall be
determined by the law of the country in which the patent was granted.
14.2 The parties hereto acknowledge that this Agreement sets forth the entire
Agreement and understanding of the parties hereto as to the subject matter
hereof, and shall not be subject to any change or modification except by the
execution of a written instrument subscribed to by the parties hereto.
14.3 The provisions of this Agreement are severable, and in the event that any
provisions of this Agreement shall be 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.
14.4 LICENSEE agrees to mark the Licensed Products sold in the United States
with all applicable United States patent numbers. All Licensed Products shipped
to or sold in other countries shall be marked in such a manner as to conform
with the patent laws and practice of the country of manufacture or sale.
14.5 The failure of either party to assert a right hereunder or to insist upon
compliance with any term or condition of this Agreement shall not constitute a
waiver of that right or excuse a similar subsequent failure to perform any such
term or condition by the other party.
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 15
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IN WITNESS WHEREOF, the parties have hereunto set their hands and seals
and duly executed this Agreement the day and year set forth below.
CHILDREN'S MEDICAL CENTER CORPORATION
By: [signature appears here]
-----------------------------------------------
Name William New
Title Vice President, Research Administration
Date:
--------------------
LEUKOSITE, INC.
By: [signature appears here]
-----------------------------------------------
Name Christopher Mirabelli, Ph.D.
Title President and CEO
Date:
--------------------
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 1
Exhibit 10.8 (a)
CONFIDENTIAL TREATMENT
LICENCE AGREEMENT
(DOCUMENT IDENTIFICATION CODE: LEUKOSITE/IC/NHLI/0012/LICENCE)
THIS AGREEMENT (hereinafter called the "LICENCE AGREEMENT") is made effective
the Thirty First day of January, 1996 (hereinafter called the "EFFECTIVE DATE").
BY AND BETWEEN:
THE IMPERIAL COLLEGE OF SCIENCE, TECHNOLOGY & MEDICINE of Sherfield Building,
London SW7 2AZ, England (hereinafter called the "COLLEGE"); and
IMPERIAL EXPLOITATION LIMITED, a company organised under English law and having
a registered office at Sherfield Building, London SW7 2AZ, England (hereinafter
called the "LICENSOR");
OF THE FIRST PART,
AND:
LEUKOSITE INCORPORATED, a company organised under the laws of the state of
Delaware, United States of America, having a principal office at 215 First
Street, Cambridge, MA 02142, United States of America (hereinafter called the
"LICENCEE")
OF THE SECOND PART.
WITNESSETH:
A. WHEREAS, Timothy John Williams, Peter John Jose, David A.
Griffiths-Johnson and John Justin Hsuan (hereinafter called the
"INVENTORS"), have made certain discoveries and inventions in the field
of Eosinophil Chernotactic Cytokines (hereinafter called the
"INVENTION"); and
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 2
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B. WHEREAS, Timothy John Williams, Peter John Jose and David A.
Griffiths-Johnson as employees The National Heart & Lung Institute of
Dovehouse Street, London SW3 6LY, England (hereinafter "NHLI") at the
time of the making of the INVENTION have assigned their right, title and
interest in the invention to NHLI; and
C. WHEREAS, John Justin Hsuan as an employee of The Ludwig Institute for
Cancer Research formerly of Hedges House, 153-155 Regent Street, London
WIR 7FD, England (hereinafter the "LUDWIG") at the time of the making of
the INVENTION has assigned his right, title and interest in the
invention to LUDWIG; and
D. WHEREAS, applications have been filed in the United Kingdom and other
territories in the joint names of NHLI and LUDWIG for the granting of
letters patent relating to the said the INVENTION, further described in
Schedule A hereto (hereinafter all collectively called the "PATENT
APPLICATIONS"); and
E. WHEREAS, NHLI on August 1, 1995 ceased to be an independent legal entity
and became a constituent part of the COLLEGE; and
F. WHEREAS, Ludwig have by deed of assignment, appended hereto as Schedule
B, assigned its entire right, title and interest in and to the INVENTION
and the PATENT APPLICATIONS to the COLLEGE; and
G. WHEREAS, the COLLEGE has appointed the LICENSOR to act as its agent for
the purpose of granting Licences under the PATENT RIGHTS, as hereinafter
defined, relating to the INVENTION; and
H. WHEREAS, LICENSOR represents that COLLEGE is the true, sole and rightful
owner of the said INVENTION; and
I. WHEREAS, COLLEGE and LICENSOR desire that the INVENTION be developed and
made available to the public; and
J. WHEREAS, LICENCEE is willing to make a commitment to develop products
embodying the INVENTION for use by and for the general public; and
K. WHEREAS, LICENCEE represents that it is engaged in the business of
research and development of products in fields related to the INVENTION;
and
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 3
-3-
L. WHEREAS, LICENCEE is prepared to undertake a programme for the
development, manufacture and sale of LICENCED PRODUCTS, as hereinafter
defined, provided that LICENCEE is able to obtain a Licence under the
PATENT RIGHTS with exclusivity to protect its investment in such
programme; and
M. WHEREAS, LICENSOR recognises that LICENCEE requires such a Licence in
order to justify the investment in funding and personnel needed to
develop and market LICENCED PRODUCTS; and
N. WHEREAS, LICENCEE desires to obtain such a Licence under the PATENT
RIGHTS; and
O. WHEREAS, LICENSOR is willing to grant to LICENCEE such a Licence under
the PATENT RIGHTS;
NOW, THEREFORE, in consideration of the premises and the performance of the
covenants herein contained, IT IS AGREED AS FOLLOWS:
1 DEFINITIONS
For the purposes of this LICENCE AGREEMENT, and solely for such purposes, the
terms hereinafter set forth shall have the following respective meanings:
(a) "PATENT RIGHTS" shall mean rights to and in the PATENT APPLICATIONS as
identified in Schedule A hereof and in respect of letters patent,
Patent Co-operation Treaty applications, European Patent Convention
applications or applications under similar administrative international
conventions, patent applications in the listed or designated countries,
together with any divisional, continuation, continuation-inpart,
substitute, reissue, extension, supplementary protection certificate or
other application based thereon and all letters patent resulting
therefrom.
(b) "VALID CLAIM" shall mean a claim of an issued, unexpired patent within
the PATENT RIGHTS or a mutually agreed claim being prosecuted in a
pending application within the PATENT RIGHTS. A claim of an issued,
unexpired patent shall be presumed to be valid unless and until it has
been held to be invalid by a final judgement of a court or
administrative body of competent jurisdiction from which no appeal can
be or is taken. A claim being prosecuted in a pending
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 4
-4-
application shall be presumed to be mutually agreed and valid unless
LICENSOR is notified by LICENCEE in writing that said claim should no
longer be regarded as such. For the purposes of royalty determination
and payment under Article 4 hereof, any mutually agreed claim being
prosecuted in a pending patent application shall be deemed to be the
equivalent of a valid claim of an issued, unexpired patent.
(c) "CONTROL", "CONTROL(S)" or "CONTROLLED" shall refer to ownership of at
least fifty percent (50%) of the stock of a corporation or Organisation
entitled to vote upon election of directors thereof.
(d) "AFFILIATE" or "AFFILIATES" shall mean any company(ies), corporations
or organisation(s) which Ware) directly or indirectly CONTROLLED by
LICENCEE.
(e) "SUBLICENCEE" or "SUBLICENCEES" shall mean company(ies), corporations
or organisation(s) to whom or which the LICENSOR shall Licence PATENT
RIGHTS, LICENCED PRODUCTS, marketing rights, SALES rights or any other
form of right of whatsoever kind, rights to which are conferred herein
by the LICENSOR upon the LICENCEE.
(f) "SOLD", "SALE", "SALES", "SELL", "SELLING" and "SELLS" shall refer to
the act of selling or disposing of for value.
(g) "USE", "USES" and "USED" shall refer to the act of using for any
commercial purposes whatsoever.
(h) "SELLER" shall mean one who SELLS.
(i) "LICENCED PRODUCT" shall mean any product covered by a VALID CLAIM of
the PATENT RIGHTS or made by a method covered by a VALID CLAIM of the
PATENT RIGHTS or that is SOLD by LICENCEE. or an AFFILIATE under
conditions or circumstances which, if unLicenced, would amount to
infringement or contributory infringement or inducement of infringement
of the PATENT RIGHTS.
(j) "NET SALES VALUE" shall mean actual billings by the SELLER (LICENCEE or
AFFILIATE or SUBLICENCEE) for SALE of LICENCED PRODUCT less the
following deductions where they are factually applicable:
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 5
-5-
********************************************************************************
*****
********************************************************************************
******************************************
********************************************************************************
***********************************************************************
*****
************************************************************
No allowance or deduction shall be made for commissions or collections,
by whatever name known.
The NET SALES VALUE of any LICENCED PRODUCT that is USED by LICENCEE or
AFFILIATE or SUBLICENCEE or SOLD by LICENCEE or AFFILIATE or
SUBLICENCEE to any person, firm or corporation controlling, controlled
by, or under common control with LICENCEE or an AFFILIATE or enjoying a
special course of dealing with LICENCEE or an AFFILIATE, shall be
determined for the LICENCED PRODUCT so USED or SOLD by reference to the
NET SALES VALUE thereof which would apply hereunder in an arm's length
SALE to a third party other than such person, firm or corporation.
(k) "FINAL PRODUCT FORM" shall mean a LICENCED PRODUCT in a dosage form
suitable for final usage by the administering physician or other
consumer.
(l) "BULK PRODUCT FORM" shall mean a LICENCED PRODUCT in a form other than
FINAL PRODUCT FORM.
(m) "LICENCED FIELD" shall mean the making or SELLING Of LICENCED PRODUCT
for therapeutic treatment of or diagnosis of disease in humans
employing such LICENCED PRODUCTS.
(n) "MARKETING AUTHORISATION" shall mean allowance granted by the
appropriate national body within a country to market and SELL LICENCED
PRODUCT for therapeutic use in the LICENCED FIELD.
2. LICENCE
LICENSOR hereby grants to LICENCEE and LICENCEE hereby accepts from LICENSOR,
upon the terms and conditions herein specified:
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 6
-6-
(a) An exclusive, as hereinafter specified in Article 10 hereof, and
non-assignable Licence under the PATENT RIGHTS to make, to have made,
to USE and to SELL LICENCED PRODUCTS for use in the LICENCED FIELD,
including a Licence to USE processes covered by the PATENT RIGHTS, in
all countries in which the PATENT RIGHTS are or shall be in effect and
in their respective territories and possessions, to the full end of
their term or terms on a country-by-country basis for which the PATENT
RIGHTS are issued, unless sooner terminated as hereinafter provided.
(b) The right to extend to its AFFILIATES and SUBLICENCEES the Licence and
rights granted pursuant to Article 2 hereof, provided LICENCEE promptly
notifies LICENSOR in writing of each such extension.
(c) LICENCEE agrees to be responsible for the performance hereunder by its
AFFILIATES and SUBLICENCEES to which the Licence and rights shall have
been extended pursuant to Article 2 hereof.
(d) For the purposes of reporting and making payments of earned royalties
under this LICENCE AGREEMENT, the manufacture, SALE or USE of LICENCED
PRODUCTS by any AFFILIATE or SUBLICENCEE to which the Licence and
rights shall have been extended pursuant to Article 2 hereof shall be
considered the manufacture, SALE or USE of such LICENCED PRODUCTS by
LICENCEE; however, provided LICENCEE shall so notify LICENSOR in
advance thereof in writing, any such AFFILIATE or SUBLICENCEE may make
the pertinent reports and royalty payments specified in Article 4
hereof directly to LICENSOR on behalf of LICENCEE, otherwise, such
reports and payments on account of SALES or USES of LICENCED PRODUCTS
by each AFFILIATE or SUBLICENCEE shall be made by LICENCEE; and, in any
event, the SALES or USES of LICENCED PRODUCTS by each such AFFILIATE or
SUBLICENCEE shall be separately shown in the reports to LICENSOR if
such information is readily available to LICENCEE.
(e) No other, further or different Licence or right and, except as
expressly provided in Article 2 hereof, no further power to subLicence
is hereby granted or implied.
(f) LICENSOR grants to LICENCEE a sole and exclusive option to add to the
PATENT RIGHTS the entire right, title and interest of COLLEGE or an
affiliate, to any invention conceived solely by
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 7
-7-
employees of COLLEGE or an affiliate or jointly with employees of
LICENCEE and/or another third party, or first actually reduced to
practice, on a programme of research support provided by LICENCEE to
COLLEGE or an affiliate thereof and mutually agreed at the time of
agreeing on the terms of a research agreement covering said research as
falling within the scope of this Article 2(f), said option to continue
for as long as such support is being provided by LICENCEE and for three
(3) months thereafter. Upon written notice by LICENCEE, these rights to
such inventions shall automatically be added to the PATENT RIGHTS at no
additional fee or cost to LICENCEE and all other terms and conditions
of this LICENCE AGREEMENT shall apply; providing, however, that if any
LICENCED PRODUCT sold by LICENCEE or an affiliate is covered only by a
patent jointly owned by COLLEGE or an affiliate, the royalty rate,
milestone payments and all other payments due to LICENSOR hereunder
shall be reduced by fifty percent (50%).
(g) LICENSOR, COLLEGE and their AFFILIATES additionally grant LICENCEE on a
royalty free, paid-up, worldwide basis:
(i) a non-exclusive Licence to use all know-how, data and other
technical information relating to the PATENT RIGHTS and/or
developed under a programme of research supported by LICENCEE;
and
(ii) an exclusive right and Licence to receive, use and/or sell all
biological materials created by LICENSOR, COLLEGE and their
AFFILIATES and relating to the PATENT RIGHT'S and/or created
on a programme of research supported by LICENCEE.
3. LICENCE ISSUE FEES
(a) LICENCEE shall pay to LICENSOR a Licence issue fee of *****************
***********************************************************************
***************************************** of the Licence Issue Fee
shall be paid within thirty (30) days following execution and delivery
of this LICENCE AGREEMENT and payment of the remaining ****************
************************************************ of the Licence issue
Fee shall fall due on July 31, 1996.
(b) ******************* of all Licence issue fees amounting to ********
******************************************************* shall be
creditable once and once only against royalties payable under this
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 8
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LICENCE AGREEMENT on SALES of LICENCED PRODUCT subject to a maximum
reduction in any royalties due in each quarterly reporting period of
********************* of the total due pursuant to Article 4 herein.
Such reduction in royalties shall continue until Licensor has reduced
cumulative royalties payable be the said ******************************
***********************************
4. MILESTONE PAYMENTS, ROYALTIES, RECORDS AND REPORTS
(a) LICENCEE shall pay to LICENSOR a milestone payment of *****
************************************************ on first entry of the
each LICENCED PRODUCT into its first phase I clinical trial anywhere in
the world.
(b) LICENCEE shall pay to LICENSOR a milestone payment of *******
******************************************** on first entry of the each
LICENCED PRODUCT into its first phase HI clinical trial anywhere in the
world.
(c) LICENCEE shall pay to LICENSOR a milestone payment of *****
******************************************************** on first
application for MARKETING AUTHORIZATION for each LICENCED PRODUCT
anywhere in the world.
(d) LICENCEE shall pay to LICENSOR a milestone payment of ******
******************************************************** on first
issuance of MARKETING AUTHORIZATION for each LICENCED PRODUCT anywhere
in the world.
(e) ******************* of all milestone payments for each LICENCED PRODUCT
made pursuant to Articles 4(a), 4(b), 4(c) and 4(d) herein shall be
creditable once and once only against royalties payable under this
LICENCE AGREEMENT on SALES of all LICENCED PRODUCTS subject to a
maximum reduction in any royalties due in each quarterly reporting
period of ******************** of the total due pursuant to Article 4
herein. Such reduction in royalties in respect of each LICENCED PRODUCT
shall continue until Licensor has reduced cumulative royalties payable
by the ****************************************************************
********************* in respect of royalties due on each LICENCED
PRODUCT.
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 9
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(f) For the rights and privileges granted under this LICENCE AGREEMENT,
LICENCEE shall pay to LICENSOR, in the manner provided herein, to the
end of the term or terms of the PATENT RIGHTS or until this LICENCE
AGREEMENT is terminated as hereinafter provided, earned royalties
computed as a percentage of the NET SALES VALUE of all LICENCED
PRODUCTS that are made, USED or SOLD by or for LICENCEE or AFFILIATES
or SUBLICENCEES under this LICENCE AGREEMENT; the percentage of NET
SALES VALUE to be as follows:
(i) ******************* of the NET SALES VALUE of annual SALES of
LICENCED PRODUCTS SOLD for therapeutic use; and
(ii) ********************** of the NET SALES VALUE of annual SALES
of LICENCED PRODUCTS SOLD for diagnostic use); and
(g) Earned royalty shall be paid pursuant to Article 4 hereof on all
LICENCED PRODUCTS made, SOLD or USED under this LICENCE AGREEMENT;
however, earned royalty shall be payable hereunder as to a given
LICENCED PRODUCT only when a Licence right granted herein is utilised
in the manufacture or SALE or USE thereof, and the earned royalty
payable on a given LICENCED PRODUCT made hereunder shall not become due
and owing until such LICENCED PRODUCT is SOLD or USED.
Any LICENCED PRODUCT made under a Licence granted pursuant to this
LICENCE AGREEMENT prior to the termination or expiration of the
applicable PATENT RIGHTS and not SOLD or USED prior to the termination
or expiration of such PATENT RIGHTS shall be subject to the payment of
royalties hereunder when SOLD or USED, even though such SALE or USE
occurs after the termination or expiration of all pertinent Licences or
rights granted hereunder.
The earned royalty for any particular LICENCED PRODUCT shall be due
upon the first bona fide arm's length SALE or USE thereof and any
subsequent SALE or USE of such LICENCED PRODUCT by other than LICENCEE
or an AFFILIATE shall be royalty free.
(h) Notwithstanding the provisions of Article 4 hereof, in the case of
transfers or SALES of any LICENCED PRODUCT between LICENCEE, AFFILIATES
and SUBLICENCEES, one and only one royalty shall be payable thereon and
such royalty shall become
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 10
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payable upon the final SALE thereof to a third party or final USE
thereof by LICENCEE or AFFILIATE.
(i) LICENCEE shall keep full, true and accurate books of account containing
all particulars which are necessary for the purpose of showing the
amount payable to LICENSOR by way of royalty as aforesaid or by way of
any other provision hereunder. Said books of account shall be kept at
LICENCEE's principal place of business. Said books and the supporting
data shall be maintained and kept open at all reasonable times, for
three (3) years following the end of the calendar year to which they
pertain (and access shall not be denied thereafter, if reasonably
available), to the inspection of an independent accountant retained by
LICENSOR and reasonably acceptable to LICENCEE for the purpose of
verifying LICENCEE's royalty statements, or LICENCEE's compliance in
other respects with this LICENCE AGREEMENT. Such inspections shall not
be conducted more than once per year. Names of customers and other
confidential information shall not be disclosed to LICENSOR by such
independent accountant. Such accountant shall be retained at LICENSOR's
sole expense, unless during any such inspection a deficiency in
payments to LICENSOR of five percent (5%) or more is determined to
exist in which event LICENCEE shall within thirty (30) days reimburse
LICENSOR for the full expense of retaining such accountant, including
but not limited to professional and administrative fees, travel and
subsistence costs.
(j) LICENCEE within thirty (30) days after the first day of January, April,
July and October of each year shall deliver to LICENSOR a true and
accurate report, giving such particulars of the LICENCED PRODUCTS made,
USED and SOLD by LICENCEE and AFFILIATES and SUBLICENCEES during the
preceding three (3) months under this LICENCE AGREEMENT as are
pertinent to an accounting for royalty under this LICENCE AGREEMENT.
These shall include at least the following, separately stated as to the
LICENCED PRODUCTS in FINAL PRODUCT FORM and those in BULK PRODUCT FORM:
(i) the quantity of LICENCED PRODUCTS invoiced by LICENCEE and
AFFILIATES and SUBLICENCEES during those three (3) months and
the billings therefor; and
(ii) the allowable deductions therefrom; and
(iii) the calculation of royalties thereon; and
(iv) the amount of LICENCED PRODUCTS USED or SOLD during those
three (3) months; and
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 11
-11-
(v) the calculation of royalties thereon; and
(vi) the total royalties so calculated.
Simultaneously with the delivery of each such report, LICENCEE shall
pay to LICENSOR the royalty and any other payments due under this
LICENCE AGREEMENT for the period covered by such report. If no
royalties are due, it shall be so reported. Royalties shall be paid to
LICENSOR at LICENSOR's office specified for the purposes of giving
notice in Article 12 hereof.
(k) All amounts payable hereunder by LICENCEE to LICENSOR shall be payable
in United States Dollars. In the event any LICENCED PRODUCT shall be
SOLD by LICENCEE or an AFFILIATE or SUBLICENCEE for currency other than
United States Dollars, the earned royalty payable as to such LICENCED
PRODUCT under Article 4 hereof shall first be determined in the
currency for which the LICENCED PRODUCT was SOLD and then converted
into its equivalent in United States Dollars, as follows:
(i) the average rate applicable to the transfer of funds arising
from royalty payments as established by the exchange control
authorities of the country of which the currency of such funds
is the national currency for the accounting period for which
payment is thus made; or
(ii) if there is no applicable rate so established, then the
average selling rate for United States Dollars as published by
leading commercial banks in the major city of the country of
which such foreign currency is the national currency for such
accounting period; or
(iii) if there is no rate so published, then the average buying rate
for such foreign currency as published by leading United
States banks for such accounting period.
If the law or regulations of any country shall at any time operate to
prohibit the transfer of funds therefrom to the United Kingdom,
LICENCEE shall have the right to pay royalties hereunder on account of
the SALES or USE in such country by depositing local currency to the
account of LICENSOR in a bank in such country and notifying LICENSOR to
such effect. LICENCEE shall thereafter co-operate with LICENSOR by all
lawful means to obtain the lawful release of said funds to LICENSOR but
shall have no further responsibility therefor.
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 12
-12-
(l) In the event that any payment required under this LICENCE AGREEMENT
shall be overdue, LICENCEE shall pay interest thereon at an annual rate
equivalent to the United Kingdom Clearing Bank Base Lending Rate
computed from the date when the payment became due; provided, however,
that if such rate shall be in excess of that allowed by applicable law,
then the highest rate permitted by law shall apply. Payment shall be
deemed to have been made when received by LICENCEE.
(m) In the event that royalties are to be paid by LICENCEE to a party who
is not an AFFILIATE of LICENCEE for LICENCED PRODUCT for which
royalties are also due to LICENSOR pursuant to Article 4(f) hereof then
the royalties to be paid to LICENSOR by LICENCEE pursuant to Article
4(f) hereof shall be reduced by one-third of the amount of such other
royalties. In addition, in the event that the royalty paid to LICENSOR
is a significant factor in the return realised by LICENCEE so as to
diminish LICENCEE's capacity to respond to competitive pressures in the
market, LICENSOR agrees to consider a reasonable reduction in the
royalty paid to LICENSOR as to each such LICENCED PRODUCT for the
period during which such market condition exists. Factors determining
the size of the reduction will include profit margin on LICENCED
PRODUCT and on analogous products, prices of competitive products, and
LICENCEE's expenditures in LICENCED PRODUCT development.
5. DILIGENCE
LICENCEE shall exercise reasonable diligence in developing, testing,
manufacturing, promoting, advertising and SELLING LICENCED PRODUCTS under this
LICENCE AGREEMENT. the course of such diligence LICENCEE shall, either directly
or through an AFFILIATE or SUBLICENCEE to which the Licence shall have been
extended pursuant to Article 2 hereof, take appropriate steps including the
following:
(a) Diligently upon entering into this LICENCE AGREEMENT, establish and
maintain a research and development programme or programmes in the
LICENCED FIELD, or continue to conduct an existing programme or
programmes, reasonably designed, funded and resourced to obtain
information useful in enabling LICENCEE or AFFILIATE to prepare and
file all necessary documentation, data and other evidence required for
MARKETING AUTHORISATION in at least the United States of America, one
country in Europe and Japan. Such submission shall in the case of
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 13
-13-
the United States of America be a New Drug Application (hereinafter
called a "NDA") or its equivalent with the Food and Drug Administration
of the United States Government.
(b) When sufficient technical and marketing data have been obtained in the
sole discretion of the LICENCEE, file with an appropriate and properly
empowered national regulatory authority for approval to commence,
conduct or continue clinical trials of LICENCED PRODUCTS in the
LICENCED FIELD in patients. Such filing shall in the case of the United
States of America be an Investigational New Drug Application
(hereinafter called an "IND").
(c) Proceed diligently following the granting of national approval to
commission and conduct such clinical trials, associated studies and all
other works as are reasonably deemed to be required for subsequent
inclusion in the filing for MARKETING AUTHORISATION for such LICENCED
PRODUCT.
(d) Providing the results of the clinical trials warrant it, and at the
sole discretion of the LICENCEE, proceed diligently to file submissions
for MARKETING AUTHORISATION in at least the United States of America or
one country in Europe or Japan of at least one LICENCED PRODUCT in the
LICENCED FIELD. Such submission in the case of the United States of
America shall be an NDA.
(e) After such submissions are filed, diligently prosecute such submissions
and file all necessary reports and respond to all reasonable requests
from the pertinent regulatory authorities for information, data,
samples, tests and the like; and exhaust all administrative remedies
reasonably available in instances of adverse action by the pertinent
regulatory authorities.
(f) In respect of all countries, proceed diligently following issue of
MARKETING AUTHORISATION as follows:
(i) use reasonable efforts to make and SELL LICENCED PRODUCT'S in
the LICENCED FIELD;
(ii) advertise, promote the SALE of and otherwise employ marketing
and sales technique reasonably designed to develop a public
demand for LICENCED PRODUCTS in the LICENCED FIELD and satisfy
such public demand;
(ii) upon reasonable written request of LICENSOR, furnish LICENSOR
with representative copies of all advertising,
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 14
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sales and promotional material relating to such LICENCED
PRODUCTS.
(g) In order to keep LICENSOR apprised of the progress of the research and
development programme or programmes submit progress reports as to its
activities in the LICENCED FIELD, the first such report to be submitted
one (1) year from the EFFECTIVE DATE of this LICENCE AGREEMENT and
further such reports to continue to be submitted annually thereafter
until the SALE of LICENCED PRODUCTS within the LICENCED FIELD is
approved and LICENCED PRODUCTS are being marketed on a regular
commercial basis in the United States and such approval and marketing
is reported in writing to LICENSOR,
(h) Within three (3) years of the EFFECTIVE DATE of this LICENCE AGREEMENT
and every year thereafter until first SALE, LICENCEE shall provide
LICENSOR with the following:
(i) a written statement of LICENCEE's best estimate or forecast of
its projected annual SALES for each of the first three (3)
years of SALES of each product in each country in which it
intends to market a LICENCED PRODUCT under this LICENCE
AGREEMENT; and
(ii) a written statement of LICENCEE's forecast of the anticipated
marketing date in each country for each such product that it
intends to market as a LICENCED PRODUCT, based upon the
assumption that no unexpected technical or regulatory problems
will arise.
(i) Subject to necessary generally sequential performance of the acts
specified in Article 5 hereof, each of them is separately agreed upon
and performance of one of them shall not excuse non-performance of
another.
(j) Non-performance of this Article 5, or any subparagraph thereof, shall
be a breach of or default under this LICENCE AGREEMENT, subject to
LICENSOR's right to terminate this LICENCE AGREEMENT pursuant to
Article 6 hereof.
(k) LICENSOR agrees to maintain information in such reports in confidence
to the same extent that it maintains like information of its own in
confidence, subject to LICENSOR's obligation to report information to
LICENCEE.
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 15
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6. TERMINATION
(a) Subject to Article 12 hereof, if LICENCEE shall become bankrupt or
insolvent and/or if the business of LICENCEE shall be placed in the
hands of a Receiver, Assignee, or Trustee, whether by the voluntary act
of LICENCEE or otherwise, this LICENCE AGREEMENT shall immediately
terminate.
(b) Upon any material breach of or default under this LICENCE AGREEMENT by
LICENCEE, LICENSOR may terminate this LICENCE AGREEMENT by forty-five
(45) days written notice by registered mail to LICENCEE. Said notice
shall become effective at the end of said period, unless during said
period LICENCEE shall cure such breach or default.
(c) LICENCEE may terminate this LICENCE AGREEMENT at any time on three (3)
months' written notice to LICENSOR.
(d) Upon termination of this LICENCE AGREEMENT for any reason, all rights
granted hereunder shall revert to LICENSOR for the benefit of LICENSOR.
(e) LICENCEE's obligations to report to LICENSOR and to pay royalties to
LICENSOR as to any LICENCED PRODUCT made or USED under a Licence or an
immunity granted . pursuant to this LICENCE AGREEMENT prior to
termination or expiration of this LICENCE AGREEMENT shall survive such
termination or expiration and any termination of this LICENCE AGREEMENT
shall be subject to this Article 6.
(f) Notwithstanding any other remedy provided for herein, if LICENCEE shall
not make the payment provided for herein, when due, LICENSOR shall have
the option, in its discretion, to terminate the Licence and rights
granted under this LICENCE AGREEMENT on forty-five (45) days written
notice to LICENCEE, whereupon the Licence and rights granted under this
LICENCE AGREEMENT shall be terminated unless LICENCEE shall have made
such payment to LICENSOR within such forty-five (45) days from the date
of such notice.
(g) Upon any termination of this LICENCE AGREEMENT its provisions shall
continue in force and effect to the extent necessary to effectuate any
provision which by its terms clearly shall continue beyond such
termination.
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 16
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(h) Upon termination of this LICENCE AGREEMENT other than by expiry of the
PATENT RIGHTS, LICENCEE shall have no Licence to make or USE LICENCED
PRODUCTS.
7. ASSIGNMENT
This LICENCE AGREEMENT shall not be assigned by LICENCEE, except as part of a
sale or transfer of all or substantially all of LICENCEE's business and subject
to LICENSOR's right of termination as provided for in Article 6 herein, and, in
such event, only in its entirety and upon prior written approval by LICENSOR;
and, the term "LICENCEE" where used in this LICENCE AGREEMENT shall thereafter
mean such assignee of LICENCEE.
8. INFRINGEMENT
(a) LICENSOR agrees to enforce its patents within the PATENT RIGHTS from
infringement and sue infringers when in its sole judgement such action
may be reasonably necessary, proper and justified.
(b) Notwithstanding the provisions of Article 8(a) above, provided LICENCEE
shall have supplied LICENSOR with evidence comprising a prima facie
case of infringement of the PATENT RIGHTS by a third party hereto
SELLING significant quantities of products in competition with
LICENCEE's or an AFFILIATE's or a SUBLICENCEE's SALE of LICENCED
PRODUCTS hereunder, LICENCEE shall be entitled to notify LICENSOR in
writing requesting LICENSOR to take steps to enforce the PATENT RIGHTS
and LICENSOR shall within three (3) months of the receipt of such
written request either:
(i) cause said infringement to terminate (including termination
for whatever cause); or
(ii) initiate legal proceedings against the infringer; or
(iii) grant LICENCEE the right, at LICENCEE's sole expense, to bring
suit against the infringer for infringement of the PATENT
RIGHTS.
(c) In no event shall LICENCEE be entitled to invoke Article 8(b) above
with respect to more than two alleged infringers in any one country
listed with the PATENT RIGHTS at any given time even though there be
more than two such infringers in such country and
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 17
-17-
the provisions of Article 8(b) hereof shall not come into effect or
continue in effect as to such country while LICENSOR is carrying on any
such legal proceeding against two such parties therein.
(d) In the event either party hereto shall initiate or carry on legal
proceedings to enforce the PATENT RIGHTS against an alleged infringer,
as provided herein, the other party hereto shall fully co-operate with
the party initiating or carrying on such proceedings.
(e) In the event LICENSOR shall institute suit or other legal proceedings
to enforce the PATENT RIGHTS, it shall have sole control of such suit.
(f) In the event LICENCEE shall institute suit or other legal proceedings
under Article 8(b) above to enforce the PATENT RIGHTS, LICENSOR shall
be entitled to be represented by counsel of its choosing, at its sole
expense, and LICENCEE shall be entitled to retain all damages. LICENCEE
shall not discontinue or settle any such proceedings brought by it
without obtaining the concurrence of LICENSOR, not to be unreasonably
withheld, and giving LICENSOR a timely opportunity to continue such
proceedings in its own name, under its sole control, and at its sole
expense.
9. STATUS OF THE PATENT RIGHTS
(a) LICENSOR shall diligently maintain and prosecute the patent
applications filed within the PATENT RIGHT'S to obtain patents thereon.
LICENSOR does not represent or warrant that any such patent will be
obtained and LICENSOR shall in its sole discretion be responsible for
determining whether to abandon any or all of said patent applications.
Notwithstanding the aforementioned, LICENSOR shall provide LICENCEE
with adequate opportunity to comment upon filing, maintenance and
prosecution of the PATENT RIGHTS and the opportunity to assume the
maintenance and/or prosecution of any part of the PATENT RIGHTS which
LICENSOR decides to abandon.
(b) LICENCEE shall on receipt of invoices from LICENSOR reimburse LICENSOR
for all reasonable costs incurred by LICENSOR in prosecuting and
maintaining the PATENT RIGHTS before International and National Patent
Offices. Such costs shall include but not be limited to official fees,
professional services of patent agents and attorneys, renewal fees and
extension fees.
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 18
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(c) LICENSOR shall be responsible for maintaining the patents obtained on
the patent applications referred to in Article 9(a) hereof.
(d) Subject to Article 9(a) hereof, nothing in this LICENCE AGREEMENT shall
be construed to require LICENSOR to file or prosecute any patent
application or to maintain any patent.
(e) LICENSOR will advise LICENCEE regularly of the status of all patent
applications and patents within the PATENT RIGHTS.
(f) Unless mutually agreed to in writing in advance, following notification
by LICENSOR of the deadline for entry of a patent application under the
PATENT RIGHTS, filed under the Patent Co-operation Treaty into its
National and Regional Phase, LICENCEE shall give LICENSOR thirty (30)
days written notice should it wish to abandon seeking protection in any
territories designated or retrospectively designated in the Patent
Co-operation Treaty application.
(g) From the date of notification by LICENCEE of its wish to abandon the
seeking of patent protection pursuant to Article 9(f) hereof all said
applications shall cease to form a part of the PATENT RIGHTS.
(h) From the date of notification by LICENCEE of its wish to abandon the
seeking of patent protection pursuant to Article 9(f) hereof LICENSOR
shall cease to have any obligation whatsoever under rights embodied in
said applications.
(i) LICENCEE shall co-operate with LICENSOR in seeking any extension that
is available or that becomes available in respect of the term of any
patent within the PATENT RIGHTS including any patent that may issue on
a patent application within the PATENT RIGHTS and LICENCEE shall
diligently advise LICENSOR in a timely manner of approval by the Food
and Drug Administration of the United States of America to USE, SELL or
market LICENCED PRODUCTS or any other governmental approval obtained by
or on behalf of LICENCEE or an AFFILIATE or SUBLICENCEE that is
pertinent to any such extension and LICENCEE shall supply LICENSOR with
any pertinent information and data in its possession or control or that
is in the possession or control of any AFFILIATE or SUBLICENCEE of
LICENCEE and shall cooperate
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 19
-19-
fully in assisting LICENSOR to obtain any such extension that it may
seek and LICENCEE shall supply LICENSOR in a timely manner with any
information and data and any supporting affidavits or documents
required to comply with 35 USC 156 Extension of Patent Term (and any
successor legislation) and any administrative rules or regulation
thereunder or required to comply with any corresponding laws and
regulations that are or shall be in effect in any country within the
PATENT RIGHTS, all without further consideration. LICENCEE shall
require its AFFILIATES and SUBLICENCEES to comply with this Article 9.
10. EXCLUSIVITY
Subject to Articles 2, 6 and 12 hereof, the Licence and rights granted to
LICENCEE under Article 2 hereof shall be sole and exclusive to LICENCEE in each
country within the PATENT RIGHTS in that LICENSOR shall neither make nor SELL
LICENCED PRODUCTS nor grant another concurrently effective Licence for LICENCED
PRODUCTS for USE in the LICENCED FIELD under the pertinent PATENT RIGHTS, or any
of them, during the period extending from the EFFECTIVE DATE of this LICENCE
AGREEMENT until either:
(i) the end of the term or terms of the pertinent patents in each
country within the PATENT RIGHTS; or
(ii) termination of this LICENCE AGREEMENT; whichever is first to
occur.
11. NON-USE OF NAMES
(a) LICENCEE shall not use the name of any inventor of the PATENT RIGHTS,
or of any institution with which he has been or is connected, or of
LICENSOR, or any adaptation of any of them, in any advertising,
promotional or sales literature, without prior written consent obtained
from LICENSOR in each case, which shall not be unreasonably withheld.
LICENCEE shall require its AFFILIATES and SUBLICENCEES to comply with
this Article 11 to the same extent that it applies to LICENCEE.
(b) LICENSOR shall not use the name of LICENCEE or its AFFILIATES or its
SUBLICENCEES or any adaptation thereof, in any advertising, promotional
or sales literature or in any press release without prior written
consent of LICENCEE in each case, which shall not be unreasonably
withheld.
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 20
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12. GENERAL
(a) This LICENCE AGREEMENT, including the Schedules hereto attached,
constitutes the entire agreement and understanding between the parties
as to the PATENT RIGHTS. All prior negotiations, representations,
agreements, contracts, offers and earlier understandings of whatsoever
kind, whether written or oral between LICENSOR and LICENCEE in respect
of the PATENT RIGHTS, are superseded by, merged into, extinguished by
and completely expressed by this LICENCE AGREEMENT.
No aspect, part or wording of this LICENCE AGREEMENT may be modified
except by mutual agreement between the LICENSOR and LICENCEE taking the
form of an instrument in writing signed and dated by duly authorised
representatives of both LICENSOR and LICENCEE.
(b) Any notice required or permitted to be given by this LICENCE AGREEMENT
shall be given by post-paid, first class, registered or certified mail
addressed to:
LEUKOSITE INC.
215 First Street, Cambridge, MA 02142
United States of America
(marked for attention of the Chief Executive Officer)
or
IMPERIAL EXPLOITATION LTD
Sherfield Building, London SW7 2AZ, England
(marked for attention of the Company Secretary)
Such addresses may be altered by notice so given. If no time limit is
specified for a notice required or permitted to be given by this
LICENCE AGREEMENT, the time limit therefor shall be ten (10) full
business days, not including the day of mailings
(c) This LICENCE AGREEMENT and its effect are subject to and shall be
construed and enforced in accordance with English law, except as to any
issue which by English law depends upon the validity, scope or
enforceability of any patent within the PATENT RIGHTS, which issue
shall be determined in accordance with the applicable patent laws of
the country of such patent.
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 21
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(d) LICENSOR and LICENCEE shall endeavour to settle amicably any disputes
arising under this LICENCE AGREEMENT. If the parties are unable to
settle any dispute by themselves, then any such dispute arising in
connection with this LICENCE AGREEMENT shall be submitted first to
alternative dispute resolution proceedings and, if that fails, then
such dispute shall be finally settled by arbitration conducted in
England, by and in accordance with the rules then obtaining of the
London Court of Arbitration and judgement upon the award rendered may
be entered in the highest court of the forum having jurisdiction. The
provisions of this Article 12(d) shall not apply to any dispute or
controversy as to which any treaty or law prohibits settlement as
contemplated under this Article.
(e) Nothing in this LICENCE AGREEMENT shall be construed so as to require
the commission of any act contrary to law, and wherever there is any
conflict between any provision of this LICENCE AGREEMENT or concerning
the legal right of the parties to contract and any statute, law,
ordinance or treaty, the latter shall prevail, but in such event the
affected provisions of this LICENCE AGREEMENT shall be curtailed and
limited only to the extent necessary to bring it within the applicable
legal requirements.
(f) Notwithstanding anything to the contrary in this LICENCE AGREEMENT,
nothing herein contained shall be construed as a representation by
LICENSOR that the PATENT RIGHTS can be or will be used to prevent the
importation by a third party hereto of a product into or the SALE or
USE by a third party hereto of a product in any country within the
PATENT RIGHTS where such product shall have been placed in commerce
under circumstances which preclude the USE of the PATENT RIGHTS to
prevent such importation or SALE or USE by reason of any applicable law
or treaty.
(g) LICENCEE shall take all reasonable and necessary steps to register this
LICENCE AGREEMENT in any country where such is required to permit the
transfer of funds and/or payment of royalties to LICENSOR hereunder or
is otherwise required by the government or law of such country to
effectuate or carry out this LICENCE AGREEMENT. Notwithstanding
anything contained herein, but subject to Article 12(e) hereof,
LICENCEE shall not be relieved of any of its obligations under this
LICENCE AGREEMENT by any failure to register this LICENCE AGREEMENT in
any country, and, specifically, LICENCEE shall not be relieved of its
obligation
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 22
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to make any payment due to LICENSOR hereunder at LICENSOR's address
specified in Article 12(b) of this LICENCE AGREEMENT.
(h) It shall be the full and sole responsibility of LICENCEE and its
AFFILIATES and its SUBLICENCEES to use appropriate care in the practice
of any process and the manufacture and USE of any product pursuant to
any Licence or immunity granted hereunder and LICENSOR shall have no
right to control the manner in which or the material with which or upon
which any process Licenced hereunder is practised and LICENSOR shall
not be required to provide any know-how or operating instructions or
other information with respect to any such process or product and
LICENSOR makes no representation or warranty whatsoever with respect to
any such process or product.
(i) Nothing in this LICENCE AGREEMENT shall be construed as a
representation or a warranty by LICENSOR as to the validity or scope of
any patent within the PATENT RIGHTS or that any process practised or
anything made, USED or SOLD under any Licence or immunity granted under
this LICENCE AGREEMENT is or will be free from infringement of patents
of third parties.
(j) LICENCEE agrees to indemnify and hold harmless INVENTORS, LICENSOR,
COLLEGE and their respective officers, directors, employees and agents
from and against any and all claims, damages and liabilities asserted
by third parties, both government and private, arising from LICENCEE's
and AFFILIATES' and SUBLICENCEES' practice of any method covered by the
PATENT RIGHTS or manufacture, USE or SALE of LICENCED PRODUCTS or the
USE thereof by others including ultimate consumers.
(k) As used in this LICENCE AGREEMENT, singular includes the plural and
plural includes the singular, wherever so required by the context. The
headings appearing at the beginning of the numbered Articles hereof
have been inserted for convenience only and do not constitute a part of
this LICENCE AGREEMENT.
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 23
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13. EFFECTIVE DATE AND TERM
This LICENCE AGREEMENT shall become effective on the day and year first above
written and shall, unless terminated earlier by one of the parties in accord
with its terms, expire *********************************************************
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14. GOVERNMENT RIGHTS
(a) LICENCEE shall comply in all respects with the applicable provisions of
any applicable law, requirement, regulation or determination by any
Government relating to the PATENT RIGHTS and shall provide LICENSOR
with any information or report required to comply with any such law,
requirement, regulation or determination.
(b) Any inconsistency between this LICENCE AGREEMENT and the pertinent
provisions of any law, requirement, regulation or determination by a
Government shall be resolved by conforming this LICENCE AGREEMENT to
such provisions of any such law, requirement, regulation or
determination.
(c) Any agreement or arrangement relating to the PATENT RIGHTS between
LICENCEE and any third party hereto shall be made expressly subject to
the terms and conditions of this Article 14 and LICENCEE shall require
such other party to comply therewith to the same extent that LICENCEE
is required to comply.
(d) Any Licence or other right granted or to be granted pursuant to this
LICENCE AGREEMENT and any term of exclusivity applicable to such
Licence or right shall be subject to any and all applicable
governmental laws and regulations relating to compulsory licensing.
15. TAXATION
(a) All payments due under this LICENCE AGREEMENT are quoted herein as
exclusive of any United Kingdom Value Added Tax or similar tax which
shall be payable, or shall become payable during the term of this
LICENCE AGREEMENT, in addition on rendering by LICENCEE of an
appropriate invoice.
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 24
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(b) All payments under this LICENCE AGREEMENT are quoted herein as
exclusive of any Japanese withholding tax or similar tax in other
countries which shall be payable, or shall become payable during the
term of this LICENCE AGREEMENT, in addition on rendering by LICENCEE of
an appropriate invoice.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and duly
executed this LICENCE AGREEMENT on the date(s) indicated below, to be effective
the day and year first above written.
For and on Behalf of IMPERIAL EXPLOITATION LIMITED
By: /s/ Susan L. Jacobs
--------------------
Ms. Susan L. Jacobs
Title: Company Secretary
Date: 11 March 1996
-------------
For and on Behalf of IMPERIAL COLLEGE OF SCIENCE, TECHNOLOGY & MEDICINE
By /s/ David B. Thomas
-------------------
Dr. David B. Thomas
Title: Pro-Rector (Research Contracts)
Date: 11 March 1996
-------------
For and on Behalf of LEUKOSITE INCORPORATED
By: /s/ Chris K. Mirabelli
----------------------
Dr. Christopher K. Mirabelli
Title: Chief Executive Officer
Date: March 25, 1996
--------------
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 1
EXHIBIT 10.8(b)
CONFIDENTIAL TREATMENT
RESEARCH AGREEMENT
(DOCUMENT IDENTIFICATION CODE:
LEUKOSITE/IC/NHLI/0012/RESEARCH)
THIS AGREEMENT (hereinafter called the "RESEARCH AGREEMENT") is made effective
the Fourteenth day of March, 1996 (hereinafter called the "EFFECTIVE DATE").
BY AND BETWEEN:
THE IMPERIAL COLLEGE OF SCIENCE, TECHNOLOGY & MEDICINE of Sherfield Building,
London SW7 2AZ, England (hereinafter called the "COLLEGE"); and
IMPERIAL EXPLOITATION LIMITED, a company organized under English law and having
a registered office at Sherfield Building, London SW7 2AZ, England (hereinafter
called "IMPEL");
OF THE FIRST PART,
AND:
LEUKOSITE INCORPORATED, a company organized under the laws of the state of
Delaware, United States of America, having a principal office at 215 First
Street, Cambridge, MA 02142, United States of America (hereinafter called the
"COMPANY")
OF THE SECOND PART.
WITNESSETH:
A. WHEREAS The COMPANY wishes to support a research programme to be
undertaken by the COLLEGE as defined in Schedule I annexed hereto
(hereinafter called the "RESEARCH PROGRAMME"); and
B. WHEREAS the COLLEGE is willing to accept such support from the COMPANY
and to undertake the RESEARCH PROGRAMME.
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 2
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NOW, THEREFORE, in consideration of the premises and the performance of the
covenants herein contained, IT IS AGREED AS FOLLOWS:
1. The COLLEGE will carry out the RESEARCH PROGRAMME under the supervision
of Professor T.J. Williams in its Department of Applied Pharmacology at
the National Heart & Lung Institute which is a constituent part of the
COLLEGE or such other member of its staff as shall be agreed by the
COMPANY, such agreement not to be unreasonably withheld.
2. The RESEARCH PROGRAMME will be undertaken from the EFFECTIVE DATE for a
period of one (1) year.
3. The COMPANY shall make payments to the COLLEGE according to Schedule 2
annexed hereto towards the costs of the RESEARCH PROGRAMME. The COLLEGE
shall undertake to use its best efforts to complete the work based on
the costs described in Schedule 2.
4. The COLLEGE shall submit progress reports on the RESEARCH PROGRAMME to
the COMPANY at six (6) months after the EFFECTIVE DATE and on
completion of the RESEARCH PROGRAMME.
5. Each party shall keep confidential any information that is received
from the other in the course of this AGREEMENT that is marked
"CONFIDENTIAL" and shall ensure that such confidential information is
disclosed only to those of its employees and students who require
access to such information for the purpose of carrying out the RESEARCH
PROGRAMME. In the event that either party discloses confidential
information to the other orally, it shall send to the other a written
record of such information, marked "CONFIDENTIAL", within fourteen (14)
days following disclosure. Such information shall be deemed to have
been disclosed in confidence from the time of disclosure.
The COLLEGE shall have the right to publish the results of the RESEARCH
PROGRAMME in accordance with normal academic practice subject only to
any reasonable delay required in order to protect the commercial value
of such results.
The provisions of this Clause 5 shall survive termination of this
AGREEMENT for any reason.
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 3
-3-
6. The results of the RESEARCH PROGRAMME and all intellectual property
rights Therein (hereinafter referred to as the "RESULTS") shall be the
property of the COLLEGE. The COMPANY shall have the right to an option
to be granted an exclusive licence for any or all of the RESULTS. Such
option shall be exercisable in writing to the COLLEGE at any time up to
three (3) months following the date of receipt by the COMPANY Of the
progress report provided by the COLLEGE upon completion of the RESEARCH
PROGRAMME. The licence shall be effected by written amendment to and
under the terms of the licence agreement between the COLLEGE, IMPEL and
the COMPANY dated January 31, 1996; except that no licence issue fee
shall be payable by the COMPANY for such amendment.
The COMPANY shall have access to and the right to use information and
reagents generated as part of the RESEARCH PROGRAMME during the term of
this AGREEMENT. This right shall survive termination of this AGREEMENT
so long as this information or reagents do not constitute patentable
intellectual property.
The rights granted to the COMPANY pursuant to this Clause 6 shall
survive termination of this AGREEMENT for any reason other than breach
of this AGREEMENT by the COMPANY.
7. This AGREEMENT shall commence on EFFECTIVE DATE and shall remain in
full force and effect until completion of the RESEARCH PROGRAMME unless
terminated in accordance with the provisions of Clause 8.
8. Either party may terminate this AGREEMENT:
8.1 ********************************************** or
8.2 forthwith upon written notice to the other if the other
commits a breach of any of the terms of this AGREEMENT and
such breach is either irremediable or is not remedied within
thirty days following written notice of said breach requiring
it to be remedied.
9. No amendment to this AGREEMENT shall be valid until reduced to writing
and signed by an authorized signatory of each party.
10. This AGREEMENT shall not be assigned by the COMPANY, except as part of
a sale or transfer of all or substantially all of the COMPANY's
business.
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 4
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11. Any notice required or permitted to be given by this AGREEMENT shall be
given by post-paid, first class, registered or certified mail addressed
to:
LEUKOSITE INC.
215 First Street, Cambridge, MA 02142
United States of America
(marked for attention of the Chief Executive Officer)
or
IMPERIAL EXPLOITATION LTD
Sherfield Building, London SW7 2AZ, England
(marked for attention of the Company Secretary)
Such addresses may be altered by notice so given
12. This AGREEMENT shall be interpreted in accordance with the laws of
England and shall be subject to the jurisdiction of the English courts
sitting in England.
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 5
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IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and duly
executed this AGREEMENT on the date(s) indicated below, to be effective the day
and year first above written.
For and on Behalf of IMPERIAL COLLEGE OF SCIENCE, TECHNOLOGY & MEDICINE
By: /s/ David B. Thomas
------------------------------------
Dr. David B. Thomas
Title: Pro-Rector (Research Contracts)
Date: 11 March 1996
------------------------------------
For and on Behalf of IMPERIAL EXPLOITATION LIMITED
By: /s/ Susan L. Jacobs
------------------------------------
Ms. Susan L. Jacobs
Title: Company Secretary
Date: 11 March 1996
------------------------------------
For and on Behalf of LEUKOSITE INCORPORATED
By: /s/ Chris Mirabelli
------------------------------------
Dr. Christopher K. Mirabelli
Title: Chief Executive Officer
Date: March 25, 1996
------------------------------------
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 1
EXHIBIT 10.9
CONFIDENTIAL TREATMENT
RESEARCH COLLABORATION AND LICENSE AGREEMENT
BETWEEN
ROCHE BIOSCIENCE
and
LEUKOSITE, INC.
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 2
TABLE OF CONTENTS
1. Definitions............................................................
2. Grant..................................................................
2.1 License.......................................................
2.2 Third Party Agreements........................................
2.3 Sublicenses...................................................
2.4 Product Outside the Field of Research.........................
3. Due Diligence and Worldwide Marketing..................................
3.1 Diligence.....................................................
3.2 Marketing Reports.............................................
4. Confidential Information...............................................
4.1 Non-Disclosure................................................
4.2 Non-Confidential Information..................................
4.3 Permitted Disclosure..........................................
5. Research Collaboration.................................................
5.1 Object........................................................
5.2 Collaboration Management Council..............................
5.2.1 Oversight..............................................
5.2.2 Membership.............................................
5.2.3 Chair..................................................
5.2.4 Responsibilities.......................................
5.3 Meetings......................................................
5.4 CMC Deadlock..................................................
5.5 Conduct of Research Collaboration.............................
5.6 Visitation....................................................
5.7 Research Funding..............................................
5.7.1 RBS Funding at LKS.....................................
5.7.2 LKS Funding at LKS.....................................
5.7.3 RBS Funding at RBS.....................................
5.8 No Conflict With Research Collaboration.......................
5.9 Title to Equipment............................................
5.10 Term and Termination of the Research Collaboration............
5.10.1 Research Term.........................................
5.10.2 Termination by RBS....................................
5.11 Clinical and Regulatory Activity..............................
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 3
6. Results of the Research Collaboration/Patents..........................
6.1 Mutual Disclosure.............................................
6.2 LKS Results...................................................
6.2.1 Title..................................................
6.2.2 Use....................................................
6.2.3 Patent Rights..........................................
6.3 Joint Results.................................................
6.3.1 Title..................................................
6.3.2 Use....................................................
6.3.3 Patent Rights..........................................
6.4 RBS Results...................................................
6.4. 1 Title.................................................
6.4.2 Use....................................................
6.4.3 Patent Rights..........................................
6.5 Publication...................................................
6.6 Infringement..................................................
7. Royalties and other Compensation
7.1 Royalties ...................................................
7.1.1 Amount.................................................
7.1.2 Patent Protection......................................
7.1.3 Competitive Pressures..................................
7.1.4 Other Royalties........................................
7.1.5 Royalty Term...........................................
7.1.6 Combination Product....................................
7.2 License Fee...................................................
7.3 Milestone Payments............................................
7.3.1 Amounts................................................
7.3.2 Replacement Product....................................
7.3.3 Termination............................................
7.4 Records.......................................................
7.5 Accounting Period.............................................
8. Representations and Warranties.........................................
8.1 Mutual Representations and Warranties.........................
8.2 LKS Representations and Warranties............................
8.3 Limitation....................................................
9- Indemnification.......................................................
9.1 LKS Indemnification...........................................
9.1..1 Research Collaboration................................
9.1.2 Products Liability.....................................
9.2 RBS Indemnification...........................................
9.3 Conditions to Indemnification.................................
-ii-
<PAGE> 4
10. Assignment; Successors.................................................
10. 1 Assignment..............................................
10.2 Successors...............................................
11. Force Majeure..........................................................
-iii-
<PAGE> 5
CONFIDENTIAL TREATMENT
RESEARCH COLLABORATION AND LICENSE AGREEMENT
This Agreement is entered into on July 12, 1996 (the "Effective Date")
by and between SYNTEX (U.S.A.) INC., through its ROCHE BIOSCIENCE division
(hereinafter referred to as "RBS"), a Delaware corporation located at 3401
Hillview Avenue, Palo Alto, California 94304, and LEUKOSITE, INC., a Delaware
Corporation, located at 215 First Street, Cambridge, Massachusetts 02142
("LKS").
WHEREAS, RBS is a member of the Roche Group, which is an international
healthcare company which, among other things, develops, manufactures, markets
and sells pharmaceutical products for human healthcare throughout the world; and
WHEREAS, LKS is the owner or exclusive licensee of certain technology
and other proprietary know-how related to Products (as hereinafter defined); and
WHEREAS, RBS desires to obtain an exclusive right and license in and to
such technology and proprietary know-how to develop and sell Products in the
Territory (as hereinafter defined); and
WHEREAS, RBS desires to support additional research in the Field of
Research as hereinafter defined to be conducted by LKS; and
WHEREAS, LKS is willing to grant the exclusive right and license
desired by RBS and to conduct the research supported by RBS.
NOW, THEREFORE, in consideration of the mutual promises and other good
and valuable consideration, the parties agree as follows:
1. DEFINITIONS.
The terms used in this Agreement have the following meaning:
1.1 "Accounting Period" shall have the meaning set forth in Section
7.5.
1.2 "Adjusted Gross Sales" means the gross sales invoiced by RBS for
the Product(s) to Third Parties less deductions for returns (including
withdrawals and recalls), rebates (retroactive price reductions, including
Medicaid and similar types of rebates), volume (quantity) discounts,
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 6
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discounts granted at the time of invoicing, sales taxes and other taxes directly
linked to and included in the gross sales amount on a Product by Product basis
for the countries concerned (excluding income and similar taxes).
1.3 "Affiliate" as applied to either party shall mean any company or
other legal entity other than the party in question in whatever country
organized, controlling, controlled by or under common control with that party.
The term "control" means ownership or control, directly or indirectly, of at
least fifty percent (50%) of the outstanding stock, voting rights or the right
entitled to elect or appoint directors. Provided, however, Genentech, Inc., with
offices located at 460 Point San Bruno Boulevard, South San Francisco,
California, 94080, and its subsidiaries shall not be considered an Affiliate of
RBS unless and until it is granted or extended rights under this Agreement upon
written notice by RBS to LKS.
1.4 "Agreement Year" shall mean the twelve month period beginning on
the date of execution of the Heads of Agreement, and each subsequent twelve (12)
month period thereafter.
1.5 "Background Patent Right(s)" shall mean the LKS United States
patent applications, including any division, continuation, or
continuation-in-part thereof and any foreign patent application or equivalent
corresponding thereto and any Letters Patent or the equivalent thereof issuing
thereon or reissue, re-examination or extension (including Supplemental
Protection Certificates) thereof, which are set forth in Appendix A attached
hereto and made a part hereof.
1.6 "Calendar Quarter" shall mean the period of three (3) consecutive
calendar months ending on March 31, June 30, September 30 or December 31, as the
case may be.
1.7 "CBR Agreement" means the License Agreement effective as of June
15, 1993 between the Center for Blood Research and LKS.
1.8 "CMC" shall have the meaning set forth in Section 5.2.
1.9 "CMCC Agreement" means the License Agreement dated March 25, 1996
between the Children's Medical Center Corporation and LKS.
1.10 "commercially reasonable and diligent efforts" means, unless the
Parties agree otherwise, those efforts consistent with the exercise of
<PAGE> 7
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prudent scientific and business judgment, as applied to other products of
similar scientific and commercial potential within the relevant product lines of
RBS or, with respect to Section 5.5, LKS.
1.11 "Confidential Information" means all information and materials
received by either party from the other party pursuant to this Agreement and all
information and materials developed in the course of the Research Collaboration.
1.12 "FDA" shall mean the United States Food and Drug Administration.
1.13 "Field of Research" shall mean ***********************************
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1.14 "First Commercial Sale" shall mean in each country of the
Territory, the first sale to a Third Party, in connection with the nationwide
introduction of any Product by RBS, its Affiliates or Sublicensees following
marketing and/or pricing approval by the appropriate governmental agency for the
country in which the sale is to be made and, when governmental approval is not
required, the first sale in that country in connection with the nationwide
introduction of a Product in that country.
1.15 "Flat Fee" shall have the meaning set forth in Section 13.2.
1.16 "FTE" means full time-equivalent qualified scientist employee.
1.17 "Heads of Agreement" shall mean the agreement between the parties
hereto entitled Heads of Agreement containing the basic terms of this Agreement
and executed on April 18, 1996.
1.18 "High Throughput Screening" or "HTS " shall mean a ***************
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<PAGE> 8
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1.19 "Imperial Agreement" means the License Agreement effective January
31, 1996 between The Imperial College of Science, Technology & Medicine and the
Imperial Exploitation Limited, on the one hand, and LKS, on the other hand.
1.20 "IND" shall mean an Investigational New Drug application as such
term is defined in the regulations of the FDA.
1.21 "Information" shall mean any data, formulas, process information
or other information produced solely or jointly by LKS or RBS which is developed
in and/or results from the Research Collaboration.
1.22 "Invention" shall mean any product, process, use, article of
manufacture, composition of matter conceived or first actually or constructively
reduced to practice, solely or jointly by LKS or RBS, which is developed in
and/or results from the Research Collaboration.
1.23 "Joint Patents Rights" shall have the meaning set forth in Section
6.3.1.
1.24 "Joint Results" shall have the meaning set forth in Section 6.3.1.
1.25 "LKS Patent Rights" shall have the meaning set forth in Section
6.2.1.
1.26 "LKS Results" shall have the meaning set forth in Section 6.2.1.
1.27 "Major Market(s)" shall mean each of North America (the United
States and Canada only), United Kingdom, Germany, France, and Japan.
1.28 "Material" shall mean any material or substance which is
discovered, produced or derived solely or jointly by LKS or RBS, which is
developed in and/or results from the Research Collaboration.
1.29 "NDA" shall mean a New Drug Application as such term is defined in
the regulations of the FDA.
1.30 "Net Sales" means the ********************************************
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1.31 "Other Royalties" shall have the meaning set forth in Section
7.1.4.
1.32 "Patent" means any United States patent application, including any
division, continuation, or continuation-in-part thereof and any foreign patent
application or equivalent corresponding thereto and any Letters Patent or the
equivalent thereof issuing thereon or reissue, re-examination or extension
(including Supplemental Protection Certificates) thereof.
1.33 "Patent Costs" means the fees and expenses paid to outside legal
counsel and other Third Parties, and filing, prosecution and maintenance
expenses, incurred in connection with the establishment and maintenance of
rights under Patents.
1.34 "Patent Rights" means individually and collectively Background
Patent Rights, LKS Patent Rights, RBS Patent Rights and Joint Patent Rights.
1.35 "Patent Protection" shall have the meaning set forth in Section
7.1.2.
1.36 "PLA" means a Product License Application as such term is defined
by the FDA.
1.37 "Product" shall mean any article, composition, apparatus,
material, method, process or service for therapeutic and diagnostic applications
in humans in the Field of Research, including, but not limited to, small
molecules, protein products, and gene therapy applications, which is or which
incorporates or utilizes an Invention, Invention, Results and/or Material or the
manufacture, import, sale, or use of which is covered by Patent Rights.
1.38 "RBS Patent Rights" shall have the meaning set forth in Section
6.4.1.
1.39 "RBS Patents" shall mean any United States patent application,
including any division, continuation, or continuation in part thereof and any
foreign patent application or equivalent corresponding thereto and any Letters
Patent or the equivalent thereof issuing thereon
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or reissue, re-examination or extension (including Supplemental Protection
Certificates) thereof, which is owned by or licensed by RBS and in and to which
RBS has a transferable interest during the term of this Agreement insofar as it
contains one or more claims to RBS Technology.
1.40 "RBS Results" shall have the meaning set forth in Section 6.4.1.
1.41 "RBS Technology" shall mean information and materials, including
but not limited to, pharmaceutical, chemical and biological products, technical
and non-technical data and information relating to the results of tests, assays,
methods, and processes, and drawings, plans, diagrams and specifications and/or
other documents containing such information and data owned by RBS or to which
RBS has a transferable interest on the Effective Date and/or prior to
termination of this Agreement and which are necessary for the manufacture, use
or sale of a Product.
1.42 "Reciprocal Royalties" shall have the meaning set forth in Section
13.8.3.
1.43 "Research" shall mean the research performed by LKS and RBS in
accordance with the Research Plan, as amended from time to time by agreement of
the parties.
1.44 "Research Collaboration" shall have the meaning set forth in
Section 5. 1.
1.45 "Research Plan" shall mean the written description of the research
program for the research collaboration, including, but not limited to, goals,
key decision points, timing to key decision points, resource commitments and
other details identified by the CMC for the first Agreement Year as set forth in
Appendix B attached hereto and made a part hereof, and for each subsequent
Agreement Year of the Research Collaboration.
1.46 "Research Term" shall have the meaning set forth in Section
5.10.1.
1.47 "Results" means, collectively, LKS Results, Joint Results, and RBS
Results.
1.48 "Royalty Term" shall have the meaning set forth in Section 7.1.5.
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1.49 "Sublicensee" shall mean any Third Party licensed by RBS to make,
have made, import, use or sell any Product.
1.50 "Territory" shall mean all countries of the world.
1.51 "Third Party(ies)" shall mean a person or entity who or which is
neither a party hereto nor an Affiliate of a party hereto.
1.52 "Third Party Agreement(s)" shall mean the CMCC Agreement, the
Imperial Agreement, and the CBR Agreement.
1.53 "Valid Claim" shall mean a claim of an issued patent which has not
lapsed or become abandoned or been declared invalid or unenforceable by a court
of competent jurisdiction or an administrative agency from which no appeal can
be or is taken.
1.54 The use herein of the plural shall include the singular, and the
use of the masculine shall include the feminine.
2. GRANT.
2.1 License. LKS hereby grants to RBS and RBS hereby accepts from LKS
an exclusive right and license under the Background Patents to make, have made,
use and sell Products in the Territory. In addition, the parties shall grant
each other the licenses for the Results as set forth in Section 6.
2.2 Third Party Agreements. To the extent information, inventions,
materials and/or Patents licensed to RBS under this Agreement are rights which
LKS has licensed from and under a Third Party Agreement(s), RBS understands and
agrees as follows:
(i) The rights licensed to RBS by LKS are subject to the
terms, limitations, restrictions and obligations of the Third Party
Agreement(s).
(ii) RBS will comply with the terms, obligations,
limitations and restrictions of the Third Party Agreement(s) applicable to
sublicensees (excluding the financial provisions of such agreement). In
particular Section 2.7 of the CMCC Agreement requires that Articles 2, 6, 7, 8,
9, 10, 11, 12 and 14 of that agreement be attached to any sublicense and such
articles are attached hereto and made a part hereof as Appendix C.
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2.3 Sublicenses.
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3. DUE DILIGENCE AND WORLDWIDE MARKETING.
3.1 Diligence. RBS shall use commercially reasonable and diligent
efforts to develop and register Products and upon registration, continue to use
its commercially reasonable and diligent efforts to market and sell Products in
each Major Market, taking into account the scientific and commercial potential
for such Product or to sublicense the Products to Third Parties to do the same.
Subject to the terms of this Section 3, all aspects relating to the marketing
and sale of a Product shall be a business decision of RBS and its Affiliates.
Subject to the terms of this Section 3,
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RBS or its Affiliates may choose not to market, distribute, or license the
Product in a country based upon RBS' reasonable business judgment. The efforts
of an Affiliate shall be deemed to be the efforts of RBS.
3.2 Marketing Reports. RBS or its Affiliates shall provide written
reports to LKS on June 30th and December 31st of each year concerning the
efforts being made in accordance with this Section with respect to a Product in
each country of the Major Markets until launch of such Product in all Major
Markets. The report shall contain information about the timing of Product launch
in such countries. RBS or its Affiliates shall provide LKS with any additional
information reasonably requested by LKS in this respect. No more frequently than
once a year and upon LKS' request, RBS or its Affiliates shall also provide to
LKS, both prior to and after marketing a Product, a brief summary of the
marketing plans for each Product in the Major Markets and sales estimates for
each Product to be sold in each Major Market. In addition, RBS or its Affiliates
shall provide LKS with an overview of marketing activities and sales estimates
on a per Product basis for the remaining countries in the Territory.
4. CONFIDENTIAL INFORMATION.
4.1 Non-Disclosure. Each party shall have the right to refuse to accept
the other party's Confidential Information. Each party agrees not to disclose
and to maintain the Confidential Information in strict confidence, to cause all
of its Affiliates, sublicensees, agents, representatives and employees to
maintain the disclosing party's Confidential Information in confidence and not
to disclose any such Confidential Information to a third party without the prior
written consent of the disclosing party and not to use such Confidential
Information for any purpose other than as licensed under this Agreement.
4.2 Non-Confidential Information. The obligations of confidentiality
will not apply to information which:
(i) was known to the receiving party or generally known
to the public prior to its disclosure hereunder; or
(ii) subsequently becomes 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
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disclosure and who is not under an obligation of
confidentiality to the disclosing party;
(iv) is required by law, rule, regulation or bona fide
legal process to be disclosed, provided that the
disclosing party takes all reasonable steps to
restrict and maintain confidentiality of such
disclosure and provides reasonable notice to the
non-disclosing party to allow the non-disclosing
party to take appropriate action to appeal such
order; or
(v) is approved for release to the public by both
parties.
4.3 Permitted Disclosure. The obligations of Section 4.1
notwithstanding, either party may disclose the Confidential Information licensed
hereunder, to Third Parties who (i) need to know the same in order to secure
regulatory approval for the sale of Product, (ii) who need to know the same in
order to work towards the commercial development of Product, or (iii) who are
approved by other party, as the case may be; provided that such parties are
bound by obligations of confidentiality and non-use at least as stringent as set
forth herein, provided, further, that RBS may disclose Confidential Information
regarding clinical development, manufacturing, and marketing of any Product to
any Third Party at RBS's sole discretion; provided, further, that such
Confidential Information was developed solely by RBS or its Affiliates or
contractors or sublicensees and does not include Confidential Information
received from LKS.
5. RESEARCH COLLABORATION.
5.1 Object. During the Research Term, the parties shall establish a
research and pre-clinical development collaboration in the Field of Research
(the "Research Collaboration"). LKS agrees to conduct the Research to be
performed at LKS and RBS agrees to support and fund such Research at LKS in
accordance with the terms and conditions set forth below; **********************
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5.2 Collaboration Management Council
5.2.1 Oversight. The Research Collaboration will be overseen
and monitored by the Collaboration Management Council as described herein (the
"CMC").
5.2.2 Membership. Within ten (10) days of the date hereof, LKS
and RBS shall each appoint two (2) persons (or such other number of persons as
the parties may determine) to serve on the CMC. Such representatives will be
qualified, by reason of background and experience, to assess the scientific
progress of the Research Collaboration. Each party will have the right to change
its representation on the CMC upon written notice sent to the other.
5.2.3 Chair. The CMC will be co-chaired by one representative
of each party during the Research Term.
5.2.4 Responsibilities. The CMC will have authority to:
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5.6 VISITATION. Each party will permit duly authorized employees or
representatives of the party to visit its facilities where the research is
conducted, at reasonable times and with reasonable notice.
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5.7 Research Funding
5.7.1 RBS Funding at LKS.
5.7.1.1 Primary Support Commitment. *******************
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5.7.2 LKS Funding at LKS. ************************************
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5.8 No Conflict With Research Collaboration. LKS agrees that the funds
to support the Research Collaboration provided by RBS will be
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applied to the Research Collaboration and may not, without RBS prior written
approval, be used in support of any other research at LKS.
5.9 Title to Equipment. LKS will retain title to any equipment
purchased with funds provided by RBS under this Agreement. The intent is that
the costs of any such equipment will be included in the FTEs and not be a
separate cost.
5.10 Term and Termination of the Research Collaboration.
5.10.1 Research Term. The Research Collaboration shall
terminate on the earlier of (i) *********** from the execution date of the Heads
of Agreement or (ii) the date on which a clinical development candidate is
selected by the CMC (the "Research Term"). Subject to Section 5.7.1.3, both
parties will have the option to extend the Research Term for additional
************ periods upon mutually acceptable terms at the conclusion of the
second Agreement Year,
5.10.2 Termination by RBS.
5.10.2.1 Failure to Establish HTS. RBS will have the
option to terminate the Research Collaboration if an HTS for the CKR-3
receptor-based assay cannot be established at RBS. In the event RBS elects not
to terminate the Research Collaboration as provided herein, the Research Plan
and the level of Research Funding will be re-evaluated given the change in the
focus and intent of the Research Collaboration.
5.10.2.2 First Anniversary. RBS may terminate this
Agreement without cause on the first anniversary of the signing of the Heads of
Agreement upon ************* prior written notice to LKS. Upon such termination,
RBS will pay LKS a termination fee equal to************************************
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5.10.2.3 Failure to Meet Proof of Concept. RBS may
terminate this Agreement, on or before the first anniversary of the Heads of
Agreement, upon *************** prior written notice to LKS, in the event RBS
establishes a decision point at in vivo proof of concept ***********************
**************************************************utilizing criteria and
conditions established by the CMC and such criteria and conditions for going
forward have not been met.
5.10.2.4 Breach by LKS. In the event of a material
breach by LKS of any of LKS's obligations and covenants, if such breach is
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not cured within ***************** after written notice is given by RBS to LKS
specifying the breach, RBS may terminate the Research Collaboration and cease
funding hereunder upon the expiration of such ************************ provided,
however, that this Agreement shall otherwise continue in full force and effect
and ****************************************************************************
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5.10.2.5 Results of Termination by RBS. If RBS
terminates the Research Collaboration prior to the expiration of the Research
Term pursuant to Section 5.10.2.1., 5.10.2.2 or 5.10.2.3, this Agreement shall
terminate and the provisions of Section 13.8 shall apply.
5.10.3 Termination by LKS. In the event of a material breach
by RBS of any of RBS's obligations and covenants, if such breach is not cured
within ************** after written notice is given by LKS to RBS specifying the
breach, LKS may terminate this Agreement upon the expiration of such ***********
period and the provisions of Section 13.8 shall apply.
5.11 Clinical and Regulatory Activity. In accordance with the other
terms contained herein, ********************************************************
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6. RESULTS OF THE RESEARCH COLLABORATION/PATENTS.
6.1 Mutual Disclosure. Any Result that either party believes may
involve a patentable invention or a preliminary finding of scientific
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significance will be promptly disclosed to the other party at the earliest
practicable time.
6.2 LKS Results.
6.2.1 Title. All right, title and interest in and to all
Materials, Information, and Inventions which are conceived and/or made by LKS
employees alone and any and all intellectual property rights based thereon
including, but not limited to, patent rights (the "LKS Patent Rights"), shall be
owned by LKS (individually and collectively "LKS Results").
6.2.2 Use. LKS shall grant RBS an exclusive license to the
LKS Results for use in the Field of Research or with any Product. LKS may
license the LKS Results outside the Field of Research; provided, however, that
if the LKS Results are exclusive to the Field of Research, LKS may not license
the LKS Results to any Third Party.
6.2.3 Patent Rights. LKS shall file, prosecute and maintain
the Background Patent Rights and LKS Patent Rights. RBS shall pay the Patent
Costs therefor to the extent such rights are not licensed outside the Field of
Research. If any such rights are licensed outside the Field of Research, RBS
shall only pay a pro-rata share of on-going Patent Costs and with respect to the
LKS Patent Rights, RBS will be reimbursed on a pro-rata basis for the Patent
Costs RBS has paid with respect to the LKS Patent Rights. The Patent Costs shall
be pro-rated by the number of additional licensees. If LKS, with respect to the
LKS Patent Rights decides, at any time, not to file or maintain an application
or a Patent as provided hereunder, it shall give RBS notice to this effect and
upon such notice RBS shall have the right, but not the obligation, to file and
maintain, such application or Patent, in its own name and at its own expense. If
RBS elects to file and maintain a Patent that LKS has declined to file or
maintain, LKS shall assign to RBS all rights in such application or Patent.
6.3 Joint Results.
6.3.1 Title. All right, title and interest in and to all
Materials, Information, and Inventions which are conceived and/or made by RBS
employees and LKS employees and any and all intellectual property rights based
thereon including, but not limited to, patent rights (the "Joint Patent
Rights"), shall be deemed to be joint inventions, in accordance with applicable
law, and shall be owned by both parties jointly (individually and collectively
"Joint Results").
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6.3.2 Use. RBS shall have the exclusive right to use the Joint
Results in the Field of Research. RBS may license to a Third Party in the Field
of Research to the extent necessary to make, have made or use the Products. Both
RBS and LKS may use the Joint Results outside the Field of Research. Neither
party may license to a Third Party for use outside the Field of Research without
the other party's prior written consent, which may not be unreasonably withheld
or delayed.
6.3.3 Patent Rights. RBS shall file and prosecute the Joint
Patent Rights and pay the Patent Costs therefor. If RBS decides, at any time,
not to file or maintain an application or a Patent as provided hereunder, it
shall give LKS notice to this effect and upon such notice LKS shall have the
right, but not the obligation, to file and maintain, such _ application or
Patent, in its own name and at its own expense. If LKS elects to file and
maintain a Patent Right on which RBS has declined to file or maintain, RBS shall
assign to LKS all rights in such application or Patent.
6.4 RBS Results.
6.4.1 Title. All right, title and interest in and to all
Materials, Information, and Inventions which are conceived and/or made by RBS
employees alone and any and all intellectual property rights based thereon
including, but not limited to, patent rights (the "RBS Patent Rights"), shall be
owned by RBS (individually and collectively "RBS Results").
6.4.2 Use. In addition to RBS's rights to sublicense the RBS
Results as set forth elsewhere in this Agreement, RBS may license the RBS
Results outside the Field of Research. LKS shall have exclusive rights to the
RBS Results only if RBS transfers such rights to LKS pursuant to Section 13.8
hereof.
6.4.3 Patent Rights. RBS shall file and prosecute the RBS
Patent Rights and pay the Patent Costs therefor. If RBS decides, at any time,
not to file or maintain an application or a Patent as provided hereunder, it
shall give LKS notice to this effect and upon such notice LKS shall have the
right, but not the obligation, to file and maintain, such application or Patent,
in its own name and at its own expense. If LKS elects to file and maintain such
an application, RBS shall assign to LKS all rights in such application or
Patent.
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6.5 Publication. During the Research Term, there will be no publication
of the Results or other publications in the Field of Research by LKS or RBS, or
any employee of the parties unless the CMC has reviewed and approved the
proposed scientific publication concerning the Results. After termination of the
Research Term, if either party is going to publish in the Field of Research, the
publishing party shall provide such publication to the other party preferably
thirty (30) days but no later that two (2) weeks prior to submission for
publication to allow the other party time to determine whether any Confidential
Information should be deleted from the proposed publication.
6.6 Infringement
6.6.1 If any of the Patent Rights is infringed by a third
party with respect to the Products, the party which becomes aware of such
infringing activity shall promptly notify the other party of such activity. RBS
shall have the right and option but not the obligation to bring an action for
infringement, at its sole expense, against such third party in the name of LKS
and/or in the name of RBS, and to join LKS as a party plaintiff if required. RBS
shall keep LKS informed as to the prosecution of any action for such
infringement. No settlement, consent judgment or other voluntary final
disposition of the suit which adversely affects Patent Rights may be entered
into without the consent of LKS, which consent shall not unreasonably be
withheld.
6.6.2....In the event that RBS shall undertake the enforcement
and/or defense of the Patent Rights by litigation any recovery of damages by RBS
for any such suit shall be applied first in satisfaction of any unreimbursed
expenses and legal fees of RBS relating to the suit. The balance remaining from
any such recovery shall be divided equally between RBS and LKS.
6.6.3 In the event that RBS elects not to pursue an action
for infringement, upon written notice to LKS by RBS that an unlicensed third
party is an infringer of Patent Rights licensed to RBS, LKS shall have the right
and option, but not the obligation at its cost and expense to initiate
infringement litigation and to retain any recovered damages. LKS shall keep RBS
informed as to the prosecution of any action for such infringement.
6.6.4 In any infringement suit either party may institute
to enforce the Patent Rights pursuant to this Agreement, the other party hereto
shall, at the request of the party initiating such suit, cooperate in all
respects and, to the extent possible, have its employees testify when
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requested and make available relevant records, papers, information, samples,
specimens, and the like. All reasonable out-of-pocket costs incurred in
connection with rendering cooperation requested hereunder shall be paid by the
party requesting cooperation.
7 ROYALTIES AND OTHER COMPENSATION.
7.1 Royalties.
7.1.1 Amount. RBS shall pay to LKS on the Net Sales of
Products sold by RBS, its Affiliates and Sublicensees in the Territory royalties
as follows:
Non-Monoclonal Antibody Product
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7.1.3 Competitive Pressures. In the event the obligations of
RBS under the Agreement significantly diminish its or its Affiliates'
capabilities to respond to competitive pressures in a country, the parties agree
to explore, in good faith, steps to be taken to respond to such circumstances.
7.1.4 Other Royalties. ***************************************
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7.3 Milestone Payments.
7.3.1 Amounts. RBS shall pay the following amounts upon the
occurrence of the following milestone events.
MILESTONE PAYMENTS:
Non-Monoclonal Antibody Product*
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7.3.3 Termination. Discontinuation of the Research
Collaboration pursuant to Section 5.10.2 and resulting termination of this
Agreement will terminate RBS and its Affiliates obligations to make any future
milestone or upfront payments.
7.4 Records. RBS shall keep, and shall cause each of its Affiliates and
Sublicensees to keep, full and accurate books of account containing all
particulars relevant to its sales of Products that may be necessary for the
purpose of calculating all royalties payable to LKS. Such books of account shall
be kept at their principal place of business and, with all necessary supporting
data shall, for the two (2) years next following the end of the calendar year to
which each shall pertain, be open for inspection by an independent certified
public accountant reasonably acceptable to RBS, upon at least thirty (30) days
prior written notice during normal business hours at LKS's expense for the sole
purpose of verifying royalty statements or compliance with this Agreement.
Results of such inspection shall be made available to both Parties. ************
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data reviewed in the inspection shall be used only for the purpose of verifying
royalties and shall be treated as RBS Confidential Information subject to the
obligations of this Agreement. No audit by an agent of LKS shall occur more
frequently than once during any twelve (12) month period.
7.5 Accounting Period. In each year the amount of royalty due shall be
calculated semi-annually as of the end of each June 30 and December 31 (each as
being the last day of an "Accounting Period") and shall be paid semi-annually
within the ninety (90) days next following such date. Every such payment shall
be supported by the accounting prescribed in Paragraph 7.6 and shall be made in
United States currency. Whenever for the purpose of calculating royalties,
conversion from any foreign currency shall be required, such conversion shall be
made as follows:
7.5.1 For RBS and its Affiliates:
For countries other than the United States, when
calculating the Adjusted Gross Sales, the amount of such sales in foreign
currencies shall be converted into Swiss Francs as computed in the central
Roche's Swiss Francs Sales Statistics for the countries concerned, using the
average monthly rate of exchange at the time for such currencies as retrieved
from the Reuters System. When calculating the royalties on Net Sales, such
conversion shall be at the average rate of the Swiss Franc to the United States
currency as retrieved from the Reuters System for the applicable Accounting
Period. With respect to royalties due on Net Sales in the United States, RBS
shall report and have paid to LKS such royalties in United States currency
directly from one of its Affiliates in the United States.
7.5.2 For a licensee in a country:
For countries other than the United States, when
calculating the Adjusted Gross Sales, the amount of such sales shall be reported
by the Licensee to Roche within thirty (30) days from the end of an Accounting
Period, after having converted each applicable monthly sales in foreign currency
into the United States currency using the average between the buying and selling
rate of exchange published in the Wall Street Journal (or some other source
agreed upon in writing by the
<PAGE> 28
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parties for any particular country) for the last business day of each respective
month of the Accounting Period.
8 REPRESENTATIONS AND WARRANTIES.
8.1 Mutual Representations and Warranties. 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 LKS Representations and Warranties. LKS hereby represents and
warrants to RBS that:
(i) It is the owner of, or is the licensee of the Background
Patent Rights and Confidential Information related to Products which it has
licensed to RBS under this Agreement, and accordingly has the right to grant
licenses or sublicenses therefor;
(ii) It has not entered into any agreement with any Third
Party which is in conflict with the rights granted to RBS pursuant to this
Agreement;
(iii) It has furnished RBS with the audited balance sheet of
LKS as of December 31, 1995 and the related audited income statement of LKS for
the year then ended, certified by LKS's independent public accountants. The
audited financial statements, including all notes thereto (if any), are complete
and accurate in all material respects, and present fairly the financial
condition of LKS as of the date and for the periods indicated;
(iv) It has furnished unaudited financial statements as of
March 31, 1996, which statements are in accordance with the books and records of
LKS, and present fairly the financial condition of LKS as of the date and for
the periods indicated; and
(v) As of the Effective Date, LKS, without having made an
investigation, is not aware of any claim or demand, asserted or unasserted,
which it believes would have an adverse effect on the rights granted to RBS
hereunder.
8.3 Limitation. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS
AGREEMENT LKS MAKES NO REPRESENTATIONS
<PAGE> 29
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OR EXTENDS ANY WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING, BUT
NOT LIMITED TO, WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
NON-INFRINGEMENT OR VALIDITY OF ANY LKS PATENT OR OTHER INTELLECTUAL PROPERTY
RIGHTS.
9. INDEMNIFICATION
9.1 LKS Indemnification.
9.1.1 Research Collaboration. LKS will defend, indemnify and
hold harmless RBS, its Affiliates and licensors and their employees, agents,
officers, trustees, shareholders and directors and each of them (the "RBS
Indemnified Parties") from and against any and all third party claims, causes of
action and costs (including reasonable attorney's fees) of any nature made or
lawsuits or other proceedings filed or otherwise instituted against the RBS
Indemnified Parties resulting from or arising out of LKS' activities under the
Research Collaboration or out of the research, testing, handling, storage, or
use of any chemical agents by LKS, its employees, agents or Affiliates (other
than those claims which result from the gross negligence or willful misconduct
of an RBS Indemnified Party); provided, however, that no indemnification from
LKS shall be applicable under this Section with respect to a claim or loss
related to Products liability except as set forth in Section 9.1.2 below.
9.1.2 Products Liability. To the extent a Product and rights
relating thereto are transferred from RBS to LKS, LKS will defend, indemnify and
hold harmless the RBS Indemnified Parties from and against any and all third
party claims, causes of action and costs (including reasonable attorney's fees)
of any nature made or lawsuits or other proceedings filed or otherwise
instituted against the RBS Indemnified Parties resulting from or arising out of
the manufacture, sale or use of any such Product by LKS, its Affiliates or its
Sublicensees (other than those claims which result from the gross negligence or
willful misconduct of an RBS Indemnified Party).
9.2 RBS Indemnification. RBS will defend, indemnify and hold harmless
LKS, its Affiliates and licensors and their employees, agents, officers,
trustees, shareholders and directors and each of them (the "LKS Indemnified
Parties") from and against any and all third party claims, causes of action and
costs (including reasonable attorney's fees) of any nature made or lawsuits or
other proceedings filed or otherwise instituted against the LKS Indemnified
Parties resulting from or arising out of this Agreement or out of the
development, testing, manufacture, handling,
<PAGE> 30
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storage, use or sale of any Product by RBS, its Affiliates or its Sublicensees
(other than those claims which result from the gross negligence or willful
misconduct of an LKS Indemnified Party).
9.3 Conditions to Indemnification. A person or entity that intends to
claim indemnification under this Section 9 (the "Indemnitee") shall promptly
notify the indemnifying party (the "Indemnitor") of any loss, claim, damage,
liability or action in respect of which the Indemnitee intends to claim such
indemnification, and the Indemnitor shall assume the defense thereof with
counsel mutually satisfactory to the Indemnitee whether or not such claim is
rightfully brought; provided, however, that an Indemnitee shall have the right
to retain its own counsel, with the fees and expenses to be paid by the
Indemnitor if Indemnitor does not assume the defense, or if representation of
such Indenmitee by the counsel retained by the Indemnitor would be inappropriate
due to actual or potential differing interests between such Indemnitee and any
other person represented by such counsel in such proceedings. The indemnity
agreement in this Section shall not apply to amounts paid in settlement of any
loss, claim, damage, liability or action if such settlement is effected without
the consent of the Indenmitor, which consent shall not be withheld or delayed
unreasonably. The failure to deliver notice to the Indemnitor within a
reasonable time after the commencement of any such action, only if prejudicial
to its ability to defend such action, shall relieve such Indemnitor of any
liability to the Indemnitee under this Section, but the omission so to deliver
notice to the Indemnitor will not relieve it of any liability that it may have
to any Indemnitee otherwise than under this Section. The Indemnitee under this
Section, its employees and agents, shall cooperate FULLY with the Indemnitor and
its legal representatives in the investigations of any action, claim or
liability covered by this indemnification.
10. ASSIGNMENT; SUCCESSORS.
10.1 Assignment. This Agreement shall not be assignable by either of
the parties without the prior written consent of the other party (which consent
shall not be unreasonably withheld), 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 portion
of the business to which this Agreement relates.
10.2 Successors. Subject to the limitations on assignment herein, this
Agreement shall be binding upon and inure to the benefit of said successors in
interest and assigns of the parties. Any such successor or
<PAGE> 31
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assignee of a party's interest shall expressly assume in writing the performance
of all the terms and conditions of this Agreement to be performed by said party
and such Assignment shall not relieve the Assignor of any of its obligations
under this Agreement.
11. FORCE MAJEURE.
Neither party shall be liable to the other party for damages or loss
(other than with respect to payments due LKS hereunder) occasioned by failure of
performance by the defaulting party if the failure is occasioned by war, fire,
explosion, flood, strike or lockout, embargo, or any similar cause beyond the
control of the defaulting party, 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.
12. TERM.
Except as otherwise specifically provided herein and unless sooner
terminated as provided in this Agreement, this Agreement and the licenses and
rights granted hereunder shall remain in full force and effect until RBS's
obligations to pay royalties hereunder terminate. Upon termination of RBS's
obligation to pay royalties hereunder with respect to a specific country and
specific Product as to which RBS's license is then in effect and RBS's payment
of all such royalties, the license granted to RBS with respect to such country
and such Product pursuant to Section 2.1 shall be deemed to be fully paid and
RBS shall thereafter have a royalty-free right to use the Patent Rights to make,
have made, use and sell such Product in such country.
13. TERMINATION.
13.1 Failure to Develop. In the event RBS fails to use commercially
reasonable and diligent efforts to develop a Product to the point that an IND
for a Product can be approved by the FDA, then LKS at its option, may terminate
this Agreement. Following IND approval for a Product, RBS shall continue to use
commercially reasonable and diligent efforts to develop and register such
Product. In either event, however, RBS will have the right to terminate the
development of any Product after the expiration of the Research Term and such
termination will not result in a termination of this Agreement so long as RBS is
continuing the development of another Product under this Agreement. In such
event, LKS will not have rights to continue development of the Product so
terminated.
<PAGE> 32
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13.2 Decision not to Market in the Major Markets. *********************
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13.3 Failure to Market in a Major Market. *****************************
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13.4 Decision not to Market Worldwide. ********************************
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13.5 Material Breach. Upon breach of any material provisions of this
Agreement by either party to this Agreement, in the event the breach is not
cured within sixty (60) days after written notice to the breaching party by the
other party, in addition to any other remedy it may have, the other party at its
sole option may terminate this Agreement, provided that such other party is not
then in breach of this Agreement.
13.6 Bankruptcy. Either party to this Agreement may, upon giving notice
of termination, immediately terminate this Agreement upon receipt of notice that
the other party has become insolvent or has suspended business in all material
respects hereof, or has consented to an involuntary petition purporting to be
pursuant to any reorganization or insolvency law of any jurisdiction, or has
made an assignment for the
<PAGE> 33
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benefit of creditors or has applied for or consented to the appointment of a
receiver or trustee for a substantial part of its property.
13.7 Survival. The obligations of Sections 4, 8, 9, and 13, as well as
Sections 14.3 and 14.4 shall survive any termination of this Agreement.
13.8 Results of Termination.
13.8.1 Transfers and Licenses. In the event of termination
under Section 5.10.2.1, 5.10.2.2, 5.10.2.3, 13.1, 13.2, 13.3, or 13.4, or in the
event LKS terminates this Agreement pursuant to Section 5.10.3, 13.5, or 13.6,
all licenses and rights granted to RBS by LKS shall terminate forthwith and RBS
shall transfer or cause to be transferred to LKS RBS Results and all limitations
on LKS's rights to use or license the LKS Results and Joint Results shall cease.
In addition, in the case of a Product identified at the time of termination and
Products related thereto, RBS shall transfer to LKS RBS Technology and RBS
Patents that relate exclusively to such Product. *******************************
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********************RBS shall provide reasonable cooperation in transferring
such registrations and other property to LKS and thereafter shall charge LKS on
an fully allocated cost basis for the additional employee time. LKS shall have
full responsibility for such Product after such transfer. Nothing contained
herein shall require RBS to transfer the original of any data or all copies of
such data that RBS is required by law, regulation, or regulatory authority, to
retain the original or a copy thereof.
<PAGE> 34
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13.8.2 Post-Termination Access. ******************************
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13.8.3 Reciprocal Royalties. *********************************
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14. GENERAL PROVISIONS.
14.1 Independent Contractor. The relationship between LKS and RBS is
that of independent contractors. LKS and RBS are not joint venturers, partners,
principal and agent, master and servant, employer or employee, and have no
relationship other than as independent contracting parties. LKS shall have no
power to bind or obligate RBS in any manner. Likewise, RBS shall have no power
to bind or obligate LKS in any manner.
<PAGE> 35
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14.2 Entire Agreement. This Agreement sets forth the entire agreement
and understanding between the parties as to the subject matter thereof and
supersedes all prior agreements in this respect. There shall be no amendments or
modifications to these Agreements, except by a written document which is signed
by both parties.
14.3 Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the laws of New York, U.S.A. without reference to
its choice of law principles.
14.4 Arbitration. Except for the right of either party to apply to a
court of competent jurisdiction for a Temporary Restraining Order to preserve
the status quo or prevent irreparable harm pending the selection and
confirmation of a panel of arbitrators, any dispute, controversy or claim
arising out of or relating to this Agreement, or the breach or termination
thereof, shall be settled by final and binding arbitration in accordance with
the rules of the American Arbitration Association then in effect. Judgment upon
the award rendered by the arbitrators may be entered in any court having
jurisdiction thereof. In any arbitration pursuant to this section, the award
shall be rendered by a majority of the members of a board of arbitration
consisting of three members, one being appointed by each party and the third,
who shall be the chairman of the panel, being appointed by mutual agreement of
said two party-appointed arbitrators. In the event of failure of said two
arbitrators to agree within sixty (60) days after the commencement of the
arbitration proceeding upon the appointment of the third arbitrator, the third
arbitrator shall be appointed by the AAA in accordance with the Rules. In the
event that either party shall fail to appoint an arbitrator within thirty (30)
days after the commencement of the arbitration proceeding, such arbitrator and
the third arbitrator shall be appointed by the AAA in accordance with the Rules.
The place of arbitration shall be New York City.
14.5 Headings. The headings in this Agreement have been inserted for
the convenience of reference only and are not intended to limit or expand on the
meaning of the language contained in the particular or section or paragraph.
14.6 No Waiver. Any delay in enforcing a party's rights under this
Agreement or any waiver as to a particular default or other matter shall not
constitute a waiver of a party's right to the future enforcement of its rights
under this Agreement, excepting only as to an expressed written and signed
waiver as to a particular matter for a particular period of time.
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14.7 Compliance with Laws. In conducting any activities under this
Agreement or in connection with the manufacture, use, or sale of Product, each
party shall comply with all applicable laws and regulations including, but not
limited to. current good laboratory practices as defined by the FDA.
14.8 Public Statements. Neither party shall use the name of the other
party in any public statement, prospectus, annual report, or press release
without the prior written approval of the other party, which may not be
unreasonably withheld or delayed, provided, however, that both parties shall
endeavor in good faith to give the other party a minimum of five business days
to review the such press release, prospectus, annual report, or other public
statement.
14.9 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, or (iii) when sent, if sent, by facsimile, as confirmed by
certified or registered mail. Notices shall be delivered to the respective
parties as indicated:
If To LKS: LeukoSite, Inc.
215 First Street
Cambridge, Massachusetts 02142
Attn: CEO
Copy to: Carella, Byrne, Bain, Gilfillan,
Cecchi, Stewart & Olstein
6 Becker Farm Road Roseland,
New Jersey 07068 Fax No. (201) 597-0250
Attn: Elliot M. 01stein, Esq.
If to RBS: Roche Bioscience, a division of
Syntex (U.S.A.) Inc.
3401 Hillview Avenue
Palo Alto, California 94304
Attn: VP, Business Development
Inflammatory Disease Business Unit
copy to: Syntex (U.S.A.) Inc.
3401 Hillview Avenue
Palo Alto, California 94304
Attn: Corporate Law Department
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14.10 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.
LEUKOSITE, INC. SYNTEX (U.S.A.) INC.
By:/s/ Christopher Mirabelli By:/s/ James N. Woody
- ---------------------------- ---------------------
Christopher Mirabelli, Ph.D. James N. Woody, M.D., Ph.D.
President and CEO President
Appendix A - Patents Rights
Appendix B - Research Plan
Appendix C - CMCC Agreement
<PAGE> 1
EXHIBIT 10.10
CONFIDENTIAL TREATMENT
DATED 6 October 1994
(1) THE UNIVERSITY OF OXFORD
(2) THE MEDICAL RESEARCH COUNCIL
(3) LEUKOSITE, INC.
(4) LEUKOSITE LIMITED
AGREEMENT
For the construction and operation of a
Therapeutic Antibody Centre
within the University of Oxford
MORRELL, PEEL & GAMLEN
-Solicitors-
1 St Giles' Oxford OX1 3JR
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 2
THIS AGREEMENT dated 6 October 1994 ("the Effective Date") is made
between:
(1) THE CHANCELLOR MASTERS AND SCHOLARS OF THE UNIVERSITY OF OXFORD whose
administrative offices are at Wellington Square, Oxford OV 2JD, England
("the University");
(2) THE MEDICAL RESEARCH COUNCIL of 20 Park Crescent, London W1 N4AL,
England ("the MRC");
(3) LEUKOSITE, INC., a Delaware Corporation, whose principal place of
business is at 800 Huntington Avenue, Boston, Massachusetts MA 02115,
USA ("LeukoSite (US)"); and
(4) LEUKOSITE LIMITED, an English Company which is a wholly-owned
subsidiary of Leukosite (US), and whose registered office is at 39
Victoria Street, London SE1H 0EE, England ("LeukoSite (UK)".)
1 DEFINITIONS
In this Agreement, the following expressions shall have the following
meanings:
1.1 "LeukoSite" means LeukoSite (US) and LeukoSite (UK), jointly
and severally;
1.2 "the TAC" means the Therapeutic Antibody Centre which the
University intends to construct and operate an a site at the
Churchill Hospital, Oxford leased from The Oxford Radcliffe
Hospital Trust: set out in the First Schedule to this
Agreement for illustration purposes are a Site Location Plan
and a drawing of possible layouts for the floors of the
Centre: the primary function of the Centre will be the
production of antibodies for use in clinical research;
1.3 "the Mobilization Date" means a date notified by the
University to LeukoSite (UK), being the date on which both the
following conditions are fulfilled:
1.3.1 the University obtains such permissions and consents
as in the reasonable opinion of the University are
sufficient to enable the work of constructing the TAC
to begin on site; and
<PAGE> 3
1.3.2 the University enters into a binding agreement with
The Oxford Radcliffe Hospital Trust for the grant of
a lease of the site for the TAC to the University;
1.4 "the Research" means all research which is conducted in the
TAC by employees of the University, or under their direction
and supervision;
1.5 "Research Information" means data, formulae, process
information or other information developed in the course of
the Research;
1.6 "Research Invention" means any process, use, article of
manufacture or composition of matter conceived or first
actually or constructively reduced to practice in the course
of the Research;
1.7 "Research Material" means any material or substance which is
discovered, produced or derived in the course of the Research;
1.8 "the Technology Transfer Period" means the period of five (5)
years after the TAC becomes operational;
1.9 "Notified Discoveries" means Research Information, Research
Inventions and Research Material notified by the University to
LeukoSite (UK) under clause 3.2;
1.10 "the Pro Forma License" is set cut in the Second Schedule to
this Agreement;
1.11 "the Option Period" means the period beginning on the date of
notification of a Notified Discovery under clause 3.2 and
ending on whichever is the first to occur of twelve (12)
months thereafter or the service of a counter-notice by
LeukoSite (UK) under clause 3.3: the University will not
unreasonably refuse a reasoned request from LeukoSite (UK) for
an extension of the twelve-(12)-month period in relation to
any individual Notified Discovery.
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2 FUNDING FOR THE TAC
2.1 The MRC will contribute **************************************
**************************************************************
******************************
towards the costs of staff, consumables, equipment, indirect
costs and other day-to-day running expenses of the TAC, and
*********************** **************************** towards
the cost of constructing and equipping the TAC. The exact
timing of capital payments within financial years is to be
discussed between the University and the MRC, but the
intention is to front-end load payments to 1995/96 or earlier,
subject to written evidence of expenditure; provided that,
subject to written evidence of expenditure, the entire capital
contribution of the MRC will be paid by the MRC by the end of
its 1995/96 fiscal year.
2.2 The University has agreed with other parties for the payment
by such parties of further set sums towards the cost of
constructing and equipping the TAC.
2.3 The contributions by the MRC and the parties referred to in
clause 2.2 will be subject to the University's acceptance of
certain terms and conditions of grant, but the University
confirms and warrants to LeukoSite (without prejudice to the
second sentence of clause 3.4) that such terms and conditions
will not give either the MRC or the other parties any claim to
the ownership of Notified Discoveries.
2.4 LeukoSite (UK) will contribute the sum of ********************
cost of constructing and equipping the TAC. Of this sum, ****
**************************************************************
**************************************************************
*********************
2.5 Whenever a party is obliged to make a payment under the
preceding sub-clauses which attracts value-added, sales, use,
excise or other similar taxes or duties. The party under such
obligation shall be responsible for paying the taxes and
duties.
2.6 Except as otherwise provided by the MRC's terms and conditions
of grant or by an agreement signed by or on behalf
- 3 -
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of the University, as between the parties to this Agreement
the full and unencumbered title to all equipment purchased or
constructed using funds provided by the other parties shall
vest in the University.
3 TRANSFER OF TECHNOLOGY TO LEUKOSITE
3.1 Performance by the University of this clause 3 is subject to
and conditional upon:
3.1.1 receipt by the University of the contributions and
funds which are referred to in clauses 2.1, 2.2 and
2.4;
3.1.2 the grant of an appropriate lease of the site for the
TAC by The Oxford Radcliffe Hospital Trust to the
University; and
3.1.3 the obtaining of all permissions and consents
required for the construction of the TAC.
The University will use all reasonable endeavours to secure
the lease, permissions and consents referred to in clauses
3.1.2 and 3.1.3; to procure the construction and equipping of
the TAC in an appropriate and timely manner; and to operate
the TAC efficiently and in accordance with good laboratory
practice.
3.2 Throughout the Technology Transfer Period:
3.2.1 a written report shall be submitted by the University
to LeukoSite (UK) within ninety (90) days after the
end of each six (6) months following the date on
which the TAC becomes operational: such report shall
itemize the Research Information and Research
Material generated during the six-(6)-month period:
the University may file additional reports if and
whenever the University prefers not to wait for the
end of a six-(6)-month period but instead to start
time running immediately under clause 3.5 with
respect to any particular Research Information or
Research Material;
3.2.2 the University will use all reasonable endeavours to
report Research Inventions promptly to LeukoSite
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<PAGE> 6
(UK), as and when such Inventions are made and
documented.
3.3 If LeukoSite does not intend to exploit any Notified Discovery
commercially, LeukoSite (UK) shall inform the University
promptly by serving a counter-notice to that effect.
3.4 LeukoSite (US) shall have the right in accordance with clause
3.5 to take a license over each Notified Discovery, on the
terms of the Pro Forma License, with such modifications (if
any) as the parties may agree. The royalties received by the
University under each such license are to be divided between
the University and the MRC in accordance with formulae which
will be established by separate agreement between those two
parties.
3.5 During the Option Period:
3.5.1 LeukoSite is licensed to use the Notified Discovery
for evaluation purposes. No license is granted for
any other purpose, and LeukoSite will keep the
Notified Discovery confidential by using the same
care and discretion to avoid its disclosure to any
third party as LeukoSite uses with respect to
strictly-confidential information of its own which it
does not wish to be disclosed to others; and
3.5.2 the University will not negotiate with or enter into
any agreement or arrangement with any third party for
the commercial exploitation of the Notified
Discovery.
Should LeukoSite (UK) during the Option Period give the
University notice of LeukoSite's desire to exercise the right
granted in clause 3.4, the parties will complete a license of
the Notified Discovery in the form of the Pro Forma License,
utilizing the material provided by the University in the
notification under clause 3.2 in order to complete the blanks
in Paragraphs 1.3, 1.5 and 1.6 and Appendix B. Should the
parties be unable to agree any of the wording for the blanks
in Paragraphs 1.3, 1.5 and 1.6 and Appendix B by the end of
the Option Period, the issue or issues in dispute shall be
settled in London by an arbitrator. The arbitrator shall be a
barrister specializing in intellectual property law, who has
no prior association with either party, or who is otherwise
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<PAGE> 7
acceptable to both parties. He shall be nominated for the
purpose by the then Chairman of the General Council of the
Bar. The license granted to LeukoSite in clause 3.5.1, and the
obligation accepted by the University in clause 3.5.2, will
both be extended until the arbitration is concluded and the
license over the Notified Discovery completed.
3.6 If LeukoSite (UK) serves a counter-notice on the University
under clause 3.3, or if by the end of the Option Period
LeukoSite has given no notice to the University of a wish to
exercise the right granted in clause 3.4:
3.6.1 LeukoSite shall at the University's election either -
3.6.1.1 return all materials and documentation for
the Notified Discovery to the University; or
3.6.1.2 destroy all materials and documentation,
in which event LeukoSite shall provide the
University with written certification of
such destruction, signed by authorized
representatives of both LeukoSite (US) and
LeukoSite (UK);
3.6.2 the University shall be free to license the Notified
Discovery to third parties; provided that if the
University purposes to grant such a license to a
third party, the University shall notify LeukoSite;
and LeukoSite shall have the right within the period
of thirty (30) days after such notification to obtain
a license on the terms offered to the third party.
4 LIMITATION OF LIABILITY
4.1 The University makes no representation or warranty that advice
or information given by any of its employees, students, agents
or appointees who work in the TAC, or the content or use of
any materials, works or information provided in connection
with the Research, will not constitute or result in
infringement of third-party rights.
4.2 The University accepts no responsibility for any use which may
be made of the results of the Research, nor for any
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<PAGE> 8
reliance which may be placed on such results, nor for advice
or information given in connection with them.
4.3 Without prejudice to any right which the other parties may
have to claim against the University, each of the other
parties to this Agreement undertakes to make no claim against
any employee, student, agent or appointee of the University,
being a claim which seeks to enforce against any of them any
liability whatsoever in connection with this Agreement or its
subject-matter.
4.4 The liability of any party for any breach of this Agreement,
or arising in any other way out of the subject-matter of this
Agreement, will not extend to any incidental or consequential
damages or losses including (without limitation) loss of
profits.
4.5 The maximum liability of the University to each of the other
parties under or otherwise in connection with this Agreement
or its subject-matter shall not exceed a sum equal to the
aggregate of all moneys received by the University from both
LeukoSite and the MRC under clause 2, together with interest
on the balance of such moneys from time to time outstanding,
accruing from day to day at the Lloyds Bank PLC Base Rate from
time to time in force and compounded annually as at 31
December.
4.5 If any sub-clause of this clause 4 is held to be invalid or
unenforceable under any applicable statute or rule of law then
it shall be deemed to be emitted, and if as a result any party
becomes liable for loss or damage which would otherwise have
been excluded then such liability shall be subject to the
remaining sub-clauses of this clause 4.
5 DURATION AND TERMINATION
5.1 The period of this Agreement shall begin on the Effective
Date. Subject to the following sub-clauses of this clause 5,
it shall then continue throughout the Technology Transfer
Period.
5.2 The University may terminate this Agreement by giving not less
than seven (7) days' written notice to all the other parties:
- 7 -
<PAGE> 9
5.2.1 if LeukoSite (US) makes an assignment for the benefit
of its creditors, files a petition for protection
under the US Bankruptcy Code, is adjudicated
insolvent, or applies for a receiver or trustee of
any part of its property;
5.2.2 if any proceeding of a type described in clause 5.2.1
is commenced against LeukoSite (US) and remains
undismissed for a period of thirty (30) days;
5.2.3 if LeukoSite (US) indicates its consent to any
proceeding of a type described in clause 5.2.1;
5.2.4 if LeukoSite (UK) suffers distress or execution, is
the subject of a petition for a bankruptcy order,
goes or is put into liquidation, has a receiver or
administrative receiver appointed over any
substantial part of its business, or seeks any form
of protection against its creditors from any
competent court or tribunal.
Provided that the foregoing shall not be applicable in a case
filed under Chapter 11 of the United States Bankruptcy Code
until the case is converted to a Chapter 7 by a final
non-appealable order.
5.3 If the University has not notified a Mobilization Date to
LeukoSite (UK) under clause 1.3 within the period of ninety
(90) days after the Effective Date, LeukoSite (US) and
LeukoSite (UK) shall each have the night to terminate this
Agreement by giving not less than seven (7) days' written
notice to all the other parties. These rights shall become
exerciseable on and from the end of the ninety-(90)-day
period: they shall cease to be exerciseable if and when a
Mobilization Date is notified by the University to LeukoSite
(UK) under clause 1.3. Furthermore, if either LeukoSite (US)
or LeukoSite (UK) exercises its right under this subclause but
the University notifies a Mobilization Date during the
seven(7)-day period of the notice from LeukoSite (US) or
LeukoSite (UK), the notice from LeukoSite (US) or (as the case
may be) LeukoSite (UK) shall be of no effect.
5.4 By giving ninety (90) days' written notice to all the other
parties of the intention to terminate, the University may
- 8 -
<PAGE> 10
terminate this Agreement for any material breach of this
Agreement by either the MRC or LeukoSite.
5.5 By means of similar notice, the MRC and LeukoSite (US) shall
each have the night to terminate this Agreement for any
material breach by the University.
5.6 Any notice under clauses 5.4 or 5.5 shall include a detailed
statement describing the nature of the breach. If the breach
is capable of being remedied and is remedied within the
ninety-(90)-day notice period, then the termination shall not
take effect. If the breach is of a nature such that it can be
fully remedied but not within the ninety-day notice period,
then termination shall also not be effective if the party
involved begins to remedy the breach within that period, and
then continues diligently to remedy the breach until it is
remedied fully. If the breach is incapable of remedy, then the
termination shall take effect at the end of the ninety day
period in any event.
5.7 The expiration of the Technology Transfer Period, or the
termination of this Agreement under the preceding sub-clauses
of this clause 5, shall mean the termination, with effect from
the expiry date or (as the case may be) the effective date of
termination, of the obligations imposed on the parties under
clauses 2.1 through 2.5 and clause 3 (save only in relation to
Notified Discoveries which have been notified by the
University to LeukoSite (UK) under clause 3.2 before the
expiry date or the effective date of termination). The
remaining clauses shall survive the expiration of the
Technology Transfer Period and the termination of this
Agreement, for whatever reason. The duration of any licenses
granted pursuant to clauses 3.4 and 3.5 shall be determined by
the provisions for duration and termination in each such
license, and shall not be affected by the operation of the
termination clauses in this Agreement.
6 GENERAL
6.1 Clause headings are inserted in this Agreement for convenience
only, and they shall not be taken into account in the
interpretation of this Agreement.
- 9 -
<PAGE> 11
6.2 This Agreement shall not be assignable by any of the parties
without the prior written consent of all the other pates
(which consent shall not be unreasonably withheld or delayed),
except that LeukoSite without the consent of the other parties
may assign this Agreement to a successor in interest or
transferee of all or substantially all of the portion of the
business to which the Agreement relates.
6.3 Without prejudice to the University's other rights and
remedies, if LeukoSite (UK) fails to perform any of its
obligations under this Agreement, or commits any breach of
those obligations, LeukoSite (US) will indemnify the
University against all losses, costs, claims, demands and
liabilities which may be incurred or suffered by the
University as a result of such non-performance or breach,
provided that LeukoSite (US) is promptly notified. LeukoSite
(US) shall then have the right to control the defense,
settlement or compromise of any such claim which is brought by
a third party.
6.4 Subject to HM Treasury rules as they apply to Research
Councils, if another party to this Agreement fails to make any
payment due to the University under this Agreement then,
without prejudice to the University's other rights and
remedies consequent upon breach of this Agreement, the
University may charge interest on the balance outstanding,
accruing from day to day at the rate of two per cent (2%) per
annum above the Lloyds Bank PLC Base Rate from time to time in
force and compounded annually as at 31 December.
6.5 If the performance by any party of any of its obligations
under this Agreement (other than an obligation to make
payment) shall be prevented by circumstances beyond its
reasonable control, then such party shall be excused from
performance of that obligation for the duration of the
relevant event.
6.6 Unless such use is required by law, no party shall use the
name of any other party in any press release or product
advertising, or for any other commercial purpose, without that
other party's prior written consent; provided, however, that:
- 10 -
<PAGE> 12
6.6.1 publication of the sums received in the University's
Annual Report and similar publications shall not be
regarded as a breach of this clause;
6.6.2 the University will not unreasonably withhold consent
to the use of the University's name by LeukoSite in
connection with a financing.
6.7 Until further notice, the following shall be the parties'
representatives for the purpose of receiving invoices,
payments, statements, requests, notices and other documents
under this Agreement:
in the case of invoices, payments and statements
addressed to the University -.
The Administrator
Sir William Dunn School of Pathology,
University of Oxford
South Parks Road
OXFORD CX1 3RE
England;
in the case of requests, notices and other
documents addressed to the University -
The Director of the Research Services Office
University of Oxford
University Offices
Wellington Square
OXFORD OX1 2JD
England;
in the case of invoices, payments and statements
addressed to the MRC -
Helen Gadsden
Finance Division
The Medical Research Council
20 Park Crescent
LONDON W1N 4AL
England;
- 11 -
<PAGE> 13
in the case of requests, notices and other
documents addressed to the MRC -
The Head of the Technology Transfer Group
The Medical Research Council
20 Park Crescent
LONDON WIN 4AL
England;
in the case of LeukoSite (US) -
The President
LeukoSite, Inc.
800 Huntington Avenue
BOSTON Massachusetts MA 02115 USA;
in the case of LeukoSite (UK) -
The Managing Director
LeukoSite Limited
c/o Mark Andrew esq.
Messrs Bingham, Dana & Gould
39 Victoria Street
LONDON SCE1H OEE England.
6.3 Nothing in this Agreement shall create, imply or evidence any
partnership or joint venture between the parties or the
relationship between any of them of principal and agent.
6.9 This Agreement and its two (2) Schedules (which are
incorporated into and made a part of this Agreement)
constitute the entire agreement between the parties for the
TAC. Any variation of this Agreement shall be in writing and
signed by authorized representatives of all parties.
6.10 This Agreement shall be governed by English Law.
6.11 If any one or more clauses or sub-clauses of this Agreement
would result in this Agreement being prohibited pursuant to
Article 85(l) of the Treaty of Rome, then it or they shall be
deemed to be omitted. The parties shall uphold the remainder
of this Agreement, and shall negotiate an amendment which, as
far as legally feasible, maintains the economic balance
between the parties.
- 12 -
<PAGE> 14
6.12 In entering into this Agreement the parties recognize that it
is impracticable to make provision for every contingency that
may arise in the course of performance. Accordingly, the
parties declare it to be their intention that this Agreement
shall operate between them with fairness and without detriment
to the interests of any of them; and if in the course of the
performance of this Agreement unfairness to any party is
disclosed or anticipated, then all parties shall use their
best endeavors to agree upon such action as may be necessary
and equitable to remove the cause or causes of that
unfairness.
AS WITNESS the hands of authorized signatories for the parties on the date first
mentioned above
THE SCHEDULES
1. Illustrative Site Location Plan and Layouts for the TAC
2. The Pro Forma License
- 13 -
<PAGE> 15
THE FIRST SCHEDULE
*********************************************************************
***************************
***************************
- 14 -
<PAGE> 16
THE SECOND SCHEDULE
THE PRO FORMA LICENSE
****************************************************
************************************
**********************
***********
**
********************************************************
- 15 -
<PAGE> 17
********************************************************************************
********************************************************************************
********************************************************************************
- 16 -
<PAGE> 18
SIGNED for and on behalf of SIGNED for and on behalf of
THE CHANCELLOR MASTERS THE MEDICAL RESEARCH COUNCIL
AND SCHOLARS OF THE
UNIVERSITY OF OXFORD
Name:/s/ J. Clark Name:/s/ Martin R. Wood Ph.D.
Head of Technology Transfer Group
Position: Position:
Signature:/s/ J. Clark Signature:/s/ Martin R. Wood
SIGNED for and on behalf of SIGNED for and on behalf of
LEUKOSITE, INC. LEUKOSITE, INC.
Name:/s/ Christopher K. Mirabelli Name:/s/ Christopher K. Mirabelli
Position: Position:
Signature:/s/ C.K. Mirabelli Signature:/s/ C.K. Mirabelli
- 17 -
<PAGE> 1
Exhibit 10.11
DATED 1997
BRITISH TECHNOLOGY GROUP LIMITED
- and -
LEUKOSITE INC.
L I C E N C E A G R E E M E N T
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
Clause Heading Page
- ------ ------- ----
<S> <C> <C>
1 Definitions
2 Payments
3 Commencement and Duration
4 Licenses and Option Rights
5 Know-How
6 Royalties
7 Downpayments from Third Parties
8 Accounting for Royalties
9 Currency and Taxes
10 Verification
11 Suspension of Royalties
12 Undertakings by the Licensee
13 Marking
14 Supplementary Protection Certificate
15 Exclusion of Liability: Indemnity
16 Termination
17 Rights on Termination
18 Indexation
19 Legal Proceedings
20 Miscellaneous
21 Notices
22 Law and Jurisdiction
Schedule 1 The Development Plan
Schedule 2 The Know-How
Schedule 3 The Patents
Schedule 4 The Sub-License Terms
Schedule 5 The Trade Marks
</TABLE>
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
2
<PAGE> 3
THIS DEED is made the ______ day of ________________________, 1997
BETWEEN
(1) BRITISH TECHNOLOGY GROUP LIMITED whose company registration number in
England is 2664412 and whose registered office is at 101 Newington Causeway
London SE1 6BU ("BTG"), and
(2) LEUKOSITE, INC of 215 First Street, Cambridge, MA 02142, USA ("the
Licensee").
IT IS AGREED THAT:
1. Definitions
1.1. In this Agreement the following terms shall have the following
meanings (subject to subsequent amendment pursuant to this
Agreement):-
1.1.1 "Campath 1H" ********************************
**************************************
**************************************
**************************************
**************************************
**************************************
1.1.2 "Cell Culture Medium: ********************************
**************************************
**************************************
**************************************
**************************************
*****
1.1.3 "Cell Line" ********************************
**************************************
**************************************
**************************************
**************************************
**************************************
**************************
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
3
<PAGE> 4
1.1.4 "Chargeable Transaction" the use sale or other disposal of a
Product by or on behalf of the
Licensee or sub-licensee, provided
that where such sale or other
disposal is made by or on behalf of
the Licensee or sub-licensee to
another company within its Group
for further sale or disposal then
the Chargeable Transaction shall be
the first sale or other disposal
outside that Group provided further
that neither use of Product in
clinical trials nor distribution of
Samples as part of the Product
promotion shall be deemed
Chargeable Transactions as long as
no consideration is received by the
Licensee, sub-licensee or any Group
Company in relation thereto, and
provided always that if on the sale
or disposal of Product by or on
behalf of the Licensee,
sub-licensee or relevant Group
Company (as the case may be) the
Product is not in Final Form then
the Chargeable Transaction shall be
the first sale of Product which is
in Final Form;
1.1.5 "the Confidentiality
Undertaking" the written undertaking given by
the Licensee to BTG on 13th
December 1994;
1.1.6 "Connected Persons" the meaning ascribed by Section 839
of the Income and Corporation Taxes
Act 1988;
1.1.7 "Deductions" quantity discounts and bona fide
rebates as part of a
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
4
<PAGE> 5
managed care programme relating (in
both cases) specifically and solely to
Product trade discounts and (where
such items are specifically shown in
the invoice) purchase, sales, import
or Value Added taxes and the costs and
delivery and insurance, but not
commission or cash discounts;
1.1.8 "the Development Plan" the document set out in Schedule 1
below together each development plan
delivered to BTG pursuant to 4.2.2
below;
1.1.9 "Dollars" U.S. dollars;
1.1.10 "the Effective Date" the date on which this Agreement is
made;
1.1.11 "the Exercise Fee" **********************************
**************************************
**************************************
**************************************
**************************************
1.1.12 "Final Form" fully formulated, in final form
packaged for ultimate consumer use
and suitable for purchase by a
purchaser or distributor who is not
undertaking substantial product
support or marketing, (eg a drug
wholesaler, a pharmacist or a group
of pharmacists, a chain of drug
retailers or a hospital or central
purchasing department for a group
of hospitals);
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
5
<PAGE> 6
1.1.13 "Force Majeure"
1.1.13.1 civil commotion, riot,
invasion, war threat or
preparation for war;
1.1.13.2 fire, explosion, storm,
flood, earthquake,
subsidence, epidemic or
other natural physical
disaster;
1.1.13.3 impossibility of the use
of railways, shipping,
aircraft, motor transport
or other means of public
or private transport;
1.1.13.4 political interference
with the normal operations
of the Licensee.
1.1.14 "the Glaxo Group" Glaxo Wellcome plc (Co. no. in
England 1047315) and, as from time
to time, any Holding Company and
any Subsidiary of Glaxo Wellcome
plc and any other Subsidiary of
Glaxo Wellcome plc's Holding
Company and affiliates;
1.1.15 "Group" the Licensee or sub-licensee (as
appropriate in the context) and, as
from time to time, any Holding
Company and Subsidiary of the
Licensee/sub-licensee and any other
Subsidiary of the
Licensee's/Sub-licensee's Holding
Company and in the case of the
Licensee any
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
6
<PAGE> 7
company fifty percent owned by the
Licensee;
1.1.16 "Holding Company" and
"Subsidiary" the meanings ascribed to them by
Section 736 of the Companies Act
1985;
1.1.17 "The Index" the US All Urban Consumer
Price Index or if that Index shall
cease to be published the nearest
index having like effect;
1.1.18 "Inventors" Professor Herman Waldmann, Dr.
Michael Ronald Clark, Dr. Lutz
Riechmann and Dr. Gregory Paul
Winter;
1.1.19 "the Know-How" the technical information and data
and biological materials specified
in Schedule 2 and any other
information disclosed to the
Licensee by BTG pursuant to the
Confidentiality Undertaking;
1.1.20 "Launch Date" the first arm's length sale of Product
by the Licensee or any sub-licensee in
a Major Territory following grant of
Regulatory Approval in such Major
Territory;
1.1.21 "the Licences" the Licences granted or to be
granted under this Agreement;
1.1.22 "Licensee Inventions" inventions arising from the Licensee's
development of the inventions which
are the subject matter of the Patents
and inventions arising from any such
development carried out for or with
the Licensee;
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
7
<PAGE> 8
1.1.23 "Major Territory" UK, France, Germany, Italy, USA and
Japan;
1.1.24 "Net Sales" the aggregate Net Selling Prices of
Chargeable Transaction for a
calendar year;
1.1.25 "Net Selling Price" the price of Products the subject
of a Chargeable Transaction
calculated as follows: -
1.1.25.1 in the case of an arm's
length sale gross price as
charged or invoiced, less
any Deductions;
1.1.25.2 in the case of a sale which
is not at arm's length or any
disposal other than by sale
the open market price in the
country where the transaction
was effected or the use
occurred, less any
Deductions;
1.1.26 "the Options" Option 1, Option 2, Option 3 and
Option 4.
1.1.27 "Option 1" the right to insert 'or for ex-Vivo
bone marrow purging in humans' before
'which is made or sold' in the
definition of "the Product" (as varied
from time to time);
1.1.28 "Option 2" the right to replace
'propymphocytic leukaemia or
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
8
<PAGE> 9
chronic lymphocytic leukaemia' with
'cancer' in the definition of
"Product" (as varied from time to
time);
1.1.29 "Option 3" the right to insert 'or multiple
sclerosis in humans' before 'which is
made or sold' in the definition of
"Product" (as varied from time to
time);
1.1.30 "Option 4" the right to insert 'or rheumatoid
arthritis in humans' before 'which is
made or sold' in the definition of
"Product" (as varied from time to
time);
1.1.31 "the Option Period" the period of ************
commencing on the Effective Date;
1.1.32 "the Patents"
1.1.32.1 the patents and
applications for patents
specified in Schedule 3;
and
1.1.32.2 any patent which may be
granted pursuant to any of
the above applications; and
1.1.32.3 any patents and
applications corresponding
to such patents and
applications which may be
granted to or made by BTG
in other countries; and
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
9
<PAGE> 10
1.1.32.4 any re-issues or extensions
of such patents and any
Supplementary Protection
Certificates in respect of
such patents and any
divisions and continuations
of such applications.
1.1.33 "Product" any product containing Campath 1H
antibody for the treatment of
propymphocytic leukaemia or chronic
lymphocytic leukaemia in humans or
for such other therapy for which
Licensee has exercised its option
under Clause 4.2.1 which is made or
sold or otherwise disposed of, in
any country by, or on behalf of,
the Licensee or a sub-licensee, and
which
1.1.33.1 falls within the scope of, or
utilities any method or
process which falls within
the scope of, any of the
Patents or which
incorporates, or is itself,
the invention the subject of
any of he Patents of that
country, or
1.1.33.2 embodies or utilizes any
of the Know-How, or
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
10
<PAGE> 11
1.1.33.3 infringes any copyright in
the Know-how.
1.1.34 "Regulatory Approval" full regulatory approval (ie
marketing authorization) for sale
of Product;
1.1.35 "the Results" all technical data, Know-how,
computer software, notes, chemical
compounds, biological material,
models, prototypes, specimens,
drawings, reports and information
arising from the Licensees
development of the inventions which
are the subject of the Patents (and
from others' development where the
same is carried out for or with the
Licensee) including in particular
data relevant to applications for
Regulatory Approvals, and including
the copyright, design rights and
other intellectual property rights
arising therein;
1.1.36 "Sub-license" a sub-license or any agreement or
commitment for the grant of a
sub-license;
1.1.37 "the Sub-License Terms" those terms set out in Schedule 4;
1.1.38 "Supplementary Protection"
Certificates" supplementary protection
certificates granted pursuant to
Council regulation (EEC) No.
1768/92 ("the SPC Regulation") and
any like certificates granted by
any
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
11
<PAGE> 12
government, authority or agency;
1.1.39 "the Territory" the countries of the European
Union, USA, Canada and Japan;
1.1.40 "the Trade Marks" the trade marks specified in
Schedule 5;
1.1.41 "WF" The Wellcome Foundation Limited
(Co. no. in England is 194814,
registered office at Glaxo Wellcome
House, Berkeley Avenue, Greenford,
Middlesex UB6 ONN);
1.1.42 "the WF Patents" Those of the Patents which have been
licensed (as opposed to assigned) to
BTG by WF, details of which have been
made available to the Licensee;
1.1.43 "Year 1" the calendar year in which Product is
first launched by the Licensee or any
sub-licensee, with Year 2 being the
next calendar year (and so on).
1.2 Some of the licenses granted by the BTG hereunder are in fact
sub-Licences (with WF owning the relevant patent applications and
patents).
2. Payments
2.1. The Licensee shall pay to BTG: -
2.1.1 immediately upon the signing of this Agreement the sum of
***********************; and
2.1.2 ****************************** on the first anniversary of
the Effective Date; and
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
12
<PAGE> 13
2.1.3 ***************************** on the second anniversary of
the Effective Date; and
2.1.4 ***************************** on each subsequent
anniversary of the Effective Date which is prior to the
Launch Date; and
2.1.5 ************************************* on the earlier of: -
2.1.5.1 the date falling four years and six months after
the Effective Date, and
2.1.5.2 the date on which the Licensee or any sub-licensee
(or any third party on behalf of the Licensee or any
sub-licensee) files its first application for
Regulatory Approval in a Major Territory; and
2.1.6 the royalties specified in Clause 6;
2.1.7 the share of downpayments specified in Clause 7.
2.2. ********************************************************************
********.
2.3 WHEN making any payment under this Agreement the Licensee shall also
pay any Value Added Tax payable. Where the Licensee has to pay Value
Added Tax BTG shall provide the Licensee with a Value Added Tax
invoice in respect of the relevant payment.
3. Commencement and Duration
3.1 THIS agreement shall come into force on the Effective Date.
3.2 SUBJECT to Clauses 16 and 17: -
3.2.1 the Licenses under the Patents shall continue in force in each
country until all of the Patents of that country have expired;
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
13
<PAGE> 14
3.2.2 the Agreement shall continue in force until all of the royalty
obligations have expired after which Licensee shall have a
fully paid up, non-cancellable license which is equivalent in
scope to that held by the Licensee immediately before the
expiry of the said royalty obligations.
3.3 THE Licensee shall be responsible for obtaining any requisite
registration or governmental approval of this Agreement and of acts
to be carried out pursuant to or in connection with this Agreement
(including in particular that of transferring the Know-how (or part
thereof) from the UK to the USA) and the Licensee shall
expeditiously take all necessary steps to obtain the same.
4. Licenses and Option Rights
4.1 BTG grants to the Licensee on and from the Effective Date: -
4.1.1 licenses under the Patents to make, have made, use, sell
and otherwise dispose of Products;
4.1.2 Licenses for the purposes set out in 4.1.1 above to use: -
4.1.1.2 the Know-how,
4.1.2.2 the copyright in the Know-how,
SUCH licenses are without geographical restriction and, subject to the
fact that the Patents only relate to some countries, are worldwide.
FOR the avoidance of doubt it is declared that the Licensee shall not use,
nor allow others to use the biological materials forming part of Schedule 2 for
human use but substances derived from the Cell Lines may be used in humans and
Cell Culture Medium may be used in connection with the preparation of substances
for human use.
4.2.1 BTG grants the Licensee the Options.
4.2.2 Subject to the following provisions of this Agreement the
Licensee may exercise each of the Options at any time
during the Option Period except when it is in breach of its
obligations under this Agreement by simultaneously: -
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
14
<PAGE> 15
4.2.2.1 giving notice to exercise to BTG; and
4.2.2.2 making payment of the Exercise Fee to BTG; and
4.2.2.3 delivering a development plan to BTG, with such
development plan to be for the relevant indication,
to be similar in form and detail to the document set
out in Schedule 1 and to contain development
timescales consistent with those set out in the said
document; and
4.2.2.4 making payment of all outstanding sums (if any) due
to BTG under this Agreement.
4.2.3 In the exercise of each of the Options time shall be of the
essence.
4.3 THE licenses under the Patents of Schedule 3 Part A (and under the
related applications and patents falling within 1.1.32.2, 1.1.32.3
and 1.1.32.4 of the definition "the Patents") shall be exclusive.
The rest of the License shall be non-exclusive. The exclusivity
referred to above shall be qualified by (and subject to): -
4.3.1 the right of each member of the Glaxo Group to use any stocks
of Campath 1H remaining after the transfer of the Know-how to
the Licensee for general research and development purposes
which shall exclude clinical development and subsequent
commercialization; and
4.3.2 the right of each member of the Glaxo Group to retain stocks
of Campath lH for supply of Campath 1H to those patients to
whom any member of the Glaxo Group has obligations to under
existing clinical protocols; and
4.3.3 the right of the Inventors to carry out non-commercial
work in relation to that Campath 1H which is produced
by the cell line which they originated ***************
***************** in the event such research produces a cell
line which produces a humanized antibody with the same
specificity as Campath 1H, and such cell line and the
intellectual property rights related thereto are
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
15
<PAGE> 16
assigned to BTG then BTG shall notify the Licensee of such
assignment and (on request by the Licensee) such cell line and
intellectual property rights shall be licensed to the Licensee
hereunder, (and form part of the Patents or the Know-how as
appropriate).
4.4 WITHOUT prejudice to Clause 3.2 the Licences are granted for the
purpose only of making, having made, using, selling and otherwise
disposing of Products during the life of this Agreement. These
rights shall not be used thereafter or otherwise unless and until
the Know-how has come into the public domain otherwise than through
breach or default of the Licensee or the Copyright has expired.
4.5 BTG shall, at the request and expense of the Licensee, execute any
further formal document which may be necessary to give effect to
this Agreement in any country. Until such licence shall be granted
formally, this Agreement shall take effect as a licence.
4.6 THE Licensee acknowledges that BTG and WF have the right to review
and discontinue those of the Patents which they respectively own or
beneficially own provided that as regards those of the Patents
owned/beneficially owned by BTG for countries in the Territory BTG
shall notify the Licensee prior to discontinuance/abandonment. After
any such notification, and subject to the existing rights of the
Inventors and other prior owners of such of the Patents, BTG shall
allow the Licensee to continue the Patents the subject of the
discontinuance/notification notice, with such continuance to leave
BTG as owner, and to be at the Licensee's cost.
5. Know-how
5.1 TO the extent to which it has not already done so, the Licensee
shall arrange, and pay the cost of and be responsible for, copying,
shipment to the Licensee and storage of the Know-how and such
shipment shall be at the Licensee's risk.
5.2 THE Licensee may, in appropriate circumstances, but in its sole
discretion, consult the Inventors regarding the design, conduct and
results of clinical trials and give due weight to their views.
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
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5.3 THE Licensee shall keep the Know-how confidential to the Licensee,
and to such of its officers and employees as are bound by
obligations of confidence and need to be informed, and shall ensure
that the Know-how is not disclosed to others orally or in writing,
save to the extent that the Know-how: -
5.3.1 as evidenced by the Licensee's written records, was lawfully
known to the Licensee prior to its communication by or though
BTG or WF and was not communicated to the Licensee subject to
any restrictions on disclosure or use; or
5.3.2 is necessarily disclosed by the sale of Products embodying
any of the Know-how; or
5.3.3 is or becomes in the public domain, otherwise than by any
default of the Licensee, or persons acquiring the same from
the Licensee; or
5.3.4 becomes known to the Licensee by the action of a third party
not in breach of any obligation of confidence.
5.4 ON a date to be agreed between BTG and WF, and which shall be no
later than three months after the Effective Date, BTG shall procure
that WF makes available, at WF's site in Beckenham, appropriate
scientific staff for a one day question and answer session with BTG
and the Licensee on the subject matter of this Agreement. The
Licensee shall give all reasonable assistance to BTG in preparation
of an agenda for such session and the Licensee accepts that WF
reserves the right to refuse to answer any questions at such session
which it either does not wish to answer or is unable to answer.
5.5 BTG shall also procure that WF will provide the Licensee with a
telephone contract for the six month period commencing on the
Effective Date. Such telephone contact shall be available for
reasonable enquiries on specific technical matters relating to the
subject matter of this Agreement.
5.6 As the technical information disclosed pursuant to the
Confidentiality Undertaking is now subject to the obligations in
Clause 5.3 above the Confidentiality Undertaking is superseded and
is hereby terminated.
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
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6. Royalties
6.1 SUBJECT to clauses 6.2 and 6.3 below the Licensee shall pay to BTG
in respect of Products the subject of Chargeable Transactions and as
provided in Clause 17.2 on Products held on termination, a royalty
at the rate of *************************************************
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6.2 IF, in transactions where the Licensee itself is making the
Chargeable Transaction, the following apply:
6.2.1 the Licensee is paying patent royalties to a third
party/third parties; and
6.2.2 that third party or those third parties (as the case may be)
is not/are not member(s) of the Licensee's Group, or a
Connected Person(s) of the Licensee; and
6.2.3 such patent royalties are paid under an arm's length bona
fide licence; and
6.2.4 those patent royalties are for rights which are essential
for the exploitation of Product; and
6.2.5 the sum of such patent royalties with characteristics 6.2.1 to
6.2.4 above, ("Other Royalties") and the royalties payable to
BTG under clause 6.1 above would in total amount to more than
************************
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then the royalty to be paid to BTG on that Chargeable Transaction shall be
reduced by *********************************************************************
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6.3 IF, in transactions where a non-Group sub-licensee is making the
Chargeable Transaction and that sub-licensee is (in addition to the
sub-licence) licensed by the Licensee under intellectual property
rights and Know-how relating to Product
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
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which are owned by the Licensee and are of a non-trivial nature then
instead of the royalty under 10.1 above the Licensee shall pay BTG
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6.4 ROYALTY shall be payable in each country for a period of
************* from the Effective Date. Thereafter royalty shall only
be payable in respect of Products (the subject of Chargeable
Transactions) which are such by reference to 1.1.33.1 of the
definition "Product" but not 1.1.33.2 or 1.1.33.3.
6.5 ROYALTY shall only be payable once in respect of the same Product.
6.6 THE License shall at the request of BTG provide half-yearly
forecasts of the amount of royalties likely to be payable under this
Agreement but whilst such forecasts (or the like) may be adopted and
utilized by BTG for the purposes of Clause 16.5 the Licensee shall
not be liable in damages to BTG for any inaccuracies in such
forecasts.
6.7. THE Licensee shall be entitled to credit against royalties the
amount of the royalty paid on any Products the subject of Chargeable
Transactions which are:
6.7.1 subsequently returned to the Licensee, sub-licensee or Group
Company (as the case may be) in exchange for a refund or
credit and not then re-sold or disposed of again (other than
by destruction); or
6.7.2 destroyed after a refund or credit has been given.
6.8 IF in relation to any accounting period and in any country in which
there is o extant patent forming part of the Patents Licensee
demonstrates to BTG's reasonable satisfaction that a competitor or
competitors (i.e., a company which is not part of Licensee's Group
or any sub-licensee's Group) is/are selling Campath 1H products
(which would fall within the definition PRODUCT but for being sold
by the competitor or
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
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competitors), then the appropriate royalty rate on sales in the
country in question shall be reduced for that accounting period if
the market share of the competitor(s) amounts to more than
*************** of the total market for PRODUCTS (and exact
equivalents) in that country. The reduced royalty shall be the
appropriate fraction shown in the second column below of the royalty
rate normally payable (but for the application of this clause 6.8)
<TABLE>
<CAPTION>
Market share of Competitor(s)
(based upon sales value in the
relevant accounting period) Fraction
<S> <C>
********* ********
********* ********
********* ********
********* ********
</TABLE>
Notwithstanding the above, in no case shall the royalty rate be less than
5%.
7. Downpayments from Third Parties
7.1 THE Licensee shall pay TBG ******************************
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Provided that the foregoing shall not apply to bona fide payments to the
Licensee which are solely for services produced by the Licensee or which are
solely for equity in the Licensee.
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
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<PAGE> 21
7.2 THE Licensee shall, within thirty (30) days of receipt by the
Licensee (or by the Connected Person or Group member) of each such
lump sum payment (7.1.1) and non-cash benefit (7.1.2)). At the same
time as the Licensee gives BTG such notification the Licensee shall
pay BTG the sum or sums due.
7.3 WITH regard to non-cash benefits, the License shall make its own
valuation but BTG may challenge such valuation in writing.
Similarly, where a payment is received by the Licensee (or by any
Connected Person of the Licensee or member of the Licensee's Group)
from a third party, and such payment relates to equity in the
Licensee as well as rights under or in respect of Products, then the
Licensee shall apportion the payment between the two elements but
BTG may challenge the apportionment if it feels that the figure
allocated to the equity does not reflect the true open market value
of the equity and includes a premium above that ("Premium"). On
receipt of either type of challenge the Licensee shall promptly
obtain an independent auditor's certificate specifying the valuation
made the by auditor. Both parties shall abide by the auditor's
certificate and shall rectify any overpayment or underpayment (as
the case may be). Where the auditor finds that there is a Premium
the Premium (but not the non-Premium payment for the equity) shall
be subject to the above revenue sharing arrangements.
8. Accounting for Royalties
8.1 THE Licensee shall: -
8.1.1 keep true and detailed accounts and records of all
royalties and other sums due under this Agreement;
8.1.2 within sixty days after the last day of March, June,
September, and December in each year deliver to BTG a
statement of all royalties and other sums due for the three
month period ending on such date showing separately the
chargeable Transactions in each country, credits under Clause
6.7 and (where relevant), the rate of exchange used or, if it
be the case, a statement that no royalties are due;
8.1.3 send with the above statement the amount shown to be due;
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
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<PAGE> 22
8.1.4 immediately and without demand send to BTG the difference
between the amount already paid and the correct amount shown
to be due and payable as a result of verification under Clause
10.
8.2 ON termination or expiry, the final statement shall be delivered
within thirty days of termination or expiry and shall include
details of royalties on all Products being manufactured and all
Products manufactured but not yet disposed of.
8.3. IF the Licensee defaults in payment of the royalties and other
sums due within the period stated above, the amount due shall
bear interest, accruing from day to day, at the rate per annum of
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9. Currency and Taxes
9.1 ALL payments shall be made in Dollars in London, England. Any
necessary currency conversion shall be at the rate at which English
bank transfers are made on the last business day of the period to
which the relevant sales and royalty statement relates.
9.2 PAYMENTS shall be made without deduction, other than such amount as
the Licensee is required to deduct or withhold by law. In regard to
any such deduction, the Licensee shall use all reasonable endeavours
to assist BTG to claim recovery or exemption under any double
taxation or similar agreement. Evidence as to the payment of such
tax or sum withheld shall, on request, be given by the Licensee to
BTG.
10. Verification
10.1 THE Licensee shall permit any authorized representative appointed by
BTG, upon reasonable notice, access to the premises of the Licensee
and access to the accounts, records and relevant documentation of
the Licensee and shall provide such information and explanations as
the representative shall require to verify the statements and to
satisfy BTG that the financial and accounting provisions of this
Agreement are
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
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<PAGE> 23
being complied with. The representative shall also be permitted to
take copies of extracts pertinent to the verification. If the
verification discloses an underpayment to BTG of more than 10% of
the amount due the Licensee shall promptly on demand reimburse BTG
the fees and costs of the representative, and the reasonable costs
incurred by BTG in respect of the verification.
10.2 BTG shall keep confidential any information which it may acquire in
the exercise of its rights under this Clause 10 with the exception
of information which was already lawfully known to it, or to which
BTG is required to disclose by law, or which is or becomes in the
public domain otherwise than by any default of BTG.
11. Suspension of royalties
IF any of the following events shall occur in respect of the Patents:-
11.1 any patent application is finally refused so that the grant of a
patent thereon is unobtainable; or
11.2 any patent application is abandoned or withdrawn; or
11.3 any patent lapses; or
11.4 any patent is declared invalid or unenforceable by a court or
tribunal of competent jurisdiction;
then the royalties payable solely in respect of such patent application or
patent shall cease after the date of the relevant event, but BTG shall be
entitled to all sum which shall have then already fallen due, and whether
paid or unpaid at such. If such patent application is reinstated or such
patent is restored or is subsequently established as being valid and
enforceable, royalties shall again become payable, together with all
royalties which would have been payable if the relevant event had not
occurred.
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
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12. Undertakings by the Licensee
THE Licensee:-
12.1 shall not use the Campath 1H transferred pursuant to this
Agreement for human therapeutic administration;
12.2 shall not at any time make any use of the Know-how other than for
the purposes of the Licenses;
12.3 shall have full control, authority and responsibility for
development, registration and commercialization of Products and
shall use all reasonable efforts and diligence in development
registration and commercialization of Products (and the efforts of
sub-licensees, members of the Licensee's Group and collaborators
shall be considered as efforts of the Licensee in this regard);
12.4 shall deliver to BTG at intervals of six months short summary
written reports on the development and regulatory work carried out
by and for the License in relation to Products during the preceding
six months, and the Licensee shall arrange for its staff to answer
any reasonable questions BTG may raise on such reports with such
question and answer sessions to be either on the telephone or at a
meeting (as reasonable requested by BTG);
12.5 shall use all reasonable endeavours to promote the distribution and
sale of Products and will use all reasonable endeavours to procure
or make available necessary selling and manufacturing facilities to
meet demands for Products;
12.6 shall use all reasonable endeavours to maximize the demand for
Products;
12.7 undertakes to BTG that when selling Product as part of a package
with other products the Licensee shall ensure that it does not
favour the other products, or discriminate against Product, in terms
of pricing, discounts, or in any other way which would adversely
affect the royalties due to BTG under this Agreement.
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
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<PAGE> 25
13. Marking
THE Licensee shall legibly mark the Products or, if not practicable, then
any associated packaging or literature, with the relevant patent or application
number.
14. Supplementary Protection Certificates
14.1 THE Licensee shall use its reasonable endeavors to promptly take all
necessary steps to facilitate BTG's application for a Supplementary
Protection Certificate or Certificates and patent
extensions in respect of Products.
14.2 IN particular, but without limitation, the Licensee shall: -
14.2.1 promptly notify BTG of the number and date of the
first and any subsequent authorization to place Products on
the market;
14.2.2.1 a copy of every authorization fulfilling the
requirements of Article 8.1(b) of the SPC
Regulation (and of any additional applicable
requirements imposed by relevant national law) in
respect of all Products;
14.2.2.2 additional information fulfilling the requirements
of Article 8.1(c) of the SPC Regulation and a copy
of the notice publishing the authorization in the
appropriate official publication (and information
and documents fulfilling any additional
requirements imposed by relevant national law)
14.2.3 permit use of documents and information provided
pursuant to this clause for the purpose of such
application for a Supplementary Protection Certificate
or Certificates.
14.3 BTG shall notify the Licensee of the application for and grant of
every Supplementary Protection Certificate in respect of Products.
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
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<PAGE> 26
14.4 BTG shall not be obliged to apply for grant of any Supplementary
Protection Certificates.
14.5 FOR the avoidance of doubt the Licensee shall not be entitled to
make an application for or participate in negotiations for grant of
any Supplementary Protection Certificate.
15. Exclusion of liability; Indemnity
15.1 BTG warrants and represents that it has the full right and authority
to enter into this Agreement and is not aware of any impediment
which would inhibit its ability to perform the terms and conditions
imposed on it by this Agreement.
15.2 SAVE as expressly stated herein, no representation condition or
warranty whatsoever is made or given by or on behalf of BTG. All
conditions and warranties, arising by operation of law or
otherwise: -
15.2.1 to the effect that any of the Patents or copyright in
the Know-how, are valid or enforceable, or
15.2.2 to the effect that any of the acts hereby licensed or
agreed to be licensed by BTG will not infringe the
rights of third parties; or
15.2.3 in relation to the provision or use of the Know-how
or its fitness for purpose, accuracy or completeness;
are hereby expressly excluded.
15.3 BTG shall be under no liability whatsoever to the Licensee (whether
in negligence or otherwise, in contract or in tort) for any expense,
loss, death, damage or injury of any kind (including any loss of
profit or consequential damage) sustained by the Licensee or any
third party which arises directly or indirectly from any cause or
circumstance referred to in Clause 15.4 below.
15.4 THE Licensee shall indemnify BTG against all claims and actions by
and all damages awarded to any third person against BTG (and any
related costs and expenses) which arises directly or indirectly
form:-
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
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15.4.1 the development, manufacture, use, storage, sale or
disposal of Products; or
15.4.2 the use of the Patents or the said Copyright; or
15.4.3 the provision, evaluation or use of the Know-how; or
15.4.4 any technical or other advice given by BTG or any of its
officers, employees or agents to the Licensee or from
any reliance by the Licensee or any third party thereon.
Licensee's indemnification hereunder shall not apply to any damages that
are directly attributable to the intentional misconduct or negligence of
BTG. Licensee shall have the right to control the defense, settlement or
compromise of any action to which this indemnity applies, but shall not
act in any way which may or does do material adverse damage to BTG's name
or reputation. BTG shall notify Licensee promptly of any claim or
threatened claim and shall cooperate with all reasonable requests of
Licensee with respect thereto.
15.5 UPON the initiation of Clinical trials with Products and for two (2)
years after termination of this Agreement the Licensee shall, at its
own cost affect and maintain in force with reputable insurers,
adequate insurance in respect of the development, storage,
manufacture, use and supply of Products and shall provide evidence
of such insurance to BTG on request. Any consequent policy shall
name BTG as additional insured; waive any right of subrogation of
the insurers against BTG; be primary and without right of
contribution for other insurance which may be available to BTG;
prohibit any alteration adversely affecting BTG's interest in the
insurance (or any alteration inconsistent with the requirements of
Clause 15); prohibit the lapse of or any cancellation or non-renewal
of such insurance, without the prior consent in writing of BTG. In
the event a court determines that the Licensee has failed to meet
its obligation to obtain or maintain adequate insurance, BTG may
terminate this Agreement provided however that this Agreement may
not be terminated on this ground unless the
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
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Licensee has been given at least ninety (90) days to cure such failure and
has failed to do so.
16. Termination
16.1 THE Licensee may, at any time, terminate this Agreement, by giving not
less than ****************************************************************
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16.2 BTG may terminate this Agreement, or any of the Licenses forthwith, by
notice to the Licensee, upon the happening of any of the following
events:-
16.2.1 if any royalties or other sums payable remain unpaid for
thirty days after the due date; or
16.2.2 if the Licensee is in breach of any of the other terms or
obligations of this Agreement, and such breach is not capable of
remedy;
16.2.3 if the Licensee is in breach of any of the terms of
obligations of any of its Agreements with WF;
16.2.4 if in the United Kingdom the Licensee has a Receiver or an
Administrative receiver or Administrator appointed of the whole, or
any part, of its undertaking or assets, or in any other country has
an officer appointed to perform a function analogous to that of a
Receiver, Administrative Receiver or Administrator;
16.2.5if an order is made, or a resolution passed, for winding-up or
administering the Licensee, unless such order or resolution is part
f a scheme of solvent reconstruction of the Licensee.
16.3 IF the Licensee is six months or more behind schedule on any milestone
(for any indication) as per the Development Plan then BTG as its sole and
exclusive remedy for such delay may serve on the Licensee a notice of
termination of this Agreement and that notice shall have automatic effect
six months after the date of service, unless within that period the
Licensee shall have achieved the relevant milestone, provided that BTG
shall not unreasonably refuse a request for the remedy period to be
extended beyond six
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
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months where the delay is due (wholly or partly) to an event of Force
Majeure, or for other reasons beyond the control of the Licensee.
16.4 IF the Licensee is in breach of any of the terms or obligations of this
Agreement, other than the cases referred to in sub-clauses 15.4, 16.2 and
16.3, and such breach is capable of remedy, BTG may serve on the Licensee
a notice of termination of the Agreement and that notice shall have
automatic effect thirty days after the date of service, unless within that
period the Licensee shall have remedied the breach.
16.5.1 LICENSEE shall, **********************************************
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16.5.2 BTG shall ****************************************************
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16.5.3 If BTG believes, in good faith, that any such forecast does
not represent a reasonable assessment of the likely future
sales, the parties shall endeavour to find a mutually
acceptable revision of the forecast. If the parties cannot
determine such mutually acceptable resolution, BTG shall
submit the dispute to a mutually acceptable third party expert
for a final and binding forecast, and the cost of such expert
shall be equally shared by the parties.
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
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17. Rights on termination
17.1 TERMINATION (or expiry) of this Agreement shall be without prejudice
to any rights of either party against the other which may have
accrued up to the date of termination
17.2 On Termination (or expiry) of this Agreement for whatever cause, the
Licensee shall pay to BTG royalty in respect of all Products being
manufactured at the date of termination and all Products
manufactured and not yet sold. The Licensee shall then be free to
sell or dispose of Products on which royalty has been paid.
17.3 TERMINATION (or expiry) of this Agreement for any reason shall
not bring to an end:-
17.3.1 the confidentiality obligation of Clause 5.3 until the
know-how shall have come into the public domain
otherwise than through the breach of default of the
Licensee;
17.3.2 the obligations of the Licensee in respect of the
accounting for, payment of and verification of royalties
and other payments under Clauses 6, 7, 8, 9, 10 and 17.2
until the settlement of all claims of BTG;
17.3.3 the provisions of Clause 15.
17.4 ON early termination the Licensee:-
17.4.1 shall/shall procure transfer to BTG or destruction (at
BGT's option, and in the former case at BTG's expense)
of the Know-how (and all copies and derivatives) in the
possession of the Licensee's Group; and
l7.4.2 shall (at BTG's request) assign the Trade Marks to
BTG; and
17.4.3 except where the termination is for breach by BTG grant
to BTG or where necessary procure that others grant to
BTG irrevocable non-exclusive licenses under:-
17.4.3.1 each of those Licensee Inventions which is an
improvement invention to one or more of the
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
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<PAGE> 31
inventions the subject of the Patents, and all patent
applications and patents relating thereto for which
the licensee has the benefit; and
17.4.3.2 the Results.
The licence in respect of the Results shall permit use of the Results in
applications for regulatory clearance and such licences (generally) shall be to
make, use sell and otherwise dispose of products falling within the scope of the
claims of any of the applications or patents for the Licensee Inventions, or
which utilise the Results, and shall include full sub-licensing rights and shall
continue, in the case of the Licensee Inventions until all of the applications
and patents relating thereto have ceased to subsist, and in the case of the
Results until all the same have fallen into the public domain (other than
through the Licensee's default). The licence in respect of the Results shall
include the physical transfer of the Results (or copies) by the Licensee to BTG,
at BTG's expense.
17.5 IF the Agreement is terminated by the Licensee then, unless the Licensee
can prove to BTG's satisfaction (considered in good faith by BTG) that
termination was on the grounds of efficacy or safety, (and here BTG will
consider the Licensee's results from trials and studies), then the Licensee
shall pay BTG the next two annual payments (under 2.1.2 to 2.1.4) which would
have been payable but for termination (and any such payments already outstanding
on the date of termination shall be disregarded for these purposes).
18. Indexation
The sums referred to in Clause 2.1.2 to 2.1.4 (inclusive) shall be
adjusted to account for increases in the Index which are above seven per cent
(7%) in any calendar year. Each time there is an annual increase above seven per
cent (7%) the sums shall be increased by the percentage increase above seven per
cent (7%) (such increase being in addition to any previous increase hereunder).
19. Legal Proceedings
If the Licensee contemplated legal proceedings against a third party under
one or more of the WF Patents, it shall first give reasonable notice to BTG and
WF. The Licensee shall take reasonable account of any concerns that WF and the
Glaxo Group have where such concerns are notified in writing to the Licensee
(whether directly or through BTG) and
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
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the Licensee shall give reasonable consideration to any alternative strategies
that WF or any member of the Glaxo Group may propose in writing prior to
commencement of the relevant action. WF and the members of the Glaxo Group shall
have the right but not the obligation to join the licensee in any such legal
proceedings.
20. Miscellaneous
20.1 THE Licensee shall not assign, charge or otherwise dispose of any of its
rights or obligations under this Agreement, or any of the Licences except
Licensee may assign, (in whole) subject only to BTG obtaining the consent of WF
(which BTG will seek on request by the Licensee), in the he case of a merger
acquisition of transfer of all or substantially all of Licensee's assets to
which this Agreement relates as long as, at the date of assignment, the
Licensee's rights under this Agreement do not represent all, or substantially
all of the Licensees's assets. For the avoidance of doubt it is declared that on
any such assignment the assignor must transfer all of the Know-how to the
assignee.
20.2 THE Licensee may grant sub-licences but only on the Sub-Licence Terms.
20.3 THE failure by either party to exercise or enforce any rights under this
Agreement shall not bee deemed to be a waiver of any such rights, nor shall any
single or partial exercise of any right, power, or privilege, or further
exercise thereof, operate so as to bar the exercise or enforcement thereof at
any later time.
20.4 THE waiver by either party of any breach of any of the terms of this
Agreement by the other shall not be deemed to be a waiver of any other breach of
the Agreement.
20.5 IF any part or provision of this Agreement is prohibited, or rendered void
or unenforceable, by any legislation, the validity or enforceability of the
Agreement as a whole or of any other part of this Agreement shall not be
affected.
20.6 SUBJECT to Clause 16.3 the rights and remedies provided in this Agreement
are cumulative and not exclusive of any rights or remedies provided by law or in
equity.
20.7 FOR the avoidance of doubt it is declared that it is understood that the
Trade Marks will be assigned to the Licensee by WF and affiliates as of the
Effective Date; it being further understood that it is entirely the
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
32
<PAGE> 33
Licensee's responsibility to obtain the documentation necessary to accomplish
such assignment directly from WF and affiliates.
21. Notices
21.1 ANY notice authorised or required to be given by either party under this
Agreement to the other party, shall be in writing, and shall be deemed to be
duly given if left at, or sent by recorded delivery or registered post addressed
to:-
21.1.1 in the case of the BTG, its registered office, and
21.1.2 the case of the Licensee the address of the Licensee at the head
of this Agreement, unless notice or change has been given to BTG
in writing.
21.2 ANY notice, if sent by post, shall be deemed to have been served at the
expiration of three days after posting.
21.3 THE Licensee has appointed the partners (from time to time) of Bingham,
Dana & Gould LLP, 39 Victoria Street, London, SW1 HOEE, UK as its agents in
England to accept service of legal process on its behalf and shall within
fourteen days of the signing of this Agreement provide to BTG a certified copy
of the document of appointment.
22. Law and Jurisdiction
22.1 This Agreement is to be read and construed in accordance with, and governed
by, English law.
22.2 THE Licensee submits to the jurisdiction of the English Courts and BTG
submits to the jurisdiction of the Commonwealth of Massachusetts, USA.
IN WITNESS whereof this document has been executed as a Deed the day and
year first above written.
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
33
<PAGE> 34
CONFIDENTIAL TREATMENT
********************************************************************************
********************************************************************************
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<PAGE> 1
Exhibit 10.12
CONFIDENTIAL TREATMENT
30th September 1996
Leukosite, Inc.
215 First Street
Cambridge
MA 02142
USA
Ladies and Gentlemen:
PROFORMA UNDERTAKINGS AND WARRANTIES
We refer you to the Material Release Agreement dated 30th September 1996 between
The Wellcome Foundation Limited and Leukosite, Inc., the heads of a sub-licence
agreement between British Technology Group Limited ("BTG") and Leukosite, Inc.
dated 30th September 1996 ("Sub-Licence").
In this letter the following capitalized terms shall have the following meanings
attributed to them: -
"Company" means The Wellcome Foundation Limited its parent company,
subsidiaries and affiliates from time to time.
"Cell Culture Medium" means *******************************************
***********************************************************************
****************************.
"Cell Line" is cell line obtained from ********************************
***********************************************************************
***********************************
"Campath 1H" means ****************************************************
***********************************************************************
***********************************************************************
***************
"Critical Information" means that information and material listed in
the Material Release Agreement of even date hereof between The Wellcome
Foundation Ltd. and Leukosite, Inc.
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 2
-2-
"Drug Substance" means partly purified or purified Campath I H which
originates from the Company.
"Drug Product" means purified Campath IH in vials labelled "not for
human use", which originates from the Company.
"Know How" is as detailed and set forth in the Sublicence Agreement
with BTG.
"Materials" means those materials detailed and set forth in Annex I to
this Letter.
You have agreed in consideration of entering into the Sub-Licence and in
consideration of us entering into the Material Release Agreement to provide our
company with the following undertakings and warranties (which undertakings and
warranties shall be binding from time to time on all your successors and
assigns) and to procure that your subsidiaries, affiliates, sub-contractors,
consultants and agents and duly notified to us (the "Leukosite Group") from time
to time, shall all individually undertake and warrant as follows:
(i) During the term of the Sub-Licence Agreement and the final Sub-Licence
Agreement, not to do any act or thing or through any omission use,
refer to or associate its/themselves with our company name, to bring
our Company name into disrepute or to do anything which would defame
our Company, or its name;
(ii) To immediately notify our Company if either it or they apply for or
have access from time to time through their sub-contractors and agents
to patent rights on any process or formulation invention arising from
its or their use(s) of the Know-How (as defined in the Sub-Licence) and
having application to products other than Campath IH and/or where our
Company may be blocked from using such process or formulation invention
in its development and manufacture of its other products other than
Campath 1H. Our Company shall have the right to take a non-exclusive
licence under such patent rights or analogous intellectual property
rights (exclusive of Campath IH) on reasonable terms to be agreed
including royalty payments *************************
(iii) to indemnify and hold and continue to indemnify and hold harmless our
Company, its Affiliates, directors and employees from time to
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 3
-3-
time against any and all liability whatsoever and wheresoever in
respect of all acts and omissions in respect of the development,
production, use and/or sale of any products by LEUKOSITE or the
LEUKOSITE Group utilizing Campath 1H and/or any of the Know-How and/or
Drug Product and/or Drug Substance and/or Cell Culture Medium. The
indemnified party shall promptly notify the indemnifying party, who
shall have overall control and conduct of the defense, settlement or
compromise of all claims, Provided That the indemnifying party
regularly advises the indemnified party of the progress of such
defense, settlement or compromise and allows the indemnified party to
reasonably comment on such proceedings;
(iv) to obtain and maintain thereafter suitable insurance cover as set forth
in the sublicence agreement with BTG with sound and reputable
independent insurers at commercially reasonable levels of coverage in
relation to the various obligations and activities being undertaken.
You shall ensure that all your sub-contractors and agents from time to
time, likewise have similar suitable insurance covering activities by
them
(v) not to use the Materials, the Know-How, the Cell Line, Cell Culture
Medium, Drug Substance, Drug Product or the Critical Information (all
as defined in the Sub-Licence) for any purpose whatsoever except for
developing, using, making, having made and sell Campath 1H product and
you shall use best endeavors to ensure at all times that any
affiliates, subsidiaries, sub-contractors and agents from time to time
at all times comply with this provision;
(vi) to keep the Materials, the Know-How, the Cell Line, the Cell Culture
Medium and the Critical Information strictly confidential and secure at
all times and shall store the same separately from other information
and materials;
(vii) except as may be necessary to develop, make, register and sell Campath
1H product and subject to the provisions of sub-clause (x) below. not
to disclose or cause or authorize or permit the Materials, the
Know-How, the Cell Line, the Cell Culture Medium and the Critical
Information to be disclosed to any third party without first obtaining
our Company's prior written consent and to ensure at all times that all
your employees, consultants and experts from time to time prior to
being allowed access to the same are individually bound by similar
terms of confidentiality and non-use herein contained;
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 4
-4-
(viii) not to reproduce transform or store any of the Know-How, Critical
Information or details of the Cell Culture Medium on an externally
accessible computer or electronic information retrievable system;
(ix) subject to the terms of the sub-licence agreement with BTG, in the
event the Sub-Licence is terminated, to return or destroy and ensure
your subsidiaries, affiliates. sub-contractors and agents from time to
time return or destroy to our Company's satisfaction the Know-How, the
Materials and the Cell Culture Medium, Drug Substance and Drug Product,
the Cell Line and Company information (all as defined in the
Sub-Licence) within thirty (30) days of our Company's written request
and in accordance with our Company's specific instructions and you will
issue a certificate signed by a director confirming that these
provisions have been complied with and shall ensure your subsidiaries,
affiliates, sub-contractors and/or agents from time to time (as
appropriate) issue a certificate signed by one of their directors
confirming that these provisions have been duly complied with;
(x) to promptly notify our Company, in advance where from time to time,
where you contract out the development/production of Campath 1H to a
subsidiary, affiliate or any third party sub-contractor or agent, prior
to such appointment(s) you shall on each occasion enter into an
agreement which includes similar provisions to those contained herein;
(xi) not to use Drug Product or Drug Substance transferred under the
Material Release Agreement for human therapeutic administration and
shall procure that its subsidiaries, affiliates, sub-contractors and
agents from time to time do not use Drug Substance or Drug Product for
human therapeutic administration.
Please indicate your agreement and acknowledgment of these provisions by signing
and returning to us the duplicate copy of this letter.
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 5
-4-
Yours faithfully
For and on behalf of
THE WELLCOME FOUNDATION LIMITED
Signed: [signature appears here]
Name print:_________________________
Position: _________________________
Accepted, acknowledged and agreed for and on behalf of LEUKOSITE, INC.
Signed: [signature appears here]
Name print: ________________________
Position: __________________________
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 6
CONFIDENTIAL TREATMENT
********************************************************************************
********************************************************************************
**********************************************************************
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 1
Exhibit 10.13
CONFIDENTIAL TREATMENT
MATERIAL RELEASE AGREEMENT
THIS AGREEMENT is made as of the 30th day of September 1996 BETWEEN THE WELLCOME
FOUNDATION LIMITED of Glaxo Wellcome House, Berkeley Avenue, Greenford,
Middlesex UB6 ONN, England trading as GLAXO WELLCOME RESEARCH AND DEVELOPMENT
(hereinafter called "WELLCOME") and LEUKOSITE, INC. of 215 First Street, Boston,
MA 02142, USA (hereinafter called "LEUKOSITE").
WHEREAS:
A. WELCOME has executed a Heads of Agreement with British Technology Group
Limited of even date hereof following its decision not to pursue its
further development of Campath 1H, concerning inter alia the transfer
of certain patents, cell culture medium, know how, cell line, drug
substance and drug product relating to an anti CD52 humanized
monoclonal antibody called Campath 1H which is produced from a cell
line obtained from the Chinese Hamster Ovary clone.
B. LEUKOSITE has executed a Heads of Agreement with British Technology
Group Limited of even dated hereof concerning its appointment as a
sublicensee of BTG in respect of the continued development and intended
commercialization of Campath 1H aforementioned in Recital A hereto.
C. Following signature of both the aforementioned Heads of Agreement and
conditional upon the Intended Agreements to be finally executed by both
Wellcome and Leukosite respectively with BTG, WELLCOME is agreeable to
releasing certain Critical Information to Leukosite in accordance with
the provisions of this Agreement.
D. LEUKOSITE intends to enter into an agreement with BTG relating to the
commercial exploitation of Campath 1H by LEUKOSITE and WELLCOME intends
to transfer Campath 1H to BTG who intend thereafter to sub-license the
rights to LEUKOSITE.
NOW THEREFORE, in consideration of the covenants and conditions herein
contained, THE PARTIES HEREBY AGREE AS FOLLOWS:
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 2
1. DEFINITIONS AND INTERPRETATION
1.1 The following capitalized terms shall have the following
meanings in this Agreement unless the context required
otherwise.
1.1.1 "Agreement" means the Material Release Agreement
between The Wellcome Foundation Limited and Leukosite
Inc. respectively.
1.1.2 "Affiliate" means any company that is the holding
company, subsidiary or a subsidiary of the holding
company in question, as those term defined in Section
736 of the Companies Act 1985.
1.1.3 "Critical Information" *************************
***************************************
1.1.4 "Intended Agreements" means *********************
*****************************************************
*****************************************************
*****************************************************
*****************************************************
1.1.5 "Specified Purpose" means ************************
*****************************************************
*****************************************************
*****************************************************
*****************************************************
*****************************************************
*****************************************************
*****************************************************
1.2 The headings in this Agreement are inserted only for
convenience and shall not affect the construction hereof.
1.3 Where appropriate, words denoting a singular number only shall
include the plural and vice versa.
1.4 References to Sections, Clauses and Annexes are references to
Sections and Clauses of, and Annexes annexed to, this
Agreement;
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
- 2 -
<PAGE> 3
1.5 Annexed to this Agreement is Schedule 1: Critical Information.
2. RELEASE OF CRITICAL INFORMATION
2.1 Following execution of this Agreement by both parties hereto,
WELLCOME shall provide to LEUKOSITE, the Critical Information
and as soon as reasonably practicable.
2.2 The Critical Information is provided to LEUKOSITE strictly for
the Specified Purpose and subject to the conditions set forth
herein. Notwithstanding the foregoing, the Critical
Information shall at all times remain confidential.
3. CONFIDENTIALITY AND NON-USE
3.1 LEUKOSITE shall:
3.1.1 hold the Critical Information separately and securely
from other information and materials and in the
strictest of confidence at all times.
3.1.2 not disclose to, or allow any of its subsidiaries
affiliates, employees, subcontractors and/or agents
to use the Critical Information nor shall LEUKOSITE
allow any of its sublicensees, subsidiaries,
affiliates, employees, sub-contractors and/or agents
to use the Critical Information for any purpose other
than for the Specified Purpose.
3.2 Other than sublicensees and other than for the Specified
Purpose and provided that such sublicensee is bound by
confidentiality and non-use provisions at least as strict as
this Agreement, LEUKOSITE shall not disclose or cause or
authorize or permit the Critical Information to be disclosed
to any third party without first obtaining WELLCOME's prior
written consent.
3.3. LEUKOSITE shall ensure that all its employees, (including but
not limited to Dr. Lee Brettmann) consultants and experts
having access to the Critical Information shall be
individually bound in writing to an Agreement, of
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
- 3 -
<PAGE> 4
confidentiality and non-use at least as strict as this
Agreement.
3.4 LEUKOSITE shall not use, reproduce, transform or store any of
the Critical information on an externally accessible computer
or electronic information retrievable system or transmitting
it in any form or by any means whatsoever (with the exception
of facsimile where appropriate in the circumstances) outside
its place of business in USA.
3.5 LEUKOSITE shall only make copies of the Critical Information
to the extent that the same is strictly required for the
purposes hereof.
3. 6 LEUKOSITE shall return or destroy and shall ensure its
sublicensees, sub-contractors, employees, consultants and
experts having access to the Critical Information return or
destroy to WELLCOME's complete satisfaction all Critical
Information and sub-unit derivative or product thereof within
thirty (30) days of termination of this Agreement.
3.7
**************************************************************
**************************************************************
**************************************************************
**************************************************************
**************************************************************
**************************************************************
**************************************************************
**************************************************************
3.8 The requirements and restrictions contained in this Clause
shall continue to apply after the termination or expiry of
this Agreement.
4. LIABILITY
4.1 No warranties or representations, expressed or implied, are
made by WELLCOME with regard to the Critical Information its
fitness for purpose, accuracy, completeness or its suitability
for any particular purpose. LEUKOSITE hereby accepts the
Critical Information on an "as is basis".
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
- 4 -
<PAGE> 5
4.2 LEUKOSITE shall be fully responsible for the use of the
Critical Information for the Specified Purpose at all stages
and for the results obtained therefrom. In no circumstances
will WELLCOME be held responsible or liable for the same.
LEUKOSITE shall indemnify and hold WELLCOME harmless against
all costs, claims, demands, loss, damage, liability or claims
by any person(s). WELLCOME shall give prompt notice to
LEUKOSITE of any such claim. LEUKOSITE shall control the
defense settlement or compromise of any such claim, unless the
parties mutually agree otherwise in writing.
5. TERM AND TERMINATION
5.1 This Agreement shall be effective from the date of signature
hereof and shall be coterminous with the Sublicense Agreement
between BTG and LEUKOSITE.
5.2 Following termination the provisions of Clause 3.7 shall
apply, unless the parties mutually agree otherwise in writing.
5.3 Termination of this Agreement shall not affect the obligations
concerning liability and confidentiality and non-use herein
contained.
6. ASSIGNMENT
LEUKOSITE may not assign its rights and obligations hereunder to any
third party who is not a party to this Agreement without the prior
written consent of WELLCOME, which consent shall not be unreasonably
withheld (it being understood that assignment to a competitor of
WELLCOME shall be a reasonable reason for withholding consent).
7. ACKNOWLEDGMENT
LEUKOSITE acknowledge hereunder that any breaches of its obligations
hereunder would cause irreparable damage to WELLCOME.
8. AMENDMENT
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
- 5 -
<PAGE> 6
This Agreement may be only amended, extended or modified by written
agreement of the LEUKOSITE and WELLCOME authorized representatives.
9. GOVERNING LAW
This Agreement shall be governed and construed in accordance with
English Law.
Accepted and Agreed
For and on behalf of
THE WELLCOME FOUNDATION LIMITED
Signed:[signature appears here]
Name(Print):__________________
Position:_____________________
Accepted and Agreed
For and on behalf of
LEUKOSITE, INC.
Signed:[signature appears here]
Name(Print):__________________
Position:_____________________
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
- 6 -
<PAGE> 7
ANNEX I
********************************************************************************
********************************************************************************
********************************************************************************
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
- 7 -
<PAGE> 1
Exhibit 10.14
CONFIDENTIAL TREATMENT
LEUKOSITE, INC.
CHRISTOPHER K. MIRABELLI, PH.D.
Chairman of the Board
Chief Executive Officer
October 7, 1996
Wendell Wierenga, Ph.D.
Senior Vice President, Research
Pharmaceutical Research Division
Warmer-Lambert/Parke-Davis
2800 Plymouth Rd.
Ann Arbor, MI 48106-1047
Dear Wendell:
As per our mutual interest in expanding our ongoing collaborative
relationship, below is a description and set of terms and conditions for a one
year collaborative agreement.
Scientific Plan
- - LeukoSite will establish assays in format for high throughput screening
of ******************************************************
**********************************
- - Parke-Davis will screen the Parke-Davis compound collection for
antagonists.
- - LeukoSite will make monoclonal antibodies t- ********************
***************************
- - Parke-Davis and LeukoSite will collaborate, possibly with academic
labs, on devising secondary assays on binding and signaling of ****
*******************************************************************
************
- - Parke-Davis will evaluate the antiviral activity of compounds
discovered in ****************************
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 2
Terms
- - The collaboration will terminate ************ from the signing of this
agreement letter, unless extended by mutual agreement.
- - During the **************** LeukoSite and Parke-Davis will work together on
a semiexclusive basis with regard to the screening and characterization of
compounds from the Parke-Davis and LeukoSite compound libraries.
LeukoSite will not enter into any other similar collaboration with a
commercial partner during the period except, LeukoSite will retain the right
to enter into an agreement with a third party with regard to screening and
discovery of small molecule antagonists for development and
commercialization in Japan.
Commercial Terms
- - Parke-Davis will pay LeukoSite a milestone of ***** If a compound is
discovered with antiviral activity with a ******************************
************************************************************************
******************************************* Alternatively, if this is
reached and Parke-Davis decides not to pursue the project further and elects
not to pay this milestone, the collaboration will terminate and LeukoSite
will have exclusive rights to use the results of the collaboration. Terms and
conditions for such rights to compounds found from the Parke-Davis Library
will be negotiated.
- - At the end of the one year, if there is mutual interest in continuing the
collaboration, Parke-Davis and LeukoSite will negotiate a research
collaboration agreement that includes milestone and royalty terms,
************************************************************************
************************************************************************
************************************************************************
***********************
- - If the collaboration terminates without LeukoSite and Parke-Davis reaching an
agreement on proceeding with the collaboration, both companies will be free
to continue independently with all of the results from the collaboration.
LeukoSite will have the right to find another partner to work on the project,
with no further obligations to Parke-Davis. Parke-Davis will be obligated to
pay LeukoSite ********* milestone payment if it proceeds with the project,
independent from
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
-2-
<PAGE> 3
LeukoSite. If either party commercializes a compound derived from a lead
identified during the ********* collaborative period (alone or with another
partner) it will agree to pay the other a royalty or portion of revenues
received on the sale of the product. The royalty or portion of revenues to be
paid will be agreed to upon termination of the ******** agreement.
- - ********************************************************************
************************************************************************
- - ********************************************************************
************************************************************************
***************************************
********************************************************************
********************************************************************************
***************
Japan
- - ********************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
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********************************************************************************
********************************************************************************
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
-3-
<PAGE> 4
For and on behalf of
LeukoSite,
Signed: [signature appears here]
Name (printed): Christopher K. Mirabelli
Position: CEO and Chairman, Board of Directors
Accepted, acknowledged and agreed for and on behalf of
Warner-Lambert/Parke-Davis
Signed: [signature appears here]
Name (printed):
Position:
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
- 4 -
<PAGE> 1
Exhibit 10.15
CONFIDENTIAL TREATMENT
RESEARCH COLLABORATION AND LICENSE AGREEMENT
This Agreement is effective _________________________ , 1997 ("the
EFFECTIVE DATE") by and between Kyowa Hakko Kogyo Co. Ltd. (hereinafter
referred to as "KHK"), a corporation located at 6-1 Ohtemachl, 1-Chome,
Chiyoda-Ku, Tokyo. 100 Japan. and LeukoSite, Inc., a Delaware Corporation,
located at 215 First Street, Cambridge, MA 02142 ("LKS").
WHEREAS, KHK is a healthcare company which develops, manufactures, and
markets pharmaceutical products for human healthcare throughout the world; and
WHEREAS, LKS is the owner or exclusive licensee of certain technology and
other proprietary, know-how related to PRODUCTS as hereinafter defined; and
WHEREAS, KHK desires to obtain an exclusive right and license in and to
such technology and proprietary know-how in the TERRITORY as hereinafter
defined; and
WHEREAS, KHK desires to support additional research in the FIELD as
hereinafter defined to be conducted by LKS; and
WHEREAS, LKS is willing to grant the exclusive right and license desired
by KHK and to, conduct the research supported by KHK.
NOW, THEREFORE, in consideration of the mutual promises and other good and
valuable consideration, the parties agree as follows:
SECTION I - DEFINITIONS.
The terms used in this Agreement have the following meaning:
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 2
-2-
1.1 The term "AFFILIATE" as applied to either party shall mean any company
or other legal entity other than the party in question in whatever country
organized, controlling controlled by or under common control with that party.
The term "control" means ownership or control, directly or indirectly, of at
least fifty percent (50%) of the outstanding stock, voting rights or the right
entitled to elect or appoint directors.
1.2 The term "AGREEMENT YEAR" shall mean the twelve month period beginning
on the EFFECTIVE DATE, and each subsequent twelve (12) month period thereafter
1.3 The term "COMPOUND" shall mean individually and collectively a
**********************************************
1.4 The term ***********************************************************
***********************************************
1.5 The term ***********************************************************
***********************************************
1.6 The term "DEVELOPMENT" shall mean the conduct of all preclinical,
chemical. chemical syntheses, formulations, assays and validation, testing and
development in accordance with Good Laboratory, Clinical and Manufacturing
Practices insofar as the same are reasonably necessary to obtain marketing
approval for a PRODUCT's first approved indication in any country and performed
by either party hereto in accordance with the DEVELOPMENT PLAN.
1.7 The term "DEVELOPMENT CANDIDATE" shall have the meaning set forth in
Section 5.9.
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 3
-3-
1.8 The term "DEVELOPMENT PLAN" shall mean the written description of
DEVELOPMENT for each AGREEMENT YEAR of this Agreement provided in Section 5.8.
1.9 The term "DIAGNOSTIC PRODUCTS" shall have the meaning set forth in
Section 2.2(f).
1.10 The term "EXTENDED TERRITORY" shall mean the entire world other than
the KHK TERRITORY.
1.11 The term "FIELD" shall mean the treatment of diseases in humans.
1.12 The term "FIRST COMMERCIAL SALE" shall mean in each country of
the TERRITORY, the first sale to a THIRD PARTY, in connection with the
nationwide introduction of any PRODUCT by KHK, its AFFILIATES or SUBLICENSEES
following, marketing and/or pricing approval by the appropriate governmental
agency for the country in which the sale is to be made and. when governmental
approval is not required, the first sale in that country in connection with the
nationwide introduction of a PRODUCT in that country.
1.13 The term "IND" shall mean an Investigational New Drug application
filed with the United States Food and Drug Administration ("FDA") or a
comparable application in other countries.
1.14 The term "JOINT PATENT RIGHTS" shall have the meaning set forth in
Section 5.15(b).
1.15 The term "KHK TERRITORY" shall mean Japan, Peoples Republic of China,
Korea, Taiwan, India, Singapore, Malaysia, Cambodia, Myanamar, Philippines,
Thailand, Laos, Indonesia, Vietnam and Pakistan.
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 4
-4-
1.16 The term "KHK PATENTS" shall mean any United States patent
application, including any division, continuation, or continuation-in-part
thereof and any foreign patent application or equivalent corresponding, thereto
and any Letters Patent or the equivalent thereof issuing thereon or reissue,
re-examination or extension thereof. including KHK's interest in JOINT PATENT
RIGHTS which is owned by or licensed to KHK and in and to which KHK has a
transferable interest during the term of this Agreement insofar as it contains
one or more claims to KHK TECHNOLOGY.
1.17 The term "KHK TECHNOLOGY" shall mean information and materials,
including but not limited to, inventions, whether patentable or not,
pharmaceutical, chemical and biological products, technical and non-technical
data and information relating to the results of tests, assays, methods, and
processes, and drawings, plans, diagrams and specifications and/or other
documents containing such information and data owned by KHK or to which KHK has
a transferable interest on the EFFECTIVE DATE and/or prior to termination of
this Agreement and which are necessary or useful for the manufacture, use or
sale of a PRODUCT.
1.18 The term "LKS PATENTS" shall mean any United States patent
application. including any division, continuation. or continuation-in-part
thereof and any foreign patent application or equivalent corresponding thereto
and any Letters Patent or the equivalent thereof issuing thereon or reissue,
re-examination or extension thereof, including LKS's interest in JOINT PATENT
RIGHTS which is owned by or licensed to LKS and in and to which LKS has a
transferable interest during the term of this Agreement insofar as it contains
one or more claims to LKS
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 5
-5-
TECHNOLOGY. The LKS Patents in effect on the EFFECTIVE DATE are set forth in
Appendix A, attached hereto and made a part hereof.
1.19 The term "LKS TECHNOLOGY" shall mean information and materials,
including but not limited to, inventions, whether patentable or not,
pharmaceutical, chemical and biological products, technical and non-technical
data and information relating to the results of tests, assays, methods, and
processes, and drawings, plans, diagrams and specifications and/or other
documents containing such information and data owned by LKS or to which LKS has
a transferable interest on the EFFECTIVE DATE and/or during the term of this
AGREEMENT and which are necessary or useful for the manufacture, use or sale of
a PRODUCT.
1.20 The term "NET SALES " means the gross amount invoiced by KHK or LKS
in the case of Sections 2.2(d) and 12.8, its AFFILIATES and SUBLICENSEES for
sale or distribution of PRODUCT to THIRD PARTIES, less *************************
********************************************************************************
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*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 6
-6-
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1.21 The term "PATENT RIGHT(S)" shall mean individually and collectively,
KHK PATENTS, LKS PATENTS and JOINT PATENT RIGHTS.
1.22 The term "PRODUCT" shall mean any article, composition, material,
method, process or service in the FIELD which is or incorporates or utilizes a
COMPOUND.
1.23 The term "RESEARCH" shall mean the research performed by either party
in accordance with the RESEARCH PLAN, as amended from time to time by agreement
of the parties.
1.24 The term "RESEARCH PLAN" shall mean the written description of
RESEARCH for the first AGREEMENT YEAR and for each subsequent AGREEMENT YEAR of
the Research Collaboration as set forth in Appendix B attached hereto and made a
part hereof.
1.25 The term "RESEARCH TERM" shall mean the term of the Research
Collaboration as set forth in Section 5.13.
1.26 The term "SUBLICENSEE" shall mean any non-AFFILIATE THIRD PARTY
licensed by KHK to make. have made, import, use or sell any PRODUCT.
1.27 The term "TARGET" shall mean the chemokine receptor of *************
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1.28 The term "TERRITORY" shall mean the KHK TERRITORY and the EXTENDED
TERRITORY.
1.29 The term "THIRD PARTY(IES)" shall mean a person or entity who or
which is neither a party hereto nor an AFFILIATE or SUBLICENSEE of a party
hereto.
1.30 The term "VALID CLAIM" shall mean (i) a claim of a pending patent
application or (ii) a claim of an issued patent which has not lapsed or become
abandoned or been declared invalid or unenforceable by a court of competent
Jurisdiction or an administrative agency from which no appeal can be or is
taken.
1.31 The term "WL" shall mean the Warner Lambert Company.
1.32 The term "WL PATENT" shall mean any United States patent application,
including any division, continuation, or continuation-in-part thereof and any
Foreign patent application or equivalent corresponding thereto and any Letters
Patent or the equivalent thereof issuing thereon or reissue, re-examination or
extension thereof, including WL's interest in joint patent rights, which JOINT
PATENT RIGHTS are defined in Section 1.14 and 5.15(b) and which is owned by or
licensed to WL and in and to which WL has a transferable interest during the
term of this Agreement insofar as it contains one or more claims to WL
TECHNOLOGY.
1.33 The term "WL TECHNOLOGY" shall mean information and materials,
including but not limited to, inventions, whether patentable or not,
pharmaceutical, chemical and biological products, technical and non-technical
data and information relating to the results of tests, assays, methods, and
processes, and drawings, plans, diagrams and specifications
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and/or other documents containing such information and data owned by WL or to
which WL has a transferable interest on the effective date of the Agreement
between WL and KHK and/or during the term of any sublicense agreement with KHK
and which are necessary or useful for the manufacture, use or sale of a PRODUCT.
1.34 The use herein of the plural shall include the singular, and the use
of the masculine shall include the feminine.
SECTION 2 - GRANT.
2.1 Unless this Agreement has already been terminated as set forth herein,
upon the selection by the parties of a COMPOUND for DEVELOPMENT under Section
5.9, LKS shall grant to KHK and KHK shall accept from LKS an exclusive royalty
bearing right and license for the KHK TERRITORY under LKS' interest in LKS
TECHNOLOGY and LKS PATENTS to make, have made, use, sell, offer to sell or
import PRODUCTS containing the selected COMPOUND or COMPOUNDS in the KHK
TERRITORY but only for use in the KHK TERRITORY. At such time as KHK grants a
sublicense pursuant to Section 2.2(c) and for the duration of such sublicense,
the grant set forth herein shall also be applicable to the EXTENDED TERRITORY.
2.2 (a) Subject to Paragraph 2.2(b) KHK shall be entitled to extend the
license granted herein to AFFILIATES and to sublicense THIRD PARTIES but only
for the KHK TERRITORY.
In case of a license which has been extended to AFFILIATES or sublicensed
to a SUBLICENSEE, such AFFILIATES and SUBLICENSEES shall be bound by all terms
and conditions of this
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Agreement. KHK shall advise LKS of any such extension to AFFILIATES or
sublicenses to SUBLICENSEES and provide LKS with a copy of any sublicense within
sixty (60) days of execution of such sublicense.
(b) KHK shall guarantee and be responsible for the payment of all
royalties due and the making of reports under this Agreement by reason of sales
of any PRODUCTS by its AFFILIATES and SUBLICENSEES and their compliance with all
applicable terms of this Agreement. Performance or satisfaction of any
obligations of KHK under this Agreement by any of its AFFILIATES or SUBLICENSEES
shall be deemed performance or satisfaction of such obligations by KHK.
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(d) During the term of this Agreement and during such time as LKS retains
rights with regard to PRODUCTS in the EXTENDED TERRITORY and subject to Section
12.8, KHK will grant to LKS an exclusive sublicenseable, royalty-bearing right
and license for the EXTENDED TERRITORY under KHK PATENTS and KHK TECHNOLOGY to
make, have made, use, sell, offer to sell or import PRODUCTS for use in the
EXTENDED TERRITORY. The royalty shall be negotiated by the parties in good faith
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(e) For the avoidance of doubt, in the event of a sublicense by KHK to WL,
Section 2.1(a) and (b) shall be applicable to such sublicense and such
sublicense shall provide for a transfer of WL TECHNOLOGY and WL PATENTS to KHK
and/or LKS in the event of termination of such sublicense. In addition, the
sublicense shall provide that LKS shall be a third party beneficiary of such
sublicense and such sublicense shall terminate in the event this Agreement
terminates.
(f) LKS hereby grants to KHK an exclusive option during the RESEARCH TERM
to negotiate an agreement to research, develop, manufacture and sell DIAGNOSTIC
PRODUCTS (i.e., reagents in
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combination with COMPOUNDS for the purpose of the diagnosis of disease in
humans). This option may be exercised at any time during the RESEARCH TERM on
written notice to LKS. Upon receipt of such notice, the parties will negotiate
for ninety (90) days thereafter, in good faith, the terms of such an agreement.
If the parties cannot reach an agreement within said ninety (90) days, neither
party will have any further obligation with respect to such DIAGNOSTIC PRODUCTS.
SECTION 3 - DUE DILIGENCE.
3.1 (a) KHK shall initiate and diligently use best efforts to develop and
register PRODUCTS and continue to use its best efforts to market and sell
PRODUCTS in the KHK TERRITORY and if licensed, also in the EXTENDED TERRITORY,
as the case may be.
(i) KHK shall provide written progress reports within fifteen (15)
days of the 1st of January of each calendar year (ending for each particular
PRODUCT with the FIRST COMMERCIAL SALE of that particular PRODUCT), indicating
efforts (including research and development manpower) and progress toward
achieving research tasks and DEVELOPMENT milestones described in the RESEARCH
and DEVELOPMENT PLANS.
(ii) Upon selection of a DEVELOPMENT CANDIDATE, the parties shall agree
that KHK shall meet the certain milestones including the following: File an IND
for one PRODUCT and Initiate Phase IIb/III Clinical Trials for one PRODUCT with
the timing for meeting such milestones to be agreed upon in the DEVELOPMENT PLAN
provided for in Section 5.8.
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(b) In the event that KHK falls to meet any of its obligations under
Section 3.1 (a) with respect to PRODUCT or advises LKS that it does not have a
significant interest in developing, marketing or selling a PRODUCT or does not
intend to develop, market or sell a PRODUCT, LKS shall have the right and option
to terminate this Agreement on sixty (60) days prior written notice.
(c) KHK shall provide written reports to LKS on June 30th and December
31st of each year concerning the efforts being made in accordance with this
Section with respect to PRODUCTS in each country of the TERRITORY. KHK shall
provide LKS with any additional information reasonably requested by LKS in this
respect.
(d) As part of KHK's obligations under this Section, KHK shall provide to
LKS, both prior to and after marketing PRODUCT, its marketing plans and sales
forecasts for each PRODUCT to be sold in the TERRITORY and/or the EXTENDED
TERRITORY, as the case may be.
3.2 LKS will use its best efforts to complete the RESEARCH pursuant to the
terms of Section 5.
3.3 To the extent LKS TECHNOLOGY and/or PATENT RIGHTS licensed to KHK
under this Agreement have been licensed by LKS from a THIRD PARTY under an
agreement with such party, ("Other Party Agreement(s)"), KHK understands and
agrees as follows:
(i) The rights licensed to KHK by LKS are subject to the terms,
limitations, restrictions and obligations of the Other Party Agreement(s).
(ii) KHK will comply with the terms, obligations, limitations and
restrictions of the Other Party Agreement(s), except that
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the compensation terms set forth in this Agreement shall be the only
compensation payable to LKS by KHK hereunder.
SECTION 4 - CONFIDENTIALITY AND ADVERSE EXPERIENCES.
4.1 During the term of this Agreement, it is contemplated that each party
may disclose to the other, proprietary and confidential technology, inventions.
technical information, material, reagents, biological materials and the like
which are owned or controlled by the party providing such information or which
that party is obligated to maintain in confidence and which is designated by the
party providing such information as confidential ("Confidential Information").
Each party shall have the right to refuse to accept the other party's
Confidential Information. Each party agrees not to disclose and to maintain the
Confidential Information in strict confidence, to cause all of its agents,
representatives and employees to maintain the disclosing party's Confidential
Information in confidence and not to disclose any such Confidential Information
to a third party without the prior written consent of the disclosing party and
not to use such Confidential Information for any purpose other than as licensed
under this Agreement.
4.2 The obligations of confidentiality will not apply to information
which:
(i) was known to the receiving party or generally known to the
public prior to its disclosure hereunder through no fault of the disclosing
party or any agent, representative or employee thereof, or
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(ii) subsequently becomes known to the public by some means other
than a breach of this Agreement, including publication and/or laying open to
inspection of any patent applications or patents;
(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 required by law, rule, regulation or bona fide legal process
to be disclosed. provided that the disclosing party takes all reasonable steps
to restrict and maintain confidentiality of such disclosure and provides
reasonable notice to the non-disclosing party; or
(V) is approved for release by the parties.
4.3 The obligations of Section 4.1 notwithstanding, KHK or LKS, as the
case may be, may disclose the Confidential Information licensed hereunder. to
THIRD PARTIES who (i) need to know the same in order to secure regulatory
approval for the sale of PRODUCT, (ii) who need to know the same in order to
work towards the commercial development of PRODUCT, or (iii) who are approved by
LKS or KHK, as the case may be, provided that such parties are bound by
obligations of confidentiality and non-use at least as stringent as set forth
herein.
4.4 Each party will keep the other informed of all reports of Adverse
experiences ("AE's") coming to its knowledge and possibly related to PRODUCT.
All reports of AE's which are serious or unexpected shall be forwarded to the
other party immediately and/or in sufficient time to properly notify the
regulatory authorities.
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SECTION 5 - RESEARCH AND DEVELOPMENT COLLABORATION.
5.1 Object. As soon as practical after the EFFECTIVE DATE, a research and
development collaboration shall be established to discover and commercialize
COMPOUND(S) in the FIELD (the "Collaboration"). Each party agrees to conduct the
RESEARCH and DEVELOPMENT to be performed and KHK agrees to support and fund the
RESEARCH in accordance with the terms and conditions set forth below.
5.2 Oversight of the RESEARCH
(a) Oversight. The RESEARCH will be overseen and monitored by the
Committee described herein (the "Research Committee").
(b) Membership. Within ten (10) days of the EFFECTIVE DATE, LKS and KHK
shall each appoint three (3) persons (or such other number of persons as the
parties may determine) to serve on the Research Committee. Such representatives
will be qualified, by reason of background and experience, to assess the
scientific progress of the RESEARCH. Each party will have the right to change
its representation on the Research Committee upon written notice sent to the
other.
(c) Chair. The Research Committee will be chaired by one representative of
each party during each six (6) month period of the RESEARCH TERM. During the
first six (6) months the Research Committee will be chaired by a representative
of LKS.
(d) Responsibilities. The Research Committee will have authority to:
(i) review and approve the RESEARCH PLAN for each AGREEMENT YEAR
prepared by LKS;
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(ii) make recommendations regarding the performance and the conduct
of the RESEARCH pursuant thereto, and monitor performance thereunder:
(iii) modify the RESEARCH PLAN;
(iv) review any and all proposed publications or communications
relating to the Collaboration and the results therefrom. in accordance with the
procedure set forth in this Section 5;
(v) review any and all proposed filing or patent applications in
connection with the RESEARCH.
5.3 Meetings. The Research Committee will meet not less than two (2) times
a year during the RESEARCH TERM of the, at such dates, times and places as
agreed to by the parties. At such meetings, the Research Committee will discuss
the RESEARCH and the performance under the Collaboration, evaluate the results
thereof and set priorities therefor. All decisions made or actions taken by the
Research Committee will be made unanimously by its members with the LKS members
cumulatively having one vote and the KHK members cumulatively having one vote
each. The Committee will prepare written minutes of each meeting and a written
record of all decisions whether made at a formal meeting or not.
5.4 Committee Deadlock. If there are issues on which the Research
Committee cannot reach agreement because of a Deadlock (as hereinafter defined),
such matters will be submitted to the President and CEO of LKS and KHK. In the
event agreement cannot be reached at this level, the Deadlock shall be resolved,
in good faith, by KHK.
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For the purpose of this Section 5.4, "Deadlock" will mean, (i) with
respect to any matter considered and voted upon by the Research Committee, that
one party votes in favor of such matter and the other party does not vote in
favor of such matter or (ii) a quorum cannot be established for the Committee to
vote on a matter.
5.5 (a) Conduct of the Collaboration. RESEARCH and DEVELOPMENT will
be conducted at appropriate sites approved by the Research Committee.
(b) LKS will be responsible for conducting the biological (i.e. molecular
biology, cell biology, in vitro and in vivo pharmacology) and chemistry (i.e.
screening of LKS compound libraries, synthetic chemistry, molecular modeling)
research in the FIELD RESEARCH activities will also go on at KHK. The nature of
these activities [eg compound/natural product library screening pharmacology,
medicinal chemistry] and how and where they shall be conducted shall be
determined by the Research Committee and set forth in the RESEARCH PLAN.
5.6 (a) Conduct of Development. LKS will, at no cost to LKS, participate
in DEVELOPMENT to the extent it desires to do so, provided however, that the
level of LKS' participation will be defined by the Development Committee
described below at the end of the research and discovery phase of the
COLLABORATION.
(b) KHK will be responsible for all preclinical and clinical development
costs both within the KHK TERRITORY and in the EXTENDED TERRITORY.
(c) KHK will have the right to assign (up to 2) KHK scientists at any one
time at LKS during the collaborative period. KHK will bear all
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costs related to such scientists, excluding indirect laboratory and overhead
costs.
5.7 Development Committee. Prior to the selection of a COMPOUND for
DEVELOPMENT, a Development Committee shall be established by the parties hereto.
The Development Committee shall be comprised of seven (7) persons, with four (4)
being appointed by KHK and the other three (3) being appointed by LKS. Such
member(s) of the Development Committee may be replaced by the party appointing
the member(s) with prior written notice to the other party. Any increase or
decrease in the number of the members of Development Committee shall be decided
by the Development Committee. All decisions of the Development Committee shall
require a majority vote of all of the members of the Development Committee. Once
established, the Development Committee will meet at least quarterly to evaluate
and discuss the Development of PRODUCTS. The chairperson of the Development
Committee will be appointed by KHK among the members of the Development
Committee.
5.8 Responsibility of the Development Committee. The purpose of the
Development Committee shall be to coordinate and expedite the DEVELOPMENT of
COMPOUNDS into commercially successful PRODUCTS in the TERRITORY. The parties
shall establish the DEVELOPMENT PLAN setting forth the strategy, schedule and
objectives for DEVELOPMENT of COMPOUNDS selected for the DEVELOPMENT of PRODUCTS
in the TERRITORY and submit the plan to the Development Committee. The
Development Committee shall review and revise the DEVELOPMENT strategy for such
PRODUCTS.
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The DEVELOPMENT PLAN shall be updated at least annually. KHK shall keep the
Committee regularly informed and consult with the Development Committee no less
frequently than quarterly with respect to KHK's clinical and regulatory activity
relative to PRODUCTS.
5.9 Selection of COMPOUNDS for DEVELOPMENT. As long as the Development
Committee is in existence, the Development Committee shall be responsible for
the selection of COMPOUNDS for development in the KHK TERRITORY which shall take
place upon a decision to proceed to GLP Technology and other safety/PK studies
required for submission of an IND or foreign equivalent ("DEVELOPMENT
CANDIDATE"). The Development Committee may select any COMPOUND for DEVELOPMENT
resulting from RESEARCH; provided however that such selection shall take place
no later than the end of the third AGREEMENT YEAR of the Agreement or all rights
granted herein and this Agreement shall terminate forthwith.
5.10 Financial Conditions.
(a) Support Commitment. Unless terminated prior to the end of the RESEARCH
TERM during the term of the Collaboration, KHK will provide funding to LKS for
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agreed upon amount for the additional research which will be necessary if two
(2) TARGETS are selected. The aforesaid funding will be inclusive of all costs
incurred by LKS implementing the RESEARCH PLAN at LKS.
(b) Payment Schedule. The support payments set forth above will be
payable by KHK annually in advance, with the First payment to be made on the
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5.11 No Conflict With Research and Title to Equipment. LKS agrees that the
RESEARCH funds provided by KHK will be applied to the RESEARCH and may not,
without KHK prior written approval, be used in
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support of any other research at LKS. LKS will retain title to any equipment
purchased with funds provided by KHK under this Agreement, if such purchase is
mutually agreed upon as part of the RESEARCH budget.
5.12 Reports, Records and Unexpended Research Funding.
(a) In the event LKS does not expend the amounts provided by KHK pursuant
to this Section 5 for RESEARCH for an AGREEMENT YEAR during the RESEARCH TERM
such amounts will be retained by LKS for use in a future AGREEMENT YEAR or
YEARS; provided that any amounts not expended by the end of the RESEARCH TERM
shall be repaid by LKS to KHK in the event the Agreement is terminated at that
time or credited against the milestone payment set forth in Section 7.2(iii);
and provided further that the total amount to be credited under this Section
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(b) LKS shall provide and submit to KHK summary reports on a semi-annual
basis of the amounts expended for and a description of the work performed in
RESEARCH. The records on which such reports are based may be reviewed no more
than once each year, during normal business hours, by an independent auditor
selected by KHK and reasonably acceptable to LKS. All information disclosed in
such a review shall be deemed Confidential Information of LKS.
5.13 Term and termination of the Research Collaboration.
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Either party may request an extension of up to ************************
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(b) KHK shall be entitled to terminate the RESEARCH and cease funding
thereof in the event of a material breach by LKS of any of LKS's obligations and
covenants hereunder following written notice of such breach to LKS. If such
breach is not cured within thirty (3O) days after written notice is given by KHK
to LKS specifying the breach, KHK may terminate the RESEARCH and cease funding
hereunder forthwith upon written notice to LKS after expiration of such thirty
(30) day period, in which case KHK will not be responsible for any actual and
noncancelable expenditures of LKS unpaid to the date of termination and the
remedies set forth in this paragraph shall be KHK's sole and exclusive remedies
for such breach under this Agreement.
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(c) In the event that the RESEARCH is terminated pursuant to Section
5.13(b), LKS's right to receive any unpaid balance otherwise committed by KHK as
support commitment hereunder will become forfeited and no further payments with
respect to the RESEARCH will be due to LKS by KHK except to the extent that such
funds are necessary to pay actual and non-cancelable obligations of LKS accrued
to that date.
(d) LKS may terminate RESEARCH and/or DEVELOPMENT for breach by KHK of its
obligations hereunder in which case this Agreement and all licenses and rights
granted herein shall terminate forthwith.
5.14 Confidentiality. In order to facilitate the operation of RESEARCH
and/or DEVELOPMENT either party may disclose confidential or proprietary
information owned or controlled by it to the. other. It is hereby understood and
agreed that such information shall be deemed "Proprietary Information" and
treated as such in accordance with Section 4 hereof.
5.1 5 Results of the Research Collaboration.
(a) All right, title and interest in and to any new or useful process,
manufacture, compound or composition of matter, materials, Information, data,
inventions and know-how, patentable or unpatentable, or any improvement thereof,
conceived or first reduced to practice, or demonstrated to have utility during
the conduct of the Collaboration (the "Results"), and any patent applications or
patents based thereon, solely by employees or others acting on behalf of LKS
shall be owned solely by LKS ("LKS Results"), and solely by employees or others
acting on behalf of KHK shall be owned solely by KHK ("KHK Results").
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(b) The Parties recognize that, as a result of the Collaboration between
KHK and LKS hereunder, certain Results may be deemed to be joint inventions, in
accordance with applicable law, as both:
(i) one or more employees or agents of LKS or any other persons
obliged to assign such Results to LKS, and
(ii) one or more employees or agents of KHK or any other persons
obliged to assign such Results to KHK, are joint inventors of such Results
("Joint Results"). In that event, the Parties shall jointly own patents,
inventor's certificates and applications therefor covering such Joint Results
("JOINT PATENT RIGHTS").
(c) To the extent that any LKS Results or Joint Results are necessary to
make, have made, use or sell PRODUCTS, LKS' interest in such Results shall be
included in PATENT RIGHTS licensed to KHK in the TERRITORY or EXTENDED
TERRITORY, as the case may be, under this Agreement. To the extent that any KHK
Results or Joint Results are necessary to make, use or sell PRODUCTS. KHK's
interest in such Results as well as KHK PATENTS and KHK TECHNOLOGY shall be
exclusively licensed to LKS in the EXTENDED TERRITORY to the extent LKS retains
rights in such TERRITORY under this Agreement.
(d) Any Result that a party believes may involve a patentable invention or
a preliminary finding of scientific significance will be promptly disclosed to
the Other Party at the earliest practicable time.
(e) There will be no publication of the Results by LKS or KHK, or any LKS
or KHK employee unless the Research Committee has reviewed the proposed
scientific publication concerning the Results. A party will, upon request by the
other party, delay publication to enable patent rights
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to be perfected, but in no event shall such delay exceed sixty (60) days from
the time the publication was submitted to the receiving party.
SECTION 6 - PATENTS.
6.1 (a) Each party shall promptly advise the other party in writing of
each invention arising from the Collaboration. Representatives of LKS and KHK
shall then discuss whether a patent application or applications pertaining to
such invention should be filed and in which countries. The titles, serial
numbers and other identifying data of patent applications claiming an invention
to which KHK is granted rights hereunder and filed after the EFFECTIVE DATE by
mutual agreement of LKS and KHK, shall be listed in Appendix A and shall become
LKS PATENTS.
(b) LKS at its cost and expense shall file, prosecute and maintain LKS
PATENTS through patent counsel selected by LKS, who shall consult with and keep
KHK advised with respect thereto. provided that the costs and expenses paid by
LKS for LKS PATENTS conceived or reduced to practice after the EFFECTIVE DATE
will be included as part of the support commitment set forth in Section 5.10 and
paid out of such funding.
(c) After the EFFECTIVE DATE, all costs and expenses incurred under this
Section with respect to JOINT PATENT RIGHTS and KHK PATENTS will be paid by KHK.
(d) Included in patent costs are all reasonable costs for the prosecution,
issuance, and maintenance of such applications and patents issuing thereon, and
any divisional, continuation-in-part, reissue
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applications or patents, patents-in-addition, patents-of-revalidation or the
registrations of any patent or the like.
(e) Notwithstanding anything in this Section, KHK may, at its discretion,
elect to discontinue financial support of any patent or patent application,
provided, however, that prior to taking such action, KHK will notify LKS of its
intention at least ninety (90) days prior to the date on which any payment or
action is due. In any country in which KHK has elected to discontinue its
support of any patent application or patent. LKS, upon receiving notice, may
elect at its own expense to assume all financial responsibility for the
prosecution or maintenance of such patent application or patent. In such event
the license of the patent or patent application will be deemed to have expired
with respect to that country upon LKS's receiving notice of KHK's decision. If
any such patent or patent application is based upon a Joint Result, then KHK
shall promptly thereafter assign all of its rights and interest in any such
patent or patent application to LKS without further cost or obligation of LKS to
KHK.
6.2 With respect to any PATENT RIGHTS, each patent application, office
action, response to office action, request for terminal disclaimer, and request
for reissue or reexamination of any patent issuing from any such application
shall be provided to the other party sufficiently prior to the Filing of such
application, response or request to allow for review and comment by such party.
The owner of the patent application or patent shall have the right to take any
action that in its judgment is necessary to preserve such rights.
6.3 (a) If any of the PATENT RIGHTS under which KHK is licensed hereunder
is infringed by a THIRD PARTY in the TERRITORY,
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 27
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KHK shall have the right and option but not the obligation to bring an action
for infringement, at its sole expense, against such third party in the name of
LKS and/or in the name of KHK, and to LKS as a party plaintiff if required. KHK
shall promptly notify LKS of any such infringement and shall keep LKS informed
as to the prosecution of any action for such infringement. No settlement,
consent or other voluntary final disposition of the suit which adversely affects
LKS PATENTS may be entered into without the consent of LKS, which consent shall
not unreasonably be withheld.
(b) In the event that KHK shall undertake the enforcement and/or defense
of the PATENT RIGHTS under which KHK is licensed hereunder by litigation any
recovery of damages by KHK for any such suit shall be applied first in
satisfaction of any unreimbursed expenses and legal fees of KHK relating to the
suit. The balance remaining from any such recovery shall be divided equally
between KHK and LKS.
(c) In the event that KHK elects not to pursue an action for infringement,
upon written notice to LKS by KHK that an unlicensed THIRD PARTY is an infringer
of a VALID CLAIM of PATENT RIGHTS licensed to KHK, LKS shall have the right and
option, but not the obligation at its cost and expense to initiate infringement
litigation and to retain any recovered damages.
(d) In any infringement suit either party may institute to enforce the
PATENT RIGHTS pursuant to this Agreement, the other party hereto shall, at the
request of the party initiating such suit, cooperate In all respects and. to the
extent possible, have its employees testify when requested and make available
relevant records, papers, information,
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 28
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samples, specimens, and the like. All reasonable out-of-pocket costs incurred in
connection with rendering cooperation requested hereunder shall be paid by the
party requesting cooperation.
SECTION 7 - ROYALTIES AND OTHER COMPENSATION.
7.1 (a) KHK shall pay to LKS royalties on the annual NET SALES of
PRODUCTS sold by KHK, its AFFILIATES and SUBLICENSEES in the TERRITORY as
follows: ***********************************************************************
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(b) Such royalties shall be paid as set forth above by KHK, on a country
by country, PRODUCT by PRODUCT, basis for a period of ****** *************** in
each country of the TERRITORY from the date of FIRST COMMERCIAL SALE by KHK, its
AFFILIATES and SUBLICENSEES of such PRODUCT in each such country and thereafter
such PRODUCT is covered by a VALID CLAIM of a PATENT RIGHT, such royalties shall
be payable until the last to expire PATENT RIGHT in such country.
7.2 (a) Subject to Section 2.2(d), KHK shall pay the following amounts
upon the occurrence of the following milestone events, which may be achieved by
KHK through a SUBLICENSEE or AFFILIATE.
(i) **************************************************************
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*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 29
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********************************************************************************
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*********
(ii) **************************************************************
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(iii) **************************************************************
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(iv) **************************************************************
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(b) Should a COMPOUND and/or PRODUCT replace another compound and/or
PRODUCT before such compound and/or PRODUCT reaches the market, it shall, for
the purpose of milestones, enter at the next payable milestone.
7.3(a) In the event that royalties are required to be paid by KHK to a
THIRD PARTY who is not an AFFILIATE of KHK in order for KHK to make, use and
sell PRODUCT without infringing such THIRD PARTY'S patents and for which
royalties are also due to LKS pursuant to Paragraph 7.1 (such royalties to such
THIRD PARTY are hereinafter "Other Royalties"), then ***************************
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*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 30
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********************************************************************************
************************************************************
(b) In the event that litigation against KHK is initiated by a THIRD-PARTY
charging KHK with infringement of a patent of the THIRD PARTY as a result of the
manufacture, use or sale by KHK of PRODUCT covered by a PATENT RIGHT licensed
hereunder KHK shall promptly notify LKS in writing.*****************************
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7.4 KHK shall keep, and shall cause each of its AFFILIATES and
SUBLICENSEES to keep. full and accurate books of account containing all
particulars relevant to its sales of PRODUCTS that may be necessary for the
purpose of calculating all royalties payable to LKS. Such books of account shall
be kept at their principal place of business and, with all necessary supporting
data shall, for the five (5) years next following the end of the calendar year
to which each shall pertain, be open for inspection by an independent certified
public accountant reasonably acceptable to KHK, upon reasonable notice during
normal business hours at LKS's expense for the sole purpose of verifying royalty
statements or compliance with this Agreement. In the event the inspection
determines that royalties due LKS for any period have been underpaid by five
percent (5%) or more, then KHK shall pay for all costs of the inspection. In all
cases, KHK shall pay to LKS any underpaid royalties promptly and with
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 31
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interest at the prime rate available to LKS, plus two percent (2%). All
information and data reviewed in the inspection shall be used only for the
purpose of verifying royalties and shall be treated as KHK Confidential
Information subject to the obligations of this Agreement. No audit by an agent
of LKS shall occur more frequently than once during any twelve (12) month
period.
7.5 In each year the amount of royalty due shall be calculated quarterly
as of the end of each CALENDAR QUARTER (each as being the last day of an
"ACCOUNTING PERIOD") and shall be paid quarterly within the thirty (30) days
next following such date. Every such payment shall be supported by the
accounting prescribed in Paragraph 7.6 and shall be made in United States
currency. Whenever for the purpose of calculating royalties, conversion from any
foreign currency shall be required. such conversion shall be at the rate of
exchange published in The Wall Street Journal for the last business day of the
ACCOUNTING PERIOD.
7.6 With each quarterly payment, KHK shall deliver to LKS a full and
accurate accounting to include at least the following information:
(a) Quantity of PRODUCT subject to royalty sold (by country) by
KHK, its AFFILIATES and SUBLICENSEES,
(b) Total receipts for each PRODUCT subject to royalty (by
country);
(C) Total royalties payable to LKS
7.7 Royalties payable to LKS which are subject to withholding tax will be
paid net of any amounts to be withheld by KHK in accordance
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 32
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with applicable withholding provisions of the tax laws of Japan. All other
payments due hereunder, except the payment provided for in Section 7.2(a)(iv)
will be paid in full to LKS with no deduction for withholding taxes.
SECTION 8 - REPRESENTATIONS AND WARRANTIES.
8.1 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 LKS hereby represents and warrants to KHK that:
(a) It is the owner of, or is the licensee of the proprietary information
related to PRODUCTS which it has provided to KHK under this Agreement, and
accordingly has the right to grant licenses or sublicenses therefor;
(b) As of the EFFECTIVE DATE, all patent applications included in LKS
PATENTS are pending and have not been abandoned;
(c) It has not entered into any agreement with any THIRD PARTY which is in
conflict with the rights granted to KHK pursuant to this Agreement;
(d) To the best of its knowledge as of the EFFECTIVE DATE there are no
claims or demands which it believes can be enforced against any PRODUCTS
disclosed in the LKS PATENTS in effect on the EFFECTIVE DATE;
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 33
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(e) To the best of its knowledge and without having made any special
investigation for this purpose, the practice of any process or PRODUCT disclosed
in the LKS PATENTS in effect on the EFFECTIVE DATE does not infringe upon any
THIRD PARTY patents.
8.3 EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT LKS MAKES NO
REPRESENTATIONS OR EXTENDS ANY WARRANTIES OF ANY KIND, EITHER EXPRESS OR
IMPLIED, INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF MERCHANTABILITY, FITNESS
FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OR VALIDITY OF ANY LKS PATENT OR
OTHER INTELLECTUAL PROPERTY RIGHTS.
SECTION 9 - INDEMNIFICATION AND INSURANCE.
9.1 Indemnification by KHK
KHK will defend, indemnify and hold harmless LKS, its AFFILIATES and
licensors and their employees, agents, officers, trustees. shareholders and
directors and each of them (the "LKS Indemnified Parties") from and against any
and all third party claims, causes of action and costs (including reasonable
attorney's fees) of any nature made or lawsuits or other proceedings filed or
otherwise instituted against the LKS Indemnified Parties resulting from or
arising out of this Agreement or out of the research, development, testing,
manufacture, sale or use of any PRODUCT by KHK or its AFFILIATES or its
SUBLICENSEES (other than those claims which result from the gross negligence or
willful misconduct of an Indemnified Party.
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 34
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9.2 Indemnification by LKS
LKS will defend, indemnify and hold harmless KHK, its AFFILIATES and
licensors and their employees, agents, officers, trustees, shareholders and
directors and each of them (the "KHK Indemnified Parties") from and against any
and all third party claims, causes of action and costs (including reasonable
attorney's fees) of any nature made or lawsuits or other proceedings filed or
otherwise instituted against the KHK Indemnified Parties resulting from or
arising out of the RESEARCH. performed by LKS or its AFFILIATES under this
Agreement (other than those claims which result from the gross negligence or
willful misconduct of an Indemnified Party.
9.3 Conditions to Indemnification
A person or entity that intends to claim indemnification under this
Section (the "Indemnitee") shall promptly notify the other party (the
"Indemnitor") of any loss, claim, damage, liability or action in respect of
which the Indemnitee intends to claim such indemnification, and the Indemnitor
shall assume the defense thereof with counsel mutually satisfactory to the
Indemnitee whether or not such claim is rightfully brought; provided, however,
that an Indemnitee shall have the right to retain its own counsel, with the fees
and expenses to be paid by the Indemnitor if Indemnitor does not assume the
defense, or if representation of such Indemnitee by the counsel retained by the
Indemnitor would be inappropriate due to actual or potential differing interests
between such Indemnitee and any other person represented by such counsel in such
proceedings. The indemnity agreement in this Section shall not apply to amounts
paid in settlement of any loss, claim
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 35
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damage, liability or action if such settlement is effected without the consent
of the Indemnitor, which consent shall not be withheld or delayed unreasonably.
The failure to deliver notice to the Indemnitor within a reasonable time after
the commencement of any such action, only if prejudicial to its ability to
defend such action, shall relieve such Indemnitor of any liability to the
Indemnitee under this Section, but the omission so to deliver notice to the
Indemnitor will not relieve it of any liability that it may have to any
Indemnitee otherwise than under this Section. The Indemnitee under this Section,
its employees and agents, shall cooperate fully with the Indemnitor and its
legal representatives in the investigations of any action, claim or liability
covered by this indemnification.
9.4 Insurance
To the extent that a party is insured for any matter which is covered by
the indemnities of Section 9.1, the Indemnitees shall be named as additional
insureds under any and all insurance policies and the insured party will provide
evidence of such insurance upon the request of the other party.
SECTION 10 - ASSIGNMENT; SUCCESSORS.
10.1 This Agreement shall not be assignable by either of the parties
without the prior written consent of the other party (which consent shall not be
unreasonably withheld), except that either party, without the consent of the
other, may assign this Agreement to a successor in interest or transferee of all
or substantially all of the portion of the business to which this Agreement
relates.
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 36
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SECTION 11 - FORCE MAJEURE.
Neither party shall be liable to the other party for damages or loss
(other than with respect to payments due LKS hereunder) occasioned by failure of
performance by the defaulting party if the failure is occasioned by war, fire,
explosion, flood, strike or lockout, embargo, or any similar cause beyond the
control of the defaulting party, 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.
SECTION 12 - TERMINATION.
12.1 Except as otherwise specifically provided herein and unless sooner
terminated pursuant to Sections 12.2 or 12.3 of this Agreement, this Agreement
and the licenses and rights granted hereunder shall remain in full force and
effect until KHK's obligations to pay royalties hereunder terminate. Upon
termination of KHK's obligation to pay royalties hereunder with respect to a
specific country and specific PRODUCT as to which KHK's license is then in
effect, the license granted to KHK with respect to such country and such PRODUCT
pursuant to Section 2.1 shall be deemed to be fully paid and KHK shall
thereafter have a royalty-free right to use the PATENT RIGHTS to make, have
made, use and sell such PRODUCT in such country.
12.2 (a) Upon breach of any material provisions of this Agreement by
either party to this Agreement, in the event the breach is not cured within
sixty (60) days after written notice to the breaching party by the
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 37
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other party, in addition to any other remedy it may have, the other party at its
sole option may terminate this Agreement provided that such other party is not
then in breach of this Agreement.
(b) Notwithstanding anything else to the contrary, LKS's liability for any
breach of this Agreement (including but not limited to any liability which
results from any breach of a representation or warranty) is limited to an amount
equal to the research and milestone payments received from KHK under this
Agreement.
12.3 Either party to this Agreement may, upon giving notice of
termination, immediately terminate this Agreement upon receipt of notice that
the other party has become insolvent or has suspended business in all material
respects hereof, or has consented to an involuntary petition purporting to be
pursuant to any reorganization or insolvency law of any jurisdiction, or has
made an assignment for the benefit of creditors or has applied for or consented
to the appointment of a receiver or trustee for a substantial part of its
property.
12.4 Upon any termination of this Agreement, KHK shall be entitled to, but
shall not be obligated to finish any work-in-progress for which KHK has received
firm purchase orders and to sell any completed inventory of a PRODUCT covered by
this Agreement which remains on hand as of the date of the termination, so long
as KHK pays to LKS the royalties applicable to subsequent sales in accordance
with the same terms and conditions as set forth in this Agreement.
12.5 The obligations of Sections 4 and 9, as well as Sections 12.4, 12.5,
12.6, 12.7, 12.8 and 13.3 shall survive any termination of this Agreement.
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 38
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12.6 Upon termination of this Agreement or of the rights and licenses
granted to KHK in any country, KHK agrees not to use the LKS TECHNOLOGY and
PATENT RIGHTS or information or technology derived therefrom for the
manufacture, use or sale of PRODUCTS in any country other than those countries
in which KHK retains a license under this Agreement.
12.7 KHK agrees to use LKS TECHNOLOGY and the PATENT RIGHTS only for the
manufacture, use or sale of PRODUCTS and only and to the extent licensed under
this Agreement.
12.8 During the RESEARCH TERM, ******************************************
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*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 39
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SECTION 13 - GENERAL PROVISIONS.
13.1 The relationship between LKS and KHK is that of independent
contractors. LKS and KHK are not joint venturers, partners, principal and agent
master and servant, employer or employee, and have no relationship other than as
independent contracting parties. LKS shall have no power to bind or obligate KHK
in any manner. Likewise, KHK shall have no power to bind or, obligate LKS in any
manner.
13.2 This Agreement sets forth the entire agreement and understanding
between the parties as to the subject matter thereof and supersedes all prior
agreements in this respect. There shall be no amendments or modifications to
these Agreements, except by a written document which is signed by both parties.
13.3 This Agreement shall be construed and enforced In accordance with
the laws of the Commonwealth of Massachusetts, U.S.A. without reference to
its choice of law principles.
13.4 The headings in this Agreement have been inserted for the convenience
of reference only and are not intended to limit or expand on the meaning of the
language contained in the particular or section or paragraph.
13.5 Any delay in enforcing a party's rights under this Agreement or any
waiver as to a particular default or other matter shall not constitute a waiver
of a party's right to the future enforcement of its
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 40
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rights under this Agreement, excepting only as to an expressed written and
signed waiver as to a particular matter for a particular period of time.
13.6 In conducting any activities under this Agreement or in connection
with the manufacture use or sale of PRODUCT, KHK shall comply with all
applicable laws and regulations including, but not limited to, all Export
Administration Regulations of the United States Department of Commerce.
13.7 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, or (iii) when sent, if sent, by facsimile, as confirmed by
certified or registered mail. Notices shall be delivered to the respective
parties as indicated:
If To LKS: LeukoSite, Inc.
215 First Street
Cambridge, MA 02142
Attn: CEO
Copy to: Carella, Byrne, Bain, Gilfillan,
Cecchi, Stewart & Olstein
6 Becker Farm Road
Roseland, New Jersey 07068
Fax No. (201) 994-1744
Attn: Donald S. Brooks. Esq.
If To KHK: Kyowa Kakko Kogyo Co. Ltd.
6-1 Ohtemachi, I-Chome, Chiyoda-Ku
Tokyo, 100 Japan
Attn: CEO
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 41
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13.8 Any matter or disagreement under this Agreement (other than matters
involving the validity or enforceability of patents) which cannot be resolved by
the parties is to be resolved by arbitration and shall be submitted to a
mutually selected single arbitrator to so decide any such matter or
disagreement. The arbitrator shall conduct the arbitration in accordance with
the Rules of the American Arbitration Association, unless the parties agree
otherwise. If the parties are unable to mutually select an arbitrator, the
arbitrator shall be selected in accordance with the procedures of the American
Arbitration Association. The decision and award rendered by the arbitrator shall
be final and binding. Judgment upon the award may be entered in any court having
Jurisdiction thereof Any arbitration pursuant to this section shall be held in
Boston, Massachusetts, or such other place as may be mutually agreed upon in
writing by the parties.
13.9 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.
LEUKOSITE, INC. KYOWA HAKKO HOGYO CO. LTD.
By:[signature appears here] By:[signature appears here]
Name:____________________________ Name:_____________________________
Title:___________________________ Title:____________________________
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 42
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CONFIDENTIAL TREATMENT
**********
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*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 1
Exhibit 10.16
CONFIDENTIAL TREATMENT
THIS AGREEMENT is made the 25th day of September 1996
BETWEEN:
(1) OXFORD ASYMMETRY LIMITED whose principal place of business is at 151
Milton Park, Abingdon, Oxfordshire, OX14 4SD, England (hereinafter
referred to as "OA"); and
(2) LEUKOSITE INC. whose principal place of business is 215 First Street,
Cambridge, MA 02141, (hereinafter referred to as "LeukoSite").
INTRODUCTION:
(A) OA has expertise in the field of combinatorial chemistry for the rapid
production of new chemical compounds. OA offers such libraries to
customers for screening to detect compounds which may be useful for
particular applications.
(B) OA is willing to supply the libraries of chemical compounds defined in
Appendix B to LeukoSite together with data relating to the libraries and
to license LeukoSite to use the chemical compounds and the library data
for the purpose of screening the libraries for applications within the
Field of Use and to make use and sell Compounds and/or Products resulting
from the screening and LeukoSite is willing to accept such supply and
license on and subject to the provisions of this Agreement.
(C) OA's combinatorial chemistry techniques are still experimental, therefore
preparation of the library compounds identified in Appendix B may require
a substantial amount to research and development work on the part of OA.
Accordingly, OA cannot guarantee that it will be able to synthesize
successfully all of the library compounds.
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 2
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IT IS AGREED AS FOLLOWS:
1. DEFINITIONS
In this Agreement, the following terms shall have the following meanings:
1.1 "Affiliates" (a) any company or other legal entity which
directly or indirectly controls or is under
common control with the party concerned and
(b) any company or other legal entity which
is directly or indirectly controlled by a
company or other legal entity referred to in
(a) above;
1.2 "Compounds" single organic chemical entities developed
and produced by or on behalf of OA;
1.3 "Plate" a micro-titre plate of Library Compounds in
a spatial arrangement agreed with LeukoSite;
1.4 "Confidential Information" shall have the meaning to it in Clause 9.1;
1.5 "Estimated Delivery Dates" the estimated delivery date for each Library
as stated in Appendix A;
1.6 "Exclusivity Period" the initial exclusivity period for each
Library as stated in Appendix A, which may
be extended by OA from time to time pursuant
to Clause 3.5;
1.7. "Exclusivity Extension
Fee Per Month" the price per month for extending the
Exclusivity Period for each Library as
stated in Appendix A;
1.8 "Initial Payments" the initial nonrefundable payment payable by
the Customer to OA in respect of each
Library as stated in Appendix A;
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 3
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1.9 "Success Criteria" the criteria defined in Appendix C which
have been agreed by LeukoSite and OA to
indicate that a particular Library Compound
is shown to have certain characteristics of
particular interest;
1.10 "Success Payment" the payment made by LeukoSite to OA in
respect of a Library Compound which has
achieved the Success Criteria;
1.11 "Field of Use" human pharmaceutical applications
1.12 "Intellectual Property
Rights" patents, patent applications, utility
models, copyrights, know-how, design
rights, and any other intellectual
property rights analogous to the same;
1.13 "Libraries" the libraries of Compounds identified in
Appendix B;
1.14 "Library Compound" a Compound included within any Library;
1.15 'Products" an active Compound or product resulting from
screening a Library;
1.16 "Library Data" the information to be provided by OA with
each Library as described in Appendix E;
1.17 "Purchase Price" the price payable by LeukoSite to OA in
respect of the Library Compounds and the
Library Dam as set out in Appendix A
1.18 "Specification" the specification for the Compounds as set
out in Appendix D.
1.19 "Valid Claim" a claim of an issued OA parent or joint
parent owned by OA and
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 4
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LeukoSite covering a Product which has not
lapsed or been declared invalid or
unenforceable by a court of competent
jurisdiction or an administrative agency
from which no appeal can or is taken.
2. SUPPLY OF THE LIBRARIES AND THE LIBRARY DATA
2.1 OA shall use reasonable efforts to synthesize each of the Compounds
forming part of the Libraries. However, LeukoSite acknowledges that it may
not be feasible for OA to prepare every Compound within a Library.
Accordingly, OA shall not be liable for any failure to supply any of the
Compounds within a Library, provided tat OA has used reasonable efforts to
try to do so.
2.2 OA shall use it reasonable efforts to deliver to LeukoSite each Library by
the Estimated Delivery Date for that Library, provided that time shall not
be of the essence for such delivery and OA shall not in any circumstances
be liable for any loss or damage incurred by LeukoSite as a result of any
delay in delivery.
2.3 Physical title to and all risk of loss in each Library Compound shall pass
to LeukoSite upon delivery of the Library Compound to LeukoSite's
premises.
2.4 LeukoSite may from time to time notify OA that it wishes to receive
duplicates of any Library Compound. If OA is willing to provide such
duplicates, it shall notify LeukoSite accordingly and include in such
notice, an estimated delivery date and purchase price for the duplicates.
All duplicate Libraries Compounds shall be supplied to LeukoSite on and
subject to the same provisions as apply to the initial Library Compounds.
2.5 OA shall provide the Library Data for a particular Library to LeukoSite at
the same time as it supplies the Library Compounds to LeukoSite.
3. USE OF LIBRARIES COMPOUNDS AND THE LIBRARY DATA
3.1 OA shall grant to LeukoSite a license as described in Clause 5 to use the
Library Compounds and the Library Data for the sole purpose of screening
the Libraries to detect Compounds which may have application within the
Field of Use.
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 5
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3.2 LeukoSite shall not use the Library Compounds and/or the Library Data for
any purpose other than the purpose expressly stated in Clause 3.1. For the
avoidance of doubt, LeukoSite shall not be entitled to screen or test the
Library Compounds for potential applications in any area or field of use
other than the Field of Use.
3.3 LeukoSite shall nor and shall procure that its Affiliates shall not
develop and/or exploit commercially any Library Compound or analogs or
derivatives of a Library Compound unless OA and LeukoSite have executed an
agreement in of such Library Compound, analog or derivative in accordance
with the provisions of Clause 5.
3.4 During a Library's Exclusivity Period, OA shall not supply or grant rights
to that Library to any third party for screening for potential
applications within the Field of Use.
3.5 If LeukoSite wishes to extend the initial Exclusivity Period for any
Library for a further period, LeukoSite shall give OA written notice
thereof at least 14 days before the expiry of the initial Exclusivity
Period specifying the Library concerned and the length of the requested
extension. If OA, at its sole discretion, agrees to extend the Exclusivity
Period, it shall notify LeukoSite of the relevant extension fee calculated
in accordance with Clause 4.5. Any such extension to the Exclusivity
Period shall commence on the date of OA's notice to LeukoSite and shall be
in respect of the Field of Use only.
3.6. LeukoSite shall not in any circumstances sell, swap, give or in any way
release any of the Library Compounds supplied by OA to any third party.
4. PAYMENT
4.1. LeukoSite has paid OA the sum of *******************************
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****************************************** The Initial Payments are to
cover some of OA's costs in carrying out the research and development work
required to produce the Library Compounds. *********************
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 6
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**************************************************************************
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********************************************* LeukoSite is prepared to be
flexible and accept the appropriate substitution of particular building
blocks by others if they are shown to be technically difficult to
incorporate.
4.2. The Purchase Price for each Library Compound and the target number of
Library Compounds in each Library are stated in Appendix A.
4.3. LeukoSite may give OA one month's notice in writing that it does not wish
to receive any additional Library Compounds from a particular Library
provided that at the same time LeukoSite provides a sum of money to OA,
equivalent to the outstanding purchase price for that Library (total
Library price - price of Library Compounds already supplied), as a
non-returnable deposit for future purchases. Notwithstanding the
foregoing, on receipt of such notice from LeukoSite, OA shall issue an
invoice payable by LeukoSite for all labour, material and overhead costs
that it has incurred, or for which commitments have been made, for the
development and synthesis of Library Compounds forming part of the
cancelled Library which have not been supplied. In no event shall this
invoice be for a sum greater than the outstanding purchase price for a
particular Library.
4.4. On or after delivery of any Plate to LeukoSite, OA shall submit an invoice
to LeukoSite for the Purchase Price of the Plate together with the costs
of packaging, carriage and insurance of the Plate and any VAT payable
thereon.
4.5. If LeukoSite notifies OA pursuant to Clause 3.5, that it wishes to extend
a Library Compound's Exclusivity Period and OA notifies LeukoSite that it
is prepared to do so then Leukosite shall pay an extension fee calculated
by multiplying the Extension Fee Rate Per Month for that Library Compound
by the requested number of months extension.
4.6. On or after OA has notified LeukoSite pursuant to Clause 3.5. that OA will
grant the requested extension, OA shall invoice LeukoSite for the relevant
extension fee calculated in accordance with Clause 4.5 together any VAT
payable thereon.
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 7
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4.7. Leukosite will promptly inform OA if a Library Compound achieves the
Success Criteria as defined in Appendix C.
4.8. Having received notice pursuant to Clause 4.7, OA shall invoice LeukoSite
for the Success Payment defined in Appendix C.
4.9 LeukoSite shall make payments to OA in respect of any invoice submitted
under this Agreement within 14 days of the date of the invoice.
4.10 All sums stated in this Agreement are exclusive of Value Added Tax which
shall be payable in addition if applicable.
4.11. All sums payable under this Agreement shall be paid in US dollars by way
of bank transfer into OA's bank account, details of which shall from time
to time be notified to LeukoSite by OA.
5. RIGHT TO EXPLOIT THE COMPOUNDS COMMERCIALLY
5.1 If LeukoSite and/or any of its Affiliates wish to develop any Library
Compound (or analogue or derivative thereof) as a Potential Product, then
LeukoSite shall notify OA in writing, identifying the Library Compound (or
the analogue or derivative thereof) concerned and the potential
application.
5.2 On receipt of notice from LeukoSite pursuant to Clause 5. 1, the parties
shall promptly negotiate in good faith an agreement on fair and reasonable
terms to implement inter alia the FOLLOWING commercial principles and
provisions:-
5.2.1 OA to grant LeukoSite (or its designated Affiliate) the
-exclusive worldwide right to manufacture, use, sell and market
the Licensed Product solely for applications within the Field of
Use.
5.2.2 In countries where OA owns Intellectual Property Rights covering
the Licensed Product or jointly owns such Intellectual Property
Rights with LeukoSite, OA shall grant to LeukoSite an exclusive
license under such Intellectual Property Rights to develop,
manufacture, use, sell and market the Licensed Product solely for
applications within the Field of Use.
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 8
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5.2.3 LeukoSite shall have the right to grant sub-licenses under the
above license.
5.2.4 LeukoSite shall pay OA royalties of **********************
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*****
5.2.5 Royalties under Clause 5.2.4 shall be paid on a country by
country basis for *************** after the date of launch and
thereafter so long as the Product is covered by a Valid Claim in
the country where sold.
5.2.6 Royalties, including those based on amounts received from sub
licensees, payable under Clause 5.2.4 shall be reduced by *****
for any period during which the Product is not covered by a Valid
Claim in the country where sold.
5.2.7 The compensation set forth in Clauses 5.2.4, 5.2.5 and 5.2.6
shall be the sole compensation applicable to a Product.
5.2.8 Only one royalty shall be payable regardless of the number of
Valid Claims covering a Product.
5.2.9 Reporting and audit provisions.
5.2.10 LeukoSite to use reasonable efforts to develop and commercialize
the licensed Product and to maximize sales thereof.
5.2.11 Reciprocal indemnity in respect of third party claims.
5.2.12 Confidentiality provisions.
5.2.13 Termination provisions for breach and insolvency.
6. INTELLECTUAL PROPERTY RIGHTS
6.1. Subject to any rights granted in an agreement executed pursuant to Clause
5.2 and except for sole inventions made by LeukoSite and except for Joint
Inventions as set forth below, OA shall retain all Intellectual Property
Rights in the Libraries and Library Compounds including without limitation
the right to apply for
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 9
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patent protection in respect of the Libraries and/or the Library
Compounds.
6.2 LeukoSite shall not, without the prior written consent of OA, apply for
patent protection in respect of any application that it discovers for a
Library Compound until the parties have executed an agreement in respect
of such Library Compound pursuant to Clause 5.2. Subject to this provision
LeukoSite shall be responsible for filing and pursuing patent applications
for all inventions related to Products and all related costs.
6.3 In the event that OA and LeukoSite make a joint invention ("Joint
Invention"):-
6.3.1 OA and LeukoSite shall jointly own all patents resulting from such
Joint Invention except as provided in Clause 6.3.3.
6.3.2 LeukoSite shall be responsible for preparing filing and pursuing
patent applications for Joint Inventions and they shall be
responsible for all related costs. However, LeukoSite shall consult
fully with OA on the patent strategy for each Joint Invention and
shall keep OA fully informed of the progress of such patent
strategy.
6.3.3 If Leukosite does not wish to obtain patent protection for a Joint
Invention then LeukoSite shall promptly notify OA. OA shall then
have the right to obtain patent protection on such Joint Invention.
Any such patents obtained by OA in respect of a Joint Invention
shall be solely owned by OA.
6.3.6 Except for the rights granted hereunder neither party shall exploit
commercially or license a jointly owned patent in respect of a Joint
Invention in any country without prior written consent of the other
party.
7. NO OBLIGATION TO PROVIDE FURTHER INFORMATION
7.1 Save as provided in Clauses 4.7 & 5.1, LeukoSite shall be under no
obligation to provide OA with any results relating to LeukoSite's
screening of the Libraries provided that if LeukoSite shall become aware
that any of the Library Compounds are toxic or hazardous LeukoSite shall
promptly notify OA with all information in its possession or control
concerning the toxicity or hazard.
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 10
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7.2. OA shall be under no obligation to provide LeukoSite with any information
other than that contained in the Library Data.
8. WARRANTIES
8.1. OA gives no warranties whatsoever in respect of the Libraries or any of
the Library Compounds or the Library Data except that OA warrants that:
8.1.1 OA will own the physical material in the Plates that it delivers
to LeukoSite under this Agreement;
8.1.2 The Plates and Library Compounds delivered to LeukoSite under
this Agreement will meet the Specifications; and
8.1.3 OA has the right to disclose the Library Data to LeukoSite solely
for use in accordance with the provisions of this Agreement.
8.2 Without limitation to the generality of Clause 8.1, OA gives no warranty
that the Library Compounds:-
8.2.1. are fit for any purpose;
8.2.2. are safe for use in connection with humans, animals or plants;
8.2.3. are non toxic;
8.2.4. are non-hazardous;
8.2.5 are new or have never been published; and/or
8.2.6 do not infringe the Intellectual Property Rights of any third
parry nor that the production or use of the Library Compounds
will not infringe the Intellectual Property Rights of any third
parry.
8.3 All warranties implied by law (whether by stature, common law, trade
usage, custom or otherwise) are hereby excluded to the maximum extent
permitted by law.
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 11
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9. CONFIDENTIALITY
9.1 In this Agreement "Confidential Information" shall mean any :information
provided to LeukoSite by OA in anticipation of, or during, the term of
this Agreement including without limitation technical information (such as
the Library Data and Information relating to OA's business (such as its
future plans). Confidential information shall not include any information
which:-
9.1.1 is or becomes, through no act of default on the part of LeukoSite
or its officers or employees, generally known or available to the
public:
9.1.2 LeukoSite can prove by documentary evidence produced to OA that
the Confidential Information disclosed was already known to
LeukoSite at the time of its disclosure to OA or is subsequently
developed by LeukoSite independently of the information received
from OA; and/or
9.1.3 is disclosed to LeukoSite by a third party without any
obligations of confidence and such third party did not acquire
such Confidential Information directly or indirectly from OA.
9.2 LeukoSite shall not use any Confidential Information directly or
indirectly for any purpose other than that stated in Clause 3.1 or
pursuant to any license granted under Clause 5.2.
9.3 LeukoSite shall not make conies of the Confidential Information - except
as necessary for the purposes stated in Clause 3.1 or pursuant to any
license granted under Clause 5.21.
9.4 LeukoSite shall not disclose to any third party any of the Confidential
Information except with the express prior written consent of OA except as
set forth in Clause 9.5.
9.5 LeukoSite shall limit disclosure of the Confidential Information to such
of its offices and employees to whom such disclosure is necessary for the
purposes of this Agreement. LeukoSite shall procure that its officers and
employees maintain the confidentiality of the Confidential Information.
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 12
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10. LIMITATION OF LIABILITY
10.1 Unless caused by the negligence or willful misconduct of OA, OA shall have
no liability whatsoever to LeukoSite for any loss or damage resulting
directly or indirectly from LeukoSite's activities in connection with the
Libraries (and/or any of the Library Compounds) and/or the Library Data.
10.2 OA's total liability to LeukoSite in respect of matters arising out of or
in connection with this Agreement shall not exceed the total amount paid
to OA under this Agreement.
10.3 This Clause 10 shall not operate to exclude or limit any liability which
OA is prohibited by law from excluding, or limiting-
11. INDEMNITY
LeukoSite shall indemnify fully, and keep indemnified fully, OA against
any and all damages. losses, costs and/or expenses (including without
limitation legal expenses and experts fees) incurred by OA which arise out
of or in connection with any claim or allegations by any third party in
respect of LeukoSite's use of or other activities in connection with the
Library Compounds provided under this Agreement and/or the Library Data,
except to the extent of negligence or willful misconduct by OA. OA shall
promptly notify LeukoSite of any such claim and LeukoSite shall control
the defense settlement or compromise of any such claim.
12. EXPIRY & TERMINATION
12.1 This Agreement shall expire at **********************************
************************
12.2 This Agreement may be terminated by either party by giving immediate
notice of termination to the other party if the other party shall have
failed to remedy any breach of this Agreement within 30 days of receiving
notice of such breach.
12.3 This Agreement may be terminated forthwith by OA giving written notice to
LeukoSite where LeukoSite becomes insolvent or has an Administrator,
Administrative Receiver or Receiver appointed over the whole or any
significant part of its business and assets, or if any order is made or a
resolution passed or proposed for winding-up LeukoSite (except for the
purposes of a valid amalgamation or
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 13
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reconstruction) or any similar action or event which occurs in respect of
that party under the laws of any other country.
13. CONSEQUENCES OF EXPIRY & TERMINATION
13.1 Expiry or termination of this Agreement shall be without prejudice to any
rights which may have accrued to either party before the date of expiry or
termination, including but not limited to rights granted under Clause 5.
13.2 Upon expiry or termination of this Agreement:-
13.2.1 all rights and obligations of the parties under this Agreement
shall, subject to Clause 13.1 and 13.2.4, terminate;
13.2.2 LeukoSite shall return to OA all unused Library Compounds in its
possession and/or control supplied under this Agreement and all
copies of the Confidential Information in the possession and/or
control of LeukoSite;
13.2.3 any agreements entered into pursuant to Clause 5.2 shall continue
in full force and effect; and
13.2.4 the following clauses shall remain in full force and effect;
Clauses 1, 3.2, 3.3, 4.7, 4.8, 4.9, 4.10, 4.11, 5, 6, 8, 9, 10,
11, 13 and 15.
14. FORCE MAJEURE
If the performance of this Agreement or any obligation under this
Agreement (except for the payment of any sum of money) is prevented,
restricted or interfered with by reason of any circumstances beyond the
reasonable control of the parties then the party so affected shall, upon
giving prompt notice in writing to the other party, be excused from such
performance or obligation to the extent of and for the duration of such
prevention, restriction or interference.
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 14
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15. MISCELLANEOUS
15.1 Notice
15.1.1 Any notice or other communication given under this Agreement
shall be in writing in the English language and shall be sent by
pre-paid air-mail or by fax (confirmed on the same day be
pre-paid air-mail) to the address or fax number set out below or
to such other address or fax number as may from time to time be
notified to the other party in writing as the address or fax
number for service notices under this Agreement.
for Oxford Asymmetry for LeukoSite Inc.
notices to: notices to:
Dr. Edwin Moses Dr. Christopher Mirbelli
Managing Director Chief Executive Officer
151, Milton Park 215 First Street
Abingdon Cambridge,
Oxon, OX14 4SD MA 02142
UK USA
Fax: 011-44-1235-863139 Fax: 1-617-621-9349
15.1.2 Any notice so sent by pre-paid air-mail shall be deemed to have
been given on the sixth business day from and including the date
of posting. Any notice so sent by fax (and confirmed by airmail)
shall be deemed to have been given the next business day
following the day of transmission.
15.2 Severability
15.2.1 If any provision of this Agreement is declared by any judicial or
other competent authority to be void, voidable, illegal or
otherwise unenforceable then such provision shall be deemed to be
deleted from this Agreement and the remaining provisions of this
Agreement shall continue in full force and effect.
15.2.2 The parties shall substitute for any such unenforceable provision
an enforceable provision which achieves to the greatest extent
permissible the economic, legal and commercial objectives of the
unenforceable provision.
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 15
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15.3 Waiver
Failure or delay by either party to exercise any right or remedy under
this Agreement shall not be deemed to be a waiver of that right or remedy,
or prevent it from exercising that or any other right or remedy on that
occasion or on any other occasion.
15.4 Entire Agreement and Amendments
15.4.1 This Agreement constitutes the entire agreement and understanding
of the parties relating to the subject matter of this Agreement
and supersedes all prior oral or written agreements,
representations, understandings or arrangements between the
parties relating to the subject matter of this Agreement.
15.4.2 The parties acknowledge that they are not relying on any
agreement, understanding, arrangements, warranty, representation
or term which is not set out in this Agreement.
15.4.3 The parties irrevocably and unconditionally waive any rights
and/or remedies they may have (including without limitation the
right to claim damages and/or to rescind this Agreement) in
respect of any misrepresentation other than a misrepresentation
which is contained in this Agreement or a misrepresentation which
was made fraudulently.
15.4.4 Nothing in this Clause 15.4 shall operate to: -
15.4.4.1 exclude any provision implied into this Agreement by law
and which may not be excluded by law; or
15.4.4.2 limit or exclude any liability, right or remedy to a
greater extent than is permissible under law.
15.4.5 No change may be made to this Agreement except in writing in the
English language signed by the duly authorised representatives of
both parties.
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 16
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15.5 Relationship of the Parties
15.5.1 Nothing in this Agreement shall create, evidence or
imply any agency, partnership or joint venture between
the parties.
15.5.2 Neither party shall act or describe itself as the agent
of the other nor shall it represent that it has any
authority to make commitments on the other's behalf.
15.6 Assignment and Sub-contracting
15.6.1 This Agreement is personal to LeukoSite and LeukoSite
shall not, without the prior written consent of OA,
assign or transfer the rights and obligations under this
Agreement, except that LeukoSite may assign or transfer
its rights and obligations under this Agreement in the
case of a merger or acquisition or transfer of all of
LeukoSite's assets to which this Agreement relates.
15.6.2 OA shall be entitled (without the consent of LeukoSite)
to assign this Agreement and/or sub-contract the
obligations of this Agreement to an Affiliate of OA.
15.7 Publicity
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15.8 Law and Jurisdiction
The validity, construction and performance of this Agreement shall be governed
by English law and the parties accept the non-exclusive jurisdiction of the
English courts in respect thereof.
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 17
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AGREED by the parties through their authorized signatories:-
For and on behalf of For and on behalf of
Oxford Asymmetry Limited: LeukoSite Inc.
[signature appears here] [signature appears here]
- ------------------------------ ---------------------------------
Signature Signature
- ------------------------------ ---------------------------------
Name (Print) Name (Print)
- ------------------------------ ---------------------------------
Title (Print) Title (Print)
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 18
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**********
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******** ******** ******* ******* ******* ******** *************
******** ********* ***** **** ****** **********
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*** *
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* *** ****** ******* ******** ******** ********* ************
******* *
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* *** ****** ******* ******** ******* ******** ************
*** *
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*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 19
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**********
***************************
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 20
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*********************
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 21
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********************
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 22
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*******************
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 23
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*********************
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 24
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**********
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** *****************
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** **********
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************ ****************************
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*Confidential treatment requested: material has been omitted and filed
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<PAGE> 25
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**********
*************
** ********************************************************
** ****************************************************
** ************************************************************
***************
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 26
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*************
*************
** **********************************************
** *******************************************************
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** *********************************************************
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*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 1
Exhibit 10.17(a)
CONFIDENTIAL TREATMENT
AGREEMENT OF LIMITED PARTNERSHIP
--------------------------------
OF
--
L & I PARTNERS, L.P.
--------------------
This Agreement of Limited Partnership of L & I Partners, L.P. dated
May 2, 1997, is entered into by and among L & I, L.L.C., a Delaware limited
liability company, as the General Partner, and the persons who have executed and
delivered this Agreement and whose names appear on SCHEDULE A hereto (as said
SCHEDULE A hereto may be amended from time to time as hereinafter provided), as
the Limited Partners.
In consideration of the mutual covenants, conditions and agreements
herein contained, the parties hereto hereby agree as follows:
ARTICLE 1
DEFINITIONS
-----------
In addition to terms defined elsewhere in this Agreement, the following
terms shall have the following meanings:
"ACT" means the Delaware Revised Uniform Limited Partnership Act, as it
may be amended from time to time, and any successor to said Act.
"AFFILIATE" means, when used with respect to a specified Person, any
other Person directly or indirectly controlling or controlled by or under direct
or indirect common control with the specified Person, provided that the
Partnership shall not be deemed to be an Affiliate of any Partner. For purposes
of this definition "control", when used with respect to any specified Person,
means the power to direct the management and policies of the Person, directly or
indirectly, whether through -the ownership of voting securities, by contract, by
family relationship or otherwise; and the terms "controlling" and "controlled"
have the meanings correlative to the foregoing.
"AGREEMENT" means this Agreement of Limited Partnership of L & I
Partners, L.P., as the same may be amended, modified or restated from time to
time.
"CAPITAL CONTRIBUTIONS" means the amount of cash or the fair market
value, as determined in the sole judgment of the General Partner, of other
property contributed to the Partnership.
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 2
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"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMITMENT" shall mean the commitment by a Partner to make Capital
Contributions as determined under ARTICLE 4 hereof and set forth in Schedule A
hereto.
"CONTRIBUTION PER UNIT" shall mean, with respect to a Partner as of the
date of determination, the aggregate amount of all Capital Contributions made by
such Partner as of such date divided by the number of Units owned by such
Partner as of such date.
"COVERED PERSON" means any Partner, an Affiliate of a Partner or any
officer, manager, director, shareholder, partner or member of the Partnership or
of a Partner or their respective Affiliates.
"DISTRIBUTABLE CASH" shall mean, at the time of determination, all
Partnership cash derived from the conduct of the Partnership's business, other
than (i) Capital Contributions, together with interest earned thereon pending
utilization thereof, (ii) financing proceeds and (iii) reserves for working
capital and other amounts that the General Partner reasonably determines to be
necessary for the proper operation of the Partnership's business and its winding
up and liquidation.
"GENERAL PARTNER" means L & I, L.L.C., a Delaware limited liability
company, or any other Person who, at the time of reference, serves as the
general partner of the Partnership, and who owns the number of Units set forth
on SCHEDULE A hereto.
"GROSS ASSET VALUE" means, as of any date of determination, the fair
market value of all property of the Partnership as of the date on which the
determination thereof is to be made. The fair market value of the property of
the Partnership shall be determined by the General Partner. At the General
Partner's election, or if no determination is made by the General Partner within
15 days after a request therefor is made, the fair market value of the property
of the Partnership shall be determined by an independent appraiser selected by
the General Partner. An appointed appraiser may employ persons and incur
expenses as are necessary to make the determination. In all determinations of
fair market value, no value shall be placed on the goodwill or name of the
Partnership. Determinations of fair market value made in accordance with the
foregoing shall be final and not subject to challenge by any Partner.
"ILEX" means ILEX Oncology, Inc., a Delaware corporation.
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 3
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"LICENSE AGREEMENT" shall mean the License Agreement dated May 2, 1997
between the Partnership and LKS.
"LIMITED PARTNERS" means each Person who is a limited partner (which
shall include each Limited Partner executing this Agreement on the date hereof,
each additional Limited Partner and each substituted Limited Partner) at the
time of reference thereto, and who owns the number of Units set forth on
SCHEDULE A hereto.
"LKS" means LeukoSite, Inc., a Delaware corporation.
"OWNERSHIP RESTRICTION AGREEMENT" means the Ownership Restriction
Agreement dated May 2, 1997, among the Partnership, the General Partner, the
members of the General Partner and the Limited Partners.
"PARTNERS" means, collectively, the General Partner and the Limited
Partners, and "PARTNER" means any one of them.
"PARTNERSHIP" means L & I Partners, L.P., the limited partnership
entered into and formed hereunder pursuant to the Act.
"PERSON" shall mean an individual, corporation, association, limited
liability company, limited liability partnership, partnership, estate, trust,
unincorporated organization or a government or any agency or political
subdivision thereof.
"PRE-DEVELOPMENT BUDGET" shall mean the budget set forth as EXHIBIT A
hereto, as amended in accordance with SECTION 18.6.
"PRIME RATE" shall mean the variable rate per annum equal to the rate
of interest published in the Wall Street Journal (Southwest Edition) in the
"Money Rates" section as the "Prime Rate", adjusted as of the first business day
of each month.
"SECURITIES ACT" shall mean the Securities Act of 1933, as it may be
amended from time to time, and any successor to said Act.
"UNIT PERCENTAGE" means, as to any Partner, the fraction, expressed as
a percentage, having as its numerator the number of Units owned by such Partner
and having as its dominator the total number of Units of all Partners.
"UNITS" means the issued and outstanding ownership interests of the
Partnership held by the Partners as set forth on SCHEDULE A hereto (as amended
in accordance with this Agreement by the General Partner) and
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 4
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the rights and obligations associated with ownership interests of the Partners
in the Partnership at the relevant time, including the consent, approval and
management rights of the Partners and any and all other benefits to which the
Partners may be entitled as provided in this Agreement, together with the
obligations of the Partners to comply with all the terms and provisions of this
Agreement. "UNIT" means any one of the Units.
ARTICLE 2
FORMATION OF PARTNERSHIP
------------------------
2.1 FORMATION. The Partners hereby enter into and form the Partnership
as a limited partnership pursuant to the provisions of the Act.
2.2 NAME. The name of the Partnership shall be "L & I Partners, L.P."
2.3 CERTIFICATE. The General Partner shall cause a certificate of
limited partnership meeting the requirements of the Act, and any amendments
thereto which are required under the Act, to be filed, when and as required.
2.4 PRINCIPAL PLACE OF BUSINESS. The principal place of business of the
Partnership shall be 11550 IH 10 West, Suite 300, San Antonio, Texas 78230, or
such other place as the General Partner may determine.
2.5 REGISTERED OFFICE, REGISTERED AGENT. In Delaware, the Partnership
shall maintain a registered office at 1209 Orange Street, Wilmington, Delaware
19801, and the name of the Partnership's registered agent at that address shall
be CT Corporation System. In Texas, the Partnership shall maintain a registered
office at 11550 IH 10 West, Suite 300, San Antonio, Texas 78230, and the name of
the Partnership's registered agent at that address shall be James R. Koch. ILEX
shall cause Mr. Koch to forward to each of the Partners a copy of any
correspondence received by him in his capacity as the Partnership's registered
agent in Texas.
2.6 TERM. The term of the Partnership shall commence on the date hereof
and shall continue for a period of 20 years, unless the Partnership is continued
or sooner dissolved pursuant to the provisions of this Agreement.
ARTICLE 3
PURPOSE: OPPORTUNITIES
----------------------
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 5
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3.1 PURPOSE. The purpose and nature of the business to be conducted by
the Partnership shall be limited to (a) the commercialization of the Products
(as defined in the License Agreement) under the License Agreement and (b) enter
into, make and perform all such agreements and undertakings, and to engage in
all such activities and transactions, as the General Partner may deem necessary
or advisable for or incidental to the carrying out of the foregoing.
3.2 OUTSIDE ACTIVITIES. This Agreement shall not preclude or limit, in
any respect, the right of the General Partner, any other Partner or any of their
Affiliates to engage or invest in any business activity of any nature or
description, including those which may be the same as or similar to the
Partnership's business. Any such activity may be engaged in independently or
with others without any obligation whatsoever to offer same to any other
Partner. Neither the Partnership, any Partner nor any of their Affiliates shall
have any right, by virtue of this Agreement or the partnership relationship
created hereby, in or to such other investments or activities, or- to the income
or proceeds derived therefrom.
ARTICLE 4
CAPITAL CONTRIBUTIONS; PARTNERS
-------------------------------
4.1 PRE-DEVELOPMENT CONTRIBUTIONS. During the period commencing on the
date hereof and ending ************ thereafter (the "Pre-Development Period"),
the Partners hereby commit to make Capital Contributions to fund the
Partnership's payment of third party costs and expenses set forth in the
Pre-Development Budget; provided, however, that overhead and other costs
expressly designated in the Pre-Development Budget as the separate costs of a
Partner shall be borne solely by such Partner and shall not be treated as a
Capital Contribution hereunder.
4.2 INITIAL CAPITAL COMMITMENTS. Upon the expiration of the
Pre-Development Period, the Partners commit to make an aggregate of **********
in Capital Contributions (the "Initial Commitments") in accordance with their
respective Unit Percentages. Such contributions shall be used to fund the
operations of the Partnership.
4.3 ADDITIONAL CAPITAL COMMITMENTS. When the Initial Commitments have
been funded by the Partners and the Partnership has a Capital Need (as defined
below), there shall be successive additional rounds of commitments for Capital
Contributions offered by the Partnership to the Partners ("OFFERED COMMITMENTS"
and together with Initial Commitments, collectively the "COMMITMENTS");
provided, however,
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 6
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the aggregate Capital Contributions made by all Partners under all Commitments
shall not exceed *********** without the prior express written consent of all
Partners. Each such round shall be in increments of ********** in aggregate
Offered Commitments and shall be offered as soon as practical upon a Capital
Need. As used herein, a "CAPITAL NEED" shall be deemed to exist when (a) all
then outstanding Commitments of the Partners have been fully funded and (b) the
Partnership then needs additional funds (or reasonably anticipates the need for
additional funds within 60 days) for its operations or to maintain reasonable
reserves for such operations. Upon the occurrence of a Capital Need, an offering
of a round of Offered Commitments may be commenced by any Partner upon such
Partner giving written notice thereof to the other Partners and, once commenced,
such offering shall continue for a period of 30 days thereafter (the "OFFER
PERIOD"). With regard to each round of Offered Commitments, the General Partner
must accept Offered Commitments in an amount equal to ** of all Offered
Commitments accepted by the Limited Partners and each Limited Partner shall have
the right (but no obligation) to accept Offered Commitments in an amount equal
to but not less than ***** of the Offered Commitments (which percentage may not
correspond to then existing Unit Percentages, as adjusted). Each Limited Partner
that desires (or is obligated) to accept Offered Commitments must give written
notice of its acceptance to each other Partner and to the Partnership during the
Offer Period. Unless a Limited Partner accepts Offered Commitments during the
Offer Period in accordance with the foregoing, such Limited Partner shall be
deemed to have rejected such Offered Commitments. If a Limited Partner rejects
(or is deemed to have rejected) the Offered Commitments, the other Limited
Partner may elect to accept all (but not less than all) of such rejected Offered
Commitments by giving written notice thereof to the Other Partners on or before
the expiration of 15 days after the end of the Offer Period.
4.4 FUNDING OF COMMITMENTS. All Commitments made by the Partners
pursuant to the provisions of this Article 4 shall be funded upon request by the
General Partner (or its managers or officers) as necessary to fund the
Partnership's operations and to maintain reasonable reserves for such
operations. Each request for funding shall be given by the General Partner (or
its managers or officers) to all other Partners at least five business days
prior to the funding date. Each request for funding shall include the statement
as to the intended use of the proceeds of such funding.
4.5 BINDING COMMITMENTS, DEFAULT. All Commitments made by the Partners
pursuant to the provisions of this ARTICLE 4 shall be irrevocable, binding
commitments which shall be enforceable by the Partnership
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 7
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against the Partners making such Commitments. If a Partner does not fund a
Commitment made by it in accordance with the foregoing provisions, the other
Partners may (without any obligation) fund the unfunded portion of such
Commitment. Any such funding shall be in addition to, and not in lieu of, all
rights and remedies that the Partnership and the other Partners may be entitled
to against the defaulting Partner pursuant to this Agreement, at law or in
equity.
4.6 ADJUSTMENTS TO UNITS. As of any date (an "ADJUSTMENT DATE") on
which, in accordance with the foregoing, Capital Contributions are made by the
Partners other than in accordance with their Unit Percentages, the Units of all
Partners shall automatically (and without any further action by the Partners) be
adjusted so that the number of Units held by each Partner shall be equal to 100
multiplied by a fraction, the numerator of which shall be the aggregate amount
of Capital Contributions made by such Partner as of the Adjustment Date, and the
denominator of which shall be the aggregate amount of Capital Contributions made
by all Partners as of the Adjustment Date; it being understood that the total
number of Units held by all Partners shall always equal 100. As of the date of
each Adjustment Date, the Unit Percentage of each Partner shall also be adjusted
based upon the adjusted number of Units held by each Partner. Promptly after
each Adjustment Date, the General Partner shall amend SCHEDULE A hereto to
reflect the automatic adjustment of the number of Units and Unit Percentages as
of each Adjustment Date (such adjustment shall nevertheless be effective as of
the Adjustment Date regardless when SCHEDULE A hereto is amended).
4.7 SCHEDULE OF PARTNERS, COMMITMENTS-, CONTRIBUTIONS, UNIT OWNERSHIP.
The name, address, Commitments, Capital Contributions and Unit ownership of each
Partner are set forth on SCHEDULE A attached hereto. SCHEDULE A hereto shall be
amended by the General Partner to reflect the admission of additional or
substituted Limited Partners and to reflect adjustments to Units, Unit
Percentages, Commitments and Capital Contributions in accordance with the
provisions of this Agreement. The General Partner shall amend SCHEDULE A hereto
pursuant to the power of attorney granted under ARTICLE 13 hereof to reflect any
such adjustments. The Units owned by Partners hereunder shall not be represented
by certificates.
4.8 NO THIRD PARTY BENEFICIARIES. In no event shall a third party,
including without limitation a creditor of the Partnership, be entitled to in
any way rely upon or enforce the obligation of Partners to make future Capital
Contributions.
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 8
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4.9 LOANS AND WITHDRAWAL OF CAPITAL CONTRIBUTIONS. No Partner shall be
permitted to borrow, or to make an early withdrawal of, any portion of the
capital contributed by such Partner.
4.10 LIMITED LIABILITY OF LIMITED PARTNERS. No Limited Partner shall be
bound by or personally liable for the expenses, liabilities or obligations of
the Partnership.
4.11 LIMITED CATCH-UP OPTION. In the event that the Unit Percentages of
the Limited Partners are adjusted pursuant to SECTION 4.6 as a result of one
Limited Partner (the "CONTRIBUTING PARTNER") making more Capital Contributions,
in aggregate, than the other Limited Partner (the "NON-CONTRIBUTING PARTNER"),
the Non-Contributing Partner shall have a limited, one-time option (the
"OPTION") to purchase a portion of the Contributing Partner's Units as provided
in this Section. The Option shall be exercisable by the Non-Contributing Partner
one time (but not more than one time) at any time prior to (but not after) the
fifth (5th) anniversary of the initial effective date of this Agreement (the
"OUTSIDE DATE"). The Option may be exercised by the Non-Contributing Partner
giving written notice of exercise to the Contributing Partner prior to the
Outside Date. The purchase price of the Units purchasable pursuant to the Option
shall be equal to the sum of (i) the Contributing Partner's Contribution Per
Unit as of the date of exercise of the Option multiplied by the number of Units
being purchased plus (ii) Applicable Interest. The maximum number of Units
purchasable under the Option shall be equal to ******** of the amount by which
the number of Units owned by the Contributing Partner exceeds the number of
Units owned by the Non-Contributing Partner; provided, however, in no event
shall the number of Units purchasable under the Option exceed the number of
Units which, if multiplied by the Contributing Partner's Contribution Per Unit,
would equal **********.
As used herein, "APPLICABLE INTEREST" shall mean interest, at the
following per annum. rates compounded annually, applied to the amount of the
short-fall in Capital Contributions being made up by the Non-Contributing
Partner pursuant to the exercise of the Option on a first-in-first-out basis:
the lesser of (i) the maximum lawful (nonusurious) rate and (ii) Prime Rate plus
** for 0-6 months, Prime Rate plus ** for 6-12 months, Prime Rate plus ** for
12-18 months, Prime Rate plus ** if more than 18 months.
Due the complexity of the foregoing, the following example is included:
******************************************************************************
************************************************
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 9
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******************************************************************************
********. If the Option is exercised for *** of the amount by which the number
of Units owned by the Contributing Partner exceeds the number of Units owned by
the Non-Contributing Partner in month 34, the exercise price would be calculated
as follows:
Total Capital Contributions: ********************************************
*********
Total Units/Unit Percentages: ******************************************
***************************
Contribution Per Unit: ****************************************
*********
Option Price: ***********************************
***********
Plus
Applicable Interest (compounded annually) on
*******************************************
**************************************
**************************
If the Option is exercised, the closing of the transaction shall occur
15 days thereafter at the principal offices of the General Partner. At closing,
the purchasing Partner shall pay, in cash, to the selling Partner the applicable
purchase price for the Units being purchased, and the selling Partner shall
assign the Units being purchased to the purchasing Partner free and clear of all
liens and encumbrances other than those under this Agreement and the Ownership
Restriction Agreement.
If the Contributing Partner will incur a taxable gain (excluding any
income associated with the interest portion of the purchase price under clause
(ii) above) as a result of the sale of Units pursuant to the Option, the amount
of the purchase price payable at closing by the Non-Contributing Partner shall
be increased by an amount, if any, equal to (i) the then highest federal
marginal corporate income tax rate applied to the amount of such gain less (ii)
any savings or reduction of federal income tax resulting from any deduction or
credit which (x) is allowed for federal income tax purposes and (y) decreased
the federal income tax basis of the Units sold. The parties will reasonably
cooperate with each other in determining the amount, if any, of any such gain,
including any such
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 10
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determination that may be requested by the Non-Contributing Partner in
anticipation of the possible exercise of the Option.
If the parties determine that the Contributing Partner would incur such
a taxable gain if the Option is exercised, then, upon the request of the
Non-Contributing Partner, the parties will reasonably cooperate with each other
to explore other means to achieve the same limited right to "catch up" on
previously unfunded Capital Contributions that would not involve the
Non-Contributing Partner having to pay an increased purchase price to cover the
Contributing Partner's taxable gain; provided that any such alternative must be
no less favorable, in economic terms and tax effects, to the Contributing
Partner. One such alternative may be to allow Capital Contributions that are
anticipated to be needed to fund the operations of the Partnership prior to the
Outside Date to be made on a disproportionately increased basis by the
Non-Contributing Partner with an corresponding special allocation or
re-allocation to adjust the relative Capital Account balances of the
Contributing Partner and Non-Contributing Partner so that they are in the same
proportion as Units after giving effect to such disproportionate contributions.
Notwithstanding any other provision of this Agreement, the parties
agree that the Non-Contributing Partner shall never be required or obligated to
pay interest in excess of the maximum non-usurious interest rate as may be
authorized by applicable law. It is the intention of the parties to conform
strictly to the applicable laws which limit interest rates, and any of the
provisions of this Agreement for interest (or which may be deemed to be
interest), if and to the extent payable by the Non-Contributing Partner, shall
be held to be subject to reduction to the maximum non-usurious interest rate
allowed under said law.
ARTICLE 5
CAPITAL ACCOUNTS
----------------
5.1 CAPITAL ACCOUNTS. A capital account ("CAPITAL ACCOUNT") shall be
established for each Partner. A Partner's Capital Account shall be credited with
the fair market value (as determined in the sole judgment of the General
Partner) of property contributed and the amounts of cash contributed to the
Partnership by such Partner and shall be credited or charged, as the case may
be, with such Partner's share of Partnership items of book income, gain, loss
and deduction for each fiscal year of the Partnership determined pursuant to
ARTICLE 7 below. Each Partner's Capital Account shall be charged with the fair
market value (as determined in the sole judgment of the General Partner) of any
property
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 11
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distributed and the amount of cash distributed to such Partner. The respective
Capital Accounts of the Partners shall not bear interest.
5.2 ADJUSTMENTS TO CAPITAL ACCOUNTS UPON REVALUATION OF PROPERTY. Upon
the occurrence of (a) the admission of an additional or substituted Limited
Partner, (b) an extraordinary (as determined by the General Partner)
distribution of property by the Partnership, or (c) the liquidation of the
Partnership (each an "ADJUSTMENT EVENT"), then, upon any such event, the Gross
Asset Value immediately before the Adjustment Event shall be determined. The
property of the Partnership shall thereafter be treated as if it were sold by
the Partnership and any gain or loss resulting therefrom shall be allocated
among the Partners in accordance with ARTICLE 7 hereof as of the date
immediately before the Adjustment Event resulting in the valuation of
Partnership assets. Such allocation of gain or loss shall thereafter be
reflected in the Capital Accounts of the Partners for all purposes of this
Agreement. Solely for purposes of determining adjustments to Capital Accounts,
any net profit or net loss shall be determined using the Gross Asset Value
rather than the adjusted tax basis of the property of the Partnership.
5.3 COMPLIANCE WITH TREASURY REGULATIONS. Notwithstanding any provision
in this Agreement to the contrary, the Capital Accounts of the Partners shall be
maintained in accordance with Treasury Regulations, as amended from time to
time, and shall be adjusted as provided therein.
ARTICLE 6
DISTRIBUTIONS
-------------
Except as otherwise provided herein, Distributable Cash of the
Partnership shall be distributed on a ********* basis among the Partners ***
**** in accordance with **********************. The amount and timing of such
distributions shall be determined by the General Partner. The General Partner
shall have the absolute discretion to have any distribution treated as a return
of capital. That portion of any distribution which is treated as a return of
capital shall be made to the Partners ratably in proportion to their respective
Capital Accounts immediately prior to the distribution. The General Partner and
the Partnership shall incur no liability for making distributions in accordance
with the provisions of this Agreement, whether or not the General Partner or the
Partnership have knowledge or notice of any transfer of ownership of any Units.
ARTICLE 7
ALLOCATIONS
-----------
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 12
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7.1 BOOK ALLOCATIONS. Except as otherwise provided herein or unless
another allocation is required by the Code, Treasury Regulations, published
revenue rulings or judicial decisions, all items of Partnership book income,
gain, loss, deduction and credit shall be allocated among the Partners pro rata
in accordance with their Unit Percentages in effect for the period during which
such items accrue. For purposes of computing each item of book income, gain,
deduction or loss, the determination, recognition and classification of such
item shall be the same as its determination, recognition and classification for
federal income tax purposes.
7.2 Tax Allocations.
---------------
(a) CODE SECTION 704(c). Notwithstanding anything herein to
the contrary, if any Partner has contributed or is treated as
contributing any property to the Partnership that has a Gross Asset
Value that is in excess of or less than its adjusted basis for federal
income tax purposes at the time of such contribution, then all gain,
loss, and deduction with respect to the contributed property shall,
solely for federal income tax purposes, be allocated among the Partners
so as to take account of the variation between the adjusted basis of
such property and its initial net asset value as required under Code
Section 704(c).
(b) PARTNERSHIP ASSET ADJUSTMENTS. In the event the Gross
Asset Value of any Partnership Asset is adjusted under SECTION 5.2
hereof, subsequent allocations of Partnership income, gain, loss, and
deduction with respect to such asset, as calculated for tax purposes,
shall take account of any variation between the adjusted basis of such
asset for federal income tax purposes and its Gross Asset Value in
accordance with the principals of Code Section 704(c) as is required
pursuant to Treasury Regulations Section 1.704-1(b)(4)(i).
(c) CONSISTENT ALLOCATION. Except as provided in SECTION
7.2(a) AND (b), Partnership income, gain, loss, deduction, and credit,
as calculated for tax purposes, shall be allocated among the Partners,
to the extent possible, in accordance with the allocations of the items
of Partnership book income, gain, loss, deduction, and credit allocated
pursuant to SECTION 7.1.
(d) ADJUSTMENTS BY THE PARTNERS. Any elections or other
decisions related to Partnership tax allocations pursuant to this
SECTION 7.2 shall be made by the General Partner of the Partnership in
a manner that reasonably reflects the purpose and intention of
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 13
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this Agreement. Partnership tax allocations pursuant to this SECTION
7.2 are solely for purposes of federal, state, and local taxes and
shall not affect, or in any way be taken into account in computing, any
Partner's Capital Account or distributive share of the Partners items
of Partnership book income, gain, loss, deduction, and credit or
Partnership distributions to any of the Partners under this Agreement.
7.3 TRANSFER OF UNITS. Unless otherwise unanimously agreed by the
Partners, income, gain, loss, deduction or credit attributable to any Unit (or
portion thereof) which has been transferred shall be allocated between the
transferor and the transferee equally among the days of the Partnership's fiscal
year without regard to Partnership operations during such days.
ARTICLE 8
MANAGEMENT AND OPERATION OF BUSINESS
------------------------------------
8.1 MANAGEMENT BY GENERAL PARTNER. Subject to SECTION 8.3 below and
subject to the provisions of the Act, the General Partner shall have exclusive
authority to manage and control the day-to-day operations and affairs of the
Partnership and to make all decisions regarding the business and property of the
Partnership. The General Partner is hereby granted by the other Partners the
right, power and authority to do on behalf of the Partnership all things which,
in the General Partner's sole judgment, are necessary, proper or desirable to
carry out and exercise such authority.
8.2 AUTHORITY TO ACT. In order to expedite the handling of Partnership
business, it is understood and agreed that any document executed by the General
Partner or any officer of the General Partner while acting on behalf and in the
name of the Partnership shall be deemed to be the action of the Partnership as
to any third parties. Further, any Person dealing with the Partnership or the
General Partner or any officer of the General Partner may rely upon a
certificate signed by the General Partner or any officer of the General Partner
as to:
(a) identity of the Partners;
(b) existence or nonexistence of any fact or facts that
constitute conditions precedent to acts by the Partnership or are in
any other manner related to the affairs of the Partnership;
(c) Persons who are authorized to execute and deliver any
instrument or document of the Partnership;
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 14
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(d) any act or failure to act by the Partnership; or
(e) any other matter whatsoever involving the Partnership or
any Partner.
In no event shall any Person dealing with the General Partner or any officer of
the General Partner with respect to any business or property of the Partnership
be obligated to ascertain that the terms of this Agreement have been complied
with, or be obligated to inquire into the necessity or expedience of any act or
action of the General Partner or any officer of the General Partner, and every
contract, agreement, conveyance instrument, mortgage, security agreement,
promissory note or other instrument or document executed by the General Partner
or an officer of the General Partner with respect to any business or property of
the Partnership shall be conclusive evidence in favor of any and every Person
relying thereon and claiming thereunder that (i) at the time of the execution
and/or delivery thereof, this Agreement was in full force and effect; (ii) such
instrument or document was duly executed in accordance with the terms and
provisions of this Agreement and is binding upon the Partnership; and (iii) the
General Partner or officer of the General Partner, as applicable, was duly
authorized and empowered to execute and deliver any and every such instrument or
document for and on behalf of the Partnership.
8.3 CERTAIN LIMITATIONS UPON THE POWER OF THE GENERAL PARTNER.
Notwithstanding anything to the contrary contained herein, without the prior
written approval of all of the Limited Partners, the General Partner shall not:
(a) Do any act in contravention of this Agreement or the
certificate of limited partnership of the Partnership;
(b) Do any act which would make it impossible to carry on the
ordinary business of the Partnership;
(c) Possess Partnership property or assign its rights in
specific Partnership property for other than a Partnership purpose;
(d) Admit a person as the General Partner;
(e) Except for the admission of a transferee or assignee of a
Limited Partner's Units transferred or assigned in compliance with the
Ownership Restriction Agreement, admit an additional Partner to the
Partnership; or
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 15
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(f) Knowingly commit any act that would subject any Limited
Partner to liability as a general partner in any jurisdiction.
8.4 INVESTMENT/BANK ACCOUNTS. The Partnership will maintain such
investment, bank and other accounts as the General Partner may deem necessary
for the investment and deposit of the Partnership funds and for the proper
segregation thereof into such separate accounts as may be deemed appropriate.
All withdrawals from any such accounts shall be made by the General Partner or
the duly authorized officers of the Partnership. Partnership funds shall not be
commingled with those of any other Person. The Partnership accounts shall be in
the name of the Partnership and all payments required of the Partnership will be
made from accounts of the Partnership.
8.5 REIMBURSEMENT. The General Partner shall be reimbursed by the
Partnership for all costs and expenses, including legal, accounting and other
fees related to the formation of the Partnership and the preparation of this
Agreement. During the term of the Partnership, the General Partner shall be
reimbursed for all direct costs and expenses incurred by it in the management
and administration of the Partnership and attributable to the business of the
Partnership.
8.6 COMPENSATION. The General Partner shall not be entitled to any
compensation for the management and administration of the Partnership.
ARTICLE 9
BOOKS OF ACCOUNT: RECORDS, TAX INFORMATION
------------------------------------------
9.1 FISCAL YEAR. The fiscal year of the Partnership shall end on
December 31 in each year.
9.2 BOOKS AND RECORDS. Proper and complete records and books of account
shall be kept by the General Partner in which shall be entered fully and
accurately all transactions and other matters relative to the Partnership's
business as are usually entered into records and books of account maintained by
Persons engaged in businesses of like character. The Partnership books and
records shall be prepared in accordance with generally accepted accounting
principles applied on a consistent basis. The books and records shall at all
times be made available at the principal office of the Partnership and shall be
open to the reasonable inspection and copying by the Partners or their duly
authorized representatives with advance notice (not more than one business day
shall be required) during reasonable business hours.
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 16
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9.3 TAXATION AS A PARTNERSHIP. The Partnership shall be treated as a
partnership for federal and all state tax purposes. The General Partner shall
cause the Partnership to prepare and file annually on or before the due date or
extended due date thereof all required federal, state and local tax returns and
filings.
9.4 TAX ELECTIONS. All elections required or permitted to be made by
the Partnership under the Code, including but not limited to, the election
pursuant to Section 754 thereof, shall be made by the General Partner, if at
all, in its sole discretion. Each Partner will upon request supply the
information necessary to properly give effect to such elections.
9.5 TAX RETURNS. The General Partner shall, on a timely basis, send
each Person who is a holder of an interest in the Partnership at any time during
a calendar year all partnership tax information kept on a federal income tax
basis as shall be necessary for the preparation by such holder of its federal
income tax return. Further, on request by any holder of an interest in the
Partnership, the General Partner will furnish such holder copies of all federal,
state and local income tax returns or information returns, if any, which the
Partnership is required to file.
ARTICLE 10
RESTRICTIONS ON TRANSFER
------------------------
10.1 PRIVATE OFFERING. Each Limited Partner is fully aware that the
Partnership is selling Units to such Limited Partner in reliance upon the
exemption from registration provided by Section 4(2) of the Securities Act, and
upon the truth and accuracy of the representations of such Limited Partner
contained in this Agreement.
10.2 SECURITIES ACT REQUIREMENTS. Each Limited Partner represents that
(a) its Units are being acquired for investment, with no present intention of
distributing or selling any portion thereof or with a view to any distribution
thereof within the meaning of the Securities Act, and (b) its financial
condition is such that it is able to bear all risks of holding its Units for an
indefinite period of time and that it has such knowledge and experience in
financial and business matters that it is capable of evaluating the merits and
risks of acquisition of the Units and of making an informed investment decision
with respect thereto; and (c) it will not offer or make a transfer of its Units
unless it shall have delivered to the Partnership (i) an opinion of counsel
satisfactory to the General Partner to the effect that no registration (or
perfection of an exemption) under the Securities Act is required with respect to
such transfer or (ii) such other evidence satisfactory to the General Partner
that the transfer
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 17
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will not violate the Securities Act and other applicable state securities laws.
10.3 TRANSFERS BY THE LIMITED PARTNERS. A Limited Partner may not sell,
transfer, assign or devise, or subject to security interest, lien or charge, all
or any part of its Units, except as permitted in the Ownership Restriction
Agreement, and any act in violation of this Section 10.3 shall be null and void
ab initio. Any transfer of or assignment of the Units of a Limited Partner shall
not dissolve the Partnership. A transferee or assignee of a Limited Partner's
Units transferred or assigned in compliance with the Ownership Restriction
Agreement shall be admitted as a substituted Limited Partner of the Partnership
(with regard to the interest so transferred and assigned) without any further
approval by the Partners.
10.4 TRANSFERS BY THE GENERAL PARTNER. The General Partner may not
sell, assign or transfer, or subject to security interest, lien or charge, all
or any portion of its Units. The General Partner agrees not to voluntarily
withdraw or resign as the general partner of the Partnership.
ARTICLE 11
DISSOLUTION
-----------
The Partnership shall dissolve and its affairs shall be wound up in
accordance with ARTICLE 12 on the first to occur of the following:
(a) the expiration of the term of the Partnership;
(b) the bankruptcy, dissolution or termination and winding up
of the affairs of the General Partner; or
(c) the written consent to terminate by all of the Partners.
ARTICLE 12
WINDING UP AND TERMINATION OF THE PARTNERSHIP
---------------------------------------------
12.1 WINDING UP. If the Partnership is dissolved for any reason, it
shall be wound up and its assets sold or distributed in an orderly manner,
unless, in the case of the bankruptcy or termination and winding up of the
affairs of the General Partner, all of the Partners agree, in accordance with
the Act, to reconstitute and continue the Partnership and appoint one or more
new general partners within 90 days after such event. In the absence of any such
applicable agreement, no Partner shall have the right to reconstitute or
continue the Partnership.
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 18
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12.2 LIQUIDATOR. The General Partner, or if there is no General
Partner, then a liquidation trustee appointed by Partners owning at least *** of
the Units of all Partners (the "LIQUIDATION TRUSTEE"), shall have the exclusive
authority to manage and control the Partnership during the period during which
it is being wound up. The Person(s) vested with the authority to manage and
control the Partnership during the winding up period are hereinafter referred to
as the "LIQUIDATOR".
12.3 LIQUIDATION, DISTRIBUTIONS. Upon the winding up and termination of
the business and affairs of the Partnership, its assets (other than cash) shall
be sold and its liabilities and obligations to creditors and all expenses
incurred in its liquidation shall be paid (either by payment or the making of
reasonable provision for payment). Thereafter, the net proceeds from such sales
(after deducting all selling costs and expenses in connection therewith) shall
be distributed among the Partners in accordance with their respective positive
balances in their Capital Accounts. Any distributions under this SECTION 12.3
may be made, at the election of the Liquidator, in money arising from the sale
of the property of the Partnership or by a distribution of the Partnership's
assets in kind (the distributed asset being treated as sold for its fair market
value and any deemed gain or loss being treated as allocated among the Partners
in accordance with ARTICLE 7 hereof) or such distribution may be, at the
election of the Liquidator, partially in money and partially in kind. All
determinations of fair market value under this SECTION 12.3 shall be made in the
sole judgment of the Liquidator. Any sales or distributions in kind of the
Partnership's assets shall be effected in compliance with the Securities Act and
applicable state securities laws, as well as applicable contractual restrictions
or requirements relating to the transfer of the assets of the Partnership.
12.4 SOURCE OF DISTRIBUTIONS. Each holder of an interest in the
Partnership shall look solely to the assets of the Partnership for all
distributions with respect to the Partnership and its Capital Contribution
thereto (including the return thereof) and share of profits or losses thereof,
and shall have no recourse therefor (upon dissolution or otherwise) against the
Partnership, any Partner or the Liquidator.
12.5 DEFICIT CAPITAL ACCOUNTS. No Partner shall be required to restore
any deficit balance existing in its Capital Account upon the liquidation and
termination of the Partnership.
12.6 TERMINATION OF PARTNERSHIP. Upon the completion of the liquidation
of the Partnership and the distribution of all Partnership assets, the
Partnership shall terminate and the Liquidator shall (and is
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 19
-19-
hereby given the power and authority to) execute, acknowledge, swear to and
record all documents required to effectuate the dissolution and termination of
the Partnership.
ARTICLE 13
POWER OF ATTORNEY
-----------------
Each Limited Partner hereby makes, constitutes and appoints the General
Partner with full power of substitution and resubstitution, such Limited
Partner's true and lawful attorney for it and in its name, place and stead and
for its use and benefit, to sign, execute, certify, acknowledge, deliver, swear
to, file and record in all necessary or appropriate places such agreements,
instruments or documents as may be necessary or advisable (a) to reflect the
exercise by the General Partner of any of the powers granted to it under this
Agreement; (b) to reflect the admission to the Partnership of any additional
Limited Partner or substituted Limited Partner in the manner prescribed in this
Agreement; (c) to amend SCHEDULE A in the manner prescribed in this Agreement;
and (d) which may be required of the Partnership or of the Partners by the laws
of the State of Delaware or any other jurisdiction in which the Partnership may
conduct business or own property. Each Limited Partner authorizes such
attorney-in-fact to take any further action which such attorney-in-fact shall
consider necessary or advisable in connection with any of the foregoing, hereby
giving such attorney-in-fact full power and authority to do and perform each and
every act or thing whatsoever requisite or advisable to be done in and about the
foregoing as fully as such Limited Partner might or could do if personally
present, and hereby ratifying and confirming all that such attorney-in-fact
shall lawfully do or cause to be done by virtue hereof. The power of attorney
granted pursuant to this ARTICLE 13: (a) is a special power of attorney coupled
with an interest and is irrevocable; (b) may be executed by such
attorney-in-fact by listing all of the Limited Partners executing any agreement,
certificate, instrument or document with the single signature of any such
attorney-in-fact acting as attorney-in-fact for all of them; (c) shall survive
the bankruptcy, death, adjudication of incompetence or insanity, or dissolution
of a Limited Partner; and (d) shall survive the delivery of an assignment by a
Limited Partner of its Units.
ARTICLE 14
LIABILITY AND EXCULPATION
-------------------------
14.1 LIABILITY. Except as otherwise provided by the Act, the debts,
obligations and liabilities of the Partnership, whether arising in contract,
tort or otherwise, shall be solely the debts, obligations and liabilities of
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 20
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the Partnership, and no Partner shall be obligated for any such debt, obligation
or liability of the Partnership solely by reason of being a Partner of the
Partnership.
14.2 EXCULPATION. No Covered Person shall be liable to the Partnership
or any Partner under any theory of law, including tort, contract or otherwise
(INCLUDING A COVERED PERSON'S OWN NEGLIGENCE) for any loss, damage or claim
incurred by reason of any act or omission (including decisions to vote for or
against any matter) performed or omitted by such Covered Person in good faith on
behalf of the Partnership and in a manner reasonably believed to be within the
scope of authority conferred on such Covered Person by this Agreement, except
that a Covered Person shall be liable for any such loss, damage or claim
incurred by reason of such Covered Person's gross negligence or willful
misconduct. A Covered Person shall be fully protected in relying in good faith
upon the records of the Partnership and upon such information, opinions, reports
or statements presented to the Partnership by any Person as to matters the
Covered Person reasonably believes are within such other Person's professional
or expert competence and who has been selected with reasonable care by or on
behalf of the Partnership, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses or any other facts pertinent to the existence and amount of assets from
which distributions to Partners might properly be paid.
14.3 DUTIES AND LIABILITIES OF COVERED PERSONS. To the extent that, at
law or in equity, a Covered Person has duties (including fiduciary duties) and
liabilities relating thereto to the Partnership or to any other Covered Person
arising under this Agreement, a Covered Person acting under this Agreement shall
not be liable to the Partnership or to any other Covered Person for actions
(including decisions to vote for or against any matter) taken by it in good
faith reliance on the provisions of this Agreement. The provisions of this
Agreement, to the extent that they restrict the duties and liabilities of a
Covered Person otherwise existing at law or in equity, are agreed by the parties
hereto to replace such other duties and liabilities of such Covered Person.
Unless otherwise expressly provided herein, whenever a conflict of interest
exists or arises between a Covered Person and the Partnership or a Partner, the
Covered Person shall disclose such conflict to the Partners and shall resolve
such conflict of interest, taking such action or providing such terms,
considering in each case the relative interest of each party (including its own
interest) to such conflict, agreement, transaction or situation and the benefits
and burdens relating to such interests, any customary or accepted industry
practices, and any applicable generally accepted accounting practices or
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 21
-21-
principles. In the absence of bad faith by the Covered Person, the resolution,
action or term so made, taken or provided by the Covered Person shall not
constitute a breach of this Agreement or any other agreement contemplated herein
or of any duty or obligation of the Covered Person at law or in equity or
otherwise.
ARTICLE 15
INDEMNIFICATION
---------------
15.1 INDEMNIFICATION. To the fullest extent permitted by applicable
law, a Covered Person shall be entitled to indemnification from the Partnership
for any loss, damage or claim incurred by such Covered Person (a) by reason of
any act or omission performed or omitted by such Covered Person in good faith on
behalf of the Partnership and in a manner reasonably believed to be within the
scope of authority conferred on such Covered Person by this Agreement or (b) by
reason of being a Partner, an Affiliate of a Partner or an officer, manager,
director, shareholder, partner, representative, advisor or agent of the
Partnership or a Partner or its Affiliate, except that no Covered Person shall
be entitled to be indemnified in respect of any loss, damage or claim incurred
by such Covered Person by reason of gross negligence or willful misconduct with
respect to such acts or omissions; provided, however, that any indemnity under
this ARTICLE 15 shall be provided out of and to the extent of Partnership assets
only, and no Covered Person shall have any personal liability on account
thereof. THE FOREGOING INDEMNITY IS INTENDED TO INDEMNIFY EACH COVERED PERSON
FOR HIS OWN ACTS OF NEGLIGENCE AND SHALL APPLY IRRESPECTIVE OF ANY CLAIM OF
CONCURRENT OR CONTRIBUTORY NEGLIGENCE ON THE PART OF SUCH COVERED PERSON.
15.2 EXPENSES. To the fullest extent permitted by applicable law,
expenses (including legal fees) incurred by a Covered Person in defending any
claim, demand, action, suit or proceeding for which indemnity is sought under
this Agreement shall, from time to time, be advanced by the Partnership prior to
the final disposition of such claim, demand, action, suit or proceeding upon
receipt by the Partnership of an undertaking by or on behalf of the Covered
Person to repay such amount if it shall be determined that the Covered Person is
not entitled to be indemnified as authorized under this ARTICLE 15.
15.3 INSURANCE. The Partnership may purchase and maintain insurance, to
the extent and in such amounts as the General Partner shall deem reasonable, on
behalf of Covered Persons and such other Persons as the General Partner shall
determine, against any liability that may be
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 22
-22-
asserted against or expenses that may be incurred by any such Person in
connection with the activities of the Partnership or such indemnities,
regardless of whether the Partnership would have the power to indemnify such
Person against such liability under the provisions of this Agreement. The
Partnership may enter into indemnity contracts with Covered Persons and adopt
written procedures pursuant to which arrangements are made for the advancement
of expenses and the funding of obligations under this ARTICLE 15 and containing
such other procedures regarding indemnification as are appropriate.
ARTICLE 16
NOTICES
-------
All notices, requests and communications under this Agreement shall be
in writing and shall be given to a party at the party's address set forth in
SCHEDULE A hereto or, in the case of the Partnership, as follows: L & I
Partners, L.P., 11550 IH 10 West, Suite 300, San Antonio, Texas 78230,
Attention: Board of Managers of L & I, L.L.C. and L & I Partners, L.P., c/o
LeukoSite, Inc., 215 First Street, Cambridge, NM 02142, Attn: Christopher K.
Mirabelli, Ph.D. Each such notice, request or other communication shall be
effective (a) if given by registered or certified mail, return receipt
requested, two days after such communication is deposited in the mails with
postage prepaid and addressed as specified pursuant to this ARTICLE 16, or (b)
if given by any other means, when delivered at the address specified pursuant to
this ARTICLE 16. Any party may change its or its address for notifications
hereunder by giving the other parties notice thereof in accordance with this
ARTICLE 16. Notwithstanding the foregoing, a copy of each notice given to the
General Partner or the Partnership shall also be given to each Limited Partner.
ARTICLE 17
DISPUTE RESOLUTION
------------------
Except as otherwise provided herein, any claim, dispute or controversy
of any nature whatsoever, including but not limited to tort claims and contract
disputes between the parties to this Agreement arising out of or related to the
terms and conditions of this Agreement, including the implementation,
applicability or interpretation thereof, shall be resolved in accordance with
the dispute resolution procedures set forth in the Ownership Restriction
Agreement.
ARTICLE 18
MISCELLANEOUS
-------------
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 23
-23-
18.1 FURTHER ASSURANCES. Each Partner agrees to execute, with
acknowledgment or affidavit if required, any and all documents and writings
which may be necessary or expedient in connection with the formation of the
Partnership and the achievement of its purposes, specifically including all such
agreements, certificates, tax statements, tax returns and other documents as may
be required of the Partnership or its Partners by the laws of the United States
of America, the State of Texas or Delaware or any political subdivision or
agency thereof.
18.2 PARTNERSHIP PROPERTY. The Partners agree that the property and
other assets of the Partnership are and shall be owned by the Partnership as an
entity. Each Partner, accordingly, owns Unit(s) and not an undivided interest in
such assets and properties. No Partner shall have any right to partition the
assets and properties of the Partnership; and to the extent, if any, that any
Partner would have such a right, each such Partner hereby irrevocably waives any
and all rights to maintain any action for partition of the assets and properties
of the Partnership, either as a partition in kind or a partition by sale.
18.3 INVALID PROVISIONS. If any provision of this Agreement, or the
application of such provision to any Person or circumstance, shall be held
invalid, the remainder of this Agreement, or the application of such provision
to Persons or circumstances other than those to which it is held invalid, shall
not be affected thereby.
18.4 ENTIRE AGREEMENT. This Agreement and the additional documents and
agreements referred to herein constitute the entire agreement among the parties,
and it supersedes all prior or contemporaneous agreements or understandings
among the parties.
18.5 SUCCESSORS AND ASSIGNS. Except as herein otherwise specifically
provided, this Agreement shall be binding upon and inure to the benefit of the
parties and their legal representatives, heirs, administrators, executors,
successors and permitted assigns.
18.6 AMENDMENTS. Except as provided in ARTICLE 4 and ARTICLE 13
relating to certain amendment powers of the General Partner, amendments or
modifications may be made to this Agreement only by setting forth such
amendments or modifications in a written instrument signed by all the Partners.
18.7 INTERPRETATION. Wherever from the context it appears appropriate,
each term stated in either the singular or the plural shall include the singular
and the plural, and pronouns stated in the masculine,
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 24
-24-
the feminine or the neuter gender shall include the masculine, feminine and
neuter.
18.8 GOVERNING LAW. This Agreement and the rights of the parties
hereunder shall be governed by and interpreted in accordance with the laws of
the State of Delaware without giving effect to conflicts of law principles.
18.9 COUNTERPARTS. 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. It shall not be necessary for all
Partners to execute the same counterpart hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement of
Limited Partnership as of the day and in the year first above written.
GENERAL PARTNER:
----------------
L & I, L.L.C.
By:
---------------------------------
Christopher K. Mirabelli, Ph.D.,
President
LIMITED PARTNERS:
-----------------
LEUKOSITE, INC.
By:
---------------------------------
Christopher K. Mirabelli, Ph.D.,
Chairman and Chief Executive
Officer
ILEX ONCOLOGY, INC.
By:
---------------------------------
Richard L. Love,
President
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 25
-25-
<TABLE>
SCHEDULE A
----------
(As of May 2, 1997)
<CAPTION>
CAPITAL UNIT UNIT
NAME AND ADDRESS CONTRIBUTIONS OWNERSHIP PERCENTAGE
- ---------------- ------------- --------- ----------
<S> <C> <C> <C>
GENERAL PARTNER:
L & I, L.L.C. ******** *** ***
11550 IH 10 West, Suite 300
San Antonio, TX 78230-1064
Fax No. (210) 949-8227
Attention: Board of Managers
LIMITED PARTNERS:
LeukoSite, Inc. ******** **** ****
215 First Street
Cambridge, MA 02142
Fax No. (617) 621-9349
Attention: Christopher K. Mirabelli,
Ph.D.
ILEX Oncology, Inc. ******** **** ****
11550 IH 10 West, Suite 300
San Antonio, TX 78230-1064
Fax No. (210) 949-8227
Attention: Richard L. Love
---------------- ---------------- ---------------
TOTAL: ********** 100.0 100.0%
====== ========== ===== =====
</TABLE>
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 26
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<TABLE>
EXHIBIT A
Pre-Development Budget
APRIL 1. 1997 - JUNE 30, 1997
-----------------------------
<CAPTION>
Activity/Objective COMPLETE EXPENSES
- ------------------ -------- ----------
<S> <C> <C>
License Fees April 1, 1997 $ ******
****** Market Study April 1, 1997 ******
Manufacturing up-front payment to April 15, 1997 ******
*****************
Contingency ******
----------
******
Leukosite Expense
- -----------------
Travel ******
Manufacturing Consultant June 30, 1997 ******
----------
$ ******
ILEX Expense $ ******
- ------------
Medical Consultant ******
European Consultant ******
Pre-FDA Mtg. ******
Europe Coord. of Trial ******
Dossier Prep ******
(printing, out of pockets, etc.) ----------
ILEX Travel $ ******
</TABLE>
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 1
Exhibit 10.17(b)
LICENSE AGREEMENT
This Agreement is effective May 2, 1997 ("the Effective Date") by and
between LeukoSite, Inc. ("LKS"). a Delaware corporation having an address at 215
First Street, Cambridge, MA 02142, and L & I Partners, L.P., a Delaware Limited
Partnership having an address at 11550 1 H 10 West Suite 300, San Antonio, Texas
78230 ("LICENSEE") .
WHEREAS, LICENSEE desires to obtain certain exclusive and non-exclusive
sub-licenses in and to certain patents and information which LKS has licensed
from the British Technology Group Ltd. ("BTG"); and
WHEREAS, LKS is willing to grant the sub-licenses desired by LICENSEE.
NOW THEREFORE in consideration of the mutual promises and other good
and valuable consideration, the parties agree as follows:
Section I - Definitions
-----------------------
1.1 IN this Agreement the following terms shall have the following meanings
(subject to subsequent amendment pursuant to this Agreement):-
1.1.1 "Campath I H"
1.1.2 "Cell Culture Medium"
<PAGE> 2
-2-
1.1.3. "Cell Line" cell line obtained from the *******
***********************************
***********************************
***********************************
***********************************
which forms part of the Know-how;
1.1.4 "Chargeable Transaction" the use sale or other disposal of
a Product by or on behalf of the
LICENSEE, PROVIDED THAT where such
sale or other disposal is made by
or on behalf of the LICENSEE to
another company within its Group
for further sale or disposal then
the Chargeable Transaction shall be
the first sale or other disposal
outside that Group provided further
that neither use of Product in
clinical trials nor distribution of
Samples as part of Product
promotion shall be deemed
Chargeable Transactions as long as
no consideration is received by the
LICENSEE or any Group Company in
relation thereto, and PROVIDED
ALWAYS that if on the sale or
disposal of Product by or on behalf
of the LICENSEE or relevant Group
company (as the case may be) the
Product is not in Final Form then
the Chargeable Transaction shall be
the first sale of Product which is
in Final Form;
1.1.5 "the Confidentiality
Undertaking" the written undertaking given by
the LICENSEE in Section 5.3 of this
Agreement;
1.1.6 "Connected Persons" the meaning ascribed by Section 839
of the Income and Corporation Taxes
Act 1988 of the United Kingdom
("UK");
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 3
-3-
1.1.7 "Deductions" ***********************************
***********************************
******** relating (in both cases)
specifically and solely to Product
***********************************
***********************************
***********************************
***********************************
**********************, but not
***********************************;
1.1.8 "the Development Plan" the document set out in Schedule I
below together with each
development plan delivered to LKS
pursuant to 4.2.2 below;
1.1.9 "Dollars" US dollars;
1.1.10 "the Effective Date" the date on which this Agreement is
made;
1.1.11 "the Exercise Fee" ******************** Dollars
********** for exercise of each of
the options ***************
***********************************
***********************************
**********;
1.1.12 "Final Form" fully formulated, in final form
packaged for ultimate consumer use
and suitable for purchase by a
purchaser or distributor who is not
undertaking substantial product
support or marketing, (e.g., a drug
wholesaler, a pharmacist or a group
of pharmacists, a chain of drug
retailers or a hospital or central
purchasing department for a group
of hospitals);
1.1.13 "Force Majeure"
1.1.13.1 civil commotion, riot,
invasion, war threat
or-preparation for war;
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 4
-4-
1.1.13.2 fire, explosion, storm,
flood, earthquake,
subsidence, epidemic or
other natural physical
disaster;
1.1.13.3 impossibility of the use
of railways, shipping,
aircraft, motor transport
or other means of public
or private transport;
1.1.13.4 political interference
with the normal operations
of the LICENSEE.
1.1.14 "the Glaxo Group" Glaxo Wellcome plc (Co. no. in
England 1047315) and, as from time
to time, any Holding Company and
any subsidiary of Glaxo Wellcome
plc and any other Subsidiary of
Glaxo Wellcome plc,s Holding
Company and affiliates;
1.1.5 "Group" the LICENSEE (as appropriate in the
context) and, as from time to time,
any Holding Company and Subsidiary
of the LICENSEE and any other
Subsidiary of the LICENSEE's
Holding Company and in the case of
the LICENSEE any company fifty per
cent owned by the LICENSEE;
1.1.16 "Holding Company"
and "Subsidiary" the meanings ascribed to them by
section 736 of the Companies Act
1985 of the UK;
1.1.17 "The Index" the US All Urban Consumer Price
Index or if that Index shall cease
to be published the nearest index
having like effect;
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 5
-5-
1.1.18 "Inventors" Professor Herman Waldmann,
Dr Michael Ronald Clark, Dr. Lutz
Riechmann and Dr Gregory Paul
Winter;
1.1.19 "the Know-how" the technical information and data
and biological materials specified
in Schedule 2 and any other
information disclosed to the
LICENSEE by LKS pursuant to the
Confidentiality Undertaking;
1.1.20 "Launch Date" the first arm's length sale of
Product by the LICENSEE in a Major
Territory following grant of
Regulatory Approval in such Major
Territory;
1.1.21 "the Licenses" the licenses granted or to be
granted under this Agreement
1.1.22 "LICENSEE Inventions" inventions arising from the
LICENSEE's development of the
inventions which are the subject
matter of the Patents and
inventions arising from any such
development carried out for or with
the LICENSEE;
1.1.23 "Major Territory" UK, France, Germany, Italy, USA and
Japan;
1.1.24 "Net Sales" the aggregate Net Selling Prices of
Chargeable Transactions for a
calendar year;
1.1.25 "Net Selling Price" the price of Products the subject
of a Chargeable Transaction
calculated as follows:-
1.1.25.1 in the case of an arm's
length sale *********
********************
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 6
-6-
********, less any
Deductions;
1.1.25.2 in the case of a sale
which is not at arm's
length or any disposal
other than by sale the
*************************
*************************
*************************
*******************, less
any Deductions;
1.1.26 "the Options" Option 1, Option 2, Option 3 and
Option 4.
1.1.27 "Option 1" the right to insert '**************
***********************************'
before 'which is made or sold' in
the definition of "the Product" (as
varied from time to time);
1.1.28 "Option 2" the right to replace
'**********************************
******************************' with
******** in the definition of
'Product' (as varied from time to
time);
1.1.29 "Option 3" the right to insert '***********
*******************' before 'which
is made or sold' in the definition
of 'Product' (as varied from time
to time);
1.1.30 "Option 4" the right to insert '*************
*******************' before 'which
is made or sold' in the definition
of 'Product' (as varied from time
to time);
1.1.31 "the Option Period" ************** period provided for
in the license agreement between
LKS and BTG (the "BTG Agreement");
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 7
-7-
1.1.32 "the Patents"
1.1.32.1 the patents and
applications for patents
specified in Schedule 3;
and
1.1.32.2 any patent which may be
granted pursuant to any of
the above applications;
and
1.1.32.3 any patents and
applications
correspon-ding to such
patents and applications
which may be granted to or
made by LKS in other
countries; and
1.1.32.4 any re-issues or
extensions of such patents
and any Supplementary
Protection Certificates
in respect of such patents
and any divisions and
continuations of such
applications.
1.1.33. "Product" any product containing Campath I H antibody for
the treatment of **************
********* or *******************
********* in humans or for such
other therapy for which LICENSEE
has exercised its option under
Clause 4.2.1 which is made or sold
or otherwise disposed of, in any
country by, or on behalf of, the
LICENSEE, and which
1.1.33.1 falls within the scope of,
or utilizes any method or
process which falls
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 8
-8-
within the scope of, any
of the Patents or which
incorporates, or is
itself, the invention the
subject of any of the
Patents of that country,
or
1.1.33.2 embodies or utilizes any
of the Know-how, or
1.1.33.3 infringes any copyright in
the Know-how.
1.1.34 "Regulatory Approval" full regulatory approval (i.e.,
marketing authorization) for sale
of Product;
1.1.35 "the Results" all technical data, Know-how,
computer software, notes, chemical
compounds, biological material,
models, prototypes, specimens,
drawings, reports and information
arising from the LICENSEE's
development of the inventions which
are the subject of the Patents (and
from others' development where the
same is carried out for or with the
LICENSEE) including in particular
data relevant to applications for
Regulatory Approvals, and including
the copyright, design rights and
other intellectual property rights
arising therein;
1.1.36 "the Sub-License" a sub-license or any agreement or
commitment for the grant of a
sub-license;
1.1.37 "the Sub-License Terms" those terms set out in Schedule 4;
1.1.38 "Supplementary Protection
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 9
-9-
Certificates" supplementary protection
certificates granted "Certificates"
pursuant to Council regulation
(EEC) No. 1768/92 ("the SPC
Regulation") and any like
certificates granted by any
government, authority or agency;
1.1.39 "the Territory" the countries of the European
Union, USA, Canada and Japan;
1.1.40 "the Trade Marks" the trade marks specified in
Schedule 5;
1.1.41 "WF" The Wellcome Foundation Limited
(Co. no. in England is 194814,
registered office at Glaxo Wellcome
House, Berkeley Avenue, Greenford,
Middlesex UB6 ONN);
1.1.42 "the WF Patents Those of the Patents which have
been licensed (as opposed to
assigned) to LKS by WF;
1.1.43 "Year 1" the calendar year in which Product
is first launched by the LICENSEE,
with Year 2 being the next calendar
year (and so on).
1.2 Some of the licenses granted by LKS hereunder are in fact sub-licenses
(with WF owning the relevant patent applications and patents).
2. Payments
--------
2.1 THE LICENSEE shall pay to LKS:-
2.1.1 immediately upon the signing of this Agreement the sum of
****************************************; and
2.1.2 **************************************** on the first
anniversary of the Effective Date; and
2.1.3 **************************************** on the second
anniversary of the Effective Date; and
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 10
-10-
2.1.4 *********************************** on each subsequent
anniversary of the Effective Date which is prior to the Launch
Date; and
2.1.5 **************************************** on the earlier of,
2.1.5.1 the date falling ************************* after the
Effective Date, and
2.1.5.2 the date on which the LICENSEE (or any third party on
behalf of the LICENSEE) files its first application
for Regulatory Approval in a Major Territory; and
2.1.6 the royalties specified in Clause 6;
2.1.7 the share of downpayments specified in Clause 7.
2.2 THE sums referred to in sub-clause 2.1 shall not be refundable.
2.3 WHEN making any payment under this Agreement the LICENSEE shall also
pay any *************** payable by LKS. Where the LICENSEE has to pay *****
********** LKS shall provide the LICENSEE with a *************** invoice in
respect of the relevant payment.
3. Commencement and duration
-------------------------
3.1 THIS Agreement shall come into force on the Effective Date.
3.2 SUBJECT to Clauses 16 and 17:-
3.2.1 the Licenses under the Patents shall continue in force *******
************************************************ have expired;
3.2.2 the Agreement shall continue in force until ******************
************************ after which LICENSEE shall have *
************************************* which is equivalent in
scope to that held by the LICENSEE immediately before the
****************************************.
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 11
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3.3 THE LICENSEE shall be responsible for obtaining any requisite
registration or governmental approval of this Agreement and of acts to be
carried out pursuant to or in connection with this Agreement (including in
particular that of transferring the Know-how (or part thereof) from the UK to
the USA) and the LICENSEE shall expeditiously take all necessary steps to obtain
the same.
4. Licenses and Option Rights
--------------------------
4.1 LKS grants to the LICENSEE on and from the Effective Date:-
4.1.1 Licenses under the Patents to make, have made, use, sell and
otherwise dispose of Products;
4.1.2 licenses for the purposes set out in 4.1.1 above to use:-
4.1.2.1 the Know-how,
4.1.2.2 the copyright in the Know-how,
SUCH licenses are without geographical restriction and, subject to the
fact that the Patents only relate to some countries, are worldwide. Such
licenses are also subject to the terms set forth in Schedule 4 and to the terms
of the agreements between LKS and the Wellcome Foundation Limited set forth in
Schedule 6, attached hereto and made a part hereof and LICENSEE agrees to be
bound by such terms.
4.2 FOR the avoidance of doubt it is declared that the LICENSEE shall not
use, nor allow others to use the biological materials forming part of Schedule 2
for human use but substances derived from the Cell Lines may be used in humans
and Cell Culture Medium may be used in connection with the preparation of
substances for human use.
4.2.1 LKS grants the LICENSEE the Options.
4.2.2 Subject to the following provisions of this Agreement the
LICENSEE may exercise each of the Options at any time during
the Option Period except when it is in breach of its
obligations under this Agreement by simultaneously:-
4.2.2.1 giving notice of exercise to LKS; and
4.2.2.2 making payment of the Exercise Fee to LKS; and
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 12
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4.2.2.3 delivering a development plan to LKS, with such
development plan to be for the relevant indication,
to be similar in form and detail to the document set
out in Schedule I and to contain development
timescales consistent with those set out in the said
document; and
4.2.2.4 making payment of all outstanding sums (if any) due
to LKS under this Agreement.
4.2.3 In the exercise of each of the Options time shall be of the
essence.
4.3 THE licenses under the Patents of Schedule 3 Part A (and under the
related applications and patents failing within 1.1.32.2, 1.1.32.3 and 1.1.32.4
of the definition "the Patents") shall be exclusive. The rest of the Licenses
shall be non-exclusive. The exclusivity referred to above shall be qualified by
(and subject to):-
4.3.1 the right of each member of the Glaxo Group to use any stocks
of Campath IH remaining after the transfer of the Know-how to
LKS for general research and development purposes which shall
exclude clinical development and subsequent commercialization;
and
4.3.2 the right of each member of the Glaxo Group to retain stocks
of Campath I H for supply of Carnpath I H to those patients to
whom any member of the Glaxo Group has obligations to under
existing clinical protocols; and
4.3.3 the right of the Inventors to carry out non-commercial work in
relation to that Campath I H which is produced by the cell
line which they originated and which is known as *******; in
the event such research produces a cell line which produces a
humanized antibody with the same specificity as Campath IH,
and such cell line and the intellectual property rights
related thereto are assigned to LKS then LKS shall notify the
LICENSEE of such assignment and (on request by the LICENSEE)
such cell line and intellectual property right shall be
licensed to the LICENSEE hereunder, (and form part of the
Patents or the Know-how as appropriate).
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 13
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4.4 WITHOUT prejudice to Clause 3.2 the Licenses are granted for the
purpose only of making, having made, using, selling and otherwise disposing of
Products during the life of this Agreement. These rights shall not be used
thereafter or otherwise unless and until the Know-how has come into the public
domain otherwise than through breach or default of the LICENSEE or the Copyright
has expired.
4.5 LKS shall, at the request and expense of the LICENSEE, execute any
further formal document which may be necessary to give effect to this Agreement
in any country. Until such license shall be granted formally, this Agreement
shall take effect as a license.
4.6 THE LICENSEE acknowledges that LKS, BTG and WF have the right to review
and discontinue those of the Patents which they respectively own or beneficially
own PROVIDED THAT as regards those of the Patents owned/beneficially owned by
LKS for countries in the Territory LKS shall notify the LICENSEE prior to
discontinuance/ abandonment. After any such notification, and subject to the
existing rights of the Inventors and other prior owners of such of the Patents,
LKS shall allow the LICENSEE to continue the Patents the subject of the
discontinuance/notification notice, with such continuance to leave LKS as owner,
and to-be at the LICENSEE's cost.
5. Know-How
--------
5.1 TO the extent to which it has not already done so, the LICENSEE shall
arrange, and pay the cost of and be responsible for, copying, shipment to the
LICENSEE and storage of the Know-how and such shipment shall be at the
LICENSEE's risk.
5.2 THE LICENSEE may, in appropriate circumstances, but in its sole
discretion, consult the Inventors regarding the design, conduct and results of
clinical trials and give due weight to their views.
5.3 THE LICENSEE shall keep the Know-how confidential to the LICENSEE, and
to such of its officers and employees as are bound by obligations of confidence
and need to be informed, and shall ensure that the Know-how is not disclosed to
others orally or in writing, save to the extent that the Know-how:-
5.3.1 as evidenced by the LICENSEE's written records, was lawfully
known to the LICENSEE prior to its communication by or
through LKS, BTG or WF and was not communicated
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 14
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to the LICENSEE subject to any restrictions on disclosure or
use; or
5.3.2 is necessarily disclosed by the sale of Products embodying any
of the Know-how; or
5.3.3 is or becomes in the public domain, otherwise than by any
default of the LICENSEE, or persons acquiring the same from
the LICENSEE; or
5.3.4 becomes known to the LICENSEE by the action of a third party
not in breach of any obligation of confidence.
6. Royalties
---------
6.1 SUBJECT to clauses 6.2 and 6.3 below the LICENSEE shall pay to LKS in
respect of Products the subject of Chargeable Transactions and as provided in
Clause 17.2 on Products held on termination, a royalty at the rate of *******
********** on the Net Selling Price.
6.2 IF, in transactions where the LICENSEE itself is making the Chargeable
Transaction, the following apply:
6.2.1 the LICENSEE is paying patent royalties to a third party/third
parties; and
6.2.2 that third party or those third parties (as the case may be)
is not/are not member(s) of the LICENSEE's Group, or a
Connected Person(s) of the LICENSEE; and
6.2.3 such patent royalties are paid under an arm's length bona fide
license; and
6.2.4 those patent royalties are for rights which are essential for
the exploitation of Product; and
6.2.5 the sum of such patent royalties with characteristics 6.2.1
to 6.2.4 above, ("Other Royalties") and the royalties payable
to LKS under clause 6.1 above would in total amount to more
than *********************** on the Net Selling Price for
that Chargeable Transaction
then the royalty to be paid to LKS on that Chargeable Transaction shall be
reduced by ******** of the amount that such Other Royalties are above
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 15
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******************* PROVIDED that in no event shall the royalty rate payable to
LKS be reduced under this Clause 6.2 below *******************. (By way of
illustration if Other Royalties ********************** then the royalty rate
payable to LKS would be ********************************, if Other Royalties
equal ********************* then the royalty rate payable to LKS would be *****
*************.
6.3 ROYALTY shall be payable in each country for a period of ************
from the Effective Date. Thereafter royalty shall only be payable in respect of
Products (the subject of Chargeable Transactions) which are such by reference to
1.1.33.1 of the definition "Product" but not 1.1.33.2 or 1.1.33.3.
6.4 ROYALTY shall only be payable once in respect of the same Product.
6.5 THE LICENSEE shall at the request of LKS provide half-yearly forecasts
of the amount of royalties likely to be payable under this Agreement but whilst
such forecasts (or the like) may be adopted and utilized by LKS for the purposes
of Clause 16.5 the LICENSEE shall not be liable in damages to LKS for any
inaccuracies in such forecasts.
6.6 THE LICENSEE shall be entitled to credit against royalties the amount
of the royalty paid on any Products the subject of Chargeable Transactions which
are:-
6.6.1 subsequently returned to the LICENSEE or Group Company (as
the case may be) in exchange for a refund or credit and not
then re-sold or disposed of again, (other than by
destruction); or
6.6.2 destroyed after a refund or credit has been given.
6.7 IF in relation to any accounting period and in any country in which
there is no extant patent forming part of the Patents LICENSEE demonstrates to
LKS's reasonable satisfaction that a competitor or competitors, (i.e. a company
which is not part of LICENSEE's Group) is/are selling Campath IH products,
(which would fall within the definition PRODUCT but for-being sold by the
competitor or competitors), then the appropriate royalty rate on sales in the
country in question shall be reduced for that accounting period if the market
share of the competitor(s) amounts to more than ********************** of the
total market for PRODUCTS (and exact equivalents) in that country. The reduced
royalty shall be the appropriate fraction shown in the second
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 16
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column below of the royalty rate normally payable (but for the application of
this clause 6.8)
<TABLE>
<CAPTION>
Market share of Competitor(s)
(based upon sales value in the
relevant accounting period) Fraction
<S> <C>
*************** ***************
*************** *****
*************** *****
*************** *****
</TABLE>
Notwithstanding the above, in no case shall the royalty rate be less than **.
7. Downpayments from Third Parties
-------------------------------
7.1 THE LICENSEE shall pay LKS ******************** of the following:-
7.1.1 each lump sum payment, (as opposed to royalties paid as a
consequence of actual sales), received by the LICENSEE (or by
any Connected Person of the LICENSEE or member of the
LICENSEE's Group) from a third party in connection with the
grant of a distribution or any other right under or in respect
of Products; and
7.1.2 the cash equivalent of each non-cash benefit, (not in respect
of actual sales of Products), received by the LICENSEE or by
any Connected Person of the LICENSEE or member of the
LICENSEE's Group from a third party in connection with the
grant of a distribution or any other right under or in respect
of Products.
PROVIDED THAT the foregoing shall not apply to BONA FIDE payments to the
LICENSEE which are solely for services provided by the LICENSEE or which are
solely for equity in the LICENSEE.
7.2 THE LICENSEE shall, within thirty(30) days of receipt by the LICENSEE (or by
the Connected Person or Group member) of each such lump sum payment, or non-cash
benefit, notify LKS of and provide full details of such lump sum payment,
(7.1.1)), and non-cash benefit, (7.1.2)). At the same time as the LICENSEE gives
LKS such notification the LICENSEE shall pay LKS the sum or sums due.
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 17
-17-
7.3 WITH regard to non-cash benefits, the LICENSEE shall make its own
valuation but LKS may challenge such valuation in writing. Similarly, where a
payment is received by the LICENSEE (or by any Connected Person of the LICENSEE
or member of the LICENSEE's Group) from a third party, and such payment relates
to equity in the LICENSEE as well as rights under or in respect of Products,
then the LICENSEE shall apportion the payment between the two elements but LKS
may challenge the apportionment if it feels that the figure allocated to the
equity does not reflect the true open market value of the equity and includes a
premium above that ("Premium"). On receipt of either type of challenge the
LICENSEE shall promptly obtain an independent auditor's certificate specifying
the valuation made by the auditor. Both parties shall abide by the auditor's
certificate and shall rectify any overpayment or underpayment (as the case may
be). Where the auditor finds that there is a Premium the Premium (but not the
non-Premium payment for the equity) shall be subject to the above revenue
sharing arrangements.
8. Accounting for Royalties
------------------------
8.1 THE LICENSEE shall:-
8.1.1 keep true and detailed accounts and records of all royalties
and other sums due under this Agreement:
8.1.2 within forty-five days after the last day of March, June,
September, and December in each year deliver to LKS a
statement of all royalties and other sums due for the three
month period ending on such date showing separately the
Chargeable Transactions in each country, credits under Clause
6.7 and (where relevant), the rate of exchange used or, if it
be the case, a statement that no royalties are due;
8.1.3 send with the above statement the amount shown to be due;
8.1.4 immediately and without demand send to LKS the difference
between an amount already paid and the correct amount shown to
be due and payable as a result of verification under Clause
10.
8.2 ON termination or expiry, the final statement shall be delivered within
thirty days of termination or expiry and shall include details of royalties on
all Products being manufactured and all Products manufactured but not yet
disposed of.
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 18
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8.3 IF the LICENSEE defaults in payment of the royalties and other sums due
within the period stated above, the amount due shall bear interest, accruing
from day to day, at the rate per annum of ******************* above the Base
Rate for the time being of the National Westminster Bank p.l.c.
9. Currency and Taxes
------------------
9.1 ALL payments shall be made in Dollars in Cambridge, MA. Any necessary
currency conversion shall be at the rate at which English bank transfers are
made on the last business day of the period to which the relevant sales and
royalty statement relates.
9.2 PAYMENTS shall be made without deduction, other than such amount AS the
LICENSEE is required to deduct or withhold by law. In regard to any such
deduction, the LICENSEE shall use all reasonable endeavors to assist LKS to
claim recovery or exemption under any double taxation or similar agreement.
Evidence as to the payment of such tax or sum withheld shall, on request, be
given by the LICENSEE to LKS.
10. Verification
------------
10.1 THE LICENSEE shall permit any authorized representative appointed by
LKS, upon reasonable notice, access to the premises of the LICENSEE and access
to the accounts, records and relevant documentation of the LICENSEE and shall
provide such information and explanations as the representative shall require to
verify the statements and to satisfy LKS that the financial and accounting
provisions of this Agreement are being complied with. The representative shall
also be permitted to take copies of extracts pertinent to the verification. If
the verification discloses an underpayment to LKS of more than *** of the amount
due the LICENSEE shall promptly on demand reimburse LKS the fees and costs of
the representative, and the reasonable costs incurred by LKS in respect of the
verification.
10.2 LKS shall keep confidential any information which it may acquire in the
exercise of its rights under this Clause 10 with the exception of information
which was already lawfully known to it, or to which LKS is required to disclose
by law, or which is or becomes in the public domain otherwise than by any
default of LKS.
11. Suspension of royalties
-----------------------
IF any of the following events shall occur in respect of the Patents:-
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 19
-19-
11.1 any patent application is finally refused so that the grant of
a patent thereon is unobtainable; or
11.2 any patent application is abandoned or withdrawn; or
11.3 any patent lapses; or
11.4 any patent is declared invalid or unenforceable by a court or
tribunal of competent jurisdiction;
then the royalties -payable solely in respect of such patent application or
patent shall cease after the date of the relevant event, but LKS shall be
entitled to all sums which shall have then already fallen due, and whether paid
or unpaid at such date. If such patent application is reinstated or such patent
is restored or is subsequently established as being valid and enforceable,
royalties shall again become payable, together with all royalties which would
have been payable if the relevant event had not occurred.
12. Undertakings by the LICENSEE
----------------------------
THE LICENSEE:-
12.1 shall not use the Campath lH transferred pursuant to this
Agreement for human therapeutic administration;
12.2 shall not at any time make any use of the Know-how other than
for the purposes of the Licenses-,
12.3 shall have full control, authority and responsibility for
development, registration and commercialization of Products
and shall use all reasonable efforts and diligence in
development registration and commercialization of Products
(and the efforts of sub-licensees, members of the LICENSEE's
Group and collaborators shall be considered as efforts of the
LICENSEE in this regard);
12.4 shall deliver to LKS at intervals of six months short summary
written reports on the development and regulatory work carried
out by and for the LICENSEE in relation to Products during the
preceding six months, and the LICENSEE shall arrange for its
staff to answer any reasonable questions LKS may raise on such
reports with such question and answer
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 20
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sessions to be either on the telephone or at a meeting (as
reasonably requested by LKS);
12.5 shall use all reasonable endeavors to promote the distribution
and sale of Products and will use all reasonable endeavors to
procure or make available necessary selling and manufacturing
facilities to meet demands for Products;
12.6 shall use all reasonable endeavors to maximize the demand for
Products;
12.7 undertakes to LKS that when selling Product as part of a
package with other products the LICENSEE shall ensure that it
does not favor the other products, or discriminate against
Product, in terms of pricing, discounts, or in any other way
which would adversely affect the royalties due to LKS under
this Agreement.
13. Marking
-------
THE LICENSEE shall legibly mark the Products or, if not practicable,
then any associated packaging or literature, with the relevant patent or
application number.
14. Supplementary Protection Certificates
-------------------------------------
14.1 THE LICENSEE shall use its reasonable endeavors to promptly
take all necessary steps to facilitate LKS's application for a
Supplementary Protection Certificate or Certificates and
patent extensions in respect of Products.
14.2 IN particular, but without limitation, the LICENSEE shall:-
14.2.1 promptly notify LKS of the number and date of the
first and any subsequent authorization to place
Products on the market;
14.2.2 promptly and free of charge provide to LKS:-
14.2.2.1 a copy of every authorization fulfilling the
requirements of Article 8.1(b) of the SPC
Regulation (and of any additional applicable
requirements imposed
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 21
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by relevant national law) in respect of all
Products;
14.2.2.2 additional information fulfilling the
requirements of Article 8.l(c) of the SPC
Regulation and a copy of the notice
publishing the authorization in the
appropriate official publication (and
information and documents fulfilling any
additional requirements imposed by relevant
national law)
14.2.3 permit use of documents and information provided
pursuant to this clause for the purpose of such
application for a Supplementary Protection
Certificate or Certificates
14.3 LKS shall notify the LICENSEE of the application for and grant of every
Supplementary Protection Certificate in respect of Products.
14.4 LKS shall not be obliged to apply for grant of any Supplementary
Protection Certificates.
14.5 FOR the avoidance of doubt the LICENSEE shall not be entitled to make
an application for or participate in negotiations for grant of any Supplementary
Protection Certificate.
15. Exclusion of liability; Indemnity
---------------------------------
15.1 LKS warrants and represents that it has the full right and authority to
enter into this Agreement and is not aware of any impediment which would inhibit
its ability to perform the terms and conditions imposed on it by this Agreement.
15.2 SAVE as expressly stated herein, no representation condition made or
given by or on behalf of LKS. All conditions and warranties, arising by opinion
of law or otherwise:-
15.2.1 to the effect that any of the Patents or copyright in the
Know-how, are valid or enforceable, or
15.2.2 to the effect that any of the acts hereby licensed or agreed
to be licensed by LKS will not infringe the rights of third
parties; or
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 22
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15.2.3 in relation to the provision or use of the Know-how or its
fitness for purpose, accuracy or completeness;
are hereby expressly excluded.
15.3 LKS shall be under no liability whatsoever to the LICENSEE (whether in
negligence or otherwise, in contract or in tort) for any expense, loss, death,
damage or injury of any kind (including any loss of profit or consequential
damage) sustained by the LICENSEE or any third party which arises directly or
indirectly from any cause or circumstance referred to in Clause 15.4 below.
15.4 THE LICENSEE shall indemnify LKS and its licensors, including BTG and
WF, against all claims and actions by and all damages awarded to any third
person against LKS (and any related costs and expenses) which arise directly or
indirectly from:-
15.4.1 the development, manufacture, use, storage, sale or disposal
of Products; or
15.4.2 the use of the Patents or the said Copyright; or
15.4.3 the provision, evaluation or use of the Know-how; or
15.4.4 any technical or other advice given by LKS or any of its
officers, employees or agents to the LICENSEE or from any
reliance by the LICENSEE or any third party thereon.
LICENSEE's indemnification hereunder shall not apply to any damages that are
directly attributable to the intentional misconduct or negligence of LKS.
LICENSEE shall have the right to control the defense, settlement or compromise
of any action to which this indemnity applies, but shall not act in any way
which may or does do material adverse damage to LKS's or BTG's name or
reputation. LKS shall notify LICENSEE promptly of any claim or threatened claim
and shall cooperate with all reasonable requests of LICENSEE with respect
thereto.
15.5 UPON the initiation of Clinical trials with Products and for two (2) years
after termination of this Agreement the LICENSEE shall, at its own cost effect
and maintain in force with reputable insurers, adequate insurance in respect of
the development, storage, manufacture, use and supply of Products and shall
provide evidence of such insurance to LKS on request. Any consequent policy
shall name LKS as additional insured; waive any right of subrogation of the
insurers against LKS; be primary
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 23
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and without right of contribution from other insurance which may be available to
LKS; prohibit any alteration adversely affecting LKS's interest in the insurance
(or any alteration inconsistent with the requirements of Clause 15); prohibit
the lapse of or any cancellation or non-renewal of such insurance, without the
prior consent in writing of LKS. In the event a court determines that the
LICENSEE has failed to meet its obligation to obtain or maintain adequate
insurance, LKS may terminate this Agreement PROVIDED HOWEVER that this Agreement
may not be terminated on this ground unless the LICENSEE has been given at least
ninety (90) days to cure such failure and has failed to do so.
16. Termination
-----------
16.1 THE LICENSEE may, at any time, terminate this Agreement, by giving ***
***************************************. In such notice the LICENSEE must
specify whether it is terminating on account of breach by LKS, and, if it is,
must give details of that breach.
16.2 LKS may terminate this Agreement, or any of the Licenses forthwith, by
notice to the LICENSEE, upon the happening of any of the following events:-
16.2.1 if any royalties or other sums payable remain unpaid for
thirty days after the due date, or
16.2.2 if the LICENSEE is in breach of any of the other terms or
obligations of this Agreement, and such breach is not capable
of remedy;
16.2.3 if the LICENSEE is in breach of any of the terms or
obligations of any of LKS agreements with WF and BTG;
16.2.4 if in the United Kingdom the LICENSEE has a Receiver or an
Administrative Receiver or Administrator appointed of the
whole, or any part, of its undertaking or assets, or in any
other country has an officer appointed to perform a function
analogous to that of a Receiver, Administrative Receiver or
Administrator;
16.2.5 if an order is made, or a resolution passed, for winding-up or
administering the LICENSEE, unless such order or resolution is
part of a scheme of solvent reconstruction of the LICENSEE.
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 24
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16.2.6 if LICENSEE is dissolved or otherwise ceases to do business.
16.3 IF the LICENSEE is six months or more behind schedule on any milestone
(for any indication) as per the Development Plan then LKS as its sole and
exclusive remedy for such delay may serve on the LICENSEE a notice of
termination of this Agreement and that notice shall have automatic effect six
months after the date of service, unless within that period the LICENSEE shall
have achieved the relevant milestone, PROVIDED that LKS shall not unreasonably
refuse a request for the remedy period to be extended beyond six months where
the delay is due (wholly or partly) to an event of Force Majeure, or for other
reasons beyond the control of the LICENSEE.
16.4 IF the LICENSEE is in breach of any of the terms or obligations of this
Agreement, other than the cases referred to in sub-clauses 15.4, 16.2 and 16.3,
and such breach is capable of remedy. LKS may serve on the LICENSEE a notice of
termination of the Agreement and that notice shall have automatic effect thirty
days after the date of service, unless within that period the LICENSEE shall
have remedied the breach.
16.4.1 LICENSEE shall, no later than 15th June of Year 3 produce Net
Sales forecasts for Years 3 to 5 inclusive: and thereafter
LICENSEE shall no later than 15th December of Year 5 and then
no later than 15th December of each subsequent third Year
produce Net Sales forecasts for the following three Years (so
that an uninterrupted stream of Net Sales forecasts are
produced). The LICENSEE shall deliver each three Year set of
Net Sales forecasts co LKS within one week of them being
produced.
16.4.2 LKS shall have the right to terminate this Agreement forthwith
on notice to the LICENSEE if the aggregate Net Sales for Years
3 to 5 inclusive do not match or exceed ********************
***** of the aggregate Net Sales forecasts for those Years.
Thereafter LKS shall have the right to terminate this
Agreement forthwith on notice to the LICENSEE if the aggregate
Net Sales for any two years, (the first two being Years 5 and
6, and the next Years 6 and 7), do not match or exceed ******
************** of the aggregate Net Sales forecasts for the
two Years in question.
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 25
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16.4.3 IF LKS believes, in good faith, that any such forecast does
not represent a reasonable assessment of the likely future
sales, the parties shall endeavor to find a mutually
acceptable revision of the forecast. If the parties cannot
determine such mutually acceptable resolution, LKS shall
submit the dispute to a mutually acceptable third party expert
for a final and binding forecast, and the cost of such expert
shall be equally shared by the parties.
17. Rights on termination
---------------------
17.1 TERMINATION (or expiry) of this Agreement shall be without prejudice to
any rights of either party against the other which may have accrued up to the
date of termination.
17.2 ON termination (or expiry) of this Agreement for whatever cause, the
LICENSEE shall pay to LKS royalty in respect of all Products being manufactured
at the date of termination and all Products manufactured and not yet sold. The
LICENSEE shall then be free to sell or dispose of Products on which royalty has
been paid.
17.3 TERMINATION (or expiry) of this Agreement for any reason shall not
bring to an end:-
17.3.1 the confidentiality obligations of Clause 5.3 until the
Know-how shall have come into the public domain otherwise than
through the breach or default of the LICENSEE;
17.3.2 the obligations of the LICENSEE in respect of the accounting
for, payment of and verification of royalties and other
payments under Clauses 6, 7, 8, 9, 10 and 17.2 until the
settlement of all claims of LKS;
17.3.3 the provisions of Clause 15.
17.4 ON early termination the LICENSEE:-
17.4.1 shall/shall procure transfer to LKS or destruction (at LKS's
option, and in the former case at LKS's expense) of the
Know-how (and all copies and derivatives) in the possession of
the LICENSEE's Group; and
17.4.2 shall (at LKS's request) assign the Trade Marks to LKS; and
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 26
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17.4.3 except where the termination is for breach by LKS grant to
LKS or where necessary procure that others grant to LKS
irrevocable non-exclusive licenses under:-
17.4.3.1 each of those LICENSEE Inventions
which is an improvement invention to
one or more of the inventions the
subject of the Patents, and all
patent applications and patents
relating thereto for which the
LICENSEE has the benefit; and
17.4.3.2 the Results.
The license in respect of the Results shall permit use of the Results in
applications for regulatory clearance and such licenses (generally) shall be to
make, use, sell and otherwise dispose of products failing within the scope of
the claims of any of the applications or patents for the LICENSEE Inventions, or
which utilize the Results, and shall include full Sub-licensing rights and shall
continue, in the case of the LICENSEE Inventions until ***********************
***************************************************, and in the case of the
Results until *********************************************** (other than
through the LICENSEE's default). The license in respect of the Results shall
include the physical transfer of the Results (or copies) by the LICENSEE to LKS,
at LKS's expense.
17.5 IF the Agreement is terminated by the LICENSEE then, unless the
LICENSEE can prove to LKS's satisfaction (considered in good faith by LKS) that
termination was on the grounds of efficacy or safety, (and here LKS will
consider the LICENSEE's results from trials and studies), then the LICENSEE
shall pay LKS the next two annual payments (under 2.1.2 to 2.1.4) which would
have been payable but for termination (and any such payments already outstanding
on the date of termination shall be disregarded for these purposes).
18. Indexation
----------
THE sums referred to in Clause 2.1.2 to 2.1.4 (inclusive) shall be adjusted
to account for increases in the Index which are above ******************* in any
calendar year. Each tine there is an annual increase above *******************
the sums shall be increased by the percentage increase above *******************
(such increase being in addition to any previous increase hereunder).
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 27
-27-
19. Legal Proceedings
-----------------
If the LICENSEE contemplates legal proceedings against a third party
under one or more of the WF Patents, it shall first give reasonable notice to
LKS and WF. The LICENSEE shall take reasonable account of any concerns that WF
and the Glaxo Group have where such concerns are notified in writing to the
LICENSEE (whether directly or through LKS) and the LICENSEE shall give
reasonable consideration to any alternative strategies that WF or any member of
the Glaxo Group may propose in writing prior to commencement of the relevant
action. WF and the members of the Glaxo Group shall have the right: but not the
obligation to join the LICENSEE in any such legal proceedings.
20. Miscellaneous
-------------
20.1 THE LICENSEE shall not assign, charge or otherwise dispose of any of
its rights or obligations under this Agreement, or any of the Licenses.
20.2 Pursuant to the terms and conditions set forth in Schedule 4, the
LICENSEE may grant sub-licenses with the consent of LKS which consent shall not
be unreasonably withheld.
20.3 THE failure by either party to exercise or enforce any rights under
this Agreement shall not be deemed to be a waiver of any such rights, nor shall
any single or partial exercise of any right, power, or privilege, or further
exercise thereof, operate so as to bar the exercise or enforcement thereof at
any later time.
20.4 THE waiver by either party of any breach of any of the terms of this
Agreement by the other shall not be deemed to be a waiver of any other breach of
the Agreement.
20.5 IF any part or provision of this Agreement is prohibited, or rendered
void or unenforceable, by any legislation, the validity or enforceability of the
Agreement as a whole or of any other part of this Agreement shall not be
affected.
20.6 SUBJECT to Clause 16.3 the rights and remedies provided in this
Agreement are cumulative and not exclusive of any rights or remedies provided by
law or in equity.
20.7 FOR the avoidance of doubt it is declared that it is understood that
the Trade Marks will be assigned to the LICENSEE as of the Effective
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 28
-28-
Date; it being further understood that it is entirely the LICENSEE's
responsibility to obtain the documentation necessary to accomplish such
assignment directly from LKS and/or WF and affiliates.
21. Notices
-------
21.1 ANY notice authorized or required to be given by either party
under this Agreement to the other party, shall be in writing.
and shall be deemed to be duly given if left at, or sent by
recorded delivery or registered post addressed to:-
21.1.1 in the case of LKS, the address of LKS at the head of
the Agreement, unless notice of change has been given
to LICENSEE, in writing; and
21.1.2 in the case of the LICENSEE the address of the
LICENSEE at the head of this Agreement, unless notice
of change has been given to LKS, in writing.
21.2 ANY notice, if sent by post, shall be deemed to have been served at the
expiration of three days after posting.
22. Law and Jurisdiction
--------------------
22.1 THIS Agreement is to be read and construed in accordance with. and
governed by, English law.
22.2 THE LICENSEE submits to the jurisdiction of the English Courts and to
the Courts of the Commonwealth of Massachusetts, USA.
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 29
-29-
I N W I T N E S S whereof this document has been executed as a Deed,
pursuant to English law, the day and year first above written.
LEUKOSITE, INC. L & I PARTNERS, L.P.
By: L & I, L.L.C.
General Partner
- ---------------------------------- ------------------------------------
, President , President
- ---------------------------------- ------------------------------------
, Secretary , Secretary
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE> 30
BDG LLP DRAFT
6/25/97
ACQUISITION AND DEVELOPMENT
CLOSING AGENDA
WINTER STREET OPCO, L.L.C.
MASSACHUSETTS MEDICAL SOCIETY
CLOSING DATE: JUNE 26, 1997
DOCUMENT RESPONSIBILITY STATUS
- -------- -------------- ------
(1) Property Acquisition and BDG In Progress
Development Agreement
Exhibit A: Legal Description of BDG Copy from P+S
- --------- Land
Exhibit B: Development Approvals BDG Copy from P+S
- ---------
Exhibit C: ANR Plan BDG Received
- ---------
Exhibit D: Form of Winter Street BDG Done
- --------- Realty Trust Declaration
of Trust
Exhibit E: COREA Term Sheet LM In Progress
- ---------
Exhibit F: Form of Rights of First R&G Done
- --------- Offer Agreement
Exhibit G: Form of Site LM In Progress
- --------- Development
Management Agreement
Exhibit H: Form of Building LM In Progress
- --------- Development
Management Agreement
Exhibit I: Designated LM Need MMS Reps
- --------- Representatives
Exhibit J: Purchase Price LM In Progress
- --------- Adjustment
<PAGE> 31
DOCUMENT RESPONSIBILITY STATUS
-------- -------------- ------
Exhibit K: Polaroid Siting Plan BDG Received
- ---------
Schedule 3.2: Schedule of Third LM Bill Gause is
- ------------ Party, Out of Pocket preparing
Due Diligence
Expenses
Schedule 8.4: Illustration of EYKL John Keefe is
- ------------ Sitework preparing
Savings/Building
Costs and Building
Savings/Sitework
Costs
Schedule 8.5: Illustration of "Truing EYKL John Keefe is
- ------------ Up" Concept preparing
(2) Rights of First Offer Agreement R&G Done
(a) Lot 1
(b) Lot 2
(c) Lot 3
(d) Lot 4
(3) Site Development LM Post-Closing
Management Agreement
(4) Building Develop ment LM Post-Closing
Management Agreement
(5) Development Rights Owners BDG Post-Closing
Agreement
(6) COREA BDG Post-Closing
<PAGE> 32
DOCUMENT RESPONSIBILITY STATUS
-------- -------------- ------
(7) Winter Street Realty Trust BDG Draft of each done
(a) Declaration of Trust
(b) Schedule of
Beneficiaries
(c) Trustee Certificates (2)
(d) Designation of
Beneficiaries (2)
(8) Winter Street Realty Trust BDG Not yet done
(a) Declaration of Trust
(b) Schedule of
Beneficiaries
(c) Trustee Certificate
(d) Designation of
Beneficiaries
(9) MMS Real Estate Trusts A + B R&G In progress
(a) Declaration of Trust
(b) Schedule of
Beneficiaries
(c) Trustee Certificate
(d) Designation of
Beneficiaries
(10) No Consideration Quitclaim R&G Done
Deeds
(i) Lots 1 & 2 = (MMS or
Nominees)
(ii) Lots 3 & 4 = (WSO or
Nominees)
(11) Winter Street OpCo, L.L.C. BDG/Shulte Roth In progress
Creation/Authority Documents
(12) MMS Winter Street, L.L.C. R&G In progress
<PAGE> 33
DOCUMENT RESPONSIBILITY STATUS
-------- -------------- ------
(13) Title Insurance BDG/R&G Commitments
Received
(i) Parcel B
(ii) Lots 1 & 2
(iii) Lots 3 & 4
(14) Title Insurance Affidavits BDG Circulated to
Polaroid
(i) Mechanics Lien
(ii) PIP
(iii) Gap
(15) Survey BDG/R&G Draft Received
(16) Escrow Instruction Letter BDG/R&G Not yet done
(17) Settlement Statement BDG/R&G Not yet done
(18) Wire Instructions BDG Received
(19) Overnight Investment BDG/R&G Not yet done
Instructions
<PAGE> 34
BDG LLP DRAFT
6/25/97
RECORDING ORDER
(1) ANR Plans
(2) Easement Plan
(3) MLCs
(4) Declaration of Trust
(5) Authority Documents
(6) Quitclaim Deed
(7) Easement
(7.5) [Rights of First Offer]
(8.) MMS Authority Documents
(9.) MMS Deed
(10.) New Trust/Declaration of Trust
(11.) New Trust Deed
<PAGE> 1
Exhibit 10.18
LEASE
1. PARTIES. ROBERT A. JONES, and K. GEORGE NAJARIAN, as they are
Trustees of ATHENAEUM REALTY NOMINEE TRUST, under a Declaration of Trust dated
October 3, 1990 and not individually, ("LESSOR") , which expression shall
include their successors and assigns where the context so permits, do hereby
lease to LeukoSite, Inc., a Delaware corporation, ("LESSEE") which expression
shall include its successors and assigns, and the LESSEE hereby leases and shall
peaceably hold and enjoy the following described premises:
2. LEASED PREMISES. On the Commencement Date, or such earlier date as
LESSEE shall take occupancy thereof, the "Leased Premises" shall consist of a
portion of the basement, first, and second floor in the building located at 215
First Street, Cambridge, Massachusetts, (the "Building") which basement space
contains two hundred (200) rentable square feet more or less, which first floor
space contains twelve thousand eight hundred ninety eight (12,898) rentable
square feet, more or less, and which second floor space contains eleven thousand
three hundred seventy (11,370) rentable square feet, more or less, as outlined
on the sketch contained in Exhibit Al (herein called the "Leased Premises").
The Leased Premises shall have as appurtenant thereto: (a) the right to
use in common with others entitled thereto, the entrances, lobbies, hallways,
stairways, walkways, sidewalks, driveways, loading docks, elevators and other
common facilities in the Building necessary for access to and enjoyment of the
Leased Premises, or portion, and (b) the pipes, conduits, wires, and appurtenant
equipment serving the Leased
<PAGE> 2
-2-
Premises, or portion thereof, in common with other portions of the Building
subject, however, to the following rights which are expressly excepted and
reserved by LESSOR: (i) the right, from time to time, to install, maintain, use,
repair, relocate, place and replace utility lines, pipes, ducts, conduits,
wires, gas, electric, or any other meters and fixtures located on or passing
through any portion of the Leased Premises to serve other portions of the
LESSOR's property of which the Leased Premises, or a portion thereof, are a
part; (ii) the right to enter into upon and across any portion of the Leased
Premises to exercise any reserved right of LESSOR hereunder; and (iii) the right
from time to time to make alterations or additions to the Building, and to
permit others to do so from time to time all as LESSOR may determine in its sole
discretion, and without LESSEE's consent in any instance; any such alterations
or additions or construction being performed in a manner so as not unreasonably
to interfere with the LESSEE's use and occupancy of the Leased Premises with any
construction, alteration or addition of the Leased Premises to be, except in the
case of an emergency, performed after normal business hours.
Subject to LESSOR's reserved rights specified above, there shall be
appurtenant to the Leased Premises the right to park two (2) passenger motor
vehicles per 1,000 feet of occupied square feet in the open, uncovered, parking
areas as shown on Exhibit B. LESSOR reserves the right to designate the
locations of the spaces to be utilized for such parking rights by written notice
to LESSEE, and to change the location of any or all of such spaces by notice to
LESSEE at any time and from time to time as LESSOR shall solely determine. The
parking spaces provided hereunder need not be contiguous.
<PAGE> 3
-3-
3.1 TERM. The term (the "term") of this Lease shall be for a period of
five (5) years following the "Commencement Date". The "Commencement Date" shall
be that date which is six months after the date upon which this Lease is
executed ("Lease Execution Date"), but, in no event later than December 1, 1994.
As soon as may be convenient after the Commencement Date has been
determined, the LESSOR and the LESSEE agree to join with each other in the
execution, in recordable form, of a written declaration in which the
Commencement Date shall be stated.
3.1.1. EARLY OCCUPANCY. In the event a portion of the Leased Premises
are substantially completed and ready for occupancy and LESSEE shall have given
notice to LESSOR thereof, then LESSEE shall have the right to commence use and
occupancy of such portion of the Leased Premises subject to the terms and
conditions of this Lease. During the period of such partial use and occupancy,
LESSEE shall perform, comply with and abide by all of its obligations,
undertakings and covenants as if, and to the same extent, as though the term had
commenced; however, no obligation to pay Base Rent or Rent Adjustments,
including tax payments shall accrue until the Commencement Date.
3.2 CONDITION OF THE PREMISES. The Premises shall be delivered to the
LESSEE in their present "as is" condition, broom clean and free of any tenants
on the Lease Execution Date. LESSOR makes no representations or warranties
concerning the suitability of the Leased Premises for LESSEE's purposes.
3.3 COMPLETION OF IMPROVEMENTS. The Leased Premises shall be considered
"ready for occupancy" on the date upon which the
<PAGE> 4
-4-
improvements to be constructed by the LESSEE with respect to 9,398 square feet
of the first floor and 7,870 square feet of the second floor of the Leased
Premises (hereinafter "Tenant Improvement Work") are substantially completed.
The Leased Premises shall be deemed substantially completed notwithstanding the
completion of work and adjustment of equipment and fixtures or minor items of
uncompleted work (so-called "punch list" work items) remain to be done, if such
work can be completed after occupancy has been taken without causing
unreasonable interference with LESSEE's use of the Leased Premises.
On or before July 15, 1994, LESSEE shall provide to LESSOR complete
design development drawings and specifications for all Tenant Improvement Work
(the "Plans") . The Plans shall include all alterations, additions, equipment
and fixtures to be performed, constructed and installed in the Leased Premises.
The Plans shall require use of new materials of good quality, and all
construction shall be in compliance with applicable laws, ordinances, orders and
regulations of governmental authorities and with requirements of LESSOR's
insurance underwriters.
Within five (5) business days of receipt of the Plans, the LESSOR shall
either approve said plans, which approval shall not be unreasonably withheld or
shall indicate in writing to LESSEE the specific reasons for not approving
LESSEE's plans. Within the succeeding ten (10) business days, LESSEE shall
correct the deficiencies noted and return the revised Plans to LESSOR for
approval. once approved, LESSEE's Plans may not be modified in any material
respect except with LESSOR's further approval. LESSOR's approval of the Plans
shall not constitute an acknowledgment that work done in conformity therewith
will so comply, and LESSEE shall be solely responsible for modifications to the
Plans
<PAGE> 5
-5-
required by any governmental agency or LESSOR's insurance underwriters.
3.3.1 LESSEE'S CONTRACTOR. LESSEE shall arrange with its own general
contractor to perform the work shown on the approved LESSEE's Plans. The
identity of LESSEE's contractor shall be subject to LESSOR's prior approval
(approval not to be unreasonably withheld or delayed). LESSEE shall procure and
convey to LESSOR all necessary governmental approvals, including, without
limitation, building and occupancy permits and all applicable approvals relative
to electrical, gas, water, heating and cooling, and telephone work, before
undertaking any work. LESSEE shall perform all work at its risk in a good and
workmanlike manner in accordance with LESSEE's approved Plans employing new
materials of good quality with interior finishes being at least equal to the
other parts of the Leased Premises. LESSEE shall furnish all ramps, chutes,
coverings, and the like necessary to protect other parts of the Building from
damage during the performance of the Tenant Improvement work shown on the Plans.
Any resulting damage to other parts of the Building shall be repaired by LESSOR
at LESSEE's expense, reimbursement to be made promptly and deemed additional
rent. The performance of the Tenant Improvement Work shown on the Plans shall be
coordinated with all reasonable regulations of LESSOR with respect to the
performance of other work in the Building and the requirements of other
occupants thereof.
When any LESSEE Tenant Improvement Work is in progress, LESSEE shall
maintain or cause its contractor to maintain workmen's compensation insurance
required by law covering all persons employed in such Tenant Improvement Work
and such other insurance as may be
<PAGE> 6
-6-
required by LESSOR covering the additional hazards due to such Tenant
Improvement Work, in each case for the benefit of LESSOR and such additional
parties as LESSOR shall require. it shall be a condition of LESSOR's approval of
any plans for LESSEE's Work that certificates of such insurance shall have been
deposited with LESSOR. Prior to performing any work in the Building, LESSEE's
contractor shall obtain and file a statutory lien bond protecting the Building
and all ownership interests therein against the imposition of liens by
contractors, subcontractors, material suppliers and laborers.
3.3.2. COMPLIANCE WITH LEASE. Prior to the Commencement Date, LESSEE
shall cause its employees, agents, contractors, subcontractors, material
suppliers and laborers to observe and perform all of LESSEE's obligations under
this Lease excepting only the obligations to pay Base Rent and additional rent
and other charges and excepting further the other obligations in the Lease, the
performance of which would be clearly incompatible with construction and the
installation of furnishings fixtures and equipment pursuant herein.
3.3.3 FIRST AND SECOND FLOOR TENANT IMPROVEMENT WORK. At least sixty
(60) days prior to occupying and at least thirty (30) days prior to commencing
construction in the Supplemental Space, LESSEE shall provide to LESSOR complete
construction drawings and specifications for all Tenant Improvement Work for the
three thousand five hundred square feet on the first floor and three thousand
five hundred square feet on the second floor shown crosshatched on Exhibit Al,
(hereinafter the "Supplemental Spaces" and the tenant improvement work
hereinafter defined as the "Supplemental Space Tenant Improvement Work"). The
provisions of Paragraph 3.3, relating to the definition of
<PAGE> 7
-7-
substantial completion and the Plan approval mechanism and 3.3.1, as they relate
to the contractor for the Supplemental Space, shall also apply to the
Supplemental Space Tenant Improvement Work.
3.4 FINANCING OF TENANT IMPROVEMENT WORK. LESSOR has agreed to finance
two hundred fifty thousand ($250,000.00) dollars "*of the tenant improvement
work referenced in Paragraph 3.3 (Lessor's Contribution) . Any and all other
costs and expenses over and above $250,000.00 shall be the sole and exclusive
responsibility Of LESSEE. LESSEE shall submit to LESSOR such reasonable
documentation, including financial statements, as LESSOR deems necessary to
assure LESSOR of LESSEE's ability to fund its portion of the tenant improvement
buildout costs.
Disbursement of Landlord's Contribution shall be subject to such
reasonable conditions, including but not limited to processing time and
inspections, which may be imposed by LESSOR's lender. Payment of LESSEE's
contractors will be on a pro-rata basis, that is proportional between LESSOR and
LESSEE in the same percentage that Landlord's Contribution bears to the total
construction contract for the Tenant Improvement Work. In no event shall LESSOR
be responsible for contributing more than $250,000 toward the Tenant Improvement
Work. LESSOR shall not be obligated to make its pro-rata contribution unless and
until the contractor' s invoice has been approved by LESSEE and LESSEE has
provided LESSOR with evidence of its payment to the contractor for its pro-rata
obligation.
4. RENT. LESSEE covenants and agrees to pay to LESSOR annual base rent
("Base Rent") in the amounts set forth or provided for below, by equal payments
of one-twelfth of such annual rate on the first
<PAGE> 8
-8-
day of each calendar month in advance, the first monthly payment to be made on
the Commencement Date, and by payment in advance of a pro-rata portion of a
monthly payment for any portion of a month at the beginning or end of the term;
all payments to be made to LESSOR or such agent, and at such place, as LESSOR
shall from time to time in writing designate, the following being now so
designated:
ATHENAEUM REALTY NOMINEE TRUST
THE ATHENAEUM GROUP
215 First Street
Cambridge, MA 02142
During the first twenty one months of the Term the annual Base Rent
shall be $83.33 per month (calculated as 200 square feet in the basement
multiplied by $5.00 per square foot with no Base Rent for the first floor or
second floor space and no outdoor Parking rent for the parking spaces otherwise
available to LESSEE under Paragraph 2).
The Base Rent for the twenty second month of the Term shall be the sum
of the following:
(i) $12,458.73 (calculated as one twelfth of the Annual Base Rent for
9,398 square feet on the first floor and 7,870 square feet on the second floor
multiplied by $8.60 per square foot, and 200 square feet in the basement
multiplied by $5.00 per square foot, with no Base Rent for the Supplemental
Space); plus
(ii) the annual fair rental value of the parking spaces made available
to LESSEE, all to be reasonably determined by LESSOR ("Outdoor Parking"); it
being expressly understood and agreed to by the parties that the first five (5)
spaces taken by LESSEE shall be at no cost or charge to LESSEE.
<PAGE> 9
-9-
The annual Base Rent for the twenty third and twenty fourth months of
the Term shall be the sum of the following:
(i) $33,612.03 per month (calculated as one twelfth of the Annual Base
Rent for 9,398 square feet on the first floor and 7,870 square feet on the
second floor multiplied by $23.30 per square foot, and 200 square feet in the
basement multiplied by $5.00 per square foot, with no Base Rent for the
Supplemental Space; plus
(ii) the annual fair rental value of the parking spaces made available
to LESSEE, all to be reasonably determined by LESSOR ("Outdoor Parking"); it
being expressly understood and agreed by the parties that the first five (5)
spaces taken by LESSEE shall be at no cost or charge to LESSEE.
The annual Base Rent for the third year of the Term, shall be the sum
of the following:
(i) $420,612.40 per year; (calculated as 9,398 square feet on the first
floor and 7,870 square feet on the second floor multiplied by $24.30 per square
foot, with no Base Rent for the Supplemental Space, plus 200 square feet in the
basement multiplied by $5.00 per square foot; plus
(ii) the annual fair rental value of the parking spaces made available
to LESSEE, all to be reasonably determined by LESSOR ("Outdoor Parking") ; it
being expressly understood and agreed to by the parties that the first five (5)
spaces taken shall be at no cost or charge to LESSEE.
The Annual Base Rent for the fourth and fifth years of the Term, shall
be the sum of the following:
(i) $572,050.40 per year (calculated as 9,398 square feet on the first
floor and 7,870 square feet on the second floor multiplied by $27.80
<PAGE> 10
-10-
per square foot, plus the Supplemental Space multiplied by $13.00 per square
feet of foot, plus 200 square feet in the basement multiplied by $5.00 per
square foot; plus
(ii) the annual fair rental value of the parking space made available
to LESSEE, all to be reasonably determined by LESSOR ("Outdoor Parking"), it
being expressly understood and agreed to by the parties that the first five (5)
spaces taken shall be at no cost or charge to LESSEE.
Notwithstanding the foregoing, if LESSEE expands into the Supplemental
Space prior to the fourth year of the Lease Term, LESSEE shall pay Base Rent
equal to $11.00 per square foot on an annualized basis. As set forth herein,
LESSEE shall provide LESSOR with at least sixty days notice of its intention to
occupy the Supplemental Space and the Base Rent allocable to the Supplemental
Space shall be due and payable as of that date which is the earlier of (i) the
sixtieth day after LESSEE's notice to LESSOR or (ii) that date upon which the
Supplemental Space is ready for occupancy.
Further, LESSOR agrees that it shall employ only one announced fair
rental parking value at any particular time during the term of the Lease for the
tenants of the Building, exclusive of any rental concessions it may grant
tenants. LESSOR reserves the right to change the announced fair rental parking
value as it deems reasonably necessary.
5. RENT ADJUSTMENTS.
5.1. RENT ADJUSTMENT - COMMON AREA OPERATING EXPENSES FOR THE BUILDING.
Commencing as of the Commencement Date and with respect to any calendar year
falling within the term, or fraction of a calendar year at the beginning or end
of the
<PAGE> 11
-11-
term, the LESSEE shall pay to the LESSOR, as additional rent, the "LESSEE'S
Proportionate Building Share" (defined below) of operating expenses attributable
to the Building PICAO Building"). CAO Building shall include, but is not limited
to, the following: all costs and expenses incurred by the LESSOR in connection
with the insurance, operation, repair, maintenance and cleaning of or for the
Building and heating, plumbing, elevators, electrical, air-conditioning and
other systems, thereof, trash removal, janitorial services, security systems,
landscaping and lawn care services, walkway, driveway, parking and common
entryway upkeep, paving, snowplowing, snow and ice removal and general expenses
incurred by the LESSOR in connection with the insurance, operation and
maintenance of the Building, to keep the same in safe, secure condition but
excluding any management fee to affiliated entities or capital improvements
performed by LESSOR to the Building.
LESSEE'S Proportionate Building Share shall be that percentage, which
is equal to the ratio of the square footage of space constituting the Leased
Premises to the aggregate square footage of space in the Building. Provided
LESSEE is not then occupying the Supplemental Space, LESSEE's Proportionate
Building Share during the first two years of the Lease Term shall be 6.04%. From
the earlier of (i) the Third Year of the Lease Term or (ii) LESSEE's full
occupancy of the Supplemental Space, LESSEE's Proportionate Building Share shall
be 8.59%.
5.2 MONTHLY PAYMENTS. Beginning with the calendar year in which the
Commencement Date occurs, and in subsequent years during the term of this Lease,
the LESSEE shall pay to the LESSOR pro rata monthly installments of amounts due
under Paragraphs 5.1 on account of projected CAO Building Expenses for such
year, calculated by the
<PAGE> 12
-12-
LESSOR on the basis of the best and most recent budget or data available.
Appropriate adjustments of estimated amounts shall be made between LESSOR and
LESSEE promptly after the close of each calendar year to account for actual CAO
Building Expenses for such year, except that LESSOR may at its option, credit
any amounts due from it to LESSEE as provided above against any sums then due
from LESSEE to LESSOR under this Lease. The balance of any amounts due shall be
paid within twenty (20) days after written notice thereof.
5.3. RENT ADJUSTMENT - TAXES.
5.3.1. LESSOR TO PAY TAXES. The LESSOR shall be responsible for the
payment, before the same becomes delinquent, of all general and special taxes of
every kind and nature, including assessments for local improvements, and other
governmental charges which may be lawfully charged, assessed or imposed (herein
collectively called the "Taxes") upon the Building.
If at any time during the term the present system of ad valorem
taxation of real property shall be changed to that in lieu of the whole or any
part of the ad valorem tax on real property, there shall be assessed on LESSOR a
capital levy or other tax on he gross rents received with respect to the
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) 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
"Taxes" but only to the extent that the same would be payable if the Building
were the only property of LESSOR.
<PAGE> 13
-13-
5.3.2. LESSEE'S SHARE OF TAXES. Commencing as of the Commencement Date,
the LESSEE shall pay to the LESSOR, as additional rent, LESSEE'S applicable
Proportionate Building Share of that portion of the Taxes attributable to the
Building.
5.3.3. RENT ADJUSTMENT-PAYMENT. Beginning with the calendar year in
which the Commencement Date occurs and in subsequent years during the term of
this Lease, LESSEE shall pay to the LESSOR monthly installments of one-twelfth
of the amounts due to LESSOR under Paragraphs 5.3.1 and 5.3.2 on account of
projected Taxes for such year, calculated by the LESSOR on the basis of the best
and most recent data available as set forth in a statement from LESSOR (and,
when available, based upon the real estate tax bill covering any such period) .
Appropriate adjustments of estimated amounts shall be made between LESSOR and
LESSEE promptly after LESSOR shall have received the tax bill covering any such
period.
5.3.4. TAX ADJUSTMENT. If the LESSOR or any other tenant (excluding
LESSEE) in the Building shall construct an addition to the Building, or
construct improvements within the Building of unusual value so as to result in
an increase in Taxes over the Taxes which would have been assessed to that
Building but for such construction, there shall not be included in Taxes for
purposes of this Lease the amount of such increase in Taxes unless such
additions or improvements directly benefit the LESSEE. If the LESSEE, or the
LESSOR at the direction of the LESSEE, shall construct improvements within the
Leased Premises, or any part thereof, of unusual value (other than the Tenant
Improvement Work or Supplemental Space Tenant Improvement Work) so as to result
in an increase in Taxes over the Taxes which would have been assessed to
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the Building, or part, but for such unusually valuable improvements, the LESSEE
shall be responsible for the payment of the full amount of such increase.
6. UTILITIES AND OTHER SERVICES. (a) Commencing on the date of
execution of this Lease, the LESSEE shall pay for all gas, electricity, water
and sewer and any other utilities separately metered or sub-metered to the
Leased Premises. The LESSEE shall be responsible for all utility company
deposits applicable to the supply of such services to the Leased Premises. To
the extent not separately metered, LESSEE shall be responsible for the payment
of its proportionate share of all gas, electricity, water and sewer. use and any
other utilities not separately metered or sub-metered to the Leased Premises all
as reasonably determined by LESSOR. Upon request by the LESSOR, the LESSEE shall
provide the LESSOR with evidence of payment of such charges to the utility
supplier. LESSEE shall defend, indemnify and hold LESSOR harmless from and
against any claim or liability arising from such charges made by any such
utility supplier for which LESSEE is responsible.
(b) LESSOR agrees to furnish reasonable heat to the stairways,
elevators and other common areas in the Building, or portions thereof, as
necessary for comfortable occupancy and to provide lighting to passageways and
stairways and all parking areas and walkways providing access from the Building
to the parking area in the evening and to furnish ordinary repairs and cleaning
of the common areas and facilities of the Building and removal of snow and ice
reasonably promptly after snowfall and ice accumulation have ended to all
walkways, access ways and approaches to the Building and the parking facility as
is customary in or
<PAGE> 15
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about similar buildings in Cambridge. LESSOR shall not be liable to LESSEE for
any compensation or reduction of rent by reason of inconvenience or annoyance or
for loss of business arising from the necessity of LESSOR or its agents entering
the Leased Premises, or for LESSEE's repairing the Leased Premises if such
repair is not performed by LESSOR, or for making repairs or renovations to any
portion of the Building, however the necessity may occur. In case LESSOR is
prevented or delayed from making any such repairs or alterations, or supplying
the utilities or services provided for herein, or performing any other covenant
or duty to be performed on LESSOR's part, by reason of any cause beyond LESSOR's
control, LESSOR shall not be liable to LESSEE therefor, nor shall LESSEE be
entitled to any abatement or reduction of rent by reason thereof, nor shall the
same give rise to a claim in LESSEE's favor that such failure constitutes actual
or constructive, total or partial, eviction from the Leased Premises, or any
portion thereof. LESSOR 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. LESSOR agreeing to use reasonable due diligence to
restore any such service or utility service.
7. USE OF LEASED PREMISES. The LESSEE may use the Leased Premises only
for the purpose of general office, laboratory, research and development,
including pharmaceutical research and development and such other accessory uses
incidental thereto to the extent such accessory use is not otherwise violative
of the uses permitted under the Cambridge Zoning Act.
8. COMPLIANCE WITH LAWS.. The LESSEE acknowledges that no trade or
occupation shall be conducted in the Leased Premises or
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use made thereof which shall be unlawful, improper, noisy or offensive, or be
contrary to any law or any municipal by-law or ordinance in force in the City of
Cambridge. LESSEE shall keep the Leased Premises equipped with all safety
appliances and shall procure and keep in force all licenses and permits required
by law or ordinance of any public authority because of the uses made of the
Leased Premises by LESSEE and shall maintain in good condition on the Leased
Premises all safety and fire protection devices required by the Board of Fire
Underwriters, or other body having similar functions, and of every insurance
company and policy by which LESSOR or LESSEE is insured. If any use of the
Leased Premises results in the cancellation of any insurances carried by LESSOR,
or increases the cost thereof, the LESSEE shall on demand reimburse the LESSOR
all extra insurance premiums incurred as a result of such use of the Leased
Premises by the LESSEE.
9. RISK OF LOSS OF PERSONAL EFFECTS. LESSEE acknowledges and agrees
that all of the furnishings, equipment, effects and property of LESSEE and of
all persons claiming by, through or under LESSEE which may be on the Leased
Premises or elsewhere in the Building, shall be at the sole risk and hazard of
LESSEE and if the whole or any part thereof shall be destroyed or damaged by
fire, water or otherwise, or by the leakage or bursting of water pipes, steam
pipes, or other pipes, by theft or from any other cause, no part of said loss or
damage is to be charged to or to be borne by LESSOR, unless arising from any
injury, loss, damage or liability caused by LESSOR's gross negligence or willful
misconduct.
9A. INSURANCE - WAIVER OF SUBROGATION. LESSOR agrees to LESSOR agrees
to keep the Building and LESSEE agrees to
<PAGE> 17
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keep the Leased Premises, and all equipment, machinery and fixtures therein
insured in amounts equal to the actual cash value of the same, against fire and
other perils included in a standard extended coverage endorsement, and against
breakdown of boilers and other machinery and equipment, and LESSEE agrees to
procure and keep in force comprehensive general liability insurance indemnifying
LESSEE against all claims and damages for any injury to or death of person or
damage to property which may be claimed to have occurred upon or to have been
caused by activities or conditions within the Leased Premises and indemnifying
LESSOR to the extent any such claims and demands are the responsibility or
obligation of LESSEE pursuant to this Lease or as a matter of law, in amounts
not less than $1,000,000 for property damage, $500,000 for injury or death of
one person, and $1,000,000 for injury or death of more than one person in a
single accident. LESSOR agrees to maintain insurance for the full replacement
cost value of the Building.
All insurance required hereunder shall be written by insurance carriers
qualified to do business and in good standing in Massachusetts and approved by
LESSOR, which approval shall not be unreasonably withheld. All policies of
insurance shall name LESSOR and LESSEE as the insured parties. Each required
policy of insurance shall provide that, notwithstanding any act or omission of
LESSEE which might otherwise result in forfeiture of said insurance: (A) it
shall not be cancelled nor its coverage reduced without at least ten (10) days
prior written notice to each insured named therein, and (B) any proceeds shall
be first payable to LESSOR or to the holder of any mortgage encumbering the
Leased Premises as their respective interests may appear.
<PAGE> 18
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As of the commencement of the term hereof, and thereafter not less than
fifteen (15) days prior to the expiration dates of, the expiring policies, the
original policies to be obtained by LESSEE hereto issued by the respective
insurers or certificates thereof including photocopies of the original policies,
shall be delivered to LESSOR.
Any insurance carried by either party with respect to the Leased
Premises or property therein or occurrences thereon shall 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 of
loss due to hazards covered by such insurance to the extent of the
indemnification received thereunder.
10. MAINTENANCE OF LEASED PREMISES. The LESSEE agrees to maintain the
Leased Premises in the same condition as they are at the commencement of the
term or as they may be put in during the term of this Lease, reasonable wear and
tear, damage by fire, other casualty and eminent domain, and matters for which
the LESSOR is responsible hereunder only excepted, to provide its own interior
janitorial service, to install and maintain its own security system as it
considers appropriate and, whenever necessary, to replace plate glass and other
glass therein with that of the same quality as that damaged or injured. LESSEE
shall be responsible for the costs of maintaining the HVAC System servicing the
Leased Premises, and shall be responsible for all repairs and replacements to
said system. The LESSEE shall not permit the Leased Premises to be overloaded,
damaged, stripped, or defaced, nor suffer any waste. LESSEE shall obtain written
consent of LESSOR before
<PAGE> 19
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erecting any sign on or about the Leased Premises, which consent shall not be
unreasonably withheld or delayed. LESSEE further covenants and agrees: to take
all reasonably necessary actions to insure that smoke, fumes, vapors and odors
will not permeate any building containing the Leased Premises and will be
removed only through the exhaust and ventilating system servicing the Leased
Premises; to keep the Leased Premises free of pests, roaches and vermin; to keep
all trash garbage and debris stored on the Leased Premises (and not in any other
portions of the Building) in adequate covered containers, approved by LESSOR and
placed in locations or areas approved by LESSOR in writing and to arrange for
the regular removal thereof once each day; to provide for the frequent and
adequate cleaning of the Leased Premises and all walls, floors, fixtures and
equipment therein consistent with its use. LESSOR shall maintain in good
condition the structural elements and the roof of the Building, the mechanical
equipment and systems in the Building (other than such equipment and systems
which are located within or exclusively serve the Leased Premises, and other
than LESSEE's maintenance obligations otherwise provided herein), and the common
areas of the Building. LESSOR shall provide for the benefit of LESSEE adequate
internal signage identifying LESSEE's location within the Building. LESSEE shall
pay its proportionate share for these expenses and services as set out in
paragraph 5 above.
LESSEE shall be responsible for compliance with the Americans With
Disabilities Act within the Leased Premises. LESSOR shall be responsible for
compliance with the Americans With Disabilities Act in the common areas of the
Building.
<PAGE> 20
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11. ALTERATIONS - ADDITIONS. other than the Tenant Improvement Work and
Supplemental Space Tenant Improvement Work governed by the applicable provisions
of Paragraph 3 of this Lease, the LESSEE shall not make structural alterations
or additions to the Leased Premises, but may make non-structural alterations and
improvements, provided the LESSOR consents thereto in advance in writing in each
instance, which consent shall not be unreasonably withheld or delayed provided
that LESSOR is furnished with detailed plans and specifications reasonably
approved by LESSOR. All such allowed alterations or additions shall be at
LESSEE's expense and shall be in quality at least equal to the present
construction. LESSEE shall not permit any mechanics' liens or similar liens, to
remain upon the Leased Premises for labor and materials furnished to LESSEE or
claimed to have been furnished to LESSEE in connection with the work of the any
character performed or claimed to have been performed at the direction of
LESSEE, and shall cause any such lien to be released of record forthwith without
cost to LESSOR. Any alterations, additions or improvements made by the LESSEE,
except for moveable partitions and furnishings, installed at the LESSEE'S cost,
shall become the property of the LESSOR at the termination of the Lease as
provided herein.
With respect to all such LESSEE work, LESSEE further, agrees as
follows: that such work shall commence only after all required municipal and
other governmental permits and authorizations have been obtained (the LESSOR
agreeing, if requested by LESSEE, to join in any application therefor at the
LESSEE's expense) and all such work shall be done in a good and workmanlike
manner in compliance with building and zoning laws and with all other laws,
ordinances, regulations and requirements of
<PAGE> 21
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all federal, state and municipal agencies, and in accordance with the
requirements and policies issued by any insurer of LESSOR or LESSEE; that all
such work shall be prosecuted with reasonable dispatch to completion; that at
all times when any such work is in progress, LESSEE shall maintain or cause to
be maintained adequate workmen's compensation insurance for those employed in
connection therewith with respect to whom death or injury claims could be
asserted against LESSOR, the LESSEE or the Leased Premises and comprehensive
general liability or builder's risk insurance (for mutual benefit of LESSEE and
LESSOR) in coverages reasonably approved by LESSOR; and that all such work of
LESSEE shall be coordinated with any work being performed by LESSOR and other
tenants of the building in which the work is taking place in such manner as to
maintain harmonious labor relations and not to interfere with the operation of
the Building or the construction work of others.
12. ASSIGNMENT - SUBLETTING. The LESSEE shall not assign or sublet the
whole or any part of the Leased Premises without the LESSOR's prior written
consent, which consent shall not be unreasonably withheld or delayed. LESSEE
shall be entitled to assign this Lease to any entity controlled by, or under
common control with LESSEE, and to any entity acquiring substantially all of the
assets of LESSEE, in all such case without the consent of LESSOR.
Notwithstanding such consent or permitted assignment, LESSEE shall remain liable
to LESSOR for the payment of all rent and for the full performance of the
covenants and conditions of his Lease (which following assignment shall be joint
and several with assignee).
<PAGE> 22
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12A. QUIET ENJOYMENT, COVENANT OF TITLE. The LESSEE, on paying the rent
and other charges hereunder, as and when the same shall become due and payable
and observing and performing the covenants, conditions and agreements contained
in this Lease on the part of the LESSEE to be observed and performed, all as
herein provided, shall and may lawfully, peaceably and quietly have, hold and
enjoy the Leased Premises during the term, subject to all of the terms and
provisions hereof, without hindrance, ejection or disturbance by the LESSOR or
by any person or persons claiming by, through or under the LESSOR or by anyone
claiming paramount title.
13. SUBORDINATION. The Lease and LESSEE's interest hereunder, subject
to the provisions of this Paragraph 13, shall be subordinate to the lien of any
present or future mortgage or mortgages upon the Leased Premises or any property
of which the Leased Premises are a part, irrespective of the time of execution
or the time of recording of any such mortgage or mortgages, and to each advance
made or to be made thereunder and to all renewals, modifications,
consolidations, and extensions thereof, and all substitutions therefor. Any
subordination of this Lease pursuant to the provisions of this Paragraph 13 is
made and granted upon the condition that, in the event of any entry by the
holder of any such to foreclose, a default under any such mortgage, a
foreclosure of any such mortgage of LESSOR'S interest under this Lease or in the
Leased Premises through foreclosure or otherwise, the LESSEE shall (provided the
LESSEE is not then in default beyond any applicable cure period) peaceably hold
and enjoy the Leased Premises as a lessee of such holder, during the term upon
the terms, covenants and conditions as set forth in this Lease without any
hindrance or interruption from such
<PAGE> 23
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holder. In the event of such entry, foreclosure, acquisition or other action by
such holder, LESSEE shall recognize the holder of the mortgage with respect to
which such action is taken as the LESSOR under this Lease. As used in this
Paragraph 13, the word "holder" includes any person claiming through or under
any such mortgage, including any purchaser at a foreclosure sale, and the word
"LESSEE" shall include LESSEE'S successors and assigns. The word "mortgage" as
used in this Paragraph shall mean mortgages, deeds of trust, and other similar
instruments held by any institutional lender and all modifications, extensions,
renewals and replacements thereof. This Paragraph 13 is self-operative, and no
further instrument of subordination shall be required.
Notwithstanding the self-operative effect of this Paragraph 13, the
LESSEE agrees to execute such further documents in recordable form as the LESSOR
or any lender may reasonably require, consistent with the terms of this
Paragraph 13 and 21. Should the LESSEE fail to execute and deliver to the LESSOR
any such document within twenty (20) days of a written notice requesting the
LESSEE to execute and deliver such document, (which request in order to be
effective must contain copies of all documents necessary for LESSEE to review in
order to execute such subordination document, including without limitation,
copies of any security and financing documents, appropriately redacted, which
are the subject of such subordination document), LESSEE shall pay to LESSOR (as
liquidated damages and not as a penalty) the sum of $500.00 per day for each day
after such twentieth (20th) day during which such failure to deliver such
instrument continues.
14. LESSOR'S ACCESS. The LESSOR or agents of the LESSOR may, at
reasonable times and upon reasonable prior notice to the
<PAGE> 24
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LESSEE, enter to view the Leased Premises or any part thereof and may remove
placards and signs not approved and affixed as herein provided, and make repairs
and alterations which LESSOR may deem necessary or desirable and, at LESSEE's
expense, to remove any alterations, additions, signs, or other improvements made
by LESSEE, and not consented to by LESSOR; to show the Leased Premises to others
with reasonable prior notice, in a manner so as not to unreasonably interfere
with the normal conduct of the LESSEE'S business, at any time within the four
(4) month period prior to the Expiration of the term.
15. INDEMNIFICATION AND LIABILITY. The LESSEE shall defend, save
harmless and indemnify LESSOR from any claims of liability for injury, loss,
accident or damage to any person or property while on the Leased Premises, if
not due to the negligence or willful misconduct of LESSOR, or LESSOR's employees
or agents, and to any person or property anywhere occasioned by any omission,
fault, negligence or other misconduct of LESSEE and persons for whose conduct
LESSEE is legally responsible.
16. HOLDING OVER. LESSEE agrees to pay to LESSOR one and one-half times
the total of the Base rent set forth in Paragraph 4 in effect for the period
immediately prior to LESSEE's holding over and one and one-half times the
additional rent provided for under this Lease then applicable for each month or
portion thereof LESSEE shall retain possession of the Leased Premises or any
part thereof after the termination of this Lease, whether by lapse of time or
otherwise, and also to pay all damages sustained by LESSOR on account thereof;
the provisions of this paragraph shall not operate as a waiver by LESSOR of any
right of re-entry provided in this Lease.
<PAGE> 25
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16A. FURTHER LESSEE COVENANTS. LESSEE further covenants and agrees
during the term and such further time as LESSEE holds any part of the Leased
Premises:
(a) to pay when due all rent and other sums herein specified, without
offset, deduction or counterclaim except as otherwise specifically provided in
this Lease;
(b) not to obstruct in any manner any portion of any building not
hereby leased or the sidewalks or approaches to such building or any inside
windows or doors;
(c) that neither the original LESSOR nor any successor LESSOR who or
which is a trustee or a partnership, nor any beneficiary of the original LESSOR
or any successor LESSOR nor any partner, general or limited, of such partnership
shall be personally liable under any term, condition, covenant, obligation or
agreement expressed herein or implied hereunder or for any claim or damage or
cause at law or in equity arising out of the occupancy of the Leased Premises or
the use or maintenance of the Building and LESSEE specifically agrees to look
solely to the LESSOR's interest in the Building for the recovery of any judgment
against LESSOR; and
(d) if any payment of rent or other sums due hereunder is not paid when
due, LESSEE shall pay to LESSOR a late charge equal to five (5k) percent of the
unpaid amount per month, or part thereof, that such amount remains unpaid.
17. FIRE, CASUALTY.
17.1 DEFINITION OF "SUBSTANTIAL DAMAGE" AND "PARTIAL DAMAGE". The term
"substantial damage", as used herein, shall refer to damage which is of such a
character that the same cannot,
<PAGE> 26
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in ordinary course, be expected to be repaired within ninety (90) calendar days
from the time that such repair work would commence. Any damage which is not
"substantial damage" is "partial damage". In the event of substantial damage to
the Building, the LESSOR shall notify the LESSEE as soon as is practicable and
in no event later than thirty (30) days after such damage of LESSOR'S estimated
time for repair of such damage.
17.2. PARTIAL DAMAGE TO THE BUILDING. If during the Lease Term there
shall be partial damage to the Building by fire or other casualty and if such
damage shall materially interfere with -'*the LESSEE's use of the Leased
Premises as contemplated by this Lease, the LESSOR shall, to the extent
insurance proceeds are available to LESSOR, promptly proceed to restore the
Building to substantially the condition in which it was immediately prior to the
occurrence of such damage. Notwithstanding the foregoing, if there shall be
partial damage to the Building, and if such damage shall materially interfere
with LESSEE's use of the Leased Premises as contemplated by this Lease occurring
during the last twelve (12) months of the Lease Term of such a character that
the same cannot, in ordinary course, be expected to be repaired within thirty
(30) days from the time such repair work would begin, the LESSOR may, within ten
(10) days of the date of such damage, elect to terminate this Lease. If such
election is not made, the LESSOR shall promptly proceed with such restoration.
17.3. SUBSTANTIAL DAMAGE TO THE BUILDING. If during the Lease Term
there shall be substantial damage to the Building by fire or other casualty and
if such damage shall materially interfere with the LESSEE'S use of the Leased
Premises as contemplated by this Lease, the LESSOR shall, to the extent
insurance proceeds are available to LESSOR,
<PAGE> 27
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promptly restore the Building to an architectural unit that is not less suitable
than that which existed prior to such fire or casualty, unless the LESSOR or the
LESSEE, within thirty (30) days after the occurrence of such damage, shall give
notice to the other of its election to terminate this Lease. If at any time
during such thirty (30) day period the LESSOR notifies the LESSEE of its
intention to restore the Building, the LESSEE must then give notice to the
Lessor, within ten (10) days of its receipt of the LESSOR'S notice of intention
to restore the Building, as to whether the LESSEE will elect to terminate the
Lease. Should the LESSEE fail to elect to terminate the Lease within such ten
(10) day period, the LESSEE'S right to terminate under this Paragraph 17.3 shall
expire. If the LESSOR proceeds with the restoration of the Building and if such
damage shall not have been repaired to the extent necessary for the LESSEE to
resume its normal business operations at the Leased Premises by the end of the
180th day following the date of such fire or casualty, or if the Lessor shall
fail diligently to cause such repair and restoration work to be performed then
the LESSEE may, at any time thereafter while the damage remains unrepaired,
terminate this Lease upon notice to the LESSOR. If the LESSOR or the LESSEE
shall give such notice of termination, 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.
17.4. ABATEMENT OF RENT. If during the Lease Term the Building shall be
damaged by fire or casualty and if such damage shall materially interfere with
the LESSEE'S use of the Leased Premises as contemplated by this Lease, a just
proportionate amount of the rent and other charges payable by the LESSEE
hereunder shall abate
<PAGE> 28
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proportionately for the period in which, by reason of such damage, there is such
interference with the LESSEE'S use of the Leased Premises.
17A. EMINENT DOMAIN. If the Building is totally taken by condemnation
or right of eminent domain, this Lease shall terminate as of the date of such
taking. If the Building, or such portion thereof as to render the balance (if
reconstructed to the maximum extent practicable in the circumstances) physically
unsuitable in the LESSEE'S reasonable judgment for the LESSEE'S purposes, shall
be taken by condemnation or right of eminent domain (including a temporary
taking in excess of 180 days), the LESSEE or the LESSOR 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 ten (10) days after the LESSEE has been
deprived of possession.
Should any part of the Building be so taken or condemned or receive
such damage and should this Lease not be terminated in accordance with the
foregoing provisions, the LESSOR shall, to the extent condemnation proceeds are
available to LESSOR, promptly restore the Leased Premises to an architectural
unit that is suitable to the uses of the LESSEE permitted hereunder.
In the event of a taking described in this Paragraph 17A, the rent and
other charges payable hereunder, or a fair and just proportion thereof according
to the nature and extent of the loss of use shall be suspended or abated.
The LESSOR reserves, and the LESSEE grants to the LESSOR, all rights
which the LESSEE may have for damages or injury to the Leased Premises for any
taking by eminent domain, except for damage to the LESSEE'S trade fixtures,
personal property or equipment, if any, the
<PAGE> 29
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LESSEE'S right to relocation expenses, if any, and the LESSEE'S right for
business interruption, if any.
18. DEFAULT AND BANKRUPTCY. In the event that:
(a) The LESSEE, shall default in the payment of any installment of rent
or other sum herein specified continuing for five (5) days after written notice
from LESSOR to LESSEE; or
(b) The LESSEE shall default in the observance or performance of the
LESSEE's covenants, agreements, or obligations hereunder (except as provided in
Paragraph 18(a) above) and the LESSEE shall not cure such default within thirty
(30) days after written notice thereof or if such default cannot be cured within
thirty (30) days, then if LESSEE shall not commence to cure the same within
thirty (30) days and diligently pursue the curing of the same; or
(c) LESSEE makes any assignment for the benefit of creditors, commits
any act of bankruptcy or files a petition under any bankruptcy or insolvency
law; or if such a petition is filed against LESSEE and is not dismissed within
ninety (90) days; or if a receiver or similar officer becomes entitled to
LESSEE's leasehold hereunder and it is not returned to LESSEE within ninety (90)
days, or if such leasehold is taken on execution or other process of law in any
action against LESSEE;
then in any such case the LESSOR shall have the right thereafter, while
such default continues, to re-enter and take complete possession of the Leased
Premises, to declare the term of this Lease ended, and remove the LESSEE'S
effects at LESSEE's sole cost and expense, without prejudice to any remedies
which might be otherwise used for arrears of rent or other default. The LESSEE
shall indemnify the LESSOR against all loss and reasonable payment of rent and
other payments which the
<PAGE> 30
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LESSOR may incur by reason of such termination during the residue of the term.
In the event of default LESSOR shall use its reasonable efforts to re-let the
Leased Premises so as to mitigate any damages to the LESSEE hereunder. If LESSOR
re-lets the Leased Premises, LESSEE may offset its payable rent by the amount of
rent received by LESSOR.
If the LESSEE shall default, after written notice thereof as provided
herein, in the observance or performance of any conditions or covenants on its
part to be observed or performed under or by virtue of any of the provisions of
this Lease and after the expiration of any period within which the LESSEE is
entitled to cure such default as is provided above in this Paragraph 18, the
LESSOR, without being under any obligation to do so and without thereby waiving
such default, may remedy such default for the account and at the expense of the
LESSEE. If the LESSOR makes any expenditures or incurs any obligations for the
payment of money in connection therewith, including, but not limited to,
reasonable attorney's fees (except for unsuccessful suits against the LESSEE) in
instituting, prosecuting or defending any action or proceeding, such sums paid
or obligations incurred, with interest at the rate of twelve (12) per annum and
costs, shall be paid to the LESSOR by the LESSEE as additional rent.
Nothing contained in this Lease shall limit or prejudice '*the right of
LESSOR to claim and obtain in proceedings for bankruptcy, insolvency or like
proceedings by reason of the termination of this Lease, an amount equal to the
maximum allowed by any statute or rule of law in effect at the time when, and
governing the proceedings in which the damages are to be claimed or proved,
whether or not the amount be greater, equal to, or less than the amount of the
loss or damages referred to above.
<PAGE> 31
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18A. DEFAULT OF LANDLORD AND MORTGAGEE RIGHTS. LESSOR shall in no event
be in default in the performance of any of LESSOR's obligations hereunder unless
and until LESSOR 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 receipt of written notice by LESSEE to LESSOR properly specifying
wherein LESSOR has failed to perform any such obligation. LESSEE agrees to give
any mortgagee, by registered mail, a copy of any notice of default served upon
the LESSOR, provided that prior to such notice the LESSEE has been notified in
writing of the identity and address (by way of Notice of Assignment of Rents
and Leases or otherwise) of the address of such mortgagee. The LESSEE further
agrees that if the LESSOR shall have failed to cure such default within the time
provided for in this Lease, then the mortgagee shall have an additional sixty
(60) days within which to cure such default or if such default cannot be cured
within that time, then such additional time as may be necessary if within sixty
(60) days the mortgagee has commenced and is diligently pursuing the remedies
necessary to cure such default (including but not limited to commencement of
foreclosure proceedings, if necessary to effect such cure) in which event this
Lease shall not be terminated while such remedies are being so diligently
pursued.
18B. BANKRUPTCY OR INSOLVENCY.
(a) LESSEE'S INTEREST NOT TRANSFERABLE. Neither LESSEE's interest in
this Lease nor any estate hereby created in LESSEE nor any interest herein or
therein shall pass to any trustee, except as may specifically be provided
pursuant to the Bankruptcy Code (11 USC Sec.
<PAGE> 32
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101 et seq.) or to any receiver or assignee for the benefit of creditors or
otherwise by operation of law.
(b) TERMINATION OF LEASE. Notwithstanding anything to the contrary
contained in this Lease, and to the extent enforceable under the Bankruptcy
Code, in the event the interest or estate created in LESSEE hereby shall be
taken in execution or by other process of law or if LESSEE or LESSEE's
executors, administrators or assigns, if any, shall be adjudicated insolvent or
bankrupt pursuant to the provisions of any state law or an order for the relief
of such entity shall be entered pursuant to the Bankruptcy Code, or if a
receiver or trustee of the property of LESSEE shall be appointed by reason of
the insolvency or inability of LESSEE to pay its debts or if any assignment
shall be made of the property of LESSEE or LESSEE's guarantor, if any, for the
benefit of creditors, then and in any such events this Lease and all rights of
LESSEE hereunder shall automatically cease and terminate with the same force and
effect as though the date of such event were the date originally established
herein and fixed for the expiration of the term and LESSEE shall vacate and
surrender the Leased Premises but shall remain liable as herein provided.
(c) LESSEE'S OBLIGATION TO AVOID CREDITORS' PROCEEDINGS. LESSEE shall
not cause or give cause for the appointment of a trustee or receiver of the
assets of LESSEE and shall not make any assignment for the benefit of creditors
or become or be adjudicated insolvent. The allowance of any petition under any
insolvency law, except under the Bankruptcy Code or the appointment of a trustee
or receiver of Lessee or Lessee's guarantor, if any, or of the assets of either
of them, shall be conclusive evidence that LESSEE caused or gave cause
<PAGE> 33
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therefor, unless such allowance of the petition or the appointment of a trustee
or receiver is vacated within ninety (90) days after such allowance or
appointment. Any act described in this paragraph shall be deemed a material
breach of LESSEE's obligations hereunder and this Lease shall thereupon
automatically terminate. LESSEE does, in addition, reserve any and all other
remedies provided in this Lease or in law.
(d) RIGHTS AND OBLIGATIONS UNDER THE BANKRUPTCY CODE. Upon the filing
of a petition by or against LESSEE under the Bankruptcy Code, LESSEE, as debtor
and as debtor-in-possession, and any trustee who may be appointed agree as
follows: (i) to perform each, and every obligation of LESSEE under this Lease
including, but not limited to, the manner of operation of this Lease, until such
time as this Lease is either rejected or assumed by order of the United States
Bankruptcy Court; (ii) to pay monthly in advance, on the first day of each
month, as reasonable compensation for use and occupancy of the Leased Premises,
an amount equal to all fixed Annual Base Rent, Additional Rent and other charges
otherwise due pursuant to this Lease; (iii) to reject or assume this Lease
within sixty (60) days of the appointment of such trustee under Chapter 7 of the
Bankruptcy Code or within one hundred twenty (120) days (or such shorter term as
LESSOR, in its sole discretion, may deem reasonable, so long as notice of such
period is given) of the filing of a petition under any other chapter; (iv) to
give LESSOR at least forty five (45) days' prior written notice of any
proceeding relating to any assumption of this Lease; (v) to give at least thirty
(30) days' prior written notice of any abandonment of the Leased Premises, with
any such abandonment to be deemed a rejection of this Lease and an abandonment
of any property not previously removed from the Leased Premises; (vi) to
<PAGE> 34
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do all other things of benefit to LESSOR otherwise required under the Bankruptcy
Code; (vii) to be deemed to have rejected this Lease in the event of the failure
to comply with any of the above; and (viii) to have consent to the entry of an
order by an appropriate United States Bankruptcy Court providing all of the
above, waiving notice and hearing of the entry of same.
No default of this Lease by LESSEE, either prior to or, subsequent to
the filing of such a petition, shall be deemed to have been waived unless
expressly done so in writing by LESSOR.
Included within and in addition to any other conditions or obligations
imposed upon LESSEE or its successor in the event of -'*assumption and/or
assignment are the following: (i) the cure of any monetary defaults and the
reimbursement of pecuniary loss immediately upon entry of a court order
providing for assumption and/or assignment; (ii) the deposit of an additional
sum equal to three (3) months' Rent to be held as a security deposit; (iii) the
use of the Leased Premises as set forth in the reference date section of this
Lease and the quality, quantity and/or lines of merchandise of any goods or
services required to be offered for sale are unchanged; (iv) the payment of any
sums which may then be due or which may thereafter become due under the
provisions of this Lease; (v) the debtor, debtor-in-possession, trustee or
assignee of such entity demonstrates in writing that it has sufficient
background, including, but not limited to, substantial commercial experience in
buildings of comparable size and financial ability to operate a commercial
establishment out of the Leased Premises in the manner contemplated in this
Lease, and meets all other reasonable criteria of LESSOR as did LESSEE upon
execution of this Lease; (vi) the prior written consent of any
<PAGE> 35
-35-
mortgagee to which this Lease has been assigned as collateral security; and
(vii) the Leased Premises at all times remains a single store (if retail) and no
physical changes of any kind may be made to the Leased Premises unless in
compliance with the applicable provisions of this Lease.
Any person or entity to which this Lease is assigned pursuant to the
provisions of the Bankruptcy Code shall be deemed without further act or deed to
have assumed all of the obligations arising under this Lease on and after the
date of such assignment. Any such assignee shall, upon demand, execute and
deliver to LESSOR an instrument confirming such assumption in accordance with
the terms of Paragraph 21 hereof.
19. RULES AND REGULATIONS. The LESSOR shall have the right to institute
and to change from time to time, rules and regulations for the use of the
Building by commercial office lessees, and by commercial retail lessees, which
shall be reasonable in all instances and shall be uniformly applicable to all
commercial lessees in the Building and the LESSEE agrees to abide thereby.
19A. 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.
20. BROKER. The LESSOR and LESSEE each represent and warrant to the
other that each has had no dealings with any Brokers concerning this Lease,
except LYNCH, MURPHY, WALSH & PARTNERS and FALLON, HINES, CONNOR and each party
agrees to indemnify and hold the other harmless for any damages occasioned to
the other by reason of a breach of this representation and warranty.
<PAGE> 36
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LESSOR shall be responsible for a leasing commission to each of such
brokers listed above, and for a commission, if any, due such listed brokers, if
LESSEE extends the term of this Lease as provided herein.
21. ESTOPPEL CERTIFICATE. LESSOR and LESSEE each agree at any time from
time to time, upon not less than ten (10) days prior notice to execute,
acknowledge and deliver to the other, a statement in writing, certifying to the
extent possible that this Lease is unmodified and in full force and effect or if
there have been modifications. that the same is in full force and effect as
modified and stating such modifications and otherwise certifying if there exists
any default under the terms of this Lease and such other information as may be
reasonably requested concerning this Lease by the other party or any other third
party with a bona fide interest. Should either party fail to deliver to the
other party any such statement within ten (10) days of receipt of a written
notice requesting any such statement, the party failing to deliver any such
statement shall pay to the requesting party, the sum of $500.00 per day (as
liquidated damages and not as a penalty) for each day after such tenth (10th)
day during which such failure continues.
22. NOTICE. Any notice from the LESSOR to the LESSEE relating to the
Leased Premises or to the occupancy thereof shall be deemed duly served, if in
writing and mailed by registered or certified mail, return receipt requested,
postage prepaid, addressed to the LESSEE,
LeukoSite, Inc.
215 First Street
Cambridge, MA 02142
with a copy to:
<PAGE> 37
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Bingham, Dana & Gould
150 Federal Street
Boston, MA 02210
Attn: Douglas M. Henry
Any notice from the LESSEE to the LESSOR relating to the Leased
Premises or to the occupancy thereof, shall be deemed duly served, if in writing
and mailed to the LESSOR by registered or certified mail, return receipt
requested, postage prepaid, addressed to the LESSOR at such address as the
LESSOR may from time to time advise in writing, the following now being
designated:
Athenaeum Realty Nominee Trust
The Athenaeum Group
215 First Street
Cambridge, Massachusetts 02142
23. SURRENDER. Subject to the provisions of the Landlord's Waiver and
Consent, which LESSOR agrees to execute for the benefit of LESSEE's equipment
lessor, substantially in the form attached hereto as Exhibit - I the LESSEE
shall at the expiration or other termination of this Lease yield up and
peaceably surrender all portions of the Leased Premises to LESSOR and shall
remove all LESSEE'S goods and effects therefrom (including, without hereby
limiting the generality of the foregoing, all signs and lettering affixed or
painted by the LESSEE, either inside or outside the Leased Premises). LESSEE
shall deliver to the LESSOR the Leased Premises and all keys, locks thereto, and
all fixtures, alterations and additions made to or upon the Leased Premises,
except FOR moveable partitions and furnishings installed at the LESSEE'S
expense, in the same condition as they were at the commencement of the
<PAGE> 38
-38-
term, or as they were put in during the term hereof, reasonable wear and tear
and damage by fire, other casualty or eminent domain and matters for which the
LESSOR is responsible hereunder only excepted. All moveable partitions and
furnishings, and so long as LESSEE has expended $1.7 million dollars in Tenant
Improvements, those items specified on Exhibit - attached to this Lease,
installed in the Leased Premises at the LESSEE's expense prior to or during the
term of the Lease may be removed by the LESSEE at the expiration or other
termination of the Lease. The LESSEE shall, at its expense, promptly repair any
and all damage to the Leased Premises resulting from such removal. In the event
of the LESSEE'S failure to remove any of the LESSEE'S property from the Leased
Premises, LESSOR is hereby authorized, upon fifteen (15) days written notice to
the LESSEE without liability to LESSEE for loss or damage thereto, and at the
sole risk of LESSEE, to remove and store any of the property at LESSEE's sole
cost and expense. It is expressly acknowledged and understood by the parties
that the Tenant Improvements and built in equipment, such as fume hoods,
installed at the commencement of this Lease to the first and second floor of the
Leased Premises and the Supplemental Space Tenant Improvement Work, (as
distinguished from moveable partitions, personal property, or the capital
equipment listed on Exhibit), shall become the property of the LESSOR at the
expiration or sooner termination of this Lease. Moreover, it is expressly
agreed, in the event of an uncured default, that the items on Exhibit -, may not
be removed by LESSEE, but shall become the property of the, LESSOR.
24. OPTION TO EXTEND. If the LESSEE is not then in default, LESSOR does
hereby grant to LESSEE the option to extend this Lease for
<PAGE> 39
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two (2) additional five (5) year term, commencing on the expiration of the
initial term and the expiration of the first extended term, as the case may be,
upon the same terms and conditions as herein contained except the annual base
rent set forth in paragraph 4 hereof shall be at the rate set forth below.
The annual rent for the first extended term shall be the sum of the
following:
(i) $317,484.00 per year (calculated as 24,268 square feet of
space on the first and second floors at $13.00 per square foot
plus 200 square feet of space in the basement at $10.00 per
square foot); plus
(ii) the annual fair value of the parking spaces made
available to LESSEE, all to be reasonably determine by LESSOR
("Outdoor Parking"); it being expressly understood and agreed
by the parties that the first five (5) spaces taken by LESSEE
shall be at no cost or charge to LESSEE.
The annual rent for the second extended term (the "Second Extended
Term") shall be adjusted at the commencement of the Second Extended Term and
shall be ninety (90k) percent of the then fair market rental (the "Market Rent")
of the Leased Premises plus the annual fair value of LESSEE's Outdoor Parking
spaces as reasonably determined by LESSOR; it being expressly understood and
agreed by the parties that the first five (5) spaces taken by LESSEE shall be at
no cost or charge to LESSEE. Market Rent shall be determined as set forth on
Exhibit E to this Lease.
<PAGE> 40
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Notwithstanding the foregoing, in no event shall the annual base rent
for the second extended term be less than the annual base rent for the last year
of the first extended term.
The option shall be exercised by written notice from LESSEE and
received by LESSOR at least four (4) months prior to the expiration of the
initial term or the first extended term, as the case may be.
25. OPTION TO EXPAND. Provided LESSEE is not then in default of the
terms of this Lease, LESSEE shall have the option to lease additional space on
the third floor in the Building, (15,383 square feet now occupied by Inscribe or
24,150 currently unoccupied - hereinafter Option Space) on the terms and
conditions as set forth in this Lease except that the Base Rent shall be the
fair Market Rent for the Option Space. In the event LESSEE properly exercises
its option to lease the Option Space, the Option Space shall automatically be
included in and become a part of the Leased Premises from and after the date on
which the Option Space is included within the Leased Premises; all of the terms,
provisions, conditions and covenants contained in this lease shall apply
thereto, except with respect to Base Rent for the Option Space and further, all
of the terms defined in this Lease shall then be automatically adjusted
accordingly (including appropriate CAO calculations), so that, for example, the
term "Leased Premises" whenever used herein shall then and thereafter apply to
such Option space.
LESSEE acknowledges that some portion of the Option Space is currently
under written lease agreement and that the existing tenant has some rights with
respect to such Option Space (which rights are summarized on Exhibit F attached
hereto) and that LESSEE's rights
<PAGE> 41
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hereunder are subject to the rights of tenants currently occupying a portion of
the Option Space.
If the current tenant does not exercise its rights with respect to a
portion of the Option Space, LESSOR agrees that prior to accepting any proposal
for lease of the now occupied portion of the Option Space or the remainder of
the Option Space, LESSOR shall give LESSEE written notice to LESSEE of the
proposed terms for rental of the then available Option Space. LESSEE shall have
fourteen (14) business days following receipt of LESSOR's notice, to elect by
written notice received by LESSOR within said fourteen (14) business days of the
receipt of such notice to add such space to the Leased Premises. In the event
LESSEE fails to properly exercise its option to lease the Option Space, such
option shall thereafter terminate and LESSOR shall thereafter be free to lease
the Option Space to other parties.
26. HAZARDOUS WASTE INDEMNITY. LESSEE hereby agrees to indemnify and
hold LESSOR harmless from and against any and all demands, claims, actions,
losses, damages and liabilities (the "Claims"), which may be imposed on,
asserted against or incurred by LESSOR arising from or out of LESSEE's use and
occupancy of the demised premises, including, without limitation, any and all
liabilities pertaining to any present or future use (within the term of this
Lease) in violation of any Federal, state, local or other laws, relating to
pollution or protection of the environment, including, without limitation, laws
relating to emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes into the environment (including, without limitation,
ambient air, surface water, ground water, land surface or subsurface strata) or
<PAGE> 42
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otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of pollutants, contaminants, chemicals,
or industrial, toxic or hazardous substances or wastes.
If any action or proceeding is brought against LESSOR by reason of any
claim, LESSEE, upon notice from LESSOR, shall defend such action or proceeding
by counsel reasonably satisfactory to LESSOR, and LESSEE shall pay all
reasonable expenses incurred in connection with defending against such action or
proceeding.
27. MISCELLANEOUS.
(a) The LESSOR reserves the right to assign or transfer any and all of
its right, title and interest under the Lease, including but not limited to the
benefit of all covenants of the LESSEE hereunder. Notwithstanding anything
contained in this Lease to the contrary. it is specifically understood and
agreed that the obligations imposed upon the LESSOR hereunder shall be binding
upon the LESSOR and LESSOR s successors in interest only with respect to
breaches occurring during LESSOR's and LESSOR's successors' ownership of
LESSOR's interest hereunder and LESSOR and its said successors in interest shall
not be liable for acts and occurrences arising from and after the transfer of
their interest as LESSOR hereunder.
(b) Notwithstanding any other provision of this Lease to the contrary,
LESSOR shall have the right to sublet the Supplemental Space for a short term
rental to expire prior to the commencement of the fourth year of the initial
term. To the extent as part of such short term rental, LESSOR receives rental
income from the short term lessee, said rental income shall reduce LESSEE's
required CAO reimbursements for the
<PAGE> 43
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Supplemental Space which would have otherwise been due as of the commencement of
the third year of the initial term. During any time when LESSOR is unable to
lease the Supplemental Space on a short term basis, LESSEE shall have the right
to use the Supplemental Space for storage; provided that LESSEE pay any utility
or operating costs associated with the use of the Supplemental Space for
storage.
(c) This Lease shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts, as the same may from time to time
exist.
(d) This Lease contains all of the agreements of the parties with
respect to the subject matter thereof and supersedes all prior oral and written
negotiations and dealings between them with respect to such subject matter. The
agreement of the parties contained in this Lease shall not be modified or
amended unless such modification or amendment is in writing and signed by the
parties.
(e) The LESSEE acknowledges that LESSEE has not been influenced to
enter into this Lease nor has it relied upon any warranties or representations
not set forth or incorporated in this Lease or previously made in writing.
The undersigned Trustees of Athenaeum Realty Nominee Trust do hereby
certify that they each were authorized by all of the beneficiaries of said Trust
to execute and acknowledge the within Lease on behalf of the Trust.
IN WITNESS WHEREOF, the LESSOR and LESSEE have hereunto set their hands
and common seals this Eight day of June, 1994.
<PAGE> 44
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ATHENAEUM REALTY NOMINEE TRUST
/s/ Robert A. Jones /s/
- ----------------------------------- -------------------------------
ROBERT A. JONES, Trustee WITNESS
/s/ K. George Najarian /s/
- ----------------------------------- -------------------------------
K.GEORGE NAJARIAN, Trustee WITNESS
LEUKOSITE, INC.
BY: /s/ Chris Mirabelli
------------------------------ -------------------------------
PRESIDENT, duly authorized WITNESS
BY: /s/ Bob Gallahue
------------------------------ -------------------------------
TREASURER, duly authorized WITNESS
CONTROLLER
<PAGE> 1
EXHIBIT 10.19
M A S T E R L E A S E A G R E E M E N T
COMDISCO, INC. - LESSOR
MASTER LEASE AGREEMENT DATED DECEMBER 13, 1993 BY AND BETWEEN COMDISCO, INC.
("LESSOR") AND LEUKOSITE, INC. ("LESSEE").
IN CONSIDERATION OF THE MUTUAL AGREEMENTS DESCRIBED BELOW, THE PARTIES AGREE AS
FOLLOWS (ALL CAPITALIZED TERMS ARE DEFINED IN SECTION 14.19):
1. PROPERTY LEASED.
Lessor leases to Lessee all of the Equipment described on each
Schedule. In the event of a conflict, the terms of a Schedule prevail over this
Master Lease.
2. TERM.
On the Commencement Date, Lessee will be deemed to accept the
Equipment, will be bound to its rental obligations for each item of Equipment
and the term of a Schedule will begin and continue through the Initial Term and
thereafter until terminated by either party upon prior written notice received
during the Notice Period. No termination may be effective prior to the
expiration of the Initial Term.
3. RENT AND PAYMENT.
Rent is due and payable in advance, in immediately available funds, on
the first day of each Rent Interval to the payee and at the location specified
in Lessor's invoice. Interim Rent is due and payable when invoiced. If any
payment is not made when due, Lessee will pay interest at the Overdue Rate. Upon
Lessee's execution of each Schedule, Lessee will pay Lessor the Advance
specified on the Schedule. The Advance will be credited towards the final Rent
payment if Lessee is not then in default. No interest will be paid on the
Advance.
4. SELECTION; WARRANTY AND DISCLAIMER OF WARRANTIES.
<PAGE> 2
- 2 -
4.1 SELECTION. Lessee acknowledges that it has selected the Equipment
and disclaims any reliance upon statements made by the Lessor.
4.2 WARRANTY AND DISCLAIMER OF WARRANTIES. Lessor warrants to Lessee
that, so long as Lessee is not in default, Lessor will not disturb Lessee's
quiet and peaceful possession, and unrestricted use of the Equipment. To the
extent permitted by the manufacturer, Lessor assigns to Lessee during the term
of the Schedule any manufacturer's warranties for the Equipment. LESSOR MAKES NO
OTHER WARRANTY, EXPRESS OR IMPLIED AS TO ANY MATTER WHATSOEVER, INCLUDING,
WITHOUT LIMITATION, THE MERCHANTABILITY OF THE EQUIPMENT OR ITS FITNESS FOR A
PARTICULAR PURPOSE. Lessor is not responsible for any liability, claim, loss,
damage or expense of any kind (including strict liability in tort) caused by the
Equipment except for any loss or damage caused by the negligent acts of Lessor.
In no event is Lessor responsible for special, incidental or consequential
damages. 5. TITLE; RELOCATION OR SUBLEASE; AND ASSIGNMENT.
5.1 TITLE. Lessee holds the Equipment subject and subordinate to the
rights of the Owner, Lessor, any Assignee and any Secured Party. Lessee
authorizes Lessor, as Lessee's agent, to prepare, execute and file in Lessee's
name precautionary Uniform Commercial Code financing statements showing the
interest of the Owner, Lessor, and any Assignee or Secured Party in the
Equipment and to insert serial numbers in Schedules as appropriate. Lessee will,
at its expense, keep the Equipment free and clear from any liens or encumbrances
of any kind (except any caused by Lessor) and will indemnify and hold Lessor,
Owner, any Assignee and Secured Party harmless from and against any loss caused
by Lessee's failure to do so.
5.2 RELOCATION OR SUBLEASE. Upon prior written consent, Lessee may
relocate Equipment to any location within the continental United States provided
(i) the Equipment will not be used by an entity exempt from federal income tax,
(ii) all additional costs (including any administrative fees, additional taxes
and insurance coverage) are reconciled and promptly paid by Lessee.
Lessee may sublease the Equipment upon the reasonable consent of the
Lessor and the Secured Party. Such consent to sublease will be granted if: (i)
Lessee meets the relocation requirements set out above, (ii) the sublease is
expressly subject and subordinate to the terms of the
<PAGE> 3
- 3 -
Schedule, (iii) Lessee assigns its rights in the sublease to Lessor and the
Secured Party as additional collateral and security, (iv) Lessee's obligation to
maintain and insure the Equipment is not altered, (v) all financing statements
required to continue the Secured Party's prior perfected security interest are
filed, and (vi) the sublease is not to a leasing entity affiliated with the
manufacturer of the Equipment described on the Schedule. Lessor acknowledges
Lessee's right to sublease for a term which extends beyond the expiration of the
Initial Term. If Lessee subleases the Equipment for a term extending beyond the
expiration of such Initial Term of the applicable Schedule, Lessee will remain
obligated upon the expiration of the Initial Term to return such Equipment, or,
at Lessor's sole discretion to (i) return Like Equipment or (ii) negotiate a
mutually acceptable lease extension or purchase. If the parties cannot mutually
agree upon the terms of an extension or purchase, the term of the Schedule will
extend upon the original terms and conditions until terminated pursuant to
Section 2.
No relocation or sublease will relieve Lessee from any of its
obligations under this Master Lease and the relevant Schedule.
5.3 ASSIGNMENT BY LESSOR. The terms and conditions of each Schedule
have been fixed by Lessor in order to permit Lessor to sell and/or assign or
transfer its interest or grant a security interest in each Schedule and/or the
Equipment to a Secured Party or Assignee. In that event, the term Lessor will
mean the Assignee and any Secured Party. However, any assignment, sale, or other
transfer by Lessor will not relieve Lessor of its obligations to Lessee and will
not materially change Lessee's duties or materially increase the burdens or
risks imposed on Lessee. The Lessee consents to and will acknowledge such
assignments in a written notice given to Lessee. Lessee also agrees that:
(a) The Secured Party will be entitled to exercise all of Lessor's
rights, but will not be obligated to perform any of the obligations of
Lessor. The Secured Party will not disturb Lessee's quiet and peaceful
possession and unrestricted use of the Equipment so long as Lessee is
not in default and the Secured Party continues to receive all Rent
payable under the Schedule; and
(b) Lessee will pay all Rent and all other amounts payable to the
Secured Party, despite any defense or claim which it has against
Lessor. Lessee reserves its right to have recourse directly against
Lessor for any defense or claim;
(c) Subject to and without impairment of Lessee's leasehold rights in
the Equipment, Lessee holds the Equipment for the Secured Party to the
extent of the Secured Party's rights in that Equipment.
<PAGE> 4
- 4 -
6. NET LEASE; TAXES AND FEES.
6.1 NET LEASE. Each Schedule constitutes a net lease. Lessee's
obligation to pay Rent and all other amounts is absolute and unconditional and
is not subject to any abatement, reduction, set-off, defense, counterclaim,
interruption, deferment or recoupment for any reason whatsoever.
6.2 TAXES AND FEES. Lessee will pay when due or reimburse Lessor for
all taxes, fees or any other charges (together with any related interest or
penalties not arising from the negligence of Lessor) accrued for or arising
during the term of each Schedule against Lessor, Lessee or the Equipment by any
governmental authority (except only Federal, state and local taxes on the
capital or the net income of Lessor). Lessor will file all personal property tax
returns for the Equipment and pay all property taxes due. Lessee will reimburse
Lessor for property taxes within thirty (30) days of receipt of an invoice.
7. CARE, USE AND MAINTENANCE; ATTACHMENTS AND RECONFIGURATIONS; AND INSPECTION
BY LESSOR.
7.1 CARE, USE AND MAINTENANCE. Lessee will maintain the Equipment in
good operating order and appearance, protect the Equipment from deterioration,
other than normal wear and tear, and will not use the Equipment for any purpose
other than that for which it was designed. If commercially available, Lessee
will maintain in force a standard maintenance contract with the manufacturer of
the Equipment, or another party acceptable to Lessor, and will provide Lessor
with a complete copy of that contract. If Lessee has the Equipment maintained by
a party other than the manufacturer, Lessee agrees to pay any costs necessary
for the manufacturer to bring the Equipment to then current release, revision
and engineering change levels, and to re-certify the Equipment as eligible for
manufacturer's maintenance at the expiration of the lease term. The lease term
will continue upon the same terms and conditions until recertification has been
obtained.
7.2 ATTACHMENTS AND RECONFIGURATIONS. Upon receiving the prior written
consent of Lessor, Lessee may reconfigure and install Attachments on the
Equipment. In the event of such a Reconfiguration or
<PAGE> 5
- 5 -
Attachment, Lessee will, upon return of the Equipment, at its expense, restore
the Equipment to the original configuration specified on the Schedule in
accordance with the manufacturer's specifications and in the same operating
order, repair and appearance as when installed (normal wear and tear excluded).
If any parts of the Equipment are removed during a Reconfiguration or
Attachment, Lessor may require Lessee to provide additional security,
satisfactory to the Lessor, in order to ensure performance of Lessee's
obligations set forth in this subsection. Neither Attachments nor parts
installed on Equipment in the course of Reconfiguration will be accessions to
the Equipment.
7.3 INSPECTION BY LESSOR. Upon request, Lessee, during reasonable
business hours and subject to Lessee's security requirements, will make the
Equipment and its related log and maintenance records available to Lessor for
inspection.
8. REPRESENTATIONS AND WARRANTIES OF LESSEE. Lessee hereby represents, warrants
and covenants that with respect to the Master Lease and each Schedule executed
hereunder:
(a) The Lessee is a corporation duly organized and validly existing in
good standing under the laws of the jurisdiction of its incorporation,
is duly qualified to do business in each jurisdiction (including the
jurisdiction where the Equipment is, or is to be, located) where its
ownership or lease of property or the conduct of its business requires
such qualification; and has full corporate power and authority to hold
property under the Master Lease and each Schedule and to enter into and
perform its obligations under such Lease.
(b) The execution and delivery by the Lessee of the Master Lease and
each Schedule and its performance thereunder have been duly authorized
by all necessary corporate action on the part of the Lessee, and the
Master Lease and each Schedule are not inconsistent with the Lessee's
Certificate of Incorporation or Bylaws, do not contravene any law or
governmental rule, regulation or order applicable to it, do not and
will not contravene any provision of, or constitute a default under,
any indenture, mortgage, contract or other instrument to which it is a
party or by which it is bound, and the Master Lease and each Schedule
constitute legal, valid and binding agreements of the Lessee,
enforceable in accordance with their terms.
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(c) There are no actions, suits, proceedings or patent claims pending
or, to the knowledge of the Lessee, threatened against or affecting the
Lessee in any court or before any governmental commission, board or
authority which, if adversely determined, will have a material adverse
effect on the ability of the Lessee to perform its obligations under
the Master Lease and each Schedule.
(d) The Equipment is personal property and when subjected to use by the
Lessee will not be or become fixtures under applicable law.
(e) The Lessee has no material liabilities or obligations, absolute or
contingent (individually or in the aggregate), except the liabilities
and obligations of the Lessee as set forth in the Financial Statements
and liabilities and obligations which have occurred in the ordinary
course of business, and which have not been, in any case or in the
aggregate, materially adverse to Lessee's ongoing business.
(f) To the best of the Lessee's knowledge, the Lessee owns, possesses,
has access to, or can become licensed on reasonable terms under all
patents, patent applications, trademarks, trade names, inventions,
franchises, licenses, permits, computer software and copyrights
necessary for the operations of its business as now conducted, with no
known infringement of, or conflict with, the rights of others.
(g) All material contracts, agreements and instruments to which the
Lessee is a party are in full force and effect in all material
respects, and are valid, binding and enforceable by the Lessee in
accordance with their respective terms, subject to the effect of
applicable bankruptcy and other similar laws affecting the rights of
creditors generally, and rules of law concerning equitable remedies.
9. DELIVERY AND RETURN OF EQUIPMENT.
Lessee hereby assumes the full expense of transportation and in-transit
insurance to Lessee's premises and installation thereat of the Equipment. Upon
termination (by expiration or otherwise) of each Schedule, Lessee shall,
pursuant to Lessor's instructions and at Lessee's full expense (including,
without limitation, expenses of transportation and in-transit insurance), return
the Equipment to Lessor in the same operating order, repair, condition and
appearance as when received, less normal depreciation and wear and tear. Lessee
shall return the
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Equipment to Lessor at its address set forth herein or at such other address
within the continental United States as directed by Lessor, provided, however,
that Lessee's expense shall be limited to the cost of returning the equipment to
Lessor's address as set forth herein. During the period subsequent to receipt of
a notice under Section 2, Lessor may demonstrate the Equipment's operation in
place and Lessee will supply any of its personnel as may reasonably be required
to assist in the demonstrations.
10. LABELING.
Upon request, Lessee will mark the Equipment indicating Lessor's
interest. Lessee will keep all Equipment free from any other marking or labeling
which might be interpreted as a claim of ownership.
11. INDEMNITY.
Lessee will indemnify and hold Lessor, any Assignee and any Secured
Party harmless from and against any and all claims, costs, expenses, damages and
liabilities, including reasonable Attorneys' fees, arising out of the ownership
(for strict liability in tort only), selection, possession, leasing, operation,
control, use, maintenance, delivery, return or other disposition of the
Equipment. However, Lessee is not responsible to a party indemnified hereunder
for any claims, costs, expenses, damages and liabilities occasioned by the
negligent acts of such indemnified party. Lessee agrees to carry bodily injury
and property damage liability insurance during the term of the Master Lease in
amounts and against risks customarily insured against by the Lessee on equipment
owned by it. Any amounts received by Lessor under that insurance will be
credited against Lessee's obligations under this Section.
12. RISK OF LOSS.
Effective upon delivery and until the Equipment is returned, Lessee
relieves Lessor of responsibility for all risks of physical damage to or loss or
destruction of the Equipment. Lessee will carry casualty insurance for each item
of Equipment in an amount not less than the Casualty Value. All policies for
such insurance will name the Lessor and any Secured Party as additional insured
and as loss payee, and will provide for at least thirty (30) days prior written
notice to the Lessor of cancellation or expiration, and will insure Lessor's
interests regardless of any breach or violation by Lessee of any representation,
warranty or condition contained in such policies and will be primary without
right of contribution from any insurance effected by Lessor. Upon the execution
of any Schedule, the
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Lessee will furnish appropriate evidence of such insurance acceptable to Lessor.
Lessee will promptly repair any damaged item of Equipment unless such
Equipment has suffered a Casualty Loss. Within fifteen (15) days of a Casualty
Loss, Lessee will provide written notice of that loss to Lessor and Lessee will,
at Lessor's option, either (a) replace the item of Equipment with Like Equipment
and marketable title to the Like Equipment will automatically vest in Lessor or
(b) pay the Casualty Value and after that payment and the payment of all other
amounts due and owing, Lessee's obligation to pay further Rent for the item of
Equipment will cease.
13. DEFAULT, REMEDIES AND MITIGATION.
13.1 DEFAULT. The occurrence of any one or more of the following Events
of Default constitutes a default under a Schedule:
(a) Lessee's failure to pay Rent or other amounts payable by Lessee
when due if that failure continues for five (5) days after written
notice; or
(b) Lessee's failure to perform any other term or condition of the
Schedule or the material inaccuracy of any representation or warranty
made by the Lessee in the Schedule or in any document or certificate
furnished to the Lessor hereunder if that failure or inaccuracy
continues for ten (10) days after written notice; or
(c) An assignment by Lessee for the benefit of its creditors, the
failure by Lessee to pay its debts when due, the insolvency of Lessee,
the filing by Lessee or the filing against Lessee of any petition under
any bankruptcy or insolvency law or for the appointment of a trustee or
other officer with similar powers, the adjudication of Lessee as
insolvent, the liquidation of Lessee, or the taking of any action for
the purpose of the foregoing; or
(d) The occurrence of an Event of Default under any Schedule or other
agreement between Lessee and Lessor or its Assignee or Secured Party.
13.2 REMEDIES. Upon the occurrence of any of the above Events of
Default, Lessor, at its option, may:
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(a) enforce Lessee's performance of the provisions of the applicable
Schedule by appropriate court action in law or in equity;
(b) recover from Lessee any damages and or expenses, including Default
Costs;
(c) with notice and demand, recover all sums due and accelerate and
recover the present value of the remaining payment stream of all Rent
due under the defaulted Schedule (discounted at the same rate of
interest at which such defaulted Schedule was discounted with a Secured
Party plus any prepayment fees charged to Lessor by the Secured Party
or, if there is no Secured Party, then discounted at 6%) together with
all Rent and other amounts currently due as liquidated damages and not
as a penalty;
(d) with notice and process of law and in compliance with Lessee's
security requirements, Lessor may enter on Lessee's premises to remove
and repossess the Equipment without being liable to Lessee for damages
due to the repossession, except those resulting from Lessor's, its
assignees', agents' or representatives' negligence; and
(e) pursue any other remedy permitted by law or equity.
The above remedies, in Lessor's discretion and to the extent permitted
by law, are cumulative and may be exercised successively or concurrently.
13.3 MITIGATION. Upon return of the Equipment pursuant to the terms of
Section 13.2, Lessor will use its best efforts in accordance with its normal
business procedures (and without obligation to give any priority to such
Equipment) to mitigate Lessor's damages as described below. EXCEPT AS SET FORTH
IN THIS SECTION, LESSEE HEREBY WAIVES ANY RIGHTS NOW OR HEREAFTER CONFERRED BY
STATUTE OR OTHERWISE WHICH MAY REQUIRE LESSOR TO MITIGATE ITS DAMAGES OR MODIFY
ANY OF LESSOR'S RIGHTS OR REMEDIES STATED HEREIN. Lessor may sell, lease or
otherwise dispose of all or any part of the Equipment at a public or private
sale for cash or credit with the privilege of purchasing the Equipment. The
proceeds from any sale, lease or other disposition of the Equipment are defined
as either:
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(a) if sold or otherwise disposed of, the cash proceeds less the Fair
Market Value of the Equipment at the expiration of the Initial Term
less the Default Costs; or
(b) if leased, the present value (discounted at three points over the
prime rate as referenced in the WALL STREET JOURNAL at the time of the
mitigation) of the rentals for a term not to exceed the Initial Term,
less the Default Costs.
Any proceeds will be applied against liquidated damages and any other
sums due to Lessor from Lessee. However, Lessee is liable to Lessor for, and
Lessor may recover, the amount by which the proceeds are less than the
liquidated damages and other sums due to Lessor from Lessee.
14. ADDITIONAL PROVISIONS.
14.1 BOARD ATTENDANCE. Lessor or its duly appointed representative will
have the right to attend Lessee's corporate Board of Directors meetings and
Lessee will give Lessor reasonable notice in advance of any special Board of
Directors meeting, which notice will provide an agenda of the subject matter to
be discussed at such board meeting. Lessee will provide Lessor with a certified
copy of the minutes of each Board of Directors meeting within thirty (30) days
following the date of such meeting held during the term of this Lease.
14.2 FINANCIAL STATEMENTS. Lessee will provide to Lessor the financial
statements specified in this Section, prepared in accordance with generally
accepted accounting principles, consistently applied (the "Financial
Statements"); provided, however, after the effective date of the initial
registration statement covering a public offering of Lessee's securities, the
term "Financial Statements" will be deemed to refer to only those statements
required by the Securities and Exchange Commission, to be provided no less
frequently than quarterly. Lessee will provide to Lessor (i) as soon as
practicable (within thirty (30) days) after the end of each month, the same
information which Lessee provides to its Board of Directors, but which will
include not less than a monthly income statement, balance sheet and statement of
cash flows, certified by Lessee's Chief Executive or Financial Officer to be
true and correct; and (ii) as soon as practicable (and in any event within
ninety (90) days) after the end of each fiscal year, audited balance sheets as
of the end of such year (consolidated if applicable), and related statements of
income or loss, retained earnings or deficit and changes in the financial
position and capital structure of Lessee for such year, setting forth in
comparative form the corresponding figures for the preceding fiscal year, and
accompanied
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by an audit report and opinion of the independent certified public accountants
selected by Lessee. Lessee will promptly furnish to Lessor any additional
information (including but not limited to tax returns, income statements,
balance sheets, and names of principal creditors) as Lessor reasonably believes
necessary to evaluate Lessee's continuing ability to meet financial obligations.
14.3 OBLIGATION TO LEASE ADDITIONAL EQUIPMENT. Upon notice to Lessee,
Lessor will not be obligated to lease any Equipment which would have a
Commencement Date after said notice if: (i) Lessee is in default under this
Master Lease or any Schedule; (ii) Lessee is in default under any loan
agreement, the result of which would allow the lender or any secured party to
demand immediate payment of the indebtedness; (iii) there is a material adverse
change in Lessee's credit standing; or (iv) Lessor determines (in reasonable
good faith) that Lessee will be unable to perform its obligations under this
Master Lease.
14.4 MERGER AND SALE PROVISIONS. Lessee will notify Lessor of any
proposed Merger at least sixty (60) days prior to the closing date. Lessor may,
in its discretion, either (i) consent to the assignment of the Master Lease and
all relevant Schedules to the successor entity, or (ii) terminate the Master
Lease and all relevant Schedules. If Lessor elects to consent to the assignment,
Lessee and its successor will sign the assignment documentation provided by
Lessor. If Lessor elects to terminate the Master Lease and all relevant
Schedules, then Lessee will pay Lessor all amounts then due and owing and a
termination fee equal to the present value (discounted at 6%) of the remaining
Rent for the balance of the Initial Term(s) of all Schedules, and will return
the Equipment in accordance with Section 9.
14.5 ENTIRE AGREEMENT. This Master Lease and associated Schedules
supersede all other oral or written agreements or understandings between the
parties concerning the Equipment including, for example, purchase orders. ANY
AMENDMENT OF THIS MASTER LEASE OR A SCHEDULE, MAY ONLY BE ACCOMPLISHED BY A
WRITING SIGNED BY THE PARTY AGAINST WHOM THE AMENDMENT IS SOUGHT TO BE ENFORCED.
14.6 NO WAIVER. No action taken by Lessor or Lessee will be deemed to
constitute a waiver of compliance with any representation, warranty or covenant
contained in this Master Lease or a Schedule. The waiver by Lessor or Lessee of
a breach of any provision of this Master Lease or a Schedule will not operate or
be construed as a waiver of any subsequent breach.
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14.7 BINDING NATURE. Each Schedule is binding upon, and inures to the
benefit of Lessor and its assigns. LESSEE MAY NOT ASSIGN ITS RIGHTS OR
OBLIGATIONS.
14.8 SURVIVAL OF OBLIGATIONS. All agreements, obligations including,
but not limited to those arising under Section 6.2, representations and
warranties contained in this Master Lease, any Schedule or in any document
delivered in connection with those agreements are for the benefit of Lessor and
any Assignee or Secured Party and survive the execution, delivery, expiration or
termination of this Master Lease.
14.9 NOTICES. Any notice, request or other communication to either
party by the other will be given in writing and deemed received upon the earlier
of actual receipt or three days after mailing if mailed postage prepaid by
regular or airmail to Lessor (to the attention of "Lease Administrator") or
Lessee, at the address set out in the Schedule or, one day after it is sent by
courier or on the same day as sent via facsimile transmission, provided that the
original is sent by personal delivery or mail by the receiving party.
14.10 APPLICABLE LAW. THIS MASTER LEASE HAS BEEN, AND EACH SCHEDULE
WILL HAVE BEEN MADE, EXECUTED AND DELIVERED IN THE STATE OF ILLINOIS AND WILL BE
GOVERNED AND CONSTRUED FOR ALL PURPOSES IN ACCORDANCE WITH THE LAWS OF THE STATE
OF ILLINOIS WITHOUT GIVING EFFECT TO CONFLICT OF LAW PROVISIONS. NO RIGHTS OR
REMEDIES REFERRED TO IN ARTICLE 2A OF THE UNIFORM COMMERCIAL CODE WILL BE
CONFERRED ON LESSEE UNLESS EXPRESSLY GRANTED IN THIS MASTER LEASE OR A SCHEDULE.
14.11 SEVERABILITY. If any one or more of the provisions of this Master
Lease or any Schedule is for any reason held invalid, illegal or unenforceable,
the remaining provisions of this Master Lease and any such Schedule will be
unimpaired, and the invalid, illegal or unenforceable provision replaced by a
mutually acceptable valid, legal and enforceable provision that is closest to
the original intention of the parties.
14.12 COUNTERPARTS. This Master Lease and any Schedule may be executed
in any number of counterparts, each of which will be deemed an original, but all
such counterparts together constitute one and the same instrument. If Lessor
grants a security interest in all or any part of a
<PAGE> 13
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Schedule, the Equipment or sums payable thereunder, only that counterpart
Schedule marked "Secured Party's Original" can transfer Lessor's rights and all
other counterparts will be marked "Duplicate".
14.13 NONSPECIFIED FEATURES AND LICENSED PRODUCTS. If the Equipment is
supplied from Lessor's inventory and contains any features not specified in the
Schedule, Lessee grants Lessor the right to remove any such features. Any
removal will be performed by the manufacturer or another party acceptable to
Lessee, upon the request of Lessor, at a time convenient to Lessee, provided
that Lessee will not unreasonably delay the removal of such features.
Lessee will obtain no title to Licensed Products which will at all
times remain the property of the owner of the Licensed Products. A license from
the owner may be required and it is Lessee's responsibility to obtain any
required license before the use of the Licensed Products. Lessee agrees to treat
the Licensed Products as confidential information of the owner, to observe all
copyright restrictions, and not to reproduce or sell the Licensed Products.
14.14 ADDITIONAL DOCUMENTS. Lessee will, upon execution of this Master
Lease and as may be requested thereafter, provide Lessor with a secretary's
certificate of incumbency and authority and any other documents reasonably
requested by Lessor. Upon the execution of each Schedule with a purchase price
in excess of $1,000,000, Lessee will provide Lessor with an opinion from
Lessee's counsel in a form acceptable to Lessor regarding the representations
and warranties in Section 8.
14.15 ELECTRONIC COMMUNICATIONS. Each of the parties may communicate
with the other by electronic means under mutually agreeable terms.
14.16 LESSOR'S RIGHT TO MATCH. Lessee's rights under Section 5.2 and
7.2 are subject to Lessor's right to match any sublease or upgrade proposed by a
third party. Lessee will provide Lessor with the terms of the third party offer
and Lessor will have three (3) business days to match the offer. Lessee will
obtain such upgrade from or sublease the Equipment to Lessor if Lessor has
timely matched the third party offer.
14.17 LANDLORD/MORTGAGEE WAIVER. Lessee agrees to provide Lessor with a
Landlord/Mortgagee Waiver with respect to the Equipment. Such waiver shall be in
a form satisfactory to Lessor.
<PAGE> 14
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14.18 EQUIPMENT PROCUREMENT CHARGES/PROGRESS PAYMENTS. Lessee hereby
agrees that Lessor shall not, by virtue of its entering into this Lease, be
required to remit any payments to any manufacturer or other third party until
Lessee accepts the Equipment subject to this Lease.
14.19 DEFINITIONS.
ADVANCE - means the amount due to Lessor by Lessee upon Lessee's execution of
each Schedule.
ASSIGNEE - means an entity to whom Lessor has sold or assigned its rights as
owner and Lessor of Equipment.
ATTACHMENT - means any accessory, equipment or device and the installation
thereof that does not impair the original function or use of the Equipment and
is capable of being removed without causing material damage to the Equipment and
is not an accession to the Equipment.
CASUALTY LOSS - means the irreparable loss or destruction of Equipment.
CASUALTY VALUE - means the greater of the aggregate Rent remaining to be paid
for the balance of the lease term or the Fair Market Value of the Equipment
immediately prior to the Casualty Loss. However, if a Casualty Value Table is
attached to the relevant Schedule its terms will control.
COMMENCEMENT CERTIFICATE - means the Lessor provided certificate which must be
signed by Lessee within ten (10) days of the Commencement Date as requested by
Lessor.
COMMENCEMENT DATE - is defined in each Schedule.
DEFAULT COSTS - means reasonable attorney's fees and remarketing costs resulting
from a Lessee default or Lessor's enforcement of its remedies.
EQUIPMENT - means the property described on a Schedule and any replacement for
that property required or permitted by this Master Lease or a Schedule but not
including any Attachment.
EVENT OF DEFAULT - means the events described in Subsection 13.1.
FAIR MARKET VALUE - means the aggregate amount which would be obtainable in an
arm's-length transaction between an informed and
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willing buyer/user and an informed and willing seller under no compulsion to
sell.
INITIAL TERM - means the period of time beginning on the first day of the first
full Rent Interval following the Commencement Date for all items of Equipment
and continuing for the number of Rent Intervals indicated on a Schedule.
INSTALLATION DATE - means the day on which Equipment is installed and qualified
for a commercially available manufacturer's standard maintenance contract or
warranty coverage, if available.
INTERIM RENT - means the pro-rata portion of Rent due for the period from the
Commencement Date through but not including the first day of the first full Rent
Interval included in the Initial Term.
LICENSED PRODUCTS - means any software or other licensed products attached to
the Equipment.
LIKE EQUIPMENT - means replacement Equipment which is lien free and of the same
model, type, configuration and manufacture as Equipment.
LIKE PART - means a substituted part which is lien free and of the same
manufacturer and part number as the removed part, and which when installed on
the Equipment will be eligible for maintenance coverage with the manufacturer of
the Equipment.
MERGER - means any consolidation or merger of the Lessee with or into any other
corporation or entity, any sale or conveyance of all or substantially all of the
assets of the Lessee to any other person or entity or any stock acquisition of
the Lessee by any other person or entity.
NOTICE PERIOD - means the time period described in a Schedule during which
Lessee may give Lessor notice of the termination of the term of that Schedule.
OVERDUE RATE - means the lesser of five percent (5%) of the payment due or the
maximum rate permitted by the law of the state where the Equipment is located.
OWNER - means the owner of Equipment.
RECONFIGURATION - means any change to Equipment that would upgrade or downgrade
the performance capabilities of the Equipment in any way.
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RENT - means the rent, including Interim Rent, Lessee will pay for each item of
Equipment expressed in a Schedule either as a specific amount or an amount equal
to the amount which Lessor pays for an item of Equipment multiplied by a lease
rate factor plus all other amounts due to Lessor under this Master Lease or a
Schedule.
RENT INTERVAL - means a full calendar month or quarter as indicated on a
Schedule.
SCHEDULE - means an Equipment Schedule which incorporates all of the terms and
conditions of this Master Lease and, for purposes of Section 14.12, its
associated Commencement Certificate(s).
SECURED PARTY - means an entity to whom Lessor has granted a security interest
in a Schedule and related Equipment for the purpose of securing a loan.
IN WITNESS WHEREOF, the parties hereto have executed this Master Lease
on or as of the day and year first above written.
LEUKOSITE, INC. COMDISCO, INC.
as Lessee as Lessor
By: [signature appears here] By: [signature appears here]
Title: ______________________________ Title: _______________________
<PAGE> 1
Exhibit 10.21
MASTER EQUIPMENT LEASE
Under this Master Equipment Lease (the "Lease"), dated as of October 3, 1994,
Phoenix Leasing Incorporated ("Lessor") hereby leases to LeukoSite, Inc.
("Lessee"), and Lessee hereby leases from Lessor, the equipment (herein called
"Equipment") which is described on the schedule attached hereto or any
subsequently-executed schedule entered into by Lessor and Lessee and which
incorporates this Lease by reference. Any such schedules shall hereinafter
individually be referred to as a "Schedule" and collectively be referred to as
the "Schedules." Lessor hereby leases the Equipment to Lessee upon the following
terms and conditions:
1. TERM OF AGREEMENT. The term of this Lease begins on the date set forth above
and shall continue thereafter and be in effect so long as and at any time any
Schedule entered into pursuant to this Lease is in effect. The Initial Term and
rent payable with respect to each leased item of Equipment shall be as set forth
in and as stated in the respective Schedule(s). The terms of each Schedule
hereto are subject to all conditions and provisions of this Lease as may at any
time be amended. Each Schedule shall constitute separate and independent lease
and contractual obligation of Lessee and shall incorporate the terms and
conditions of this Master Equipment Lease and any additional provisions
contained in such Schedule. In the event of a conflict between the terms and
conditions of this Lease and any additional provisions of such Schedule, the
additional provisions of such Schedule shall prevail with respect to such
Schedule only.
2. NON-CANCELLABLE LEASE. This Lease and any Schedule cannot be cancelled or
terminated except as expressly provided herein. This Lease (including all
Schedules to this Lease) constitutes a net lease and Lessee agrees that its
obligations to pay all rent and other sums payable hereunder (and under any
Schedule) and the rights of Lessor and assignee in and to such rent and other
sums, are absolute and unconditional and are not subject to any abatement,
reduction, setoff, defense, counterclaim or recoupment due or alleged to be due
to, or by reason of, any past, present or future claims which Lessee may have
against Lessor, any assignee, the manufacturer or seller of the Equipment, or
against any person for any reason whatsoever.
3. LESSOR COMMITMENT. So long as no Event of Default or event which with the
giving of notice or passage of time, or both, could become an Event of Default
has occurred or is continuing, Lessor agrees to lease to Lessee the groups of
Equipment described on each Schedule, subject to
<PAGE> 2
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the following conditions all of which shall be reasonably satisfactory to
Lessor: (i) that in no event shall Lessor be obligated to lease Equipment to
Lessee hereunder where the aggregate purchase price of all Equipment leased to
Lessee hereunder would exceed $750,000, of which not MORE than $30,000 shall be
for the purchase of furniture and not more than $25,000 shall be for the
purchase of built-in desks and shelving; (ii) the amount of Equipment purchased
by Lessor at any one time shall be at least equal to $50,000 except for a final
advance which may be less than $50,000; (iii) Lessor shall not be obligated to
purchase Equipment hereunder after June 30, 1995 provided, however, Lessor will
purchase equipment thereafter, but not after December 31, 1995, if Lessee has
complied with Section (3)(viii) below and Lessee delivers to Lessor in June 1995
projections of cash flow forecast, profit and loss projections and balance sheet
projections for each month from June 1995 to June 1996, in form and substance
acceptable to Lessor; (iv) all Lease documentation required by Lessor has been
executed by Lessee or provided by Lessee no later than October 3, 1994; (v) the
equipment described on the Schedule is acceptable to Lessor; (vi) with respect
to each funding Lessee has provided to Lessor each of the closing documents and
other items described in Exhibit A hereto (which documents shall be in form and
substance acceptable to Lessor) and which list may be modified for each
subsequent funding; (vii) there is no material adverse change in Lessee's
condition, financial or otherwise, as determined by Lessor, and Lessee so
certifies, from (yy) the date of the most recent financial statements delivered
by Lessee to Lessor prior to execution of this Lease, to (zz) the date of the
proposed lease of the Equipment; (viii) Lessee is performing according to its
business plan consisting of a one page Monthly Cash Flow Forecast dated March 5,
a one page Monthly P&L '94 -'95 Projection, dated April 5 and a one page
Monthly Balance Sheets '94 -'95 Projection dated 5/5 ("Business Plan"), as may
be amended from time to time in form and substance acceptable to Lessor; (ix)
Lessor or its agent has inspected and placed identification labels on the
Equipment; (x) Lessee shall offer to Lessor, on an exclusive basis, all lease
transactions for Equipment contemplated by Lessee during the commitment period
of this Lease; however if Lessor declines to finance any such transaction or
Lessee and Lessor cannot agree upon terms, then Lessee shall be free to seek
such financing from any other third party; and (xi) Lessor has received in form
and substance acceptable to Lessor: (a) Lessee's interim financial statements
signed by a financial officer of Lessee; (b) evidence of Lessee's receipt of
$2,000,000 equity after September 1, 1994; and (c) evidence of Lessee's
$5,640,000 cash position as of June 30, 1994.
4. NO WARRANTIES BY LESSOR. (a) Lessee has selected both (i) the Equipment and
(ii) the suppliers (herein called "Vendor") from whom
<PAGE> 3
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Lessor is to purchase the Equipment. LESSOR MAKES NO WARRANTY EXPRESS OR IMPLIED
AS TO ANY MATTER WHATSOEVER, INCLUDING THE CONDITION OF THE EQUIPMENT, ITS
MERCHANTABILITY OR ITS FITNESS FOR ANY PARTICULAR PURPOSE, AND AS TO LESSOR,
LESSEE LEASES THE EQUIPMENT "AS IS" AND WITH ALL FAULTS. (b) If the Equipment is
not properly installed, does not operate as represented or warranted by Vendor
or is unsatisfactory for any reason, Lessee shall make any claim on account
thereof solely against Vendor and shall, nevertheless, pay Lessor all rent
payable under this Lease, Lessee hereby waiving any such claims as against
Lessor. Lessor hereby agrees to assign to Lessee solely for the purpose of
making and prosecuting any said claim, to the extent assignable, all of the
rights which Lessor has against Vendor for breach of warranty or other
representation respecting the Equipment. Lessor shall have no responsibility for
delay or failure to FILL the order. (c) Lessee understands and agrees that
neither the Vendor nor any salesman or other agent of the Vendor is an agent of
Lessor. No salesman or agent of Vendor is authorized to waive or alter any term
or condition of this Lease, and no representations as to the Equipment or any
other matter by the Vendor shall in any way affect Lessee's duty to pay the rent
and perform its other obligations as set forth in this Lease. (d) Lessee hereby
requests Lessor to purchase Equipment from Vendor and to lease Equipment to
Lessee on the terms and conditions of the Lease set forth herein. (e) Lessee
hereby authorizes Lessor to insert in this Lease and each Schedule hereto the
serial numbers and other identification data of the Equipment when determined by
Lessor.
5. LESSEE'S REPRESENTATIONS AND WARRANTIES. Lessee represents and warrants that
(a) it is a corporation in good standing under the laws of the state of its
incorporation, and duly qualified to do business in each state where the
Equipment will be located; (b) it has full authority to execute and deliver this
Lease and perform the terms hereof, and this Lease has been duly authorized and
constitutes valid and binding obligations of Lessee enforceable in accordance
with its terms; (c) this Lease will not contravene any law, regulation or
judgment affecting Lessee or result in any breach of any agreement or other
instrument binding on Lessee; (d) no consent of Lessee's shareholders or holder
of any indebtedness, or filing with, or approval of, any governmental agency or
commission, is a condition to the performance of the terms hereof; (e) there is
no action or proceeding pending or threatened against Lessee before any court or
administrative agency which might have a materially adverse effect on the
business, financial condition or operations of Lessee; (f) no deed of trust,
mortgage or third party interest arising through Lessee will attach to the
Equipment or the Lease; (g) the Equipment will
<PAGE> 4
-4-
remain at all times under applicable law, removable personal property, free and
clear of any lien or encumbrance in favor of Lessee or any other person,
notwithstanding the manner in which the Equipment may be attached to any real
property; (h) all credit, financial and any other information submitted to
Lessor herewith or any other time is true and correct; and (i) Lessee has
provided, or will provide if requested, Lessee's tax identification number.
6. EQUIPMENT ORDERING. Lessee shall be responsible for all packing, rigging,
transportation and installation charges for the Equipment and Lessor may
separately invoice Lessee for such charges. Lessee has selected the Equipment
itself and shall arrange for delivery of Equipment so that it can be accepted in
accordance with Section 7 hereof. Lessee hereby agrees to indemnify and hold
Lessor harmless from any claims, liabilities, costs and expenses, including
reasonable attorneys' fees, incurred by Lessor arising out of any purchase
orders or assignments executed by Lessor with respect to any Equipment or
services relating thereto.
7. LESSEE ACCEPTANCE. Lessee shall return to Lessor the signed and dated
Acceptance Notice attached to each Schedule hereto (a) acknowledging the
Equipment has been received, installed and is ready for use and (b) accepting it
as satisfactory in all respects for the purposes of this Lease. Lessor is
authorized to fill in the Rent Start Date on each Schedule in accordance with
the foregoing.
8. LOCATION; INSPECTION; LABELS. Equipment shall be delivered to and shall not
be removed from the Equipment "Location" shown on each Schedule without Lessor's
prior written consent. Lessor shall have the right to inspect Equipment at any
reasonable time. Lessee shall be responsible for all labor, material and freight
charges incurred in connection with any removal or relocation of such Equipment
which is requested by the Lessee and consented to by Lessor, as well as for any
charges due to the installation or moving of the Equipment. The rental payments
shall continue during any period in which the Equipment is in transit during a
relocation. Lessor or its agent shall mark and label Equipment, which labels
shall state Equipment is owned by Lessor, and Lessee shall keep such labels on
the Equipment as labeled by Lessor or its agent.
9. EQUIPMENT MAINTENANCE. (a) General. Lessee will locate or base each item of
Equipment where designated in an Acceptance Notice and will reasonably permit
Lessor to inspect such item of Equipment and its maintenance records. Lessee
will at its sole expense comply with
<PAGE> 5
-5-
applicable laws, rules, regulations, requirements and orders with respect to
use, maintenance, repair, condition, storage and operation of each item of
Equipment. Except as required herein, Lessee will not make any addition or
improvement to any item of Equipment that is not readily removable without
causing material damage to any item or impairing its original value or utility.
Any addition or improvement that is so required or cannot be so removed will
immediately become the property of Lessor. (b) Service and Repair. With respect
to computer equipment, Lessee has entered into, and will maintain in effect,
Vendor's standard maintenance contract or another contract satisfactory to
Lessor for a period equal to the term of each Schedule and extensions thereto
which provides for the maintenance of the Equipment and repairs and replacement
parts thereof in good condition and working order, all in accordance with the
terms of such maintenance contract. Lessee shall have the Equipment certified
for the Vendor's standard maintenance agreement prior to delivery to Lessor upon
expiration of this Lease. With respect to any other Equipment, Lessee will, at
its sole expense, maintain and service, and repair any damage to, each item of
Equipment in a manner consistent with prudent industry practice and Lessee's own
practice so that such item of Equipment is at all times (i) in the same
condition as when delivered to Lessee, except for ordinary wear and tear, (ii)
in good operating order for the function intended by its manufacturer's
warranties and recommendations.
10. LOSS OR DAMAGE. Lessee assumes the entire risk of loss to the Equipment
through use, operation or otherwise. Lessee hereby indemnifies and holds
harmless Lessor from and against all claims, loss of rental payments, costs,
damages, and expenses relating to or resulting from any loss, damage or
destruction of the Equipment, any such occurrence being hereinafter called a
"Casualty Occurrence." On the first rental payment date following such Casualty
Occurrence, or, if there is no such rental payment date, thirty (30) days after
such Casualty Occurrence, Lessee shall (i) repair the Equipment, returning it to
good operating condition or (ii) replace the Equipment with identical equipment
in good condition and repair, the title to which shall vest in Lessor and which
thereafter shall be subject to the terms of this Lease; or (iii) pay to Lessor
(a) any unpaid amounts relating to such Equipment due Lessor under this Lease up
to the date of the Casualty Occurrence, and (b) a sum equal to the Casualty
Value as set forth in the Casualty Value table attached to each Schedule hereto
for such Equipment. Upon the making of such payment, the term of this Lease as
to each unit of Equipment with respect to which the Casualty Value was paid
shall terminate.
<PAGE> 6
-6-
11. GENERAL INDEMNITY. Lessee will protect, indemnify and save harmless Lessor
from and against all liabilities, obligations, claims, damages, penalties,
causes of action, costs and expenses, imposed upon or incurred by or asserted
against Lessor or any assignee of Lessor by Lessee or any third party by reason
of the occurrence or existence (or alleged occurrence or existence) of any act
or event relating to or caused by the Equipment, including but not limited to,
consequential or special damages of any kind, or any failure on the part of
Lessee to perform or comply with any of the terms of this Lease. In the event
that any action, suit or proceeding is brought against Lessor by reason of any
such occurrence, Lessee, upon request of Lessor, will at Lessee's expense resist
and defend such action, suit or proceeding or cause the same to be resisted and
defended by counsel designated and approved by Lessor. Lessee's obligations
under this Section 11 shall survive the expiration of this Lease with respect
to acts or events occurring or alleged to have occurred prior to the return of
the Equipment to Lessor at the end of the Lease term.
12. INSURANCE. Lessee at its expense shall keep the Equipment insured for the
entire term and any extensions of this Lease against all risks for the value of
the Equipment and in no event for less than the Casualty Value of such Equipment
as specified on Exhibit C. Such insurance shall contain insurer's agreement to
give thirty (30) days written notice to Lessor before cancellation or material
change of any policy of insurance, and shall provide for (a) loss payable
endorsement to Lessor or any assignee of Lessor, and (b) public liability and
property damage insurance in an amount not less than $3,000,000, naming Lessor
as additional insured. Lessee will provide Lessor and any assignee of Lessor
with a certificate of insurance from the insurer evidencing Lessor's or such
assignee's interest in the policy of insurance. Such insurance shall cover any
Casualty Occurrence to any unit of Equipment. Notwithstanding anything in
Section 10 or this Section 12 to the contrary, this Lease and Lessee's
obligations hereunder and under each Schedule shall remain in full force and
effect with respect to any unit of Equipment which is not subject to a Casualty
Occurrence. If Lessee fails to provide or maintain insurance as required herein,
Lessor shall have the right, but shall not be obligated to obtain such
insurance. In that event, Lessee shall pay to Lessor the cost thereof.
13. TAXES. Lessee agrees to reimburse Lessor for, (or pay directly if instructed
by Lessor), and agrees to indemnify and hold Lessor harmless from, all fees
(including, but not limited to, license, documentation, recording and
registration fees), and all sales, use, gross receipts, personal property,
occupational, value added or other taxes, levies, imposts, duties, assessments,
charges, or withholdings of any nature whatsoever, together
<PAGE> 7
-7-
with any penalties, fines, additions to tax, or interest thereon (all of the
foregoing being hereafter referred to as "Impositions") except same as may be
attributable to Lessor's income, arising at any time prior to or during the term
of this Lease, or upon termination or early termination of this Lease and levied
or imposed upon Lessor directly or otherwise by any Federal, state or local
government in the United States or by any foreign country or foreign or
international taxing authority upon or with respect to (i) the Equipment, (ii)
the exportation, importation, registration, purchase, ownership, delivery,
leasing, possession, use, operation, storage, maintenance, repair, return, sale,
transfer of title, or other disposition thereof, (iii) the rentals, receipts, or
earnings arising from the Equipment, or any disposition of the rights to such
rentals, receipts, or earnings, (iv) any payment pursuant to this Lease, and (v)
this Lease or the transaction or any part thereof. Lessee's obligations under
this Section 13 shall survive the expiration of this Lease with respect to acts
or events occurring or alleged to have occurred prior to the return of the
Equipment to Lessor at the end of the Lease term.
14. PAYMENT BY LESSOR. If Lessee shall fail to make any payment or perform any
act required hereunder, then Lessor may, but shall not be required to, after
such notice to Lessee as is reasonable under the circumstances, make such
payment or perform such act with the same effect as if made or performed by
Lessee. Lessee will upon demand reimburse Lessor for all sums paid and all costs
and expenses incurred in connection with the performance of any such act.
15. SURRENDER OF EQUIPMENT. Upon termination or expiration of this Lease, with
respect to each group of Equipment, Lessee will forthwith surrender the
Equipment to Lessor delivered in as good order and condition as originally
delivered, reasonable wear and tear excepted. Lessor may, at its sole option,
arrange for removal and transportation of the Equipment provided that Lessee's
obligations under Sections 10, 11 and 12 shall not be released. Lessee shall
bear all expenses of returning (which include, but are not limited to, the
de-installation, insurance, packaging and transportation of) the Equipment to
Lessor's location or other location within the United States as Lessor may
request. In the-event Lessee fails to return the Equipment as directed above,
all obligations of Lessee under this Lease, including rental payments, shall
remain in full force and effect until Lessee returns the Equipment to Lessor.
16. ASSIGNMENT. WITHOUT LESSOR'S PRIOR WRITTEN CONSENT WHICH LESSOR SHALL NOT
UNREASONABLY WITHHOLD, LESSEE SHALL NOT (a) ASSIGN, TRANSFER,
<PAGE> 8
-8-
PLEDGE, HYPOTHECATE OR OTHERWISE DISPOSE OF THIS LEASE, EQUIPMENT, OR ANY
INTEREST THEREIN, OR (b) SUBLET OR LEND EQUIPMENT OR PERMIT IT TO BE USED BY
ANYONE OTHER THAN LESSEE OR LESSEE'S EMPLOYEES. LESSOR MAY ASSIGN THIS LEASE OR
GRANT A SECURITY INTEREST IN ANY OR ALL EQUIPMENT, OR BOTH, IN WHOLE OR IN PART
TO ONE OR MORE ASSIGNEES OR SECURED PARTIES WITHOUT NOTICE TO LESSEE. If Lessee
is given notice of such assignment it agrees to acknowledge receipt thereof in
writing and Lessee shall execute such additional documentation as Lessor's
assignee shall require. Each such assignee and/or secured party shall have all
of the rights, but none of the obligations, of Lessor under this Lease, unless
such assignee or secured party expressly agrees to assume such obligations in
writing. Lessee shall not assert against any assignee and/or secured party any
defense, counterclaim or offset that Lessee may have against Lessor.
Notwithstanding any such assignment, and providing no Event of Default has
occurred and is continuing, Lessor, or its assignees, secured parties, or their
agents or assigns, shall not interfere with Lessee's right to quietly enjoy use
of Equipment subject to the terms and conditions of this Lease. Subject to the
foregoing, this Lease inures to the benefit of and is binding upon the
successors and assignees of the parties hereto. Lessee acknowledges that any
such assignment by Lessor will not materially change Lessee's duties or
obligations under the Lease or increase any burden of risk on Lessee.
17. DEFAULT. (a) Event of Default. Any of the following events or conditions
shall constitute an "Event of Default" hereunder: (i) Lessee's failure to pay
any monies due to Lessor hereunder or under any Schedule beyond the fifth (5th)
day after the same is due; (ii) Lessee's failure to comply with its obligations
under Section 12 or Section 16; (iii) Lessee's failure to comply with or perform
any term, covenant, condition, warranty or representation of this Lease or any
Schedule hereto or under any other agreement between Lessee and Lessor or under
any lease of real property covering the location of Equipment if such failure to
comply or perform is not cured by Lessee within twenty (20) days of receipt of
notice thereof-, (iv) seizure of the Equipment under legal process; (v) the
filing by or against Lessee of a petition for reorganization or liquidation
under the Bankruptcy Code or any amendment thereto or under any other insolvency
law providing for the relief of debtors; (vi) the voluntary or involuntary
making of an assignment of a substantial portion of its assets by Lessee, or any
guarantor under any guaranty executed in connection with this Lease
("Guaranty"), for the benefit of its creditors, the appointment of a receiver or
trustee for Lessee or any Guarantor for any of Lessee's or Guarantor's assets,
the institution by or against Lessee or
<PAGE> 9
-9-
any Guarantor of any formal or informal proceeding for dissolution, liquidation,
settlement of claims against or winding up of the affairs of Lessee or any
Guarantor; or (vii) the making by Lessee or any Guarantor of a transfer of all
or a material portion of Lessee's or Guarantor's assets or inventory not in the
ordinary course of business.
(b) Remedies. If any Event of Default shall have occurred:
(i) Lessor may proceed by appropriate court action or actions
either at law or in equity to enforce performance by Lessee, of the applicable
covenants of this Lease, or to recover damages therefor; or
(ii) Lessee will, without demand, on the next rent payment
date following the Event of Default, pay to Lessor as liquidated damages which
the parties agree are fair and reasonable under the circumstances existing at
the time this Lease is entered into, and not as a penalty, an amount equal to
the Casualty Value of the Equipment set forth in Exhibit C together with any
rent or other amounts past due and owing by Lessee hereunder; and
(iii) Lessor may, without notice to or demand upon Lessee;
(a) Take possession of the Equipment and lease the same or any portion
thereof, for such period, amount, and to such entity as Lessor shall elect. The
proceeds of such lease will be applied by Lessor (A) first, to pay all costs and
expenses, including reasonable legal fees and disbursements, incurred by Lessor
as a result of the default and the exercise of its remedies with respect
thereto, (B) second, to pay Lessor an amount equal to any unpaid rent or other
amounts past due and payable plus the Casualty Value, to the extent not
previously paid by Lessee, and (C) third, to reimburse Lessee for the Casualty
Value to the extent previously paid. Any surplus remaining thereafter will be
retained by Lessor.
(b) Take possession of the Equipment and sell the same or any portion
thereof at public or private sale and without demand or notice of intention to
sell. The proceeds of such sale will be applied by Lessor (A) first, to pay all
costs and expenses, including reasonable legal fees and disbursements, incurred
by Lessor as a result of the default and the exercise of its remedies with
respect thereto, (B) second, to pay Lessor an amount equal to any unpaid rent or
other amounts past due and payable plus the Casualty Value, to the extent not
previously paid by Lessee, and (C) third, to reimburse Lessee for the Casualty
Value to the extent previously paid by Lessee. Any surplus remaining thereafter
will be retained by Lessor.
<PAGE> 10
-10-
(c) Take possession of the Equipment and hold and keep idle the same or
any portion thereof.
Lessee agrees to pay all reasonable out-of-pocket costs of Lessor
related to the exercise of its remedies, including out-of-pocket legal fees for
outside counsel and expenses. At Lessor's request, Lessee shall assemble the
Equipment and make it available to Lessor at such location as Lessor may
designate. Lessee waives any right it may have to redeem the Equipment.
Repossession of any or all Equipment shall not terminate this Lease or
any Schedule unless Lessor notifies Lessee in writing. Any amount required to be
paid under this Section shall be increased by a service charge of 1.5% per
month, or the highest rate of interest permitted by applicable law, whichever is
less, accruing from the date the Casualty Value or other amounts are payable
hereunder until such amounts are paid.
None of the above remedies is intended to be exclusive, but each is
cumulative and in addition to any other remedy available to Lessor, and all may
be enforced separately or concurrently.
In addition to the foregoing remedies, if an Event of Default
hereunder shall have occurred and be continuing, Lessee shall promptly provide
Lessor with copies of the minutes of each meeting of Lessee's board of directors
or any committee thereof and copies of each written consent taken by the board
or such committees.
18. LATE PAYMENTS. A service charge of 1.5% per month, or the highest service
charge permitted by applicable law, whichever is less, shall be paid by Lessee
to Lessor on all funds owed Lessor by Lessee. If such funds have not been
received by Lessor at Lessor's place of business or by Lessor's designated agent
by the date such funds, are due under this Lease, Lessor shall bill Lessee for
such charges. Lessee acknowledges that invoices for rentals due hereunder are
sent by Lessor for Lessee's convenience only. Lessee's non-receipt of an invoice
will not relieve Lessee of its obligation to make rent payments hereunder.
19. LESSOR'S EXPENSE. Lessee shall pay Lessor all costs and expenses including
reasonable attorney's fees and the fees of the collection agencies, incurred by
Lessor in enforcing any of the terms, conditions or provisions hereof.
<PAGE> 11
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20. OWNERSHIP; PERSONAL PROPERTY. The Equipment shall be and remain personal
property of Lessor, and Lessee shall have no right, title or interest therein or
thereto except as expressly set forth in this Lease, notwithstanding the manner
in which it may be attached or affixed to real property, and upon termination or
expiration of the Lease term, Lessee shall have the duty and Lessor shall have
the right to remove the Equipment from the premises where the same be located
whether or not affixed or attached to the real property or any building, at the
cost and expense of Lessee.
21. ALTERATIONS; ATTACHMENTS. No alterations or attachments shall be made to the
Equipment without Lessor's prior written consent, which shall not be given for
changes that will affect the reliability and utility of the Equipment or which
cannot be removed without damage to the Equipment, or which in any way affect
the value of the Equipment for purposes of resale or re-lease.
22. FINANCING STATEMENT. Lessee will execute financing statements pursuant to
the Uniform Commercial Code. Lessee authorizes Lessor TO file financing
statements signed only by Lessor (where such authorization is permitted by law)
at all places where Lessor deems necessary.
23. MISCELLANEOUS. (a) Lessee shall provide Lessor with such corporate
resolutions, financial statements and other documents as Lessor shall request
from time to time. (b) Lessee represents that the Equipment is being leased
hereunder for business purposes. (c) Time is of the essence with respect to this
Lease. (d) Lessee shall keep its books and records in accordance with generally
accepted accounting principles and practices consistently applied and shall
deliver to Lessor its annual audited financial statements, unaudited monthly
financial statements and signed by an officer of Lessee and such other unaudited
financial statements as may be reasonably requested by Lessor. (e) Any action by
Lessee against Lessor for any default by Lessor under this Lease, including
breach of warranty or indemnity, shall be commenced within one (1) year after
any such cause of action accrues.
24. NOTICES. All notices hereunder shall be in writing, by registered mail, and
shall be directed, as the case may be, to Lessor at 2401 Kerner Boulevard, San
Rafael, California 94901, Attention: Lease Administration and to Lessee at
_____________________________________ Attention: _______________________.
<PAGE> 12
-12-
25. ENTIRE AGREEMENT. Lessee acknowledges that Lessee has read this Lease,
understands it and agrees to be bound by its terms, and further agrees that it
and each Schedule constitute the entire agreement between Lessor and Lessee with
respect to the subject matter hereof and supersedes all previous agreements,
promises, or representations. The terms and conditions hereof shall prevail
notwithstanding any variance with the terms of any purchase order submitted by
the Lessee with respect to any Equipment covered hereby.
26. AMENDMENT. This Lease may not be changed, altered or modified except by an
instrument in writing signed by an officer of the Lessor and the Lessee.
27. WAIVER. Any failure of Lessor to require strict performance by Lessee or any
waiver by Lessor of any provision herein shall not be construed as a consent or
waiver of any other breach of I the same or any other provision.
28. SEVERABILITY. If any provision of this Lease is held invalid, such
invalidity shall not affect any other provisions hereof.
29. JURISDICTION AND WAIVER OF JURY TRIAL. This Lease shall be governed by and
construed under the laws of the State of California. It is agreed that exclusive
jurisdiction and venue for any legal action between the parties arising out of
this Lease shall be in the Superior Court for Marin County, California, or, in
cases where Federal diversity jurisdiction is available, in the United States
District Court for the Northern District of California. LESSEE, TO THE EXTENT IT
MAY LAWFULLY DO SO, HEREBY WAIVES ITS RIGHT TO TRIAL BY JURY IN ANY ACTION
BROUGHT ON OR WITH RESPECT TO THIS LEASE, ANY SCHEDULE, OR ANY AGREEMENT
EXECUTED IN CONNECTION HEREWITH.
30. NATURE OF TRANSACTION. Lessor makes no representation whatsoever, express or
implied, concerning the legal character of the transaction evidenced hereby, for
tax or any other purpose.
31. SECURITY INTEREST. (a) One executed copy of the Lease will be marked
"Original" and all other counterparts will be duplicates. To the extent, if any,
that this Lease constitutes chattel paper (as such term is defined in the
Uniform Commercial Code as in effect in any applicable jurisdiction) no security
interest in the lease may be created in any documents other than the "Original."
(b) There shall be only one original
<PAGE> 13
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of each Schedule and it shall be marked "Original," and all other counterparts
will be duplicates. To the extent, if any, that any Schedule(s) to this Lease
constitutes chattel paper (or as such term is defined in the Uniform Commercial
Code as in effect in any applicable jurisdiction) no security interest in any
Schedule(s) may be created in any documents other than the "Original."
32. SUSPENSION OF OBLIGATIONS. The obligations of Lessor hereunder will be
suspended to the extent that it is hindered or prevented from complying
therewith because of labor disturbances, including but not limited to strikes
and lockouts, acts of God, fires, storms, accidents, failure of the manufacturer
to deliver any item of Equipment, governmental regulations or interference, or
any cause whatsoever not within the sole and exclusive control of Lessor.
33. COMMITMENT FEE. Lessee has paid to Lessor a commitment fee ("Fee") of
$10,000. The Fee shall be applied by Lessor first to reimburse Lessor for all
out-of-pocket UCC search costs, and inspection fees incurred by Lessor, and then
proportionally to the first month's rent for each Schedule hereunder in the
proportion that the purchase price of the Equipment leased pursuant to the
Schedule bears to Lessor's entire commitment. However, the portion of the Fee
which is not applied to rental shall be nonrefundable except if Lessor defaults
in its obligations pursuant to Section 3.
34. FINANCE LEASE. The parties agree that this lease is a "Finance Lease" as
defined by section 10-103(a)(7) of the California Commercial Code (Cal.Com.C.).
Lessee acknowledges either (a) that Lessee has reviewed and approved any written
Supply Contract (as defined by Cal.Com.C. Section 10-103(a)(25)) covering
Equipment purchased from the "Supplier" (as defined by Cal.Com.C. Section
10-103(a)(24)) thereof for lease to Lessee or (b) that Lessor has informed or
advised Lessee, in writing, either previously or by this Lease of the following:
(i) the identity of the Supplier; (ii) that the Lessee may have rights under the
Supply Contract; and (iii) that the Lessee may contact the Supplier for a
description of any such rights Lessee may have under the Supply Contract. Lessee
hereby waives any rights and remedies Lessee may have under Cal.Com.C. Sections
10-508 through 522.
<PAGE> 14
-14-
IN WITNESS WHEREOF, the parties hereto have executed this Lease.
PHOENIX LEASING INCORPORATED LEUKOSITE, INC.
By: [signature appears here] By: [signature appears here]
------------------------------- -------------------------------------
Title: Title:
---------------------------- ----------------------------------
Headquarters Location:
- ----------------------------------
Street
- ----------------------------------
City, State Zip Code
- ----------------------------------
County
Exhibit A - Closing Memorandum
<PAGE> 15
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Exhibit A
to MASTER EQUIPMENT LEASE
Dated October 3, 1994
CLOSING MEMORANDUM
1.* Duly Executed Master Equipment Lease marked "Original."
2. Duly Executed Schedule marked "Original."
3. Duly Executed Certificate of Acceptance.
4. Insurance Certificates.
5.* Resolutions of Lessee's Board of Directors/Incumbency Certificate.
6. Agreement to Allow Removal of Personal Property."
7. Purchase Agreement Assignment.
8. UCC Financing Statements.
9. Bill of Sale (for Sale-Leaseback Equipment).
10. UCC search.
11* Payment of Commitment Fee.
12. Equipment List, in form and substance satisfactory to Lessor.
13. Certificate of Chief Financial Officer as to the existence of no
defaults and as to there being no material adverse change in the condition,
financial or otherwise, of the Lessee.
14. See Section 3 of Master Equipment Lease for additional preconditions
to closing.
* First Schedule Only
** Required if any Equipment is a fixture, i.e., attached to real property.
<PAGE> 1
Exhibit 10.22
SENIOR LOAN AND SECURITY AGREEMENT NO. 0062
THIS SENIOR LOAN AND SECURITY AGREEMENT NO. 0062 (this "Security
Agreement") is dated as of March 14, 1997 between LEUKOSITE, INC., a Delaware
corporation ("Borrower") and Phoenix Leasing Incorporated, a California
corporation ("Lender"). Borrower has previously entered into that certain Master
Equipment Lease between Lender, as Lessor, and Borrower, as Lessee, dated as of
October 3, 1994, as amended (the "Lease").
RECITALS
A. Borrower desires to borrow from Lender in one or more borrowings an
amount not to exceed $1,200,000 in the aggregate, and Lender desires to loan,
subject to the terms and conditions herein set forth, such amount to Borrower.
Such borrowings shall be evidenced by one or more Senior Secured Promissory
Notes (each, a "Note" and collectively, the "Notes"), in the form attached
hereto.
B. As security for Borrower's obligations to Lender under this Security
Agreement, the Notes and any other agreement between Borrower and Lender,
Borrower will grant to Lender hereunder a first perfected security interest in
certain of its equipment, machinery and fixtures, including but not limited to
leasehold improvements, computer, laboratory and test equipment, whether now
owned by Borrower or hereafter acquired pursuant to this Security Agreement, and
all substitutions and replacements of and additions, improvements, accessions
and accumulations to said equipment, machinery and fixtures, together with all
rents, issues, income, profits and proceeds therefrom including, but not limited
to, the items described in Exhibit A attached to each Note (collectively, the
"Collateral"). In addition to the foregoing Collateral, under certain
circumstances Borrower's obligations to Lender may also be secured by certain
"Additional Collateral" as provided below, in which case the term "Collateral"
shall include such Additional Collateral.
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
SECTION 1. THE LOANS.
(a) General Terms. Subject to the terms and conditions of this
Security Agreement, Lender hereby agrees to make one or more senior secured
loans (each, a "Loan" and collectively, the "Loans") to
<PAGE> 2
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Borrower, subject to the following conditions: (i) each Loan shall be evidenced
by a Note; (ii) the total principal amount of the Loans shall not exceed
$1,200,000 in the aggregate (the "Commitment") of which Commitment amount up to
$450,000 may be utilized for leasehold improvement Collateral provided Borrower
has closed an additional strategic corporate partnership and received an initial
cash infusion of at least $1,000,000 and a commitment for additional cash
infusion; (iii) at the time of each Loan, no Event of Default or event which
with the giving of notice or passage of time, or both, could become an Event of
Default shall have occurred and be continuing, as reasonably determined by
Lender and certified by Borrower; (iv) the amount of each Loan shall be at least
$25,000.00 except for a final Loan which may be less than $25,000.00; (v) Lender
shall not be obligated to make any Loan after December 31, 1997 ("Commitment
Period"); (vi) for each Loan, Borrower shall present to Lender a list of
proposed Collateral for approval by Lender in its sole discretion; (vii) for
each Loan, Borrower shall have provided Lender with each of the closing
documents described in Exhibit A hereto (which documents shall be in form and
substance acceptable to Lender); (viii) for all fundings, Borrower is performing
according to its business plan referred to as "LeukoSite, Inc.
Cashflow-Projection, Fiscal Years '97-'98 received by Lender on February 21,
1977" (the "Business Plan"), as may be amended from time to time in form and
substance acceptable to Lender; (ix) there shall be no material adverse change
in Borrower's condition, financial or otherwise, as reasonably determined by
Lender, and Borrower so certifies, from (yy) the date of the most recent
financial statements delivered by Borrower to Lender to (zz) the date of the
proposed Loan; (x) prior to payment in full of all Notes, Borrower shall not
offer any loan secured by (or leases of) any equipment, furniture or fixtures to
any other person or entity other than Lender, unless Lender declines to finance
such transaction or Borrower and Lender are unable to agree on the terms of such
financing; (xi) Borrower shall use the proceeds of all Loans hereunder for
working capital; (xii) at the time of each Loan, Borrower has reimbursed Lender
for all UCC filing and search costs and appraisal fees provided such fees for
all Loans total $1,000 or less; (xiii) all Collateral has been marked and
labeled by Lender or Lender's agent; and (xiv) Lender has received in form and
substance acceptable to Lender: (a) Borrower's interim financial statements
signed by a financial officer of Borrower, (b) hard copy evidence of Borrower's
$9,300,000 cash position and of Borrower's short term investments as of December
31, 1996; and (c) complete copies of the Borrower's audit reports for its most
recent fiscal year, which shall include at least the Borrower's balance sheet as
of the close of such year, and the Borrower's statement of income and retained
earnings and of changes in financial position for such year, prepared on a
consolidated basis and certified by independent public accountants. Such
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certificate shall not be qualified or limited because of restricted or limited
examination by such accountant of any material portion of the company's records.
Such reports shall be prepared in accordance with generally accepted accounting
principles and practices consistently applied.
(b) The Notes. Each Loan shall be evidenced by a Note. Each
Note shall bear interest and be payable and prepayable at the times and in the
manner provided therein. Following payment of the Indebtedness related to each
Note, Lender shall return such Note, marked "canceled," to Borrower.
(c) Specific Terms - Leasehold Improvement Collateral.
Regarding leasehold improvement Collateral, Borrower and Lender agree that if,
upon the expiration of the Commitment Period, the amount funded allocable to
leasehold improvement Collateral exceeds forty percent (40%) of the utilized
Commitment, then, at Lender's option, Borrower shall pay to Lender an amount
equal to such excess ("Excess Payment"). Such Excess Payment shall be held as
Additional Collateral and shall be applied to the end of loan position
applicable to leasehold improvement Collateral as set forth in the applicable
Note if no Event of Default has occurred. Borrower agrees to pay such amount to
Lender within thirty (30) days of Lender's invoice.
SECTION 2. SECURITY INTERESTS.
(a) Borrower hereby grants to Lender a perfected first
priority security interest in all Collateral.
(b) This Security Agreement secures (i) the payment of the
principal of and interest on the Notes and all other sums due thereunder and
under this Security Agreement (the "Indebtedness") and (ii) the performance by
Borrower of all of its other covenants now or hereafter existing under the
Notes, this Security Agreement and any other obligation owed by Borrower to
Lender (the "Obligations").
SECTION 3. BORROWER'S REPRESENTATIONS AND WARRANTIES.
Borrower represents and warrants that (a) it is a corporation in good
standing under the laws of the state of its incorporation, and duly qualified to
do business in each state where necessary to carry on its present business and
operations, including the jurisdiction(s) where the Collateral will be located;
(b) it has full authority to execute and deliver this Security Agreement and the
Notes and perform the terms hereof and thereof, and this Security Agreement and
the Notes have been duly
<PAGE> 4
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authorized, executed and delivered and constitute valid and binding obligations
of Borrower enforceable in accordance with their terms; (c) the execution and
delivery of this Security Agreement and the Notes will not contravene any law,
regulation or judgment affecting Borrower or result in any breach of any
agreement or other instrument binding on Borrower; (d) no consent of Borrower's
shareholders or holder of any indebtedness, or filing with, or approval of, any
governmental agency or commission, which has not already been obtained or
performed, as appropriate, is a condition to the performance of the terms of
this Security Agreement or the Notes; (e) there is no action or proceeding
pending or threatened against Borrower before any court or administrative agency
which might have a materially adverse effect on the business, financial
condition or operations of Borrower; (f) Borrower owns and will keep all of the
Collateral free and clear of all liens, claims and encumbrances, and, except for
this Security Agreement, there is no deed of trust, mortgage, security agreement
or other third party interest against any of the Collateral; (g) Borrower has
good and marketable title to the Collateral; (h) all Collateral has been
received, installed and is ready for use and is satisfactory in all respects for
the purpose of this Security Agreement; (i) the Collateral is, and will remain
at all times under applicable law, removable personal property, which is free
and clear of any lien or encumbrance except in favor of Lender, notwithstanding
the manner in which the Collateral may be attached to any real property; (j) all
credit and financial information submitted to Lender herewith or at any other
time is and will at the time given be true and correct; and (k) the security
interest granted to Lender hereunder is a perfected first security interest.
SECTION 4. METHOD AND PLACE OF PAYMENT.
Borrower shall pay to Lender, at its office at the address specified in
the Notes, or such other address as Lender specifies in writing, all amounts
payable to it in respect of the principal of or interest on the Notes.
SECTION 5. AFFIRMATIVE COVENANTS REGARDING THE COLLATERAL.
Borrower covenants and agrees that so long as any portion of the
Indebtedness is unpaid and as long as any of the Obligations are outstanding it
will comply with the following covenants:
(a) Location; Inspection. All of the Collateral shall be located at the
address (the "Collateral Location") shown on Exhibit A to each Note and shall
not be moved without Lender's prior written consent. All of the
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records regarding the Collateral shall be located at 215 First Street,
Cambridge, MA 02142. Lender shall have the right to inspect Collateral,
including records relating thereto, and Borrower's books and records at any time
(upon reasonable notification) during regular business hours, such books and
records to be maintained in accordance with generally accepted accounting
principles. Borrower shall be responsible for all labor, material and freight
charges incurred in connection with any removal or relocation of Collateral
which is requested by Borrower and consented to by Lender, as well as for any
charges due to the installation or moving of the Collateral. Payments under the
Notes and under this Security Agreement shall continue during any period in
which the Collateral is in transit during a relocation. Lender or its agent
shall mark and label Collateral, which labels (to be provided by Lender) shall
state that such Collateral is subject to a security interest of Lender, and
Borrower shall keep such labels on the Collateral as so labeled.
(b) Collateral Maintenance. Borrower will reasonably permit Lender to
inspect such item of Collateral and its maintenance records. Borrower will at
its sole expense comply with all applicable laws, rules, regulations,
requirements and orders with respect to the use, maintenance, repair, condition,
storage and operation of each item of Collateral. Except as required herein,
Borrower will not make any addition or improvement to any item of Collateral
that is not readily removable without causing material damage to any item or
impairing its original value or utility. Any addition or improvement that is so
required or cannot be so removed will immediately become Collateral of Lender.
(c) Service and Repair. With respect to computer equipment, other than
personal computers, Borrower has entered into, and will maintain in effect,
vendor's standard maintenance contract or another contract satisfactory to
Lender for a period equal to the term of each Loan and extensions thereto which
provides for the maintenance of the Collateral in good condition and working
order and repairs and replacement of parts thereof, all in accordance with the
terms of such maintenance contract. Borrower shall have that Collateral
certified for the vendor's standard maintenance agreement before Lender acquires
any interest in the Collateral as provided in this Security Agreement. With
respect to any other Collateral, Borrower will at its sole expense maintain and
service and repair any damage to each item of Collateral in a manner consistent
with prudent industry practice and Borrower's own practice so that such item of
Collateral is at all times (i) in the same condition as when delivered to
Borrower, except for ordinary wear and tear, and (ii) in good operating order
for the function intended by its manufacturer's warranties and recommendations.
<PAGE> 6
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(d) Loss or Damage. Borrower assumes the entire risk of loss to the
Collateral through use, operation or otherwise. Borrower hereby indemnifies and
holds harmless Lender from and against all claims, loss of Loan payments, costs,
damages, and expenses relating to or resulting from any loss, damage or
destruction of the Collateral, any such occurrence being hereinafter called a
"Casualty Occurrence." Following a Casualty Occurrence, Borrower shall, on the
first day payment is due on each Note following the Casualty Occurrence, pay to
Lender an amount equal to the Balance Due (as defined below) for each item of
Collateral. The Balance Due for each item is the sum of: (i) all amounts for
each time which may be then due or accrued to the payment date, plus (ii) as of
such payment date, an amount equal to the product of the fraction specified
below times the sum of all remaining payments under the respective Note,
including the amount of any mandatory or optional payment required or permitted
to be paid by Borrower to Lender at the maturity of the Note. The numerator of
the fraction shall be the Collateral Value (as set forth on the applicable
schedule) of the item and the denominator shall be the aggregate Collateral
Value of all items under the Note. Upon the making of such payments, Lender
shall release such item of Collateral from its lien hereunder.
Notwithstanding the above, within thirty (30) days following a Casualty
Occurrence, Borrower may replace any item of Collateral which has suffered a
Casualty Occurrence with Collateral acceptable to Lender in its complete
discretion and, in such event, the provisions of the previous paragraph shall
not apply. Borrower's tender of such Collateral shall constitute a
representation and warranty that it is free of all liens, claims and
encumbrances, and otherwise qualifies as Collateral under this Security
Agreement. Following such tender, Lender shall have a first security interest in
such Collateral.
(e) Insurance. Borrower at its expense shall keep the Collateral
insured against all risks of physical loss or damage and in such amounts as
Lender shall approve, and such insurance shall provide for a loss payable
endorsement to Lender and/or any assignee of Lender for the full replacement
value of the Collateral. Borrower, at its expense, shall also maintain
commercial general liability insurance with respect to loss or damage for
personal injury, death, or property damage naming Lender and/or any assignee as
an additional insured in an amount not less than $2,000,000. Borrower will
provide Lender and/or any assignee of Lender with a certificate of insurance
from the insurer evidencing Lender's or such assignee's interest in the policy
of insurance. Such insurance shall cover any Casualty Occurrence to any unit of
Collateral. Notwithstanding
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anything in Section 5(d) or this Section 5(e) to the contrary, this Security
Agreement and Borrower's obligations hereunder shall remain in full force and
effect with respect to any unit of Collateral which is not subject to a Casualty
Occurrence.
SECTION 6. MISCELLANEOUS AFFIRMATIVE COVENANTS.
So long as any portion of the Indebtedness is unpaid and as long as any
of the Obligations are outstanding Borrower will:
(a) duly pay all governmental taxes and assessments at the
time they become due and payable;
(b) comply with all applicable governmental laws, rules and
regulations;
(c) maintain Lender's security interest in the Collateral as a
first and prior perfected security interest;
(d) furnish Lender with its annual audited financial
statements within ninety (90) days following the end of Borrower's fiscal year,
unaudited quarterly financial statements within thirty (30) days after the end
of each fiscal quarter, and within fifteen (15) days of the end of each month a
financial statement for that month prepared by Borrower, including all financial
information given to Borrower's Board of Directors, and including an income
statement and balance sheet, all of which shall be certified by an officer of
Borrower as true and correct and shall be prepared in accordance with generally
accepted accounting principles consistently applied, and such other information
as Lender may reasonably request;
(e) promptly (but in no event more than five (5) days after
the occurrence of such event) notify Lender of any material adverse change in
Borrower's condition during the commitment period and of the occurrence of any
Event of Default; and
(f) take all steps deemed by Lender reasonable or advisable to
validate or perfect the security interest of Lender in the Collateral.
SECTION 7. INDEMNITEES.
(a) General. Borrower will protect, indemnify and save harmless Lender
and any assignees on an after-tax basis from and against
<PAGE> 8
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all liabilities, obligations, claims, damages, penalties, causes of action,
costs and expenses (including reasonable attorneys' fees and expenses), imposed
upon or incurred by or asserted against Lender or any assignee of Lender by
Borrower or any third party by reason of the occurrence or existence (or alleged
occurrence or existence) of any act or event relating to or caused by any
portion of the Collateral, or its purchase, acceptance, possession, use,
maintenance or transportation, including without limitation, consequential or
special damages of any kind, any failure on the part of Borrower to perform or
comply with any of the terms of this Security Agreement or the Notes, claims for
latent or other defects, claims for patent, trademark or copyright infringement
and claims for personal injury, death or property damage, including those based
on Lender's negligence or strict liability in tort and excluding only those
based on Lender's gross negligence or willful misconduct. In the event that any
action, suit or proceeding is brought against Lender by reason of any such
occurrence, Borrower, upon Lender's request, will, at Borrower's expense, resist
and defend such action, suit or proceeding or cause the same to be resisted and
defended by counsel designated by Lender.
(b) Tax Indemnity. Borrower agrees to reimburse Lender (or pay directly
if instructed by Lender) and any assignee of Lender for, and to indemnify and
hold Lender and any assignee harmless from, all fees (including, but not limited
to, license, documentation, recording and registration fees), and all sales,
use, gross receipts, personal property, occupational, value added or other
taxes, levies, imposts, duties, assessments, charges, or withholdings of any
nature whatsoever, together with any penalties, fines, additions to tax, or
interest thereon (the foregoing collectively "Impositions"), except same as may
be attributable to Lender's income, arising at any time prior to or during the
term of any Notes or of this Security Agreement, or upon termination or early
termination of this Security Agreement and levied or imposed upon Lender
directly or otherwise by any Federal, state or local government in the United
States or by any foreign country or foreign or international taxing authority
upon or with respect to (i) the Collateral, (ii) the exportation, importation,
registration, purchase, ownership, delivery, leasing, possession, use,
operation, storage, maintenance, repair, return, sale, transfer of title, or
other disposition thereof, (iii) the rentals, receipts, or earnings arising from
the Collateral, or any disposition of the rights to such rentals, receipts, or
earnings, (iv) any payment pursuant to this Security Agreement or the Notes, or
(v) this Security Agreement, the Notes or any transaction or any part hereof or
thereof.
(c) Survivability. Borrower's obligations under this Section 7 shall
survive the payment in full of all the Indebtedness and the
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performance of all Obligations with respect to acts or events occurring or
alleged to have occurred prior to the payment in full of all the Indebtedness
and the performance of all Obligations.
SECTION 8. RELEASE OF LIENS.
Upon payment of all of the Indebtedness and performance of all of the
Obligations, Lender shall execute UCC termination statements and such other
documents as Borrower shall reasonably require to evidence the release of
Lender's lien relating to the Collateral.
SECTION 9. ASSIGNMENT.
WITHOUT LENDER'S PRIOR WRITTEN CONSENT, BORROWER SHALL NOT (a) ASSIGN,
TRANSFER, PLEDGE, HYPOTHECATE OR OTHERWISE DISPOSE OF THIS SECURITY AGREEMENT,
ANY COLLATERAL, OR ANY INTEREST THEREIN, (b) LEASE OR LEND COLLATERAL OR PERMIT
IT TO BE USED BY ANYONE OTHER THAN BORROWER OR BORROWER'S EMPLOYEES OR (c) MERGE
INTO, CONSOLIDATE WITH OR CONVEY OR TRANSFER ITS PROPERTIES SUBSTANTIALLY AS AN
ENTIRETY TO ANY OTHER PERSON OR ENTITY. Lender may assign any of the Notes, this
Security Agreement or its security interest in any or all Collateral, or any or
all of the above, in whole or in part to one or more assignees or secured
parties without notice to Borrower. If Borrower is given notice of such
assignment it agrees to acknowledge receipt thereof in writing and Borrower
shall execute such additional documentation as Lender's assignee shall
reasonably require. Each such assignee and/or secured party shall have all of
the rights, but (except as provided in Section 9 hereof) none of the
obligations, of Lender under this Security Agreement, unless it expressly agrees
to assume such obligations in writing. Borrower shall not assert against any
assignees and/or secured party any defense, counterclaim or offset that Borrower
may have against Lender. Notwithstanding any such assignment, and providing no
Event of Default has occurred and is continuing, Lender, or its assignees,
secured parties, or their agents or assigns, shall not interfere with borrower's
right to quietly enjoy use of Collateral subject to the terms and conditions of
this Security Agreement. Subject to the foregoing, the Notes and this security
Agreement shall insure to the benefit of, and are binding upon, the successors
and assignees of the parties hereto.
<PAGE> 10
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SECTION 10. DEFAULT.
(a) Events of Default. Any of the following events or conditions shall
constitute an "Event of Default" hereunder: (i) Borrower's failure to pay any
monies due to Lender hereunder or under any Note beyond the fifth (5th) day
after the same is due: (ii) Borrower's failure to comply with its obligations
under Section 5(e) or Section 9; (ii) any representation or warranty of Borrower
made in this Security Agreement or the Notes or in any other agreement,
statement or certificate furnished to lender in connection with this Security
Agreement or the Notes shall prove to have been incorrect in any material
respect when made or given; (iv) borrower's failure to comply with or perform
any term, covenant or condition of this Security Agreement or any Note or under
any other agreement between Borrower and Lender or under any lease of real
property covering the location of the Equipment if such failure to comply or
perform is not cured by Borrower within five (5) days after Borrower knows of
the noncompliance or nonperformance or notice from Lender; (v) seizure of any of
the collateral under legal process; (vi) the filing by or against Borrower or
any guarantor under any guaranty executed in connection with this Security
Agreement ("Guarantor") or a petition for reorganization or liquidation under
the Bankruptcy Code or any amendment thereto or under any other insolvency law
providing for the relief o debtors; (vii) the voluntary or involuntary making of
an assignment of a substantial portion of its assets by Borrower or by any
Guarantor for the benefit of its creditors, the appointment of a receiver or
trustee for borrower or any Guarantor or for any of borrower's or Guarantor's
assets, the institution by or against Borrower or any guarantor of any formal or
informal proceeding for dissolution, liquidation, settlement of claims against
or winding up of the affairs of borrower or any Guarantor provided that in the
case of all such involuntary proceedings, same are not dismissed within sixty
(60) days after commencement; or (viii) the making by Borrower or by any
Guarantor under any Guaranty executed in connection with this Loan of a transfer
of all or a material portion of borrower's or guarantor's assets or inventory
not in the ordinary course of business.
(b) Remedies. If any Event of Default has occurred, Lender may in its
sole discretion exercise one or more of the following remedies with respect to
any or all of the Collateral: (i) declare due any or all of the aggregate sum of
al remaining payments under the Notes, including the amount of any mandatory or
optional payment required or permitted to be paid by Borrower to Lender at the
maturity of the Notes ("Remaining Payments"); (ii) proceed by court action to
enforce Borrower's performance of the Notes and this Security Agreement or to
recover all damages and
<PAGE> 11
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expenses incurred by Lender by reason of an Event of Default; (iii) without
court order or prior demand, enter upon the premises where the collateral is
located and take immediate possession of and remove it without liability of
Lender to Borrower or any other person or entity; (iv) terminate this Security
Agreement an sell the Collateral at public or private sale, or otherwise dispose
of, hold, use or lease any or all of the Collateral or (v) exercise any other
right or remedy available to it under applicable law. If Lender has declared due
any or all of the Remaining Payments, borrower will pay immediately to Lender
(a) the Remaining Payments, (b) all amounts which may be then due or accrued,
and (c) all other amounts due under the Security Agreement and under the Notes
(Lender's Return, as referred to below, means the amounts described in clauses
(a), (b) and (c) above). The net proceeds of any sale or lease of such
Collateral will be credited against Lender's Return. The net proceeds of a sale
of the Collateral pursuant to his Section 11(b) is defined as the sales price of
the Collateral less selling expenses, including, without limitation, costs of
remarketing the Collateral and all refurbishing costs and commissions paid with
respect to such remarketing. The net proceeds of a lease of the Collateral
pursuant to this Section 11(b) is defined as the amount equal to the rental
payments due under such lease (discounted at a rate per annum equal to the
discount rate for 13-week Treasury Bills as of the date on which Lender notifies
Borrower that this Security Agreement is terminated (the "Termination Date") (as
such rate is reported in the Money Rates column in the Wall Street Journal) or
the Termination Date or, if the Wall Street Journal is published (the "Discount
Rate")) plus the residual value of the Collateral at the end of the basic term
of such lease, as reasonably determined by Lender, and discounted at the
Discount Rate.
Borrower agrees to pay all reasonable internal and out-of-pocket costs
of Lender incurred in enforcement of this Security Agreement, the Notes or any
instrument or agreement required under this Security Agreement, including, but
not limited to, direct overhead costs of Lender allocated to the estimated time
spent by its employees (and the employees of its affiliates, including counsel
who are employees of Lender or its affiliates) and outside counsel legal fees
and litigation expenses and fees of collection agencies ("Remedy Expenses"). At
Lender's request, Borrower shall assemble the Collateral and make it available
to Lender at such time and location as Lender may designate. Borrower waives any
right it may have to redeem the Collateral.
Declaration that any or all amounts under this Security Agreement
and/or the Notes are immediately due and payable shall not terminate this
Security Agreement or any of the Notes unless Lender so notifies
<PAGE> 12
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Borrower in writing. All such remedies are cumulative and may be enforced
separately or concurrently.
In addition to the foregoing remedies, if an Event of default hereunder
shall have occurred and be continuing, Lender shall have the right to cause its
representative or representatives to attend any meeting of borrower's Board of
Directors or any committee thereof. In such case, Borrower shall provide Lender
with the same notice of any such Board or committee meeting that is given to the
members of Borrower's board or committee thereof.
(c) Application of Proceeds. The proceeds of any sale of all or any
part of the Collateral and the proceeds of any remedy afforded to Lender by this
Security Agreement shall be paid to and applied as follows:
First, to the payment of reasonable costs and expenses of suit or
foreclosure, if any, and of the sale, if any, including, without limitation,
refurbishing costs, costs of remarketing and commissions related to remarketing,
all Remedy Expenses, all expenses, liabilities and advances incurred or made
pursuant to this Security Agreement or any Note by Lender in connection with
foreclosure, suit, sale or enforcement of this Security Agreement or the Notes,
and taxes, assessments or liens superior to Lender's security interest granted
by this Security Agreement.
Second, to the payment of all other amounts not described in item Third
below due under this Security Agreement and all Notes;
Third, to pay Lender an amount equal to Lender's Return, to the
extent not previously paid by Borrower; and
Fourth, to the payment of any surplus to Borrower or to whomever may
lawfully be entitled to receive it.
(d) Effect of Delay; Waiver; Foreclosure on Collateral. No delay or
omission of Lender, in exercising any right or power arising from any Event of
Default shall prevent Lender from exercising that right or power if the Event of
Default continues. No waiver of an Event of Default, whether full or partial, by
Lender or such holder shall be taken to extend to any subsequent Event of
Default, or to impair the rights of Lender in respect to any damages suffered as
a result of the Event of Default. The giving, taking or enforcement of any other
or additional security, collateral or guaranty for the payment or discharge of
the Indebtedness and performance of the Obligations shall in no way operate to
prejudice, waive or affect the security interest created by this Security
Agreement or
<PAGE> 13
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any rights, powers or remedies exercised hereunder or thereunder. Lender shall
not be required first to foreclose on the Collateral prior to bringing an action
against borrower for sums owed to Lender under this Security Agreement or under
any Note.
SECTION 11. LATE PAYMENTS.
Borrower shall pay Lender an amount equal to 10% per month of
all amounts owed Lender by Borrower which are not paid when due, but in no event
an amount greater than the highest rate permitted by applicable law. If such
amounts have not been received by Lender at Lender's place of business or by
Lender's designated agent by the date such amounts are due under this Security
Agreement or the Notes, Lender shall bill borrower for such charges. Borrower
acknowledges that invoices for amounts due hereunder or under the Notes are sent
by Lender for Borrower's convenience only. Borrower's non-receipt of any invoice
will not relieve borrower of its obligation to make payments hereunder or under
the Notes.
SECTION 12. PAYMENTS BY LENDER.
If Borrower shall fail to make any payment or perform any act
required hereunder (including, but not limited to, maintenance of any insurance
required by Section 5(e)), then lender may, but shall not be required to, after
such notice to borrower as its reasonable under the circumstances, make such
payment or perform such act wit the same effect as if made or performed by
Borrower. Borrower will upon demand reimburse Lender for all sums paid and all
costs and expenses incurred in connection with the performance of any such act.
SECTION 13. FINANCING STATEMENTS.
Borrower will execute all financing statements pursuant to the
Uniform Commercial Code and all such other documents reasonably requested by
Lender to perfect Lender's security interests hereunder. Borrower authorizes
Lender to file financing statements signed only by Lender (where such
authorization is permitted by law) at all places where Lender deems necessary.
SECTION 14. NATURE OF TRANSACTION.
Lender makes no representation whatsoever, express or implied,
concerning the legal character of the transaction evidenced hereby, for tax or
other purpose.
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SECTION 15. SUSPENSION OF LENDER'S OBLIGATIONS.
The obligations of Lender hereunder will be suspended to the extent
that Lender is hindered or prevented from complying therewith because of labor
disturbances, including but not limited to strikes and lockouts, acts of God,
fires, floods, storms, accidents, industrial unrest, strike, acts of war,
insurrection, riot or civil disorder, any order, decree, law or governmental
regulations or interference, or any cause whatsoever not within the sole and
exclusive control of Lender.
SECTION 16. COMMITMENT FEE.
Borrower has paid to Lender a non-refundable commitment fee ("Fee") of
$1,000. The Fee shall be applied by Lender first to reimburse Lender for
out-of-pocket UCC and other search costs, and all appraisal fees incurred by
Lender, and then proportionally to the first monthly payment for each Note
hereunder in the portion that the Collateral Value for such Note bears to
Lender's entire commitment. Lender shall be responsible for transaction expenses
in excess of such $1,000.
SECTION 17. MISCELLANEOUS.
(a) Borrower shall provide Lender with such corporate resolutions,
financial statements, and other documents as Lender shall reasonably request
from time to time. (b) Borrower represents that the Collateral hereunder is used
solely for business purposes. (c) Time is of the essence with respect to this
Security agreement. (d) All notices hereunder shall be in writing, sent by
registered or certified mail, return receipt requested or by reliable messenger
or delivery service, and shall be directed, as the case may be, to Lender at
2401 Kerner Boulevard, San Rafael, California 94901, Attention:
________________. Such notices shall be effective on receipt if delivered
personally, five days after dispatch if mailed and one business day after
dispatch if sent by courier service. (e) Borrower acknowledges that Borrower has
read this Security Agreement and the Notes, understands them and agrees to be
bound by their terms and further agrees that this Security Agreement and the
Notes constitute the entire agreement between Lender and Borrower with respect
to the subject matter hereof and supersede all previous agreements, promises, or
representations. (f) This Security Agreement and the Notes may not be changed,
altered or modified except by an instrument signed by an officer or authorized
representative of Lender and Borrower. (g) Any failure of Lender to require
strict performance by Borrower or any waiver by Lender of any provision herein
or in a Note shall not be construed as a consent or
<PAGE> 15
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waiver of any other breach of the same or any other provision. (h) If any
provision of this Security Agreement or the Notes until all Obligations of
Borrower to Lender have been met and all liabilities of Borrower to Lender and
any assignee have been paid in full. (j) Borrower will notify Lender at least 30
days before changing its name, principal place of business or chief executive
office. (k) Borrower will, at its expense, promptly execute and deliver to
Lender such documents and assurances (including financing statements) and take
such further action as Lender may reasonably request in order to carry out the
intent of this Security Agreement and Lender's rights and remedies. (1) Borrower
hereby appoints Lender (and each of Lender's officers, employees or agents
designed by Lender), with full power of substitution by Lender, as Borrower's
attorney, with power to execute and deliver on Borrower's behalf financing
statements and other documents necessary to perfect and/or give notice of
Lender's security interest in any of the Collateral.
SECTION 18. JURISDICTION AND WAIVER OF JURY TRIAL.
This Security, Agreement and the Notes shall be governed by and
construed under the laws of the State of California, excluding principles of
conflicts of laws. It is agreed that exclusive jurisdiction and venue for any
legal action between the parties arising out of or relating to this Security
Agreement or a Note shall be in the Superior Court for Marin County, California,
or, in cases where federal diversity jurisdiction is available, in the United
States District Court for the Northern District of California situated in San
Francisco. BORROWER, TO THE EXTENT IT MAY LAWFULLY DO SO, HEREBY WAIVES ITS
RIGHT TO TRIAL BY JURY IN ANY ACTION BROUGHT ON OR WITH RESPECT TO THIS SECURITY
AGREEMENT, ANY NOTE, ANY SECURITY DOCUMENTS, OR ANY OTHER AGREEMENTS EXECUTED IN
CONNECTION HEREWITH.
IN WITNESS WHEREOF, Borrower and Lender have caused this Security Agreement to
be executed as of the date and year first above written.
LEUKOSITE, INC. PHOENIX LEASING INCORPORATED
BORROWER LENDER
By:_______________________________ By:_____________________________________
Its:______________________________ Its:____________________________________
<PAGE> 16
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Headquarters Location:
215 First Street
Cambridge, MA 02142
County of Middlesex
EXHIBITS AND SCHEDULES:
Exhibit A -- Closing Memorandum
<PAGE> 17
EXHIBIT A to
SENIOR LOAN AND SECURITY AGREEMENT NO. 0062
CLOSING MEMORANDUM
1.* Duly executed Senior Loan and Security Agreement.
2. Duly executed Senior Security Promissory Note with Exhibit A
Collateral Description attached.
3. Insurance Certificates reflecting coverage required under Section 5(e)
of the Senior Loan and Security Agreement.
4.* Resolutions of Borrower's Board of Directors.
5. Agreement to Allow Removal of Personal Property.**
6.* UCC-1 Financing Statements and UCC Search(es) (county and state) for all
Equipment Locations showing Lender's filed UCC-1 financing statements
filed against Borrower with no UCC-1 financing statements by other
parties ahead of Lender with respect to the Collateral.
7. UCC Search.
8.* Payment of Commitment Fee.
9. Certificate of Chief Financial Officer stating that (i) there are no
liens, charges, security interests or other encumbrances that may
affect Lender's right, title and interest in the Collateral and there
are no UCC-1 financing statements filed or in the process of being
filed against any of the Collateral, (ii) Borrower is performing
according to Borrower's business plan, (iii) no material adverse
change has occurred in the financial condition of Borrower, (iv) no
default has occurred, and (v) the representations and warranties in
Section 3 of the Senior Loan and Security Agreement are true and
correct as if made on the date of the Loan.
10. Certificate from the Secretary of State of Borrower's state of
incorporation, and from the state in which Borrower's chief executive
office is located, if different, stating the Borrower is in good
standing
<PAGE> 18
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or is authorized to transact business, as the case may be, dated not
more than thirty days prior to the first Loan.*
11.* Borrower's Business Plan.
12. Borrower's most recent financial statements.
13.* Borrower's Pro Forma Financials (Income Statement, Balance Sheet, Cash
Flow) showing monthly detail for the one year period immediately
preceding initial funding.
14. List of proposed Collateral.
15. Purchase documentation verifying Borrower's ownership of equipment.
16. See Section I of the Senior Loan and Security Agreement for additional
conditions to closing.
* First Loan only.
**Required if any Equipment is a fixture, i.e., attached to real property.
<PAGE> 19
CORPORATE RESOLUTION TO BORROW
RESOLVED: That this corporation, LEUKOSITE, INC., borrow funds from Phoenix
Leasing Incorporated, a California corporation, ("Lender') and grant as
collateral for such borrowings such items of personal property and fixtures, and
upon such terms and conditions, as the officer or officers hereinafter
authorized, in their discretion, may deem necessary or advisable; provided,
however, that the aggregate principal amount of borrowings hereunder shall not
exceed the sum of $1,200,000 and together with the amount financed pursuant to
the Lease, shall not exceed the sum of $1,958,000
RESOLVED FURTHER: That:
_________________________ the President ____________________
Print or Type Name Signature
or _________________________ ___________________________ ____________________
Print or Type Name (Title of corporate officer) Signature
the President
of this corporation (this officer or officers authorized to act pursuant hereto
being hereinafter designated as "authorized officers"), are individually
authorized, directed and empowered, in the name of this corporation, to execute
and deliver to Lender, and Lender is requested to accept, any notes, security
agreements, and other documents or agreements that may be required by Lender in
connection with such borrowings.
RESOLVED FURTHER: That the authorized officers are individually authorized,
directed further and empowered, in the name of this corporation, to do or cause
to be done all such convenient acts and things as they shall deem necessary,
advisable, convenient or proper in connection with the execution and delivery of
any such notes, security agreements, and other documents or agreements and in
connection with or incidental to the carrying of the same into effect, including
without Imitator., the execution, acknowledgment, and delivery of all
instruments and documents which may reasonably be required by Lender under or in
connection with any such borrowing.
<PAGE> 20
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RESOLVED FURTHER: That Lender is authorized to act upon these resolutions until
written notice of their revocation is delivered to Lender, and that the
authority hereby granted shall apply with equal force and effect to the
successors in office of the officers herein named.
I, ____________, Secretary of LEUKOSITE, INC., a corporation incorporated
under the laws of the State of Delaware, do hereby certify that the foregoing is
a full, true and correct copy of resolutions of the Board of Directors of the
said corporation, duly and regularly passed or adopted by the Board of Directors
of said corporation as required by law and by the by-laws of the said
corporation on the __ day of 19__.
I further certify that said resolutions are still in full force and effect
and have not been amended or revoked and that the specimen signatures appearing
above are the signatures of the officers authorized to sign for this corporation
by virtue of the said resolutions.
IN WITNESS WHEREOF, I have hereunto set my hand as such Secretary, and
affixed the corporate seal of the said corporation, this __ day of ______, 1997.
AFFIX CORPORATE
SEAL HERE
________________________________________
SECRETARY OF
LEUKOSITE, INC.
a Delaware corporation
<PAGE> 1
Exhibit 10.23
LEUKOSITE, INC.
AMENDED AND RESTATED 1993 STOCK OPTION PLAN
(adopted by the Board of Directors on April 14, 1997, but
effective only upon the later of (i) the ratification
and approval thereof by the stockholders of the
Company and (ii) the closing of the Company's
initial public offering)
This Amended and Restated 1993 Stock Option Plan hereby further amends
and restates the Company's current Amended and Restated 1993 Stock Option Plan,
as heretofore amended, to read in its entirety as follows:
1. Definitions. As used in this Amended and Restated 1993 Stock Option
Plan of LeukoSite, Inc., the following terms shall have the following meanings:
1.1. Awarded Grant Date means the date as of which an Awarded Option is
granted, as determined under Section 7.1.
1.2. Awarded Option means Options granted pursuant to Section 7 hereof.
1.3. Board means the Company's Board of Directors.
1.4 Change in Corporate Control means (1) the time of approval by the
shareholders of the Company of (A) any consolidation or merger of the Company in
which the Company is not the continuing or surviving corporation or pursuant to
which Shares would be converted into cash, securities or other property, other
than a merger in which the holders of Stock immediately prior to the merger will
have the same proportionate ownership of common stock of the surviving
corporation immediately after the merger as before the merger, (B) any sale,
lease, exchange, or other transfer (in one transaction or a series of related
transactions) of all or substantially all the assets of the Company, or (C)
adoption of any plan or proposal for the liquidation or dissolution of the
Company, or (2) the date on which any "person" (as defined in Section 13(d) of
the Exchange Act), other than the Company or a Subsidiary or employee benefit
plan or trust maintained by the Company or any of its Subsidiaries shall become
(together with its "affiliates" and "associates," as defined in Rule 12b-2 under
the Exchange Act) the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of more than 25% of the Stock outstanding
at the time, without the prior approval of the Board of Directors of the
Company.
1.5. Code means the federal Internal Revenue Code of 1986, as amended.
<PAGE> 2
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1.6. Committee means a committee comprised of two or more Outside
Directors, appointed by the Board of Directors, responsible for the
administration of the Plan, as provided in Section 5; provided, that the Board
of Directors itself may at any time, in its sole discretion, exercise any or all
functions and authority of the Committee.
1.7. Company means LeukoSite, Inc., a Delaware corporation.
1.8. Exchange Act means the Securities Exchange Act of 1934, as
amended.
1.9. Eligible Director means a director of one or more of the Company
and its Subsidiaries who is not also an employee or officer of one or more of
the Company and its Subsidiaries.
1.10. Fair Market Value means on any date (i) if the Stock is traded on
a stock exchange or on the Nasdaq National Market, the closing price on the date
in question or, if no trades were reported on such date, the closing price on
the most recent trading day preceding such date on which a trade occurred, and
(ii) if the Stock is not traded on a stock exchange or on the Nasdaq National
Market, the value of a Share on such date as determined by the Committee.
1.11. Formula Grant means the grant of a Formula Option.
1.12. Formula Grant Date shall have the meaning specified in Section
8.1 hereof.
1.13. Formula Options means Options granted pursuant to Section 8
hereof.
1.14. Holder means, with respect to any Option, (i) the Optionee to
whom such Option shall have been granted under the Plan, or (ii) any transferee
of such Option to whom such Option shall have been transferred in accordance
with the provisions of Section 14.
1.15. Incentive Option means an Awarded Option which by its terms is to
be treated as an "incentive stock option" within the meaning of Section 422 of
the Code.
1.16. Nonstatutory Option means any Option that is not an Incentive
Option.
1.17. Option means an Awarded Option or Formula Option granted under
the Plan to purchase Shares.
<PAGE> 3
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1.18. Option Agreement means an agreement between the Company and an
Optionee, setting forth the terms and conditions of an Option.
1.19. Option Price means the price paid by an Optionee for a Share upon
exercise of an Option.
1.20. Optionee means a person eligible to receive an Option, as
provided in Section 6, to whom an Option shall have been granted under the Plan.
1.21. Outside Director shall mean a member of the Board who is not an
officer, employee or consultant of the Company or any Subsidiary.
1.22. Plan means this Amended and Restated 1993 Stock Option Plan of
the Company, as amended from time to time.
1.23. Retirement means, with respect to any Optionee that is an
employee or director of the Company, the voluntary retirement of such Optionee
as an employee and/or director, as the case may be, of the Company at any time
after age 65 or such earlier age as the Committee shall determine.
1.24. Securities Act means the Securities Act of 1933, as amended.
1.25. Shares means shares of Stock.
1.26. Stock means common stock, $.01 par value per share, of the
Company.
1.27. Subsidiary means any corporation which qualifies as a subsidiary
of the Company under the definition of "subsidiary corporation" in Section
424(f) of the Code.
1.28. Ten Percent Owner means a person who owns, or is deemed within
the meaning of Section 422(b)(6) of the Code to own, stock possessing more than
10% of the total combined voting power of all classes of stock of the Company
(or its parent or Subsidiaries). Whether a person is a Ten Percent Owner shall
be determined with respect to each Incentive Option based on the facts existing
immediately prior to the applicable grant date thereof.
1.29. Vesting Year for any portion of any Incentive Option means the
calendar year in which that portion of the Incentive Option first becomes
exercisable.
2. Purpose. This Plan is intended to encourage ownership of Stock by
officers, employees and directors of and consultants to the Company and its
Subsidiaries and to provide additional incentives for them to promote the
<PAGE> 4
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success of the Company's business. The Plan is intended to be an incentive stock
option plan within the meaning of Section 422 of the Code but not all Options
granted hereunder are required to be Incentive Options.
3. Term of the Plan. Options may be granted hereunder at any time in
the period commencing upon the effectiveness of the Plan pursuant to Section 21
and ending on September 10, 2003.
4. Stock Subject to the Plan. Subject to the provisions of Section 15
of the Plan, at no time shall the number of Shares then outstanding which are
attributable to the exercise of Options granted under the Plan, plus the number
of Shares then issuable upon exercise of outstanding Options granted under the
Plan exceed 1,500,000 Shares. Shares to be issued upon the exercise of Options
granted under the Plan may be either authorized but unissued Shares or Shares
held by the Company in its treasury. If any Option expires or terminates for any
reason without having been exercised in full, the Shares not purchased
thereunder shall again be available for Options thereafter to be granted.
5. Administration. The Plan shall be administered by the Committee.
Subject to the provisions of the Plan, the Committee shall have complete
authority, in its discretion, to make or to select the manner of making the
following determinations with respect to each Awarded Option to be granted by
the Company: (a) the officer, employee or consultant to receive such Awarded
Option; (b) whether the Awarded Option (if granted to an employee) will be an
Incentive Option or Nonstatutory Option; (c) the time of granting the Awarded
Option; (d) the number of Shares subject to the Awarded Option; (e) the Option
Price; (f) the option period; (g) the exercise date or dates or, if the Awarded
Option is immediately exercisable in full on its grant date, the vesting
schedule, if any, applicable to the Shares issuable upon the exercise of the
Awarded Option; (h) the effect of termination of employment, consulting or
association with the Company on the subsequent exercisability of the Awarded
Option; and (i) if the Awarded Option is a Nonstatutory Option, whether such
Nonstatutory Option may be transferred by the Holder to a third party. Subject
to the provisions of the Plan, the Committee shall have complete authority, in
its discretion, to determine whether any Formula Option may be transferred by
the Holder to a third party. In making such determinations, the Committee may
take into account the nature of the services rendered by the respective
officers, employees and consultants, their present and potential contributions
to the success of the Company and its Subsidiaries, and such other factors as
the Committee in its discretion shall deem relevant. Subject to the provisions
of the Plan, the Committee shall also have complete authority to interpret the
Plan, to prescribe, amend and rescind rules and regulations relating to it, to
determine the terms and provisions of the respective Option Agreements (which
need not be identical), and to make all other determinations necessary or
advisable for
<PAGE> 5
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the administration of the Plan. The Committee's determinations on the matters
referred to in this Section 5 shall be conclusive.
6. Eligibility. An Awarded Option may be granted only to an employee or
officer of or consultant to one or more of the Company and its Subsidiaries,
provided that Incentive Options may be granted only to an employee (including an
officer that is an employee) of the Company or one or more of its Subsidiaries.
Each Eligible Director shall receive Formula Options pursuant to Section 8
hereof. Eligible Directors may not be granted Awarded Options in their
capacities as directors of the Company, but those Eligible Directors that are
also consultants to the Company may be granted Awarded Options in their
capacities as consultants. Subject to adjustment pursuant to Section 15 hereof,
no person in any year may be granted Options with respect to more than 500,000
Shares.
7. Awarded Options.
7.1. Time of Granting Awarded Options. The granting of an Awarded
Option shall take place at the time specified by the Committee. Only if
expressly so provided by the Committee, shall the Awarded Grant Date be the date
on which an Option Agreement shall have been duly executed and delivered by the
Company and the Optionee.
7.2. Option Price. The Option Price under each Awarded Option shall be
determined by the Committee but, in the case of any Incentive Option, shall be
not less than 100% of the Fair Market Value of Stock on the Awarded Grant Date,
or not less than 110% of the Fair Market Value of Stock on the Awarded Grant
Date if the Optionee is a Ten Percent Owner. The Option Price under each
Nonstatutory Option shall not be so limited solely by reason of this Section
7.2.
7.3. Awarded Option Period. No Incentive Option may be exercised later
than the tenth (10th) anniversary of the Awarded Grant Date but in any case not
later than the fifth (5th) anniversary of the Awarded Grant Date if the Optionee
is a Ten Percent Owner. The option period under each Nonstatutory Option shall
not be so limited solely by reason of this Section 7.3.
7.4. Vesting. An Awarded Option may become exercisable in such
installments, cumulative or non-cumulative, as the Committee may determine. In
the case of an Awarded Option not otherwise immediately exercisable in full, the
Committee may accelerate the exercisability of such Awarded Option in whole or
in part at any time, provided the acceleration of the exercisability of any
Incentive Option would not cause the Awarded Option to fail to comply with the
provisions of Section 422 of the Code.
<PAGE> 6
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7.5. Limit on Incentive Option Characterization. No Incentive Option
shall be considered an Incentive Option to the extent pursuant to its terms it
would permit the Optionee to purchase for the first time in any Vesting Year
under that Incentive Option more than the number of Shares calculated by
dividing the current limit by the Option Price. The current limit for any
Optionee for any Vesting Year shall be $100,000 minus the aggregate Fair Market
Value (determined as of the respective Awarded Grant Dates) of the number of
Shares available for purchase for the first time in the Vesting Year under each
other Incentive Option granted to the Optionee under the Plan and each other
incentive stock option granted to the Optionee after December 31, 1986 under any
other incentive stock option plan of the Company (and any parent corporation and
Subsidiaries). Any Shares subject to an Incentive Option in excess of the
foregoing limitation shall be treated as if granted under a Nonstatutory Option
with otherwise identical terms.
8. Formula Options.
8.1. Annual Formula Grants. Subject to the Plan's effectiveness as set
forth in Section 21, on the date of each annual meeting of stockholders of the
Company commencing with the 1998 Annual Meeting of Stockholders of the Company,
each Eligible Director who continues to be a director of the Company on the
business day immediately following such annual meeting of stockholders shall be
granted a Nonstatutory Option on such business day (also referred to as a
"Formula Grant Date"), to purchase 2,000 Shares; provided, however, that each
Eligible Director who, prior to the consummation of the Company's proposed
initial public offering, is granted options that become exercisable in
installments pursuant to a vesting schedule (the "Pre-IPO Vesting Options"),
shall not be eligible to receive grants of Nonstatutory Options pursuant to this
Section 8 until all of such Pre-IPO Vesting Options become fully exercisable for
all of the option shares subject thereto, and thereafter such Eligible Director
shall become eligible to receive grants of Nonstatutory Options pursuant to, and
in accordance with, all of the terms and conditions of this Section 8. Grants of
Formula Options under this Section 8.1 occur automatically without any action
being required of the Optionee, the Committee, the Board of Directors, the
Company or any other person, entity or body.
8.2. Certain Terms of Formula Options. Each Formula Option granted to
an Optionee under this Section 8 shall have an exercise price equal to 100% of
the Fair Market Value of the Stock on the applicable Formula Grant Date. No
Formula Option granted pursuant to this Section 8 is intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code. The
Formula Grants shall be evidenced by Option Agreements containing provisions
that are in all respects consistent with this Section 8. All of such Option
Agreements shall contain identical terms and conditions, except as otherwise
required or permitted by this Section 8.
<PAGE> 7
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8.3. Option Period. The option period for any Formula Option granted
pursuant to this Section 8 shall be ten years from the date of grant.
8.4. Exercisability. Each Formula Option granted to an Eligible
Director pursuant to Section 8.1 hereof (a "Section 8.1 Formula Option") shall
become exercisable in four (4) equal installments, with the first installment
becoming exercisable on the last day of the first full fiscal quarter following
the Formula Grant Date applicable to such Section 8.1 Formula Option and an
additional installment becoming exercisable on the last day of each of the three
successive fiscal quarters following such first fiscal quarter; provided,
however, that if the Optionee with respect to such Section 8.1 Formula Option
shall cease to be a director of the Company and each of its Subsidiaries, then,
notwithstanding anything in this Section 8.4 to the contrary and subject to
Sections 8.5 and 13 hereof, such Section 8.1 Formula Option shall thereafter be
exercisable only with respect to those of such installments for which such
Section 8.1 Formula Option is exercisable, pursuant to this Section 8.4, at the
time of such cessation.
8.5. Certain Modifications of Formula Options. Notwithstanding anything
in this Section 8 or any applicable Option Agreement to the contrary, the Board
or any committee of two or more Outside Directors that are disinterested in the
matter may (i) accelerate the exercisability of any Formula Option in whole or
in part at any time or (ii) determine and alter at any time the effect that the
termination of any Optionee's position as a director of the Company shall have
on the exercisability of any Formula Option held by a Holder.
9. Exercise of Option.
(a) An Option may be exercised only by giving written notice,
in the manner provided in Section 20 hereof, specifying the number of Shares as
to which the Option is being exercised, accompanied (except as otherwise
provided in paragraph (b) of this Section 9) by full payment for such Shares in
the form of a check or bank draft payable to the order of the Company or other
Shares with a current Fair Market Value equal to the Option Price of the Shares
to be purchased. Receipt by the Company of such notice and payment shall
constitute the exercise of the Option or a part thereof. Subject to the
provisions of the Plan (including, without limitation, Sections 10, 11 and 12)
or any applicable Option Agreement, within 30 days after receipt of such notice
and payment, the Company shall deliver or cause to be delivered to the Holder a
certificate or certificates for the number of Shares then being purchased by the
Holder. Such Shares shall be fully paid and nonassessable. If such Shares are
not at that time effectively registered under the Securities Act, the Holder
shall include with such notice a letter, in form and substance satisfactory to
the Company,
<PAGE> 8
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confirming that such Shares are being purchased for the Holder's own account for
investment and not with a view to distribution.
(b) In lieu of payment by check, bank draft or other Shares
accompanying the written notice of exercise as described in paragraph (a) of
this Section 9, a Holder may, unless prohibited by applicable law, elect to
effect payment by including with the written notice referred to in paragraph (a)
of this Section 9 irrevocable instructions to deliver for sale to a registered
securities broker acceptable to the Company that number of Shares subject to the
Option being exercised sufficient, after brokerage commissions, to cover the
aggregate exercise price of such Option and, if the Holder further elects, the
withholding obligations of the Optionee and/or such Holder pursuant to Section
12 with respect to such exercise, together with irrevocable instructions to such
broker to sell such Shares and to remit directly to the Company such aggregate
exercise price and, if the Holder has so elected, the amount of such withholding
obligation. The Company shall not be required to deliver to such securities
broker any stock certificate for such Shares until it has received from the
broker such exercise price and, if the Holder has so elected, the amount of such
withholding obligation.
(c) The right of the Holder to exercise an Option pursuant to
any provision of this Section 9, and the obligation of the Company to issue
Shares upon any exercise of an Option pursuant to this Section 9, is subject to
compliance with all of the other provisions of the Plan (including, without
limitation, Sections 10, 11 and 12) or any applicable Option Agreement.
10. Restrictions on Issue of Shares.
(a) Notwithstanding any other provision of the Plan, if, at
any time, in the reasonable opinion of the Company the issuance of Shares
covered by the exercise of any Option may constitute a violation of law, then
the Company may delay such issuance and the delivery of a certificate for such
Shares until (i) approval shall have been obtained from such governmental
agencies, other than the Securities and Exchange Commission, as may be required
under any applicable law, rule, or regulation; and (ii) in the case where such
issuance would constitute a violation of a law administered by or a regulation
of the Securities and Exchange Commission, one of the following conditions shall
have been satisfied:
(1) the Shares with respect to which such Option has been exercised are
at the time of the issue of such Shares effectively registered under the
Securities Act; or
<PAGE> 9
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(2) a no-action letter in form and substance reasonably satisfactory to
the Company with respect to the issuance of such Shares shall have been obtained
by the Company from the Securities and Exchange Commission.
The Company shall make all reasonable efforts to bring about the occurrence of
said events.
(b) Each certificate representing Shares issued upon the
exercise of an Option will bear restrictive legends which may refer to this
Plan.
11. Purchase for Investment; Subsequent Registration.
(a) Without limiting the generality of Section 10 hereof, if
the Shares to be issued upon exercise of an Option granted under the Plan have
not been effectively registered under the Securities Act, the Company shall be
under no obligation to issue any Shares covered by any Option unless the person
who exercises such Option, in whole or in part, shall give a written
representation to the Company which is satisfactory in form and substance to its
counsel and upon which the Company may reasonably rely, that he or she is
acquiring the Shares issued pursuant to such exercise of the Option as an
investment and not with a view to, or for sale in connection with, the
distribution of any such Shares.
(b) Each Share issued pursuant to the exercise of an Option
granted pursuant to this Plan may bear a reference to the investment
representation made in accordance with this Section 11 and to the fact that no
registration statement has been filed with the Securities and Exchange
Commission in respect to said Stock.
(c) If the Company shall deem it necessary or desirable to
register under the Securities Act or other applicable statutes any Shares with
respect to which an Option shall have been granted, or to qualify any such
Shares for exemption from the Securities Act or other applicable statutes, then
the Company shall take such action at its own expense. The Company may require
from each Option holder, or each holder of Shares acquired pursuant to the Plan,
such information in writing for use in any registration statement, prospectus,
preliminary prospectus or offering circular as is reasonably necessary for such
purpose and may require reasonable indemnity to the Company and its officers and
directors from such holder against all losses, claims, damage and liabilities
arising from such use of the information so furnished and caused by any untrue
statement of any material fact therein or caused by the omission to state a
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.
<PAGE> 10
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12. Withholding; Notice of Disposition of Stock Prior to Expiration of
Specified Holding Period.
(a) Whenever Shares are to be issued in satisfaction of an
Option granted hereunder, the Company shall have the right to require the
Optionee and/or any subsequent Holder to remit to the Company an amount
sufficient to satisfy federal, state, local, employment or other tax withholding
requirements if and to the extent required by law (whether so required to secure
for the Company an otherwise available tax deduction or otherwise) prior to the
delivery of any certificate or certificates for such Shares.
(b) The Company may require as a condition to the issuance of
Shares covered by any Incentive Option that the party exercising such Option
give a written representation to the Company which is satisfactory in form and
substance to its counsel and upon which the Company may reasonably rely, that he
or she will report to the Company any disposition of such Shares prior to the
expiration of the holding periods specified by Section 422(a)(1) of the Code. If
and to the extent that the realization of income in such a disposition imposes
upon the Company federal, state, local or other withholding tax requirements, or
any such withholding is required to secure for the Company an otherwise
available tax deduction, the Company shall have the right to require that the
recipient remit to the Company an amount sufficient to satisfy those
requirements; and the Company may require as a condition to the issuance of
Shares covered by an Incentive Option that the party exercising such Incentive
Option give a satisfactory written representation promising to make such a
remittance.
(c) The Committee may, at or after grant, permit an Optionee
and/or subsequent Holder to satisfy any tax withholding requirements pertaining
to the exercise of an Option by delivery to the Company of Shares (including,
without limitation, Shares retained from the Option exercise that is creating
the tax obligation) having a value equal to the amount to be withheld. The value
of Shares to be so delivered shall be based on the Committee's determination of
the Fair Market Value of a Share on the date the amount of tax to be withheld is
to be determined.
13. Termination of Association with the Company. If an Optionee ceases
to be an employee, director or consultant of the Company and its Subsidiaries
for any reason other than Retirement or death of such Optionee, any Option held
by such Optionee and/or any subsequent Holder may be exercised by such Optionee
and/or such subsequent Holder at any time within 90 days after the termination
of such relationship, but only to the extent exercisable at termination and in
no event after the applicable option period. If an Optionee enters Retirement or
dies, any Option held by such Optionee and/or any subsequent Holder may be
exercised by such Optionee, such subsequent
<PAGE> 11
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Holder and/or the executor or administrator of such Optionee or such subsequent
Holder at any time within the shorter of the applicable option period or 12
months after the date of the Optionee's Retirement or death, but only to the
extent exercisable at the time of such Optionee's Retirement or death. Options
which are not exercisable at the time of termination of such relationship
between the Company and the Optionee or which are so exercisable but are not
exercised within the time periods described above shall terminate.
Notwithstanding the foregoing, in the event that (i) the applicable Option
Agreement with respect to an Option shall contain specific provisions governing
the effect that any such termination shall have on the exercisability of such
Option or (ii) the Board, the Committee or any other committee of the Board
composed of Outside Directors that are disinterested on the matter, as
appropriate, shall at any time adopt specific provisions governing the effect
that any such termination shall have on the exercisability of such Option, then
such provisions shall, to the extent that they are inconsistent with the
provisions of this Section 13, control and be deemed to supersede the provisions
of this Section 13. For purposes of this Section 13, military or sick leave
shall not be deemed a termination of employment, provided that it does not
exceed the longer of 90 days or the period during which the absent Optionee's
reemployment rights, if any, are guaranteed by statute or by contract.
14. Transferability of Options. Incentive Options shall not be
transferable, otherwise than by will or the laws of descent and distribution,
and may be exercised during the life of the Optionee only by the Optionee.
Nonstatutory Options shall not be transferable; provided, however, that
Nonstatutory Options shall be transferable by will or the laws of descent and
distribution; and provided, further, that Nonstatutory Options may be
transferred to a third party if and to the extent authorized and permitted by
the Compensation Committee. In granting its authorization and permission to any
proposed transfer of a Nonstatutory Option to a third party, the Compensation
Committee may impose conditions or requirements that must be satisfied by the
transferor or the third party transferee prior to or in connection with such
transfer, including, without limitation, any conditions or requirements that may
be necessary or desirable, in the sole and absolute discretion of the Committee,
to ensure that such proposed transfer complies with applicable securities laws
or to prevent the Company, such transferor or such third party transferee from
violating or otherwise not be in compliance with applicable securities laws as a
result of such transfer. For purposes of this Section 14, the term Nonstatutory
Option shall include an Option that was an Incentive Option at the time of
grant, but that has been subsequently been disqualified or otherwise lost its
status as an Incentive Option. The restrictions on transferability set forth in
this Section 14 shall in no way preclude any Holder from effecting "cashless"
exercises of an Option pursuant to, and in accordance with, Section 9(b) hereof.
<PAGE> 12
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15. Adjustment of Number of Option Shares. In the event of any stock
dividend payable in Stock or any split-up or contraction in the number of Shares
prior to the exercise in full of an Option, the number of Shares subject to the
Option and the price to be paid for each Share subject to the Option shall be
proportionately adjusted. In the event of any reclassification or change of
outstanding Stock or in case of any consolidation or merger of the Company with
or into another company or in case of any sale or conveyance to another company
or entity of the property of the Company as a whole or substantially as a whole,
shares of stock or other securities equivalent in kind and value to those shares
a Holder would have received if he or she had held the full number of Shares
subject to the Option immediately prior to such reclassification, change,
consolidation, merger, sale or conveyance and had continued to hold those shares
(together with all other shares, stock and securities thereafter issued in
respect thereof) to the time of the exercise of the Option shall thereupon be
subject to the Option. Upon dissolution or liquidation of the Company, the
Option shall terminate, but the Holder (if at the time the Optionee is in the
employ or retained as a consultant or serving as a director of the Company or
any of its Subsidiaries) shall have the right, immediately prior to such
dissolution or liquidation, to exercise the Option to the extent not theretofore
exercised. No fraction of a share shall be purchasable or deliverable upon
exercise, but in the event that any adjustment hereunder of the number of Shares
covered by the Option shall cause such number to include a fraction of a Share,
such number of Shares shall be adjusted to the nearest smaller whole number of
shares. In the event of changes in the outstanding Stock by reason of any stock
dividend, split-up, contraction, reclassification, or change of outstanding
Shares of the nature contemplated by this Section 15, the number of Shares
available for the purpose of the Plan as stated in Section 4 hereof shall be
correspondingly adjusted.
16. Change in Corporate Control. Upon a Change in Corporate Control,
each outstanding Option shall immediately become fully exercisable.
17. Reservation of Stock. The Company shall at all times during the
term of the Plan and, without duplication, of any outstanding Options reserve or
otherwise keep available such number of Shares as will be sufficient to satisfy
the requirements of the Plan (if not then terminated) and such outstanding
Options and shall pay all fees and expenses necessarily incurred by the Company
in connection therewith.
18. Limitation of Rights in Stock; No Special Employment or Other
Rights. A Holder shall not be deemed for any purpose to be a stockholder of the
Company with respect to any of the Shares covered by an Option, except to the
extent that the Option shall have been exercised with respect thereto and, in
addition, a certificate shall have been issued therefor and delivered to the
Holder or his agent. Any Stock issued pursuant to the Option shall be subject to
<PAGE> 13
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all restrictions upon the transfer thereof which may be now or hereafter imposed
by the Certificate of Incorporation, and the By-laws of the Company, if any.
Nothing contained in the Plan or in any Option shall confer upon any Optionee
any right with respect to the continuation of his or her employment with, or
retention as a consultant, director or advisor to, the Company (or any
Subsidiary), or interfere in any way with the right of the Company (or any
Subsidiary), subject to the terms of any separate employment or consulting
agreement or provision of law or corporate articles or by-laws to the contrary,
at any time to terminate such employment, consulting, directorship or advisory
relationship or to increase or decrease the compensation of the Optionee from
the rate in existence at the time of the grant of an Option.
19. Termination and Amendment of the Plan. The Board may at any time
terminate the Plan or make such modifications of the Plan as it shall deem
advisable. No termination or amendment of the Plan may, without the consent of
the Holder of any Option, adversely affect the rights of such Holder under such
Option.
20. Notices and Other Communications. All notices and other
communications required or permitted under the Plan shall be effective if in
writing and if delivered or sent by certified or registered mail, return receipt
requested (a) if to the Holder, at his or her residence address last filed with
the Company, and (b) if to the Company, at 215 First Street, Cambridge,
Massachusetts 02142, Attention: President or to such other persons or addresses
as the Holder or the Company may specify by a written notice to the other from
time to time. Copies of all notices sent to any Holder that is not the Optionee
shall also be sent to the Optionee in the manner set forth in this Section 20.
21. Effectiveness. This Amended and Restated 1993 Stock Option Plan was
adopted and approved by the Board of Directors on April 14, 1997, but shall not
become effective until and unless the later of (i) the ratification and approval
of this Amended and Restated 1993 Stock Option Plan by the stockholders of the
Company and (ii) the consummation of the Company's proposed initial public
offering. Prior to the effectiveness of this Amended and Restated 1993 Stock
Option Plan, the Company's 1993 Stock Option Plan, as amended from time to time
prior to the effectiveness of this Amended and Restated 1993 Stock Option Plan,
shall remain in full force and effect.
<PAGE> 1
EXHIBIT 10.24
LEUKOSITE, INC.
1997 EMPLOYEE STOCK PURCHASE PLAN
1. Definitions. As used in this 1997 Employee Stock Purchase Plan of
LeukoSite, Inc., the following terms shall have the meanings respectively
assigned to them below:
(a) Base Compensation means annual or annualized base compensation,
exclusive of overtime, bonuses, contributions to employee benefit plans, or
other fringe benefits.
(b) Beneficiary means the person designated as the Participating
Employees' beneficiary on the Participating Employee's Membership Agreement or
other form provided by the personnel department of the Company for such purpose
or, if no such beneficiary is named, the person to whom the Option is
transferred by will or under the applicable laws of descent and distribution.
(c) Board means the board of directors of the Company, except that, if
and so long as the board of directors of the Company has delegated pursuant to
Section 4 its authority with respect to the Plan to the Committee, then all
references in this Plan to the Board shall refer to the Committee acting in such
capacity.
(d) Code means the Internal Revenue Code of 1986, as amended.
(e) Committee means the Compensation Committee of the Board.
(f) Company means LeukoSite, Inc., a Delaware corporation.
(g) Disability means, with respect to any Participating Employee, that
an independent medical doctor (selected by the Company's health or disability
insurer) certifies that such Participating Employee has for four (4) months,
consecutive or non-consecutive, in any twelve-month period been disabled in a
manner which seriously interferes with the performance of his or her
responsibilities for the Company or applicable Related Corporation.
(h) Eligible Employee means a person who is eligible under the
provisions of Section 7 to receive an Option as of a particular Offering
Commencement Date.
<PAGE> 2
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(i) Employer means, as to any particular Offering Period, the Company
and any Related Corporation which is designated by the Board as a corporation
whose Eligible Employees are to receive Options as of that Offering Period's
Offering Commencement Date.
(j) Financial Hardship means, with respect to any Participating
Employee, an immediate and heavy financial need, as determined by the Board in
accordance with Section 9.3(c), arising out of (a) medical expenses incurred by
the Participating Employee or his or her spouse or dependents; (b) any
Disability of the Participating Employee; (c) the purchase (excluding mortgage
payments) of a principal residence of the Participating Employee; or (d) the
need to prevent the eviction of the Participating Employee from his or her
principal place of residence or the foreclosure on the mortgage on such
residence.
(k) Market Value means, as of a particular date, (i) if the Stock is
listed on an exchange, the closing price of the Stock on such date on such
exchange, (ii) if the Stock is quoted through the National Association of
Securities Dealers, Inc. Automated Quotation ("NASDAQ") National Market System
or any successor thereto, the closing price of the Stock on such date and (iii)
if the Stock is quoted through NASDAQ (but not on the National Market System) or
otherwise publicly traded, the average of the closing bid and asked prices of
the Stock on such date.
(l) Membership Agreement means an agreement whereby a Participating
Employee authorizes an Employer to withhold payroll deductions from his or her
Base Compensation.
(m) Offering Commencement Date means the first business day of an
Offering Period on which Options are granted to Eligible Employees.
(n) Offering Period means an annual period, running from January 1 to
December 31 of such year, during which Options will be offered under the Plan
pursuant to a determination by the Board.
(o) Offering Termination Date means the last business day of an
Offering Period, on which Options must, if ever, be exercised.
(p) Option means an option to purchase shares of Stock granted under
the Plan.
(q) Option Shares means shares of Stock purchasable under an Option.
(r) Participating Employee means an Eligible Employee to whom an Option
is granted.
<PAGE> 3
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(s) Plan means this 1997 Employee Stock Purchase Plan of the Company,
as amended from time to time.
(t) Related Corporation means any corporation which is or during the
term of the Plan becomes a parent corporation of the Company, as defined in
Section 424(e) of the Code, or a subsidiary corporation of the Company, as
defined in Section 424(f) of the Code.
(u) Retires means termination of employment with the Company and all
Related Corporations at or after attaining age 65.
(v) Stock means the common stock, par value $0.01 per share, of the
Company.
2. Purpose of the Plan. The Plan is intended to encourage ownership of
Stock by employees of the Company and any Related Corporations and to provide an
additional incentive for the employees to promote the success of the business of
the Company and any Related Corporations. It is intended that the Plan shall be
an "employee stock purchase plan" within the meaning of Section 423 of the Code.
3. Term of the Plan. The Plan shall become effective on the date of the
closing of the Company's initial public offering of Common Stock (the "Effective
Date"). No Option shall be granted under the Plan after the date immediately
preceding the tenth anniversary of the Effective Date.
4. Administration of the Plan. The Plan shall be administered by the
Board. The Board shall determine annually, on or before December 15, whether to
grant options under the Plan with respect to the Offering Period which would
otherwise begin as of the first following January 1. The Board shall determine
which (if any) Related Corporations shall be Employers as of each Offering
Commencement Date. Either such determination may in the discretion of the Board
apply to all subsequent Offering Periods until modified or revoked by the Board.
The Board shall have authority to interpret the Plan, to prescribe, amend and
rescind rules and regulations relating to the Plan, to determine the terms of
Options granted under the Plan, and to make all other determinations necessary
or advisable for the administration of the Plan. All determinations of the Board
under the Plan shall be final and binding as to all persons having or claiming
any interest in or arising out of the Plan. The Board may delegate all or any
portion of its authority with respect to the Plan to the Committee, and
thereafter, until such delegation is revoked by the Board, all powers under the
Plan delegated to the Committee shall be exercised by the Committee.
5. Termination and Amendment of Plan. The Board may terminate or amend
the Plan at any time; provided, however, that the Board may not, without
<PAGE> 4
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approval by the holders of a majority of the outstanding shares of Stock,
increase the maximum number of shares of Stock purchasable under the Plan or
change the description of employees or classes of employees eligible to receive
Options. Without limiting the generality of the foregoing but subject to the
foregoing proviso, the Board may amend the Plan from time to time to increase or
decrease the length of any future Offering Periods (e.g., to a nine month
period) and to make all required conforming changes to the Plan. No termination
of or amendment to the Plan may adversely affect the rights of a Participating
Employee with respect to any Option held by the Participating Employee as of the
date of such termination or amendment without his or her consent.
6. Shares of Stock Subject to the Plan. No more than an aggregate of
150,000 shares of Stock may be issued or delivered pursuant to the exercise of
Options granted under the Plan, subject to adjustments made in accordance with
Section 9.7. Shares to be delivered upon the exercise of Options may be either
shares of Stock which are authorized but unissued or shares of Stock held by the
Company in its treasury. If an Option expires or terminates for any reason
without having been exercised in full, the unpurchased shares subject to the
Option shall become available for other Options granted under the Plan. The
Company shall, at all times during which Options are outstanding, reserve and
keep available shares of Stock sufficient to satisfy such Options (or, if less,
the maximum number still available for issuance under the foregoing limit), and
shall pay all fees and expenses incurred by the Company in connection therewith.
In the event of any capital change in the outstanding Stock as contemplated by
Section 9.7, the number of shares of Stock reserved and kept available by the
Company shall be appropriately adjusted.
7. Persons Eligible to Receive Options. Each employee of an Employer
shall be granted an Option on each Offering Commencement Date on which such
employee meets all of the following requirements:
(a) The employee is customarily employed by an Employer for more than
twenty hours per week and for more than five months per calendar year and, in
the case of any Offering Period after the first Offering Period under the Plan,
has been employed by one or more of the Employers for at least one month prior
to the applicable Offering Commencement Date.
(b) The employee will not, after grant of the Option, own Stock
possessing five percent or more of the total combined voting power or value of
all classes of stock of the Company or of any Related Corporation. For purposes
of this paragraph (b), the rules of Section 424(d) of the Code shall apply in
determining the Stock ownership of the employee, and Stock which the employee
<PAGE> 5
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may purchase under outstanding options shall be treated as Stock owned by the
employee.
(c) Upon grant of the Option, the employee's rights to purchase Stock
under all employee stock purchase plans (as defined in Section 423(b) of the
Code) of the Company and its Related Corporations will not accrue at a rate
which exceeds $10,000 of fair market value of the Stock (determined as of the
grant date) for each calendar year in which such option is outstanding at any
time. The accrual of rights to purchase Stock shall be determined in accordance
with Section 423(b)(8) of the Code.
8. Offering Commencement Dates. Options shall be granted on the first
business day of each annual period, running from January 1 to December 31 of
such year, which is designated by the Board as an Offering Period.
9. Terms and Conditions of Options.
9.1 General. All Options granted on a particular Offering Commencement
Date shall comply with the terms and conditions set forth in Sections 9.2
through 9.11. Subject to Sections 7(c) and 9.9, each Option granted on a
particular Offering Commencement Date shall entitle the Participating Employee
to purchase that number of shares equal to the result of $10,000 (or such lesser
amount as is selected by the Board, prior to the applicable Offering
Commencement Date, and applied uniformly during such Offering Period) divided by
the Market Value of one such share on the Offering Commencement Date and then
rounded down, if necessary, to the nearest whole number.
9.2 Purchase Price. The purchase price of Option Shares shall be 85% of
the lesser of (a) the Market Value of the shares as of the Offering Commencement
Date or (b) the Market Value of the shares as of the Offering Termination Date.
9.3 Restrictions on Transfer.
(a) Options may not be transferred otherwise than by will or under the
laws of descent and distribution. An Option may not be exercised by anyone other
than the Participating Employee during the lifetime of the Participating
Employee.
(b) Option Shares may not be assigned, transferred, pledged or
otherwise disposed of until after the first anniversary of the Offering
Termination Date on which acquired, but thereafter may be sold or otherwise
transferred without restriction; provided that the foregoing restrictions will
lapse with respect to any Participating Employee (i) in the event of the death
of such Participating Employee or (ii) the termination of such Participating
<PAGE> 6
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Employee's employment with all Employers for any reason and in any
circumstances. In addition, the Board shall, on written request of a
Participating Employee (a "Hardship Request"), release all or part of the
Participating Employee's Option Shares from the foregoing restrictions on
transfer to the extent (as determined in the applicable Hardship Request), but
only to the extent, such Option Shares are necessary to relieve a Financial
Hardship.
(c) The Board shall be entitled to make inquiries of the applicable
Participating Employee to verify the facts set forth in the applicable Hardship
Request. Whether an event constitutes a Financial Hardship, and if so the total
value of Option Shares the Participating Employee would need to liquidate to
relieve such Financial Hardship, shall be determined by the Board on the basis
of the Hardship Request and any other facts and circumstances considered
relevant by the Board and in a nondiscriminatory fashion, so that similarly
situated Participating Employees are treated similarly.
(d) The Optionee shall agree in the Membership Agreement to notify the
Company of any transfer of Option Shares within two years of the Offering
Commencement Date for such Option Shares. The Company shall have the right to
place a legend on all stock certificates representing Option Shares instructing
the transfer agent to notify the Company of any transfer of such Option Shares.
The Company shall also have the right to place a legend on all stock
certificates representing Option Shares setting forth or referring to the
restriction on transferability of such Option Shares.
9.4 Expiration. Each Option shall expire at the close of business on
the Offering Termination Date or on such earlier date as may result from the
operation of Section 9.6.
9.5 Termination of Employment of Optionee. If a Participating Employee
ceases for any reason (other than death or Retirement) to be continuously
employed by an Employer, whether due to voluntary severance, involuntary
severance, transfer, or disaffiliation of a Related Corporation with the
Company, his or her Option shall immediately expire, and the Participating
Employee's accumulated payroll deductions shall be returned to the Participating
Employee. For purposes of this Section 9.5, a Participating Employee shall be
deemed to be employed throughout any leave of absence for military service,
illness or other bona fide purpose which does not exceed the longer of ninety
days or the period during which the Participating Employee's reemployment rights
are guaranteed by statute (including without limitation the Veterans
Reemployment Rights Act or similar statute relating to military service) or by
contract. If the Participating Employee does not return to active employment
prior to the termination of such period, his or her employment shall
<PAGE> 7
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be deemed to have ended on the ninety-first day of such leave of absence (or
such longer period guaranteed by statute or by contract as provided above).
9.6 Retirement or Death of Optionee. If a Participating Employee
Retires or dies, the Participating Employee or, in the case of death, his or her
Beneficiary shall be entitled to withdraw the Participating Employee's
accumulated payroll deductions, or to purchase shares on the Offering
Termination Date to the extent that the Participating Employee would be so
entitled had he or she continued to be employed by an Employer. The number of
shares purchasable shall be limited by the amount of the Participating
Employee's accumulated payroll deductions as of the date of his or her
Retirement or death. Accumulated payroll deductions shall be applied by the
Company toward the purchase of shares only if the Participating Employee or, in
the case of death, his or her Beneficiary submits to the Employer not later than
the Offering Termination Date a written request that the deductions be so
applied. Accumulated payroll deductions not withdrawn or applied to the purchase
of shares shall be delivered by the Company to the Participating Employee or
Beneficiary within a reasonable time after the Offering Termination Date.
9.7 Capital Changes Affecting the Stock. In the event that, between the
Offering Commencement Date and the Offering Termination Date with respect to an
Option, a stock dividend is paid or becomes payable in respect of the Stock or
there occurs a split-up or contraction in the number of shares of Stock, the
number of shares for which the Option may thereafter be exercised and the price
to be paid for each such share shall be proportionately adjusted. In the event
that, after the Offering Commencement Date, there occurs a reclassification or
change of outstanding shares of Stock or a consolidation or merger of the
Company with or into another corporation or a sale or conveyance, substantially
as a whole, of the property of the Company, the Participating Employee shall be
entitled on the Offering Termination Date to receive shares of Stock or other
securities equivalent in kind and value to the shares of Stock he or she would
have held if he or she had exercised the Option in full immediately prior to
such reclassification, change, consolidation, merger, sale or conveyance and had
continued to hold such shares (together with all other shares and securities
thereafter issued in respect thereof) until the Offering Termination Date. In
the event that there is to occur a recapitalization involving an increase in the
par value of the Stock which would result in a par value exceeding the exercise
price under an outstanding Option, the Company shall notify the Participating
Employee of such proposed recapitalization immediately upon its being
recommended by the Board to the Company's shareholders, after which the
Participating Employee shall have the right to exercise his or her Option prior
to such recapitalization; if the Participating Employee fails to exercise the
Option prior to recapitalization, the exercise price under the Option shall be
appropriately adjusted. In the event that, after the Offering Commencement
<PAGE> 8
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Date, there occurs a dissolution or liquidation of the Company, except pursuant
to a transaction to which Section 424(a) of the Code applies, each Option shall
terminate, but the Participating Employee shall have the right to exercise his
or her Option prior to such dissolution or liquidation.
9.8 Payroll Deductions. A Participating Employee may purchase shares
under his or her Option during any particular Offering Period by completing and
returning to the Company's personnel department at least ten days prior to the
beginning of such Offering Period a Membership Agreement indicating a percentage
(which shall be a full integer between one and ten) of his or her Base
Compensation which is to be withheld each pay period. Unless the Board decides
otherwise prior to the commencement of an Offering Period, all Participating
Employees shall be permitted, no more often than once per Offering Period, to
change the percentage of Base Compensation withheld during an Offering Period by
submitting an amended Membership Agreement to the Company's personnel department
indicating a different percentage of Base Compensation to be withheld. Any such
amended Membership Agreement shall become effective at the time determined
pursuant to rules adopted by the Board from time to time. In addition, no more
than once per Offering Period, the Participating Employee may cancel his or her
Agreement and withdraw all, but not less than all, of his or her accumulated
payroll deductions by submitting a written request therefor to the Company's
personnel department no later than the close of business on the last business
day of the Offering Period. The percentage of Base Compensation withheld may
also be changed from one Offering Period to another.
9.9 Exercise of Options. On the Offering Termination Date the
Participating Employee may purchase the number of shares purchasable by his or
her accumulated payroll deductions, or, if less, the maximum number of shares
subject to the Option as provided in Section 9.1, provided that:
(a) If the total number of shares which all Optionees elect to
purchase, together with any shares already purchased under the Plan, exceeds the
total number of shares which may be purchased under the Plan pursuant to Section
6, the number of shares which each Optionee is permitted to purchase shall be
decreased pro rata based on the Participating Employee's accumulated payroll
deductions in relation to all accumulated payroll deductions otherwise to be
applied to the purchase of shares as of that Offering Termination Date.
(b) If the number of shares purchasable includes a fraction, such
number shall be adjusted to the next smaller whole number and the purchase price
shall be adjusted accordingly.
Accumulated payroll deductions not withdrawn prior to the Offering
Termination Date shall be automatically applied by the Company toward the
<PAGE> 9
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purchase of Option Shares or, to the extent in excess of the aggregate purchase
price of the shares then purchasable by the Participating Employee, refunded to
the Participating Employee, except that where such excess is less than the
purchase price for a single share of Stock on the Offering Termination Date,
such excess shall not be refunded but instead shall be carried over and applied
to the purchase of shares in the first following Offering Period (subject to the
possibility of withdrawal by the Participating Employee during such Offering
Period in accordance with the terms of the Plan).
9.10 Delivery of Stock. Except as provided below, within a reasonable
time after the Offering Termination Date, the Company shall deliver or cause to
be delivered to the Participating Employee a certificate or certificates for the
number of shares purchased by the Participating Employee. A stock certificate
representing the number of Shares purchased will be issued in the participant's
name only, or if his or her Membership Agreement so specifies, in the name of
the employee and another person of legal age as joint tenants with rights of
survivorship. If any law or applicable regulation of the Securities and Exchange
Commission or other body having jurisdiction in the premises shall require that
the Company or the Participating Employee take any action in connection with the
shares being purchased under the Option, delivery of the certificate or
certificates for such shares shall be postponed until the necessary action shall
have been completed, which action shall be taken by the Company at its own
expense, without unreasonable delay. The Optionee shall have no rights as a
shareholder in respect of shares for which he or she has not received a
certificate.
9.11 Return of Accumulated Payroll Deductions. In the event that the
Participating Employee or the Beneficiary is entitled to the return of
accumulated payroll deductions, whether by reason of voluntary withdrawal,
termination of employment, Retirement, death, or in the event that accumulated
payroll deductions exceed the price of shares purchased, such amount shall be
returned by the Company to the Participating Employee or the Beneficiary, as the
case may be, not later than within a reasonable time following the Offering
Termination Date applicable to the Option Period in which such deductions were
taken. Accumulated payroll deductions held by the Company shall not bear
interest nor shall the Company be obligated to segregate the same from any of
its other assets.
--------------------------------
<PAGE> 1
Exhibit 10.25(a)
SERIES C CONVERTIBLE PREFERRED
STOCK PURCHASE AGREEMENT
by and among
LeukoSite, Inc.,
the Corporation,
and
Warner-Lambert Company
the Investor
November 8, 1994
<PAGE> 2
SERIES C CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
THIS SERIES C CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT, dated
this 8th day of November 1994, is entered into by and between LEUKOSITE, INC., a
Delaware corporation (the "Corporation"), and WARNER-LAMBERT COMPANY, a Delaware
corporation (the "Investor").
WHEREAS, the Corporation and the Investor have entered into that
certain Research, Development and Marketing Agreement, dated as of September 30,
1994, whereby the Corporation and the Investor entered into a collaborative
effort to share expertise and to develop new expertise in the field of MCP-1
inhibitors.
WHEREAS, the Corporation and the Investor desire to provide for the
issuance of shares of the Corporation's Series C Convertible Preferred Stock,
$.0001 par value per share, and for certain future issuances of capital stock of
the Corporation, as more specifically set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto, intending to be legally bound, hereby
agree as follows.
SECTION 1. DEFINITIONS. The following terms as used herein shall have
the following meanings:
"AGREEMENT" and "THIS AGREEMENT" shall mean this Series C
Convertible Preferred Stock Purchase Agreement, dated as of November 8,
1994, by and between the Corporation and the Investor.
"BY-LAWS" shall mean the By-Laws of the Corporation as in
effect on the date hereof, a copy of which is attached hereto as
Exhibit A.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended.
"PERSON" shall mean an individual, partnership, corporation,
association, trust, joint venture, unincorporated organization, and any
government, governmental department or agency or political subdivision
thereof.
"R&D AGREEMENT" shall mean the Research, Development and
Marketing Agreement between the Corporation and the Investor,
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dated as of September 30, 1994, a copy of which is attached hereto as
Exhibit B.
"RESTATED CERTIFICATE OF INCORPORATION" shall mean the
Restated Certificate of Incorporation filed with the Secretary of State
of Delaware on November 7, 1994, a copy of which is attached hereto as
Exhibit C.
"SECURITIES" shall mean, collectively, the Series C Shares (as
defined in Section 2.1 hereof) and the Conversion Shares (as defined in
Section 2.2 hereof).
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
"SERIES A COMMON STOCK" shall mean the Series A Common Stock,
$.0001 par value per share, of the Corporation.
"SERIES A PREFERRED STOCK" shall mean the Series A Convertible
Preferred Stock, $.0001 par value per share, of the Corporation.
"SERIES B PREFERRED STOCK" shall mean the Series B Convertible
Preferred Stock, $.0001 par value per share, of the Corporation.
"STOCKHOLDERS' AGREEMENT" shall mean the Stockholders'
Agreement, dated November 5, 1993, among the Corporation, those
investors listed on Schedule 1 thereto, and the Founders (as defined
therein), as amended from time to time.
SECTION 2. THE SERIES C CONVERTIBLE PREFERRED STOCK.
2.1. Series C Convertible Preferred Stock. Prior to the Closing Date
(as defined in Section 3 hereof), the Corporation will have duly authorized the
issuance and sale to the Investor of an aggregate of 1,000,000 shares (the
"Series C Shares") of its Series C Convertible Preferred Stock, par value $.0001
per share (the "Series C Preferred Stock"), at a purchase price per share of
$3.00. The Series C Shares shall have the powers, preferences, rights and other
terms and conditions applicable to shares of Series C Preferred Stock, as set
forth in Article III, Part C, of the Restated Certificate of Incorporation.
2.2. Conversion Shares. Prior to the Closing Date, the Corporation will
have authorized and reserved, and covenants to continue to reserve, free of
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preemptive rights and other preferential rights, a sufficient number of its
authorized but unissued shares of common stock, $.0001 par value per share
("Common Stock"), to satisfy the rights of conversion of the Investor. Any
shares of Common Stock issuable upon conversion of the Series C Shares, and such
shares when issued, are sometimes herein referred to as the "Conversion Shares."
SECTION 3. SALE AND PURCHASE OF STOCK.
3.1. Sale and Purchase of the Series C Shares. Subject to compliance
with all of the terms and conditions hereof and in reliance on the
representations, warranties and covenants set forth or referred to herein, the
Corporation shall issue and sell to the Investor, and the Investor shall
purchase from the Corporation, all of the Series C Shares at a purchase price
per share equal to $3.00. The aggregate purchase price for all of the Series C
Shares shall be $3,000,000. The closing of the sale and purchase of the Series C
Shares (the "Closing") will occur on November 8, 1994 at such place and time as
may be mutually agreed upon by the Investor and the Corporation. The date of the
Closing is herein called the "Closing Date". At the Closing, the Corporation
shall, unless otherwise requested, deliver to the Investor a single certificate
evidencing the Series C Shares, against payment of the aggregate purchase price
therefor by bank or certified check or wire transfer of immediately available
funds to such account or accounts as the Corporation shall designate in writing.
3.2. Issuance of Additional Shares.
(a) If the Corporation completes an initial public offering of Common
Stock for its own account at a public offering price per share of less than
$3.00 (subject to adjustment from and after the date hereof upon each stock
dividend, stock split, reverse stock split or other similar event), taking into
account the fair market value of any warrants or other rights issued as units
with the Common Stock sold in any such initial public offering, the Investor
will be issued additional Common Stock, promptly after the initial public
offering is completed, at no cost to the Investor, in an amount sufficient to
make the Investor's average price per share of capital stock of the Company then
owned by the Investor equal to the public offering price per share of the Common
Stock issued in such initial public offering.
(b) The rights of the Investor pursuant to Section 3.2(a) hereof shall
be transferable to a subsequent purchaser for value (a "Purchaser") if such
Purchaser buys the Series C Shares at a purchase price per share less than $3.00
(subject to adjustment from and after the date hereof upon each stock dividend,
stock split, reverse stock split or other similar event). Except to the extent
otherwise provided in the first sentence of this Section 3.2(b), the rights of
the Investor under Section 3.2(a) hereof shall not be transferable or assignable
in any way (including by operation of law) or to any Person (including any
purchaser, transferee or pledgee)
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of the Series C Shares. Upon any actual or purported sale, transfer, assignment
or gift of the Series C Shares (other than as provided in the first sentence of
this Section 3.2(b)) or of any of the Investor's rights thereunder, the
provisions of Section 3.2(a) hereof and the Investor's rights thereunder shall
immediately terminate and be of no further force and effect.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION. The Corporation
hereby represents and warrants to the Investor as follows:
4.1. Organization, Standing, Power, Qualification. The Corporation is a
duly organized and validly existing corporation in good standing under the laws
of the State of Delaware with corporate power and authority adequate for (a) the
execution and delivery of this Agreement and the R&D Agreement and the
performance of its obligations hereunder and thereunder and (b) the carrying on
of its business as presently conducted by it. The Corporation is duly qualified
and in good standing as a foreign corporation in The Commonwealth of
Massachusetts and does not own or lease property or engage in any activity in
any other jurisdiction which would require its qualification in such
jurisdiction and in which the failure to be so qualified would have a material
adverse effect on the financial or other business condition of the Corporation.
4.2. Capitalization. As more fully described in the capitalization
table set forth in Schedule 4.2 attached hereto, the authorized capital stock of
the Corporation immediately following the Closing shall consist of:
(a) 21,971,667 shares of Common Stock, of which:
(i) 500,000 shall be validly issued and outstanding,
fully paid and nonassessable;
(ii) 16,311,667 shares shall have been duly reserved
for issuance upon conversion of outstanding shares of Series A
Common Stock, Series A Preferred Stock, Series B Preferred
Stock and Series C Preferred Stock and of shares of Series A
Preferred Stock issuable upon exercise of outstanding warrants
issued to Comdisco, Inc. ("Comdisco") and an outstanding stock
option granted to William Haseltine;
(iii) 1,745,000 shares (the "Option Shares") shall
have been duly reserved for issuance pursuant to outstanding
options under the Corporation's 1993 Stock Option Plan, as
amended (the "Plan"), and 115,000 shares have been duly
reserved for issuance pursuant to options that may be granted
in the future under the Plan; and
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(iv) 3,300,000 shares shall have been designated as
Series A Common Stock and all of which shall be validly issued
and outstanding and fully paid and nonassessable.
(b) 13,011,667 shares of preferred stock, $.0001 par value per
share, 10,345,000 of which shall have been designated as Series A Preferred
Stock, 10,000,000 shares of which shall be validly issued and outstanding and
fully paid and nonassessable, 1,666,667 shares of which shall have been
designated as Series B Preferred Stock and shall be validly issued and
outstanding and fully paid and nonassessable, and 1,000,000 shares of which
shall have been designated as Series C Preferred Stock and shall be issued and
outstanding and, pursuant to the terms of this Agreement, fully paid and
nonassessable.
Except as set forth on Schedule 4.2 hereto, there are no outstanding warrants or
options for the purchase from the Corporation of any shares of its capital
stock..
4.3. Governing Documents. The Restated Certificate of Incorporation and
By-Laws are true, complete and correct as of the date hereof.
4.4. Financial Information. Included in Schedule 4.4 attached hereto is
the Corporation's unaudited Balance Sheet dated June 30, 1994 and the
Corporation's unaudited Statements of Operations, Stockholders' Equity and Cash
Flows for the period from January 1, 1994 to June 30, 1994 (collectively, the
"Unaudited Financial Statements"). The Unaudited Financial Statements have been
prepared in accordance with generally accepted accounting principles (except for
a lack of footnotes and subject to year-end audit adjustments) and fairly
present, in all material respects, the Corporation's financial condition as at,
and results of operations for the period ended on, such date. Since June 30,
1994, there has been no material adverse change in the business, operations,
assets, prospects or condition (financial or otherwise) of the Corporation.
4.5. Enforceability of Agreements. The Board of Directors and
stockholders of the Corporation have duly taken all action necessary to
authorize the execution, delivery and performance of this Agreement and the R&D
Agreement. This Agreement and the R&D Agreement have been duly executed and
delivered by the Corporation and constitute the valid and binding agreements of
the Corporation, enforceable against the Corporation in accordance with their
terms, except to the extent enforcement thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application relating to or affecting the enforcement of creditors' rights and by
the discretionary nature of equitable remedies.
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4.6. No Violation; No Defaults. Neither the execution and delivery of
this Agreement or the R&D Agreement nor the consummation of any transaction
contemplated hereby or thereby, including, without limitation, the issuance and
sale of the Series C Shares as provided herein, has constituted or resulted in
or will constitute or result in a breach of the provisions of any mortgage,
lease, license or other instrument, contract or agreement to which the
Corporation is a party or by which it is bound, or the charter or By-Laws of the
Corporation or the violation of any judgment, decree, law or governmental or
administrative order, rule or regulation. The Corporation is not in default
under any provision of its Restated Certificate of Incorporation or By-Laws, or
under any provision of any mortgage, lease, license or other instrument,
contract or agreement to which it is a party or by which it is bound or of any
law, ordinance, approval, rule or regulation or any terms of any applicable
order, judgment or decree of any court, arbitrator or governmental or
administrative authority which, singly or in the aggregate, may have a material
adverse effect on the business, operations, assets, prospects or condition
(financial or otherwise) of the Corporation.
4.7. Brokers' Fees. There are no brokers', finders', or similar fees
due from the Corporation in respect of the transactions contemplated by this
Agreement or the R&D Agreement.
4.8. Absence of Undisclosed Liabilities. Except as disclosed in
Schedule 4.8 hereto or in the financial statements referred to in Section 4.4
hereof, or arising in the ordinary course of business and for obligations
created pursuant to this Agreement or the R&D Agreement, as of the Closing Date,
to the best of the Corporation's knowledge, the Corporation has no material
liabilities (fixed or contingent, including, without limitation, any liabilities
for money borrowed or any tax liabilities due or to become due).
4.9. Litigation. There is neither pending nor, to the Corporation's
knowledge, threatened any action, suit, proceeding or claim, or any basis
therefor or threat thereof, to which the Corporation is or may be named as a
party or its property is or may be subject or which calls into question any of
the transactions contemplated by this Agreement or the R&D Agreement.
4.10. Consents. No consent, approval or authorization of, or filing
with, any governmental authority (other than filings required to be made under
applicable federal or state securities laws) is required in connection with the
Corporation's valid execution, delivery or performance of this Agreement or the
R&D Agreement, or the consummation of any transaction contemplated under this
Agreement or the R&D Agreement.
4.11. Trademarks, Licenses, Etc. The Corporation has or has the right
to use all patents, patent applications, trademarks, trademark rights, trade
names, trade
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name rights, copyrights, licenses, trade secrets, permits, authorizations and
other rights, as are necessary for the conduct of its business, all of which are
in full force and effect, and the Corporation, to the best of its knowledge, is
in substantial compliance with the foregoing without any infringement of,
adverse claim in respect of or known conflict with the valid rights of others
which could affect or impair in a material manner the business or assets or
financial condition of the Corporation. Annexed hereto as Schedule 4.11 is a
schedule listing all patents, patent applications, licenses, copyrights and
similar intellectual property rights of the Corporation. The Corporation has
complied with all of its obligations of confidentiality in respect of the
claimed trade secrets or proprietary information of others and knows of no
violation of such obligations of confidentiality as are owed to the Corporation.
To the best of the Corporation's knowledge, no employee, agent or consultant of
the Corporation is subject to confidentiality restrictions in favor of any third
person the breach of which could subject the Corporation to any material
liability.
4.12. Subsidiaries; Title to Properties; Liens and Encumbrances;
Insurance. Except as set forth on Schedule 4.12 hereto, the Corporation has no
subsidiary and owns no security issued by or interest in any other corporation,
partnership or other organization. The Corporation has valid title to and
ownership of all the properties and assets purported to be owned by it, free
from all mortgages, pledges, liens, security interests, conditional sale
agreements, encumbrances or charges, except such as are described on Schedule
4.12 hereto and those which, singly or in the aggregate, would not have a
material adverse effect on the business, operation, assets, prospects or
condition (financial or otherwise) of the Corporation. The Corporation maintains
insurance of the kinds and in the amounts set forth on Schedule 4.12 hereto.
4.13. Environmental Compliance.
(a) The Corporation is not in violation, or alleged violation,
of any judgment, decree, order, law, license, rule or regulation pertaining to
environmental matters, including without limitation those arising under the
Resource Conservation and Recovery Act ("RCRA"), the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended ("CERCLA"), the
Superfund Amendments and Reauthorization Act of 1986 ("SARA"), the Federal Clean
Water Act, the Federal Clean Air Act, the Toxic Substances Control Act, or any
state or local statute, regulation, ordinance, order or decree relating to
health, safety or the environment (hereinafter "Environmental Laws"), which
violation would have a material adverse effect on the environment or the
business, assets or financial condition of the Corporation.
(b) The Corporation has not received notice from any third
party, including without limitation any federal, state or local governmental
authority, (i)
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that the Corporation or any predecessor in interest has been identified by the
United States Environmental Protection Agency ("EPA") as a potentially
responsible party under CERCLA with respect to a site listed on the National
Priorities List, 40 C.F.R. Part 300 Appendix B (1986); (ii) that any hazardous
waste as defined by 42 U.S.C. Section 6903(5), any hazardous substances as
defined by 42 U.S.C. Section 9601(14), any pollutant or contaminant as defined
by 42 U.S.C. Section9601(33) and any toxic substance, oil or hazardous materials
or other chemicals or substances regulated by any Environmental Laws ("Hazardous
Substances") which any one of them has generated, transported or disposed of has
been found at any site at which a federal, state or local agency or other third
party has conducted or has ordered that the Corporation or any predecessor in
interest conduct a remedial investigation, removal or other response action
pursuant to any Environmental Law; or (iii) that any of them is or shall be a
named party to any claim, action, cause of action, complaint (contingent or
otherwise), or legal or administrative proceeding arising out of any third
party's incurrence of costs, expenses, losses or damages of any kind whatsoever
in connection with the release of Hazardous Substances.
(c) Except as set forth in Schedule 4.13 hereto: (i) no
portion of the Corporation's properties has been used for the handling,
manufacturing, processing, storage or disposal of Hazardous Substances except in
accordance with applicable Environmental Laws; (ii) in the course of any
activities conducted by the Corporation, no Hazardous Substances have been
generated or are being used on such properties except in accordance with
applicable Environmental Laws; (iii) there have been no releases (i.e. any past
or present releasing, spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, disposing or dumping) or threatened releases
of Hazardous Substances on, upon, into or from the properties of the
Corporation; and (iv) in addition, any Hazardous Substances that have been
generated on the properties of the Corporation have been transported offsite
only by carriers having an identification number issued by the EPA and treated
or disposed of only by treatment or disposal facilities maintaining valid
permits as required under applicable Environmental Laws, which transporters and
facilities have been and are, to the best of the Corporation's knowledge,
operating in compliance with such permits and applicable Environmental Laws.
4.14. Contracts. Except as set forth on Schedule 4.14 hereto, the
Corporation is not a party to or otherwise bound by any written or oral:
(a) agreement requiring the Corporation to make payments in
excess of $10,000 per year, which is not terminable on notice without
costs or other liability to the Corporation; and
(b) agreement for the employment of any officer, employee or
other person on a full-time or consulting basis.
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SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR. The Investor
represents and warrants to the Corporation that:
5.1. Organization, Standing, Power. The Investor is a duly organized
and validly existing corporation in good standing under the laws of the State of
Delaware with corporate power and authority adequate for (a) the execution and
delivery of this Agreement and the R&D Agreement and the performance of its
obligations hereunder and thereunder and (b) the carrying on of its business as
presently conducted by it. The Investor's principal office is located in New
Jersey.
5.2. Enforceability of Agreements. The Investor has duly taken all
corporate action necessary to authorize the execution, delivery and performance
of this Agreement and the R&D Agreement. This Agreement and the R&D Agreement
have been duly executed and delivered by the Investor and constitute the valid
and binding agreements of the Investor, enforceable against the Investor in
accordance with their terms, except to the extent enforcement thereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws of general application relating to or affecting the enforcement of
creditors' rights and by the discretionary nature of equitable remedies.
5.3. Consents. No consent, approval or authorization of, or filing
with, any governmental authority (other than filings required to be made under
applicable federal or state securities laws) is required in connection with the
Corporation's valid execution, delivery or performance of this Agreement or the
R&D Agreement, or the consummation of any transaction contemplated under this
Agreement or the R&D Agreement.
5.4. Investment Representations.
(a) It is acquiring the Series C Shares and, in the event it
should acquire Conversion Shares upon conversion of the Series C Shares, it will
be acquiring such Conversion Shares, for its own account, for investment and not
with a view to the distribution thereof within the meaning of the Securities
Act.
(b) It is an "accredited investor" as such term is defined in
Rule 501 (a) promulgated under the Securities Act.
(c) It further understands that the exemptions from
registration afforded by Rule 144 and Rule 144A (the provisions of which are
known to it) promulgated under the Securities Act depend on the satisfaction of
various conditions, and that, if applicable, Rule 144 may afford the basis for
sales only in limited amounts.
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(d) It has such knowledge and experience in business and
financial matters and with respect to investments in securities of
privately-held companies so as to enable it to understand and evaluate the risks
of the Investor's investment in the Series C Shares and the Conversion Shares
and form an investment decision with respect thereto. It has been afforded the
opportunity during the course of negotiating the transactions contemplated by
this Agreement to ask questions of, and to secure such information from, the
Corporation and its officers and directors as it deems necessary to evaluate the
merits of entering into such transactions.
(e) The Investor has adequate net worth and means of providing
for its current needs to sustain a complete loss of its investment in the
Corporation.
(f) Its total assets exceed $5,000,000 and it was not formed
for the specific purpose of acquiring the Series C Shares.
5.5. Brokers. It has not retained, utilized or been represented by any
broker or finder in connection with the transactions contemplated by this
Agreement or the R&D Agreement.
SECTION 6. CONDITIONS PRECEDENT.
6.1. Conditions to the Obligation of the Investor. The obligation of
the Investor to purchase and pay for the Series C Shares is subject to the
satisfaction of the following conditions precedent:
(a) Representations and Warranties. The representations and
warranties contained herein of the Corporation shall be true and correct in all
material respects on and as of the Closing Date with the same force and effect
as though made on and as of the Closing Date, both before and after giving
effect to the sale of the Series C Shares.
(b) Compliance with Agreement. The Corporation shall have
performed and complied with all of its obligations under this Agreement to be
performed or complied with by it prior to or at the Closing.
(c) Closing Certificate. The Corporation shall have executed
and delivered to the Investor at and as of the Closing a certificate, in form
and substance satisfactory to the Investor, certifying that the conditions
specified in each of Sections 6.1(a) and 6.1(b) hereof have been satisfied.
(d) R&D Agreement. A counterpart of the R&D Agreement shall
have been validly executed and delivered by the Corporation.
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(e) Filing of Restated Certificate of Incorporation. The
Restated Certificate of Incorporation shall have been duly executed and shall
have been filed with and accepted by the Secretary of State of Delaware and
shall be effective.
(f) Legal Opinion. The Investor shall have received a legal
opinion from Bingham, Dana & Gould, counsel for the Corporation, addressed to
the Investor and dated the Closing Date, in substantially the form attached
hereto as Exhibit D
(g) Proper Proceedings. All instruments and corporate
proceedings in connection with the transactions contemplated by this Agreement
and the R&D Agreement shall be satisfactory in form and substance to the
Investor, and the Investor shall have received counterpart originals, or
certified or other copies of all documents, including without limitation records
of corporate or other proceedings, which it may have reasonably requested in
connection therewith.
6.2. Conditions to the Obligation of the Corporation. The obligation of
the Corporation to issue and sell the Series C Shares to the Investor is subject
to the satisfaction of the following conditions precedent:
(a) Representations and Warranties. The representations and
warranties contained herein of the Investor shall be true and correct in all
material respects on and as of the Closing Date with the same force and effect
as though made on and as of the Closing Date, both before and after giving
effect to the sale of the Series C Shares.
(b) Compliance with Agreement. The Investor shall have
performed and complied with all of its obligations under this Agreement to be
performed or complied with by it prior to or at the Closing.
(c) Closing Certificate. The Investor shall have executed and
delivered to the Corporation at and as of the Closing a certificate, in form and
substance satisfactory to the Corporation, certifying that the conditions
specified in each of Sections 6.2(a) and 6.2(b) hereof have been satisfied.
(d) R&D Agreement. A counterpart of the R&D Agreement shall
have been validly executed and delivered by the Investor.
(e) Proper Proceedings. All instruments and corporate
proceedings in connection with the transactions contemplated by this Agreement
and the R&D Agreement shall be satisfactory in form and substance to the
Corporation, and the Corporation shall have received counterpart originals, or
certified or other copies of
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all documents, including without limitation records of corporate or other
proceedings, which it may have reasonably requested in connection therewith.
SECTION 7. REGISTRATION RIGHTS.
7.1. "Piggyback" Registration. In the event that, at any time or from
time to time during the period commencing immediately after the closing of the
Corporation's initial public offering of Common Stock and ending on the
Registration Rights Termination Date (as defined below), the Corporation
proposes to register any of its Common Stock under the Securities Act, whether
as a result of an offering of Common Stock for the account of the Company or any
selling stockholder, the Corporation shall, each such time, give to the Investor
written notice of its intent to do so. Upon the written request of the Investor
given within 30 days after the giving of any such notice by the Corporation, the
Corporation shall use its best efforts to cause to be included in such
registration such number of the Conversion Shares as the Investor shall have
specified in its notice to the Corporation (the "Requested Conversion Shares");
provided that (i) the Requested Conversion Shares are equal to at least fifty
percent (50%) of the total number of Conversion Shares then outstanding, (ii)
the Investor agrees to sell the Requested Conversion Shares in the same manner
and on the same terms and conditions as the other shares of Common Stock which
the Corporation proposes to register, and (iii) if the registration is to
include shares of Common Stock to be sold for the account of the Corporation,
the proposed managing underwriter does not advise the Corporation that in its
opinion the inclusion of the Requested Conversion Shares (without any reduction
in the number of shares to be sold for the account of the Corporation) is likely
to affect adversely the success of the offering or the price the Corporation
would receive for any shares of Common Stock offered by it pursuant thereto, in
which case the rights of the Investor shall be as provided in Section 7.2 below.
For purposes hereof, the term "Registration Rights Termination Date" shall mean
the date upon which the Investor may dispose of shares of Common Stock pursuant
to Rule 144 promulgated under the Securities Act.
7.2. Underwriting Requirements; Reduction of Shares to be Included in a
Registration. In connection with any offering involving an underwriting of
shares of Common Stock, the Corporation shall not be required under Section 7.1
hereof or otherwise to include any of the Requested Conversion Shares therein
unless the Investor accepts and agrees to the terms of the underwriting as
agreed upon between the Corporation and the underwriters selected by the
Corporation, and then only in such quantity as (without any reduction in the
numbers of shares to be sold for the account of the Corporation, if any) will
not, in the opinion of the underwriters, jeopardize the success of the offering
or the price the Corporation would receive for any shares of Common Stock
offered by it, if any, pursuant to the offering. If the total number of shares
of Common Stock which all selling
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stockholders of the Corporation (including, without limitation, the Investor)
desire to be included in any offering exceeds the number of shares which the
underwriters believe to be compatible with the success of the offering or the
price the Corporation would receive for any shares of Common Stock offered by
it, if any, pursuant to the offering, the Corporation shall only be required to
include in the offering so many of the shares of Common Stock of the selling
shareholders (including, without limitation, the Investor) as the underwriters
believe will not (without any reduction in the number of shares to be sold for
the account of the Corporation, if any) jeopardize the success of the offering
or the price the Corporation would receive for any shares of Common Stock
offered by it, if any, pursuant to the offering (the selling shareholders'
shares so included to be apportioned pro rata among the selling shareholders
according to the total number of shares of Common Stock owned by said selling
shareholders, or in such other proportions as shall mutually be agreed to by
such selling shareholders), provided that no such reduction shall be made with
respect to any securities offered for the account of the Corporation.
7.3. Furnish Information. It shall be a condition precedent to the
obligations of the Corporation to take any action pursuant to this Section 7
that the Investor shall furnish to the Corporation such information regarding
the Investor and the shares of Common Stock held by the Investor as the
Corporation shall reasonably request and as shall be required in order to effect
any such registration by the Corporation.
7.4. Expenses of Registration. All expenses incurred in connection with
a registration pursuant to this Section 7 (excluding underwriting commissions
and discounts and counsel fees of the Investor or of any other selling
shareholders of the Corporation), including without limitation all registration
and qualification fees, printing, and fees and disbursements of counsel for the
Corporation, shall be borne by the Corporation; provided, however, that the
Corporation shall not be required to pay for Blue Sky registration or
qualification expenses in connection with states in which the Corporation is not
registering or qualifying its original issue shares.
7.5 Underwriter's Lock-Up. In consideration of the registration rights
granted by the Corporation pursuant to this Section 7, the Investor agrees that,
at the request of the managing underwriter of any underwritten public offering
of Common Stock, the Investor shall not sell, assign, gift, pledge or otherwise
transfer, or exercise any registration rights with respect to, any shares of
Common Stock at any time during the period of 180 days following the closing of
any such underwritten public offering. The foregoing restriction on the
Investor's exercise of registration rights during any such 180 day period shall
be applicable only to the extent that no other person shall exercise
registration rights in respect of equity securities of the Company during such
180 day period.
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SECTION 8. RESTRICTIONS ON TRANSFER.
8.1. General Restriction. None of the Securities shall be sold,
transferred, assigned, pledged, hypothecated or otherwise disposed of by any
Person unless and until such Securities proposed to be sold, transferred,
assigned, pledged, hypothecated or otherwise disposed of are so disposed of (A)
pursuant to and in conformity with (i) an effective registration statement filed
with the Securities and Exchange Commission pursuant to the Securities Act or
(ii) any then available exemption from the registration requirements of the
Securities Act, (B) pursuant to and in conforming with any applicable state
securities or blue sky laws, and (C) pursuant and in conformity with the
provisions of this Section 8 (including, without limitation, this Section 8.1
and Section 8.3 hereof), to the extent applicable. Any transfer or purported
transfer in violation of this Section 8, including, without limitation, this
Section 8.1 and Section 8.3 hereof, shall be null and void. The Corporation may
make a notation on its records or give instructions to any transfer agents of
the Securities in order to implement the restrictions on transfer set forth in
this Section 8. The Corporation shall not incur any liability for any delay in
recognizing any transfer of Securities if the Corporation reasonably believes
that such transfer may have been or would be in violation of the provisions of
the Securities Act, applicable blue sky laws or this Agreement.
8.2. Legend. Each certificate representing any of the Series C Shares
or Conversion Shares shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF
ANY STATE AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
UNLESS THEY ARE SO REGISTERED OR UNLESS AN EXEMPTION FROM REGISTRATION
IS AVAILABLE. THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
THE RESTRICTIONS ON TRANSFER AND THE VOTING PROVISIONS SET FORTH IN A
CERTAIN SERIES C CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT DATED
AS OF NOVEMBER 8, 1994, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL
OFFICE OF LEUKOSITE, INC."
8.3. Right of Transfer. Subject to the provisions of Section 8.1
hereof, the Investor may transfer Securities to any Person, provided that any
such Person shall, as a condition precedent to such transfer, agree in writing
to become bound by all of the terms and provisions of this Section 8 and Section
9 hereof. The foregoing proviso of this Section 8.3 shall not be applicable with
respect to Securities that are transferred pursuant to a registration statement
that has been delivered effective
<PAGE> 16
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under the Securities Act or pursuant to Rule 144 promulgated under the
Securities Act.
SECTION 9. VOTING AGREEMENT. The Investor hereby agrees that it shall
vote all shares of Series C Preferred Stock and any other shares of voting stock
of the Corporation owned of record or beneficially (or controlled as to voting
rights) by the Investor in favor of any Board member nominations or removals
pursuant to, and in accordance with, all of the terms, provisions and conditions
of Section 5 of the Stockholders' Agreement to the same extent as if the
Investor were a party to the Stockholders' Agreement. Without limiting the
generality of any of the provisions of Section 5 of the Stockholders' Agreement,
the provisions of this Section 9 shall terminate upon the closing of the
Company's initial public offering.
SECTION 10. FINANCIAL REPORTS. Until such time as the Corporation has a
class of its equity securities registered under the Exchange Act and is required
to file reports thereunder pursuant to Sections 13 or 15(d) of the Exchange Act,
the Corporation shall furnish to the Investor (so long as the Investor is the
record owner of any of the Series C Shares) with the financial information
described below:
(a) Within 45 days after the end of each quarterly accounting
period, unaudited financial statements for such quarterly accounting period,
which shall include an income statement and a statement of cash flow for such
quarter and a balance sheet as of the last day thereof.
(b) Within 90 days after the end of each fiscal year of the
Corporation, audited financial statements of the Corporation, which shall
include an income statement and a statement of cash flow for such fiscal year
and a balance sheet as of the last day thereof, each prepared in accordance with
generally accepted accounting principles consistently applied, and accompanied
by the report of such independent certified public accountants as shall have
been approved by the Corporation's Board of Directors.
SECTION 11. INDEMNIFICATION.
11.1. Indemnification by the Corporation. The Corporation hereby agrees
to indemnify, defend and hold the Investor (and its directors, officers,
employees, agents and affiliates) harmless from and with respect to any and all
claims, liabilities, losses, damages, costs and expenses (including, without
limitation, the reasonable fees and disbursements of counsel) related to or
arising out of, directly or indirectly, any untruth, inaccuracy, failure or
breach by the Corporation of any representation or warranty, covenant,
obligation or undertaking made by the Corporation in this Agreement.
<PAGE> 17
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11.2. Indemnification by the Investor. The Investor hereby agrees to
indemnify, defend and hold the Corporation (and its directors, officers,
employees, agents and affiliates) harmless from and with respect to any and all
claims, liabilities, losses, damages, costs and expenses (including, without
limitation, the reasonable fees and disbursements of counsel) related to or
arising out of, directly or indirectly, any untruth, inaccuracy, failure or
breach by the Investor of any representation or warranty, covenant, obligation
or undertaking made by the Investor in this Agreement.
11.3. Indemnification Procedures. Either party seeking indemnification
hereunder (the "Indemnified Party") shall promptly notify the other party hereto
obligated to provide indemnification hereunder (the "Indemnifying Party") of any
action, suit, proceeding, demand, breach or claim (each, a "Claim") with respect
to which the Indemnified Party claims indemnification hereunder, provided that
failure of the Indemnified Party to give such notice shall not relieve any
Indemnifying Party of its obligations under this Section 11 except to the
extent, if at all, that such Indemnifying Party shall have been prejudiced
thereby. If such Claim relates to any action, suit, proceeding or demand
instituted against the Indemnified Party by a third party (a "Third Party
Claim"), upon receipt of such notice from the Indemnified Party, the
Indemnifying Party shall be entitled to participate in the defense of such Third
Party Claim, and if and only if each of the following conditions is satisfied,
the Indemnifying Party may assume the defense of such Third Party Claim, and, in
the case of such an assumption, the Indemnifying Party shall have the authority
to negotiate, compromise and settle such Third Party Claim:
(a) the Indemnifying Party confirms in writing that it is
obligated hereunder to indemnify the Indemnified Party with respect to such
Third Party Claim; and
(b) the Indemnified Party does not give the Indemnifying Party
written notice that it has determined, in the exercise of its reasonable
discretion, that matters of corporate or management policy or a conflict of
interest make separate representation by the Indemnified Party's own counsel
advisable.
The Indemnified Party shall retain the right to employ its own counsel and to
participate in the defense of any Third Party Claim, the defense of which has
been assumed by the Indemnifying Party pursuant hereto, but the Indemnified
Party shall bear and shall be solely responsible for its own costs and expenses
in connection with such participation.
11.4. Notice and Payment of Claims. In the event of any Claims under
Section 11.1 or 11.2 hereof, the Indemnified Party shall advise the Indemnifying
Party in writing of the amount and circumstances surrounding such Claim. Subject
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to the Indemnifying Party's right pursuant to Section 11.3 hereof to defend,
negotiate, compromise and settle a Third Party Claim, the amount of any Claim
shall be paid by the Indemnifying Party forthwith on demand. If the Indemnifying
Party fails to pay any such Claim forthwith on demand, the Indemnified Party may
(i) proceed directly against the Indemnifying Party to recover the amount of
such Claim or (ii) set off the amount of such Claim against amounts owed by the
Indemnified Party to the Indemnifying Party. With respect to liquidated Claims,
if within thirty days of receiving notice of any such Claim the Indemnifying
Party has not contested such Claim in writing, the Indemnifying Party shall be
deemed to have accepted the validity of such Claim and the Indemnifying Party's
obligation to indemnify the Indemnified Party with respect to such Claim
pursuant to this Section 11.
SECTION 12. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties set forth herein shall survive the Closing for a
period of two (2) years; provided, however, that the representations and
warranties set forth in Section 4.13 hereof shall survive the Closing
indefinitely. All covenants contained herein shall survive indefinitely until,
by their respective terms, they are no longer operative. Anything disclosed in
any Schedule hereto shall be deemed disclosed in all other Schedules hereto.
SECTION 13. NOTICES. All notices and other communications pursuant to
this Agreement shall be in writing, either delivered in hand or sent by
first-class mail, postage prepaid, or sent by telex, telecopier, facsimile
machine or telegraph, addressed as follows:
(i) if to the Corporation, to
LeukoSite, Inc.
800 Huntington Avenue
Boston, MA 02115
Telecopier: (617) 278-3399
Attention: Dr. Christopher K. Mirabelli,
President and Chief Executive Officer
with a copy to:
Bingham, Dana & Gould
150 Federal Street
Boston, MA 02110-1726
Telecopier: (617) 951-8736
Attention: Justin P. Morreale, Esquire
<PAGE> 19
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(ii) if to the Investor, to:
Senior Vice President,
Research and Development
Parke-Davis Pharmaceutical Research
Warner-Lambert Company
2800 Plymouth Road
Ann Arbor, MI 48105
with a copy to:
Vice President and General Counsel
Warner-Lambert Company
201 Tabor Road
Morris Plain, NJ 07950
Any notice or other communication pursuant to this Agreement shall be
deemed to have been duly given or made and to have become effective (i) when
delivered in hand to the party to which it was directed, (ii) if sent by telex,
telecopier, facsimile machine or telegraph and properly addressed in accordance
with the foregoing provisions of this Section 13, when received by the
addressee, or (iii) if sent by first-class mail, postage prepaid, and properly
addressed in accordance with the foregoing provisions of this Section 13, (A)
when received by the addressee, or (B) on the third business day following the
day of dispatch thereof, whichever of (A) or (B) shall be the earlier.
SECTION 14. AMENDMENTS AND WAIVERS. None of the terms or provisions
contained in this Agreement may be amended, modified, supplemented, waived or
terminated unless the Corporation and the Investor shall execute an instrument
in writing agreeing or consenting to such amendment, modification, supplement,
waiver or termination.
SECTION 15. MISCELLANEOUS. This Agreement and the R&D Agreement set
forth the entire understanding of the parties hereto with respect to the
transactions contemplated hereby and thereby. The invalidity or unenforceability
of any term or provision hereof or thereof shall not affect the validity or
enforceability of any other term or provision hereof or thereof. The headings in
this Agreement are for convenience of reference only and shall not alter or
otherwise affect the meaning hereof. This Agreement is intended to take effect
as a sealed instrument and may be executed in any number of counterparts which
together shall constitute one instrument and shall be governed by and construed
in accordance with the domestic substantive laws of the Commonwealth of
Massachusetts without giving effect to any choice or conflict of law provision
or rule that would cause the application of the domestic substantive laws of any
other
<PAGE> 20
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state, and shall bind and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. Except to the extent otherwise
provided in Section 3.2(b) hereof, this Agreement and the rights and obligations
hereunder of either party hereto may not be assigned, transferred or delegated
without the prior written consent of the other party hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Series C
Convertible Preferred Stock Purchase Agreement as of the date first above
written.
LEUKOSITE, INC.
By:_______________________________________
Christopher K. Mirabelli, President
WARNER-LAMBERT COMPANY
By:_______________________________________
Name:
Title:
<PAGE> 1
Exhibit 10.25(b)
SERIES E CONVERTIBLE PREFERRED
STOCK PURCHASE AGREEMENT
by and between
LeukoSite, Inc.,
the Corporation,
and
Warner-Lambert Company,
the Investor
January 3, 1996
<PAGE> 2
SERIES E CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
THIS SERIES E CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT,
dated this 3rd day of January 1996, is entered into by and between LEUKOSITE,
INC., a Delaware corporation (the "Corporation"), and WARNER-LAMBERT COMPANY, a
Delaware corporation (the "Investor").
WHEREAS, the Corporation and the Investor are parties to the R&D
Agreement (as defined in Section 1 below);
WHEREAS, the R&D Agreement contemplates that, from time to time
and subject to certain conditions precedent set forth in the R&D Agreement, the
Corporation shall sell and issue to the Investor, and the Investor shall
purchase from the Corporation, shares of the Corporation's capital stock, all
upon the terms set forth in the R&D Agreement; and
WHEREAS, the Corporation and the Investor desire to enter into
this Agreement for purposes of implementing the purchase and sale of shares of
the Corporation's Series E Convertible Preferred Stock, $.0001 par value per
share, and for purposes of implementing certain future issuances of common
stock, $.0001 par value per share, of the Corporation, said purchase and sale
and said future issuances being contemplated and provided for in the R&D
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the parties hereto, intending to be legally bound,
hereby agree as follows.
SECTION 1. DEFINITIONS. The following terms as used herein shall
have the following meanings:
"AGREEMENT" and "THIS AGREEMENT" shall mean this
Series E Convertible Preferred Stock Purchase Agreement, dated as
of January 3, 1996, by and between the Corporation and the
Investor.
"BY-LAWS" shall mean the By-Laws of the Corporation
as in effect on the date hereof, a copy of which is attached
hereto as Exhibit A.
"EXCHANGE ACT" shall mean the Securities Exchange
Act of 1934, as amended.
"PERSON" shall mean an individual, partnership,
corporation, association, trust, joint venture, unincorporated
organization, and any
<PAGE> 3
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government, governmental department or agency or political
subdivision thereof.
"R&D AGREEMENT" shall mean the Research,
Development and Marketing Agreement between the Corporation and
the Investor, dated as of September 30, 1994, as amended from
time to time. Attached hereto as Exhibit B is a copy of such
Research, Development and Marketing Agreement, as heretofore
amended.
"RESTATED CERTIFICATE OF INCORPORATION" shall mean
the Restated Certificate of Incorporation filed with the
Secretary of State of Delaware on January 2, 1996, a copy of
which is attached hereto as Exhibit C.
"SECURITIES" shall mean, collectively, the Series E
Shares (as defined in Section 2.1 hereof) and the Conversion
Shares (as defined in Section 2.2 hereof).
"SECURITIES ACT" shall mean the Securities Act of
1933, as amended.
"SERIES A COMMON STOCK" shall mean the Series A
Common Stock, $.0001 par value per share, of the Corporation.
"SERIES A PREFERRED STOCK" shall mean the Series A
Convertible Preferred Stock, $.0001 par value per share, of the
Corporation.
"SERIES B PREFERRED STOCK" shall mean the Series B
Convertible Preferred Stock, $.0001 par value per share, of the
Corporation.
"SERIES C PREFERRED STOCK" shall mean the Series C
Convertible Preferred Stock, $.0001 par value per share, of the
Corporation.
"SERIES D PREFERRED STOCK" shall mean the Series D
Convertible Preferred Stock, $.0001 par value per share, of the
Corporation.
"STAGE 2 RESEARCH PLAN" shall have the meaning
provided therefor in Section 1.4(b) of the R&D Agreement.
<PAGE> 4
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"STOCKHOLDERS' AGREEMENT" shall mean the
Stockholders' Agreement, dated November 5, 1993, among the
Corporation, those investors listed on Schedule 1 thereto, and
the Founders (as defined therein), as amended from time to time.
SECTION 2. THE SERIES E CONVERTIBLE PREFERRED STOCK.
2.1. Series E Convertible Preferred Stock. Prior to the First
Closing Date (as defined in Section 3.1 hereof), the Corporation will have duly
authorized (i) the issuance and sale to the Investor, at the First Closing (as
defined in Section 3.1 hereof), of an aggregate of 625,000 shares (the "Initial
Series E Shares") of the Corporation's Series E Convertible Preferred Stock, par
value $.0001 per share (the "Series E Preferred Stock"), at a purchase price per
share of $4.00, and (ii) the issuance and sale to the Investor, at the Second
Closing (as defined in Section 3.2 hereof), of an additional 625,000 shares (the
"Additional Series E Shares") of Series E Preferred Stock, at a purchase price
per share of $4.00. For purposes of this Agreement, the term "Series E Shares"
shall mean the Initial Series E Shares and the Additional Series E Shares,
collectively. The Series E Shares shall have the powers, preferences, rights and
other terms and conditions applicable to shares of Series E Preferred Stock, as
set forth in Article III, Part E, of the Restated Certificate of Incorporation.
2.2. Conversion Shares. Prior to the First Closing Date, the
Corporation will have duly authorized and reserved, and covenants to continue to
reserve, free of preemptive rights and other preferential rights, a sufficient
number of its authorized but unissued shares of common stock, $.0001 par value
per share ("Common Stock"), to satisfy the rights of conversion of the Investor.
For purposes of this Agreement, (i) any shares of Common Stock issuable upon
conversion of the Initial Series E Shares, and such shares when issued, are
sometimes herein referred to as the "Initial Conversion Shares," (ii) any shares
of Common Stock issuable upon conversion of the Additional Series E Shares, and
such shares when issued, are sometimes herein referred to as the "Additional
Conversion Shares", and (iii) the Initial Conversion Shares and the Additional
Conversion Shares are sometimes herein referred to, collectively, as the
"Conversion Shares."
SECTION 3. SALE AND PURCHASE OF STOCK.
3.1. Sale and Purchase of the Initial Series E Shares. Subject to
compliance with all of the terms and conditions hereof and in reliance on the
representations, warranties and covenants set forth or referred to herein, the
Corporation shall issue and sell to the Investor, and the Investor shall
purchase from the Corporation, all of the Initial Series E Shares at a purchase
price per share equal to $4.00. The aggregate purchase price for all of the
Initial Series E
<PAGE> 5
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Shares shall be $2,500,000. The closing of the sale and purchase of the Initial
Series E Shares (the "First Closing") will occur on January 3, 1996 at such
place and time as may be mutually agreed upon by the Investor and the
Corporation. The date of the First Closing is herein called the "First Closing
Date". At the First Closing, the Corporation shall, unless otherwise requested,
deliver to the Investor a single certificate evidencing the Initial Series E
Shares, against payment of the aggregate purchase price therefor by bank or
certified check or wire transfer of immediately available funds to such account
or accounts as the Corporation shall designate in writing.
3.2. Sale and Purchase of the Additional Series E Shares. Subject
to compliance with all of the terms and conditions hereof and in reliance on the
representations, warranties and covenants set forth or referred to herein, the
Corporation shall issue and sell to the Investor, and the Investor shall
purchase from the Corporation, all of the Additional Series E Shares at a
purchase price per share equal to $4.00. The aggregate purchase price for all of
the Additional Series E Shares shall be $2,500,000. The closing of the sale and
purchase of the Additional Series E Shares (the "Second Closing") will occur on
such date as the parties shall mutually agree but in no event later than the
date (the "Required Second Closing Date") that the Investor is required to
purchase the Additional Series E Shares pursuant to Section 1.4(b) of the R&D
Agreement. The date of the Second Closing is herein called the "Second Closing
Date". The Second Closing shall be held at such place and time on the Second
Closing Date as shall be mutually agreed upon by the Investor and the
Corporation. At the Second Closing, the Corporation shall, unless otherwise
requested, deliver to the Investor a single certificate evidencing the
Additional Series E Shares, against payment of the aggregate purchase price
therefor by bank or certified check or wire transfer of immediately available
funds to such account or accounts as the Corporation shall designate in writing.
The First Closing and the Second Closing are referred to herein, collectively,
as the "Closings" and each individually is sometimes referred to herein as a
"Closing." If the Second Closing shall not have occurred or been consummated on
or prior to the Required Second Closing Date, the provisions of this Section 3.2
shall terminate and be of no further force or effect whatsoever and neither the
Corporation nor the Investor shall have any further rights or obligations under
this Section 3.2; provided, however, that, if the failure to consummate the
Second Closing shall be due to the breach by either the Corporation or the
Investor of any covenant or agreement set forth in this Agreement or due to any
failure or inaccuracy of any representation or warranty made by the Corporation
or the Investor, then, notwithstanding any such termination of this Section 3.2,
the breaching party shall be and remain liable to the non-breaching party for
such breach, failure or inaccuracy.
<PAGE> 6
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3.3. Issuance of Common Stock.
(a) If the Corporation completes an initial public offering of
Common Stock for its own account at a public offering price per share of less
than $4.00 (subject to adjustment from and after the date hereof upon each stock
dividend, stock split, reverse stock split or other similar event), taking into
account the fair market value of any warrants or other rights issued as units
with the Common Stock sold in any such initial public offering, the Investor
will be issued additional Common Stock, promptly after the initial public
offering is completed, at no cost to the Investor, in an amount sufficient to
make the Investor's average price per share of capital stock of the Company
purchased by the Investor pursuant to this Agreement and then owned by the
Investor equal to the public offering price per share of the Common Stock issued
in such initial public offering.
(b) The rights of the Investor pursuant to Section 3.3(a) hereof
shall be transferable to a subsequent purchaser for value (a "Purchaser") if
such Purchaser buys the Series E Shares at a purchase price per share less than
$4.00 (subject to adjustment from and after the date hereof upon each stock
dividend, stock split, reverse stock split or other similar event). Except to
the extent otherwise provided in the first sentence of this Section 3.3(b), the
rights of the Investor under Section 3.3(a) hereof shall not be transferable or
assignable in any way (including by operation of law) or to any Person
(including any purchaser, transferee or pledgee of the Series E Shares). Upon
any actual or purported sale, transfer, assignment or gift of the Series E
Shares (other than as provided in the first sentence of this Section 3.3(b)) or
of any of the Investor's rights thereunder, the provisions of Section 3.3(a)
hereof and the Investor's rights thereunder shall immediately terminate and be
of no further force or effect.
3.4 Satisfaction of Purchase Obligations. The purchase and sale
of the Initial Series E Shares by the parties hereto at the First Closing will
satisfy each party's respective obligations under Section 2 of the First
Amendment dated as of July 1, 1995 to the R&D Agreement. The purchase and sale
of the Additional Series E Shares by the parties hereto at the Second Closing
will satisfy each party's respective obligations under Section 1.4(b) of the R&D
Agreement, as amended by Section 1.4(e) of the R&D Agreement, with respect to
the purchase and sale of capital stock of the Company.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION. The Corporation
hereby represents and warrants to the Investor as follows:
4.1. Organization, Standing, Power, Qualification. The
Corporation is a duly organized and validly existing corporation in good
standing under the laws of the State of Delaware with corporate power and
authority adequate for (a) the
<PAGE> 7
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execution and delivery of this Agreement and the performance of its obligations
under this Agreement and R&D Agreement and (b) the carrying on of its business
as presently conducted by it. The Corporation is duly qualified and in good
standing as a foreign corporation in The Commonwealth of Massachusetts and does
not own or lease property or engage in any activity in any other jurisdiction
which would require its qualification in such jurisdiction and in which the
failure to be so qualified would have a material adverse effect on the financial
or other business condition of the Corporation.
4.2. Capitalization.
(a) As more fully described in the capitalization table set forth
in Schedule 4.2 attached hereto, the authorized capital stock of the Corporation
immediately following the First Closing shall consist of:
(i) 22,058,656 shares of Common Stock, of
which:
(1) 4,266,757 shall be validly issued
and outstanding, fully paid and nonassessable;
(2) 15,743,149 shares shall have been
duly reserved for issuance upon conversion of
outstanding shares of Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock and Series E Preferred
Stock and of shares of Series A Preferred Stock
issuable upon exercise of outstanding warrants
issued to Comdisco, Inc. ("Comdisco") and an
outstanding stock option granted to William
Haseltine; and
(3) 1,923,735 shares (the "Option
Shares") shall have been duly reserved for issuance
pursuant to outstanding options under the
Corporation's 1993 Stock Option Plan, as amended
(the "Plan"), and 125,015 shares have been duly
reserved for issuance pursuant to options that may
be granted in the future under the Plan.
(ii) 15,743,149 shares of preferred stock, $.0001
par value per share, 10,345,000 shares of which shall have been
designated as Series A Preferred Stock (with 10,000,000 of such
10,345,000 shares of Series A Preferred Stock to be validly
issued and outstanding shares, fully paid and nonassessable),
1,666,667 shares of which shall have been designated as Series B
Preferred Stock and shall be validly issued and outstanding and
fully paid and nonassessable, 1,000,000 shares of which shall
have been designated as Series C Preferred Stock and shall be
validly issued and outstanding fully paid and nonassessable,
1,481,482 shares of which shall have been designated as Series D
Preferred Stock and shall be validly issued and
<PAGE> 8
-7-
outstanding and fully paid and nonassessable, and 1,250,000
shares of which shall have been designated as Series E Preferred
Stock (with 625,000 of such 1,250,000 shares of Series E
Preferred Stock to be validly issued and outstanding shares and,
pursuant to the terms of this Agreement, fully paid and
nonassessable).
(b) Except as set forth on Schedule 4.2 hereto, there are no
outstanding warrants or options for the purchase from the Corporation of any
shares of its capital stock.
4.3. Governing Documents. The Restated Certificate of
Incorporation and By-Laws are true, complete and correct as of the date hereof.
4.4. Financial Information. Included in Schedule 4.4 attached
hereto is the Corporation's unaudited Balance Sheet dated November 30, 1995 and
the Corporation's unaudited Statements of Operations, Stockholders' Equity and
Cash Flows for the period from January 1, 1995 to November 30, 1995
(collectively, the "Unaudited Financial Statements"). The Unaudited Financial
Statements have been prepared in accordance with generally accepted accounting
principles (except for a lack of footnotes and subject to year-end audit
adjustments) and fairly present, in all material respects, the Corporation's
financial condition as at, and results of operations for the period ended on,
such date. Since November 30, 1995, there has been no material adverse change in
the business, operations, assets, prospects or condition (financial or
otherwise) of the Corporation.
4.5. Enforceability of Agreements. The Board of Directors and
stockholders of the Corporation have duly taken all action necessary to
authorize the execution and delivery of this Agreement and the performance of
this Agreement and the R&D Agreement. This Agreement has been duly executed and
delivered by the Corporation, and each of this Agreement and the R&D Agreement
constitutes the valid and binding agreement of the Corporation, enforceable
against the Corporation in accordance with its terms, except to the extent
enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application relating to or
affecting the enforcement of creditors' rights and by the discretionary nature
of equitable remedies.
4.6. No Violation; No Defaults. Neither the execution and
delivery of this Agreement nor the consummation of any transaction contemplated
hereby or under the R&D Agreement, including, without limitation, the issuance
and sale of the Series E Shares as provided herein, has constituted or resulted
in or will constitute or result in a breach of the provisions of any mortgage,
lease, license or other instrument, contract or agreement to which the
Corporation is a party or by which it is bound, or the charter or By-Laws of the
Corporation or the violation of any judgment, decree, law or governmental or
administrative order, rule or regulation.
<PAGE> 9
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The Corporation is not in default under any provision of its Restated
Certificate of Incorporation or By-Laws, or under any provision of any mortgage,
lease, license or other instrument, contract or agreement to which it is a party
or by which it is bound or of any law, ordinance, approval, rule or regulation
or any terms of any applicable order, judgment or decree of any court,
arbitrator or governmental or administrative authority which, singly or in the
aggregate, may have a material adverse effect on the business, operations,
assets, prospects or condition (financial or otherwise) of the Corporation.
4.7. Brokers' Fees. There are no brokers', finders', or similar
fees due from the Corporation in respect of the transactions contemplated by
this Agreement or the R&D Agreement.
4.8. Absence of Undisclosed Liabilities. Except as disclosed in
Schedule 4.8 hereto, in any of the other Schedules to this Agreement or in the
financial statements referred to in Section 4.4 hereof, or except for
liabilities or obligations arising in the ordinary course of business or created
pursuant to this Agreement or the R&D Agreement, to the best of the
Corporation's knowledge, the Corporation has no material liabilities (fixed or
contingent, including, without limitation, any liabilities for money borrowed or
any tax liabilities due or to become due).
4.9. Litigation. There is neither pending nor, to the
Corporation's knowledge, threatened any action, suit, proceeding or claim, or
any basis therefor or threat thereof, to which the Corporation is or may be
named as a party or its property is or may be subject or which calls into
question any of the transactions contemplated by this Agreement or the R&D
Agreement.
4.10. Consents. No consent, approval or authorization of, or
filing with, any governmental authority (other than (i) filings required to be
made under applicable federal or state securities laws and (ii) filings required
to be made with the United States Food and Drug Administration or other
governmental agency in order to obtain the necessary governmental licenses,
permits and approvals to manufacture, sell or otherwise commercialize any
products under or in connection with the R&D Agreement) is required in
connection with the Corporation's valid execution and delivery of this
Agreement, the Corporation's valid performance of this Agreement and the R&D
Agreement or the consummation of any transaction contemplated under this
Agreement or the R&D Agreement.
4.11. Trademarks, Licenses, Etc. The Corporation has or has the
right to use all patents, patent applications, trademarks, trademark rights,
trade names, trade name rights, copyrights, licenses, trade secrets, permits,
authorizations and other rights, as are necessary for the conduct of its
business, all of which are in full force and effect, and the Corporation, to the
best of its knowledge, is in substantial compliance with the foregoing without
any infringement of, adverse claim in respect
<PAGE> 10
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of or known conflict with the valid rights of others which could affect or
impair in a material manner the business or assets or financial condition of the
Corporation. Annexed hereto as Schedule 4.11 is a schedule listing all patents,
patent applications, licenses, copyrights and similar intellectual property
rights of the Corporation. The Corporation has complied with all of its
obligations of confidentiality in respect of the claimed trade secrets or
proprietary information of others and knows of no violation of such obligations
of confidentiality as are owed to the Corporation. To the best of the
Corporation's knowledge, no employee, agent or consultant of the Corporation is
subject to confidentiality restrictions in favor of any third person the breach
of which could subject the Corporation to any material liability.
4.12. Subsidiaries; Title to Properties; Liens and Encumbrances;
Insurance. Except as set forth on Schedule 4.12 hereto, the Corporation has no
subsidiary and owns no security issued by or interest in any other corporation,
partnership or other organization. The Corporation has valid title to and
ownership of all the properties and assets purported to be owned by it, free
from all mortgages, pledges, liens, security interests, conditional sale
agreements, encumbrances or charges, except such as are described on Schedule
4.12 hereto and those which, singly or in the aggregate, would not have a
material adverse effect on the business, operation, assets, prospects or
condition (financial or otherwise) of the Corporation. The Corporation maintains
insurance of the kinds and in the amounts set forth on Schedule 4.12 hereto.
4.13. Environmental Compliance.
(a) The Corporation is not in violation, or alleged
violation, of any judgment, decree, order, law, license, rule or regulation
pertaining to environmental matters, including without limitation those arising
under the Resource Conservation and Recovery Act ("RCRA"), the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986 ("SARA"),
the Federal Clean Water Act, the Federal Clean Air Act, the Toxic Substances
Control Act, or any state or local statute, regulation, ordinance, order or
decree relating to health, safety or the environment (hereinafter "Environmental
Laws"), which violation would have a material adverse effect on the environment
or the business, assets or financial condition of the Corporation.
(b) The Corporation has not received notice from any third
party, including without limitation any federal, state or local governmental
authority, (i) that the Corporation or any predecessor in interest has been
identified by the United States Environmental Protection Agency ("EPA") as a
potentially responsible party under CERCLA with respect to a site listed on the
National Priorities List, 40 C.F.R. Part 300 Appendix B (1986); (ii) that any
hazardous waste
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as defined by 42 U.S.C. Section 6903(5), any hazardous substances as defined by
42 U.S.C. Section 9601(14), any pollutant or contaminant as defined by 42 U.S.C.
Section 9601(33) and any toxic substance, oil or hazardous materials or other
chemicals or substances regulated by any Environmental Laws ("Hazardous
Substances") which any one of them has generated, transported or disposed of has
been found at any site at which a federal, state or local agency or other third
party has conducted or has ordered that the Corporation or any predecessor in
interest conduct a remedial investigation, removal or other response action
pursuant to any Environmental Law; or (iii) that any of them is or shall be a
named party to any claim, action, cause of action, complaint (contingent or
otherwise), or legal or administrative proceeding arising out of any third
party's incurrence of costs, expenses, losses or damages of any kind whatsoever
in connection with the release of Hazardous Substances.
(c) Except as set forth in Schedule 4.13 hereto: (i) no portion
of the Corporation's properties has been used for the handling, manufacturing,
processing, storage or disposal of Hazardous Substances except in accordance
with applicable Environmental Laws; (ii) in the course of any activities
conducted by the Corporation, no Hazardous Substances have been generated or are
being used on such properties except in accordance with applicable Environmental
Laws; (iii) there have been no releases (i.e. any past or present releasing,
spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting,
escaping, disposing or dumping) or threatened releases of Hazardous Substances
on, upon, into or from the properties of the Corporation; and (iv) in addition,
any Hazardous Substances that have been generated on the properties of the
Corporation have been transported offsite only by carriers having an
identification number issued by the EPA and treated or disposed of only by
treatment or disposal facilities maintaining valid permits as required under
applicable Environmental Laws, which transporters and facilities have been and
are, to the best of the Corporation's knowledge, operating in compliance with
such permits and applicable Environmental Laws.
4.14. Contracts. Except as set forth on Schedule 4.14 hereto, the
Corporation is not a party to or otherwise bound by any written or oral:
(a) agreement requiring the Corporation to make payments in
excess of $10,000 per year, which is not terminable on notice without
costs or other liability to the Corporation; and
(b) agreement for the employment of any officer, employee
or other person on a full-time or consulting basis.
<PAGE> 12
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR. The
Investor represents and warrants to the Corporation that:
5.1. Organization, Standing, Power. The Investor is a duly
organized and validly existing corporation in good standing under the laws of
the State of Delaware with corporate power and authority adequate for (a) the
execution and delivery of this Agreement and the performance of its obligations
under this Agreement and the R&D Agreement and (b) the carrying on of its
business as presently conducted by it. The Investor's principal office is
located in New Jersey.
5.2. Enforceability of Agreements. The Investor has duly taken
all corporate action necessary to authorize the execution and delivery of this
Agreement and the performance of this Agreement and the R&D Agreement. This
Agreement has been duly executed and delivered by the Investor, and each of this
Agreement and the R&D Agreement constitutes the valid and binding agreement of
the Investor, enforceable against the Investor in accordance with its terms,
except to the extent enforcement thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application relating to or affecting the enforcement of creditors' rights and by
the discretionary nature of equitable remedies.
5.3. Consents. No consent, approval or authorization of, or
filing with, any governmental authority (other than (i) filings required to be
made under applicable federal or state securities laws and (ii) filings required
to be made with the United States Food and Drug Administration or other
governmental agency in order to obtain the necessary governmental licenses,
permits and approvals to manufacture, sell or otherwise commercialize any
products under or in connection with the R&D Agreement) is required in
connection with the Investor's valid execution and delivery of this Agreement,
the Investor's valid performance of this Agreement and the R&D Agreement or the
consummation of any transaction contemplated under this Agreement or the R&D
Agreement.
5.4. Investment Representations.
(a) It is acquiring the Initial Series E Shares and, in the event
it should acquire the Additional Series E Shares or Conversion Shares upon
conversion of any of the Series E Shares, it will be acquiring such Additional
Series E Shares and/or any such Conversion Shares, as the case may be, for its
own account, for investment and not with a view to the distribution thereof
within the meaning of the Securities Act.
(b) It is an "accredited investor" as such term is defined in
Rule 501 (a) promulgated under the Securities Act.
<PAGE> 13
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(c) It further understands that the exemptions from registration
afforded by Rule 144 and Rule 144A (the provisions of which are known to it)
promulgated under the Securities Act depend on the satisfaction of various
conditions, and that, if applicable, Rule 144 and Rule 144A may afford the basis
for sales only in limited amounts.
(d) It has such knowledge and experience in business and
financial matters and with respect to investments in securities of
privately-held companies so as to enable it to understand and evaluate the risks
of the Investor's investment in the Series E Shares and the Conversion Shares
and form an investment decision with respect thereto. It has been afforded the
opportunity during the course of negotiating the transactions contemplated by
this Agreement to ask questions of, and to secure such information from, the
Corporation and its officers and directors as it deems necessary to evaluate the
merits of entering into such transactions.
(e) The Investor has adequate net worth and means of providing
for its current needs to sustain a complete loss of its investment in the
Corporation.
(f) Its total assets exceed $5,000,000 and it was not formed for
the specific purpose of acquiring the Series E Shares.
5.5. Brokers. It has not retained, utilized or been represented
by any broker or finder in connection with the transactions contemplated by this
Agreement or the R&D Agreement.
SECTION 6. CONDITIONS PRECEDENT.
6.1. Conditions to the Obligation of the Investor to Consummate
each Closing. The obligation of the Investor to consummate each Closing and to
purchase the Series E Shares to be purchased by the Investor at such Closing is
subject to the satisfaction of the following conditions precedent:
(a) Representations and Warranties. The representations and
warranties contained herein of the Corporation shall be true and correct in all
material respects on and as of the applicable Closing Date with the same force
and effect as though made on and as of such Closing Date, both before and after
giving effect to the sale of the Initial Series E Shares or the Additional
Series E Shares, as the case may be.
<PAGE> 14
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(b) Compliance with Agreement. The Corporation shall have
performed and complied with all of its obligations under this Agreement to be
performed or complied with by it prior to or at such Closing.
(c) Closing Certificate. The Corporation shall have executed and
delivered to the Investor at and as of such Closing a certificate, in form and
substance satisfactory to the Investor, certifying that the conditions specified
in each of Sections 6.1(a) and 6.1(b) hereof have been satisfied.
(d) Filing of Restated Certificate of Incorporation. The Restated
Certificate of Incorporation shall have been duly executed, shall have been
filed with and accepted by the Secretary of State of Delaware and shall have
become effective on or prior to the First Closing Date.
(e) Legal Opinion. The Investor shall have received a legal
opinion from Bingham, Dana & Gould, counsel for the Corporation, addressed to
the Investor and dated the applicable Closing Date, in substantially the form
attached hereto as Exhibit D
(f) Proper Proceedings. All instruments and corporate proceedings
in connection with the transactions contemplated by this Agreement shall be
satisfactory in form and substance to the Investor, and the Investor shall have
received counterpart originals, or certified or other copies of all documents,
including without limitation records of corporate or other proceedings, which it
may have reasonably requested in connection therewith.
6.2. Conditions to the Obligation of the Corporation to Consummate each
Closing. The obligation of the Corporation to consummate each Closing and to
issue and sell the Series E Shares to be sold by the Corporation at such Closing
is subject to the satisfaction of the following conditions precedent:
(a) Representations and Warranties. The representations and
warranties contained herein of the Investor shall be true and correct in all
material respects on and as of the applicable Closing Date with the same force
and effect as though made on and as of such Closing Date, both before and after
giving effect to the sale of the Initial Series E Shares or the Additional
Series E Shares, as the case may be.
(b) Compliance with Agreement. The Investor shall have performed
and complied with all of its obligations under this Agreement to be performed or
complied with by it prior to or at such Closing.
(c) Closing Certificate. The Investor shall have executed and
delivered to the Corporation at and as of such Closing a certificate, in form
and substance
<PAGE> 15
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satisfactory to the Corporation, certifying that the conditions
specified in each of Sections 6.2(a) and 6.2(b) hereof have been satisfied.
(d) Proper Proceedings. All instruments and corporate proceedings
in connection with the transactions contemplated by this Agreement shall be
satisfactory in form and substance to the Corporation, and the Corporation shall
have received counterpart originals, or certified or other copies of all
documents, including without limitation records of corporate or other
proceedings, which it may have reasonably requested in connection therewith.
6.3. Conditions to the Respective Obligations of the Corporation and
the Investor to Consummate the Second Closing. The obligation of the Corporation
to consummate the Second Closing and to issue and sell the Additional Series E
Shares to the Investor, and the obligation of the Investor to consummate the
Second Closing and to purchase the Additional Series E Shares from the
Corporation, are subject to the satisfaction of any and all conditions precedent
thereto set forth in Section 1.4(b) of the R&D Agreement (it being the
understanding of the parties that each party's respective obligation under this
Agreement to consummate the Second Closing and the purchase and sale of the
Additional Series E Shares is contingent on such party being legally obligated
on the Second Closing Date to consummate the purchase or sale, as the case may
be, of the Additional Series E Shares pursuant to Section 1.4(b) of the R&D
Agreement).
SECTION 7. REGISTRATION RIGHTS.
7.1. "Piggyback" Registration. In the event that, at any time or from
time to time during the period commencing immediately after the closing of the
Corporation's initial public offering of Common Stock and ending on the
Registration Rights Termination Date (as defined below), the Corporation
proposes to register any of its Common Stock under the Securities Act, whether
as a result of an offering of Common Stock for the account of the Company or any
selling stockholder (other than pursuant to a registration statement on Form S-4
or Form S-8 or similar or successor forms), the Corporation shall, each such
time, give to the Investor written notice of its intent to do so. Upon the
written request of the Investor given within 30 days after the giving of any
such notice by the Corporation, the Corporation shall use its best efforts to
cause to be included in such registration such number of the Conversion Shares
as the Investor shall have specified in its notice to the Corporation (the
"Requested Conversion Shares"); provided that (i) the Requested Conversion
Shares are equal to at least fifty percent (50%) of the total number of
Conversion Shares then outstanding, (ii) the Investor agrees to sell the
Requested Conversion Shares in the same manner and on the same terms and
conditions as the other shares of Common Stock which the Corporation proposes to
register, and (iii) if the registration is to include shares of Common Stock to
be sold for the account of the Corporation, the proposed
<PAGE> 16
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managing underwriter does not advise the Corporation that in its opinion the
inclusion of the Requested Conversion Shares (without any reduction in the
number of shares to be sold for the account of the Corporation) is likely to
affect adversely the success of the offering or the price the Corporation would
receive for any shares of Common Stock offered by it pursuant thereto, in which
case the rights of the Investor shall be as provided in Section 7.2 below. For
purposes hereof, the term "Registration Rights Termination Date" shall mean the
date upon which the Investor may dispose of shares of Common Stock pursuant to
Rule 144 promulgated under the Securities Act.
7.2. Underwriting Requirements; Reduction of Shares to be
Included in a Registration. In connection with any offering involving an
underwriting of shares of Common Stock, the Corporation shall not be required
under Section 7.1 hereof or otherwise to include any of the Requested Conversion
Shares therein unless the Investor accepts and agrees to the terms of the
underwriting as agreed upon between the Corporation and the underwriters
selected by the Corporation, and then only in such quantity as (without any
reduction in the numbers of shares to be sold for the account of the
Corporation, if any) will not, in the opinion of the underwriters, jeopardize
the success of the offering or the price the Corporation would receive for any
shares of Common Stock offered by it, if any, pursuant to the offering. If the
total number of shares of Common Stock which all selling stockholders of the
Corporation (including, without limitation, the Investor) desire to be included
in any offering exceeds the number of shares which the underwriters believe to
be compatible with the success of the offering or the price the Corporation
would receive for any shares of Common Stock offered by it, if any, pursuant to
the offering, the Corporation shall only be required to include in the offering
so many of the shares of Common Stock of the selling shareholders (including,
without limitation, the Investor) as the underwriters believe will not (without
any reduction in the number of shares to be sold for the account of the
Corporation, if any) jeopardize the success of the offering or the price the
Corporation would receive for any shares of Common Stock offered by it, if any,
pursuant to the offering (the selling shareholders' shares so included to be
apportioned pro rata among the selling shareholders according to the total
number of shares of Common Stock owned by said selling shareholders, or in such
other proportions as shall mutually be agreed to by such selling shareholders),
provided that no such reduction shall be made with respect to any securities
offered for the account of the Corporation.
7.3. Furnish Information. It shall be a condition precedent to
the obligations of the Corporation to take any action pursuant to this Section 7
that the Investor shall furnish to the Corporation such information regarding
the Investor and the shares of Common Stock held by the Investor as the
Corporation shall reasonably request and as shall be required in order to effect
any such registration by the Corporation.
<PAGE> 17
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7.4. Expenses of Registration. All expenses incurred in
connection with a registration pursuant to this Section 7 (excluding
underwriting commissions and discounts and counsel fees of the Investor or of
any other selling shareholders of the Corporation), including without limitation
all registration and qualification fees, printing, and fees and disbursements of
counsel for the Corporation, shall be borne by the Corporation; provided,
however, that the Corporation shall not be required to pay for Blue Sky
registration or qualification expenses in connection with states in which the
Corporation is not registering or qualifying its original issue shares.
7.5 Underwriter's Lock-Up. In consideration of the registration
rights granted by the Corporation pursuant to this Section 7, the Investor
agrees that, at the request of the managing underwriter of any underwritten
public offering of Common Stock, the Investor shall not sell, assign, gift,
pledge or otherwise transfer, or exercise any registration rights with respect
to, any shares of Common Stock at any time during the period of 180 days
following the closing of any such underwritten public offering. The foregoing
restriction on the Investor's exercise of registration rights during any such
180 day period shall be applicable only to the extent that no other person shall
exercise registration rights in respect of equity securities of the Company
during such 180 day period.
SECTION 8. RESTRICTIONS ON TRANSFER.
8.1. General Restriction. None of the Securities shall be sold,
transferred, assigned, pledged, hypothecated or otherwise disposed of by any
Person unless and until such Securities proposed to be sold, transferred,
assigned, pledged, hypothecated or otherwise disposed of are so disposed of (A)
pursuant to and in conformity with (i) an effective registration statement filed
with the Securities and Exchange Commission pursuant to the Securities Act or
(ii) any then available exemption from the registration requirements of the
Securities Act, (B) pursuant to and in conformity with any applicable state
securities or blue sky laws, and (C) pursuant and in conformity with the
provisions of this Section 8 (including, without limitation, this Section 8.1
and Section 8.3 hereof), to the extent applicable. Any transfer or purported
transfer in violation of this Section 8, including, without limitation, this
Section 8.1 and Section 8.3 hereof, shall be null and void. The Corporation may
make a notation on its records or give instructions to any transfer agents of
the Securities in order to implement the restrictions on transfer set forth in
this Section 8. The Corporation shall not incur any liability for any delay in
recognizing any transfer of Securities if the Corporation reasonably believes
that such transfer may have been or would be in violation of the provisions of
the Securities Act, applicable blue sky laws or this Agreement.
<PAGE> 18
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8.2.. Legend. Each certificate representing any of the Series E Shares
or Conversion Shares shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF UNLESS THEY ARE SO REGISTERED OR UNLESS AN
EXEMPTION FROM REGISTRATION IS AVAILABLE. THE SHARES REPRESENTED
BY THIS CERTIFICATE ARE SUBJECT TO THE RESTRICTIONS ON TRANSFER
AND THE VOTING PROVISIONS SET FORTH IN A CERTAIN SERIES E
CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT DATED AS OF
JANUARY 3, 1996, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL
OFFICE OF LEUKOSITE, INC."
8.3. Right of Transfer. Subject to the provisions of Section 8.1
hereof, the Investor may transfer Securities to any Person, provided that any
such Person shall, as a condition precedent to such transfer, agree in writing
to become bound by all of the terms and provisions of this Section 8 and Section
9 hereof. The foregoing proviso of this Section 8.3 shall not be applicable with
respect to Securities that are transferred pursuant to a registration statement
that has been declared effective under the Securities Act or pursuant to Rule
144 promulgated under the Securities Act.
SECTION 9. VOTING AGREEMENT. The Investor hereby agrees that it shall
vote all shares of Series E Preferred Stock and any other shares of voting stock
of the Corporation owned of record or beneficially (or controlled as to voting
rights) by the Investor in favor of any Board member nominations or removals
pursuant to, and in accordance with, all of the terms, provisions and conditions
of Section 5 of the Stockholders' Agreement to the same extent as if the
Investor were a party to the Stockholders' Agreement. Without limiting the
generality of any of the provisions of Section 5 of the Stockholders' Agreement,
the provisions of this Section 9 shall terminate upon the closing of the
Company's initial public offering.
SECTION 10. FINANCIAL REPORTS. Until such time as the Corporation has a
class of its equity securities registered under the Exchange Act and is required
to file reports thereunder pursuant to Sections 13 or 15(d) of the Exchange Act,
the Corporation shall furnish to the Investor (so long as the Investor is the
record owner of any of the Series E Shares) with the financial information
described below:
(a) Within 45 days after the end of each quarterly accounting
period, unaudited financial statements for such quarterly accounting period,
which
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shall include an income statement and a statement of cash flow for such
quarter and a balance sheet as of the last day thereof.
(b) Within 90 days after the end of each fiscal year of the
Corporation, audited financial statements of the Corporation, which shall
include an income statement and a statement of cash flow for such fiscal year
and a balance sheet as of the last day thereof, each prepared in accordance with
generally accepted accounting principles consistently applied, and accompanied
by the report of such independent certified public accountants as shall have
been approved by the Corporation's Board of Directors.
SECTION 11. INDEMNIFICATION.
11.1. Indemnification by the Corporation. The Corporation hereby agrees
to indemnify, defend and hold the Investor (and its directors, officers,
employees, agents and affiliates) harmless from and with respect to any and all
claims, liabilities, losses, damages, costs and expenses (including, without
limitation, the reasonable fees and disbursements of counsel) related to or
arising out of, directly or indirectly, any untruth, inaccuracy, failure or
breach by the Corporation of any representation or warranty, covenant,
obligation or undertaking made by the Corporation in this Agreement.
11.2. Indemnification by the Investor. The Investor hereby agrees to
indemnify, defend and hold the Corporation (and its directors, officers,
employees, agents and affiliates) harmless from and with respect to any and all
claims, liabilities, losses, damages, costs and expenses (including, without
limitation, the reasonable fees and disbursements of counsel) related to or
arising out of, directly or indirectly, any untruth, inaccuracy, failure or
breach by the Investor of any representation or warranty, covenant, obligation
or undertaking made by the Investor in this Agreement.
11.3. Indemnification Procedures. Either party seeking indemnification
hereunder (the "Indemnified Party") shall promptly notify the other party hereto
obligated to provide indemnification hereunder (the "Indemnifying Party") of any
action, suit, proceeding, demand, breach or claim (each, a "Claim") with respect
to which the Indemnified Party claims indemnification hereunder, provided that
failure of the Indemnified Party to give such notice shall not relieve any
Indemnifying Party of its obligations under this Section 11 except to the
extent, if at all, that such Indemnifying Party shall have been prejudiced
thereby. If such Claim relates to any action, suit, proceeding or demand
instituted against the Indemnified Party by a third party (a "Third Party
Claim"), upon receipt of such notice from the Indemnified Party, the
Indemnifying Party shall be entitled to participate in the defense of such Third
Party Claim, and if and only if each of the following conditions is satisfied,
the Indemnifying Party may assume the defense of
<PAGE> 20
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such Third Party Claim, and, in the case of such an assumption, the Indemnifying
Party shall have the authority to negotiate, compromise and settle such Third
Party Claim:
(a) the Indemnifying Party confirms in writing that it is
obligated hereunder to indemnify the Indemnified Party with respect to such
Third Party Claim; and
(b) the Indemnified Party does not give the Indemnifying Party
written notice that it has determined, in the exercise of its reasonable
discretion, that matters of corporate or management policy or a conflict of
interest make separate representation by the Indemnified Party's own counsel
advisable.
The Indemnified Party shall retain the right to employ its own counsel and to
participate in the defense of any Third Party Claim, the defense of which has
been assumed by the Indemnifying Party pursuant hereto, but the Indemnified
Party shall bear and shall be solely responsible for its own costs and expenses
in connection with such participation.
11.4. Notice and Payment of Claims. In the event of any Claims
under Section 11.1 or 11.2 hereof, the Indemnified Party shall advise the
Indemnifying Party in writing of the amount and circumstances surrounding such
Claim. Subject to the Indemnifying Party's right pursuant to Section 11.3 hereof
to defend, negotiate, compromise and settle a Third Party Claim, the amount of
any Claim shall be paid by the Indemnifying Party forthwith on demand. If the
Indemnifying Party fails to pay any such Claim forthwith on demand, the
Indemnified Party may (i) proceed directly against the Indemnifying Party to
recover the amount of such Claim or (ii) set off the amount of such Claim
against amounts owed by the Indemnified Party to the Indemnifying Party. With
respect to liquidated Claims, if within thirty days of receiving notice of any
such Claim the Indemnifying Party has not contested such Claim in writing, the
Indemnifying Party shall be deemed to have accepted the validity of such Claim
and the Indemnifying Party's obligation to indemnify the Indemnified Party with
respect to such Claim pursuant to this Section 11.
SECTION 12. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties set forth herein shall survive each Closing for a
period of two (2) years; provided, however, that the representations and
warranties set forth in Section 4.13 hereof shall survive each Closing
indefinitely. All covenants contained herein shall survive indefinitely until,
by their respective terms, they are no longer operative. Anything disclosed in
any Schedule hereto shall be deemed disclosed in all other Schedules hereto.
<PAGE> 21
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SECTION 13. NOTICES. All notices and other communications
pursuant to this Agreement shall be in writing, either delivered in hand or sent
by first-class mail, postage prepaid, or sent by telex, telecopier, facsimile
machine or telegraph, addressed as follows:
(i) if to the Corporation, to
LeukoSite, Inc.
215 First Street
Cambridge, MA 02142
Telecopier: (617) 278-3399
Attention: Dr. Christopher K. Mirabelli,
President and Chief Executive Officer
with a copy to:
Bingham, Dana & Gould
150 Federal Street
Boston, MA 02110-1726
Telecopier: (617) 951-8736
Attention: Justin P. Morreale, Esquire
(ii) if to the Investor, to:
Senior Vice President,
Research and Development
Parke-Davis Pharmaceutical Research
Warner-Lambert Company
2800 Plymouth Road
Ann Arbor, MI 48105
with a copy to:
Vice President and General Counsel
Warner-Lambert Company
201 Tabor Road
Morris Plains, NJ 07950
Any notice or other communication pursuant to this Agreement
shall be deemed to have been duly given or made and to have become effective (i)
when delivered in hand to the party to which it was directed, (ii) if sent by
telex, telecopier, facsimile machine or telegraph and properly addressed in
accordance with the foregoing provisions of this Section 13, when received by
the addressee, or (iii) if sent by first-class mail, postage prepaid, and
properly addressed in
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accordance with the foregoing provisions of this Section 13, (A) when received
by the addressee, or (B) on the third business day following the day of dispatch
thereof, whichever of (A) or (B) shall be the earlier.
SECTION 14. AMENDMENTS AND WAIVERS. None of the terms or
provisions contained in this Agreement may be amended, modified, supplemented,
waived or terminated unless the Corporation and the Investor shall execute an
instrument in writing agreeing or consenting to such amendment, modification,
supplement, waiver or termination.
SECTION 15. MISCELLANEOUS. This Agreement sets forth the entire
understanding of the parties hereto with respect to the transactions
contemplated hereby. The invalidity or unenforceability of any term or provision
hereof or thereof shall not affect the validity or enforceability of any other
term or provision hereof. The headings in this Agreement are for convenience of
reference only and shall not alter or otherwise affect the meaning hereof. This
Agreement is intended to take effect as a sealed instrument and may be executed
in any number of counterparts which together shall constitute one instrument and
shall be governed by and construed in accordance with the domestic substantive
laws of the Commonwealth of Massachusetts without giving effect to any choice or
conflict of law provision or rule that would cause the application of the
domestic substantive laws of any other state, and shall bind and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns. Except to the extent otherwise provided in Section 3.3(b) hereof, this
Agreement and the rights and obligations hereunder of either party hereto may
not be assigned, transferred or delegated without the prior written consent of
the other party hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Series
E Convertible Preferred Stock Purchase Agreement as of the date first above
written.
LEUKOSITE, INC.
By:
-----------------------------------
Christopher K. Mirabelli, President
WARNER-LAMBERT COMPANY
By:
-----------------------------------
Name:
Title:
<PAGE> 1
Exhibit 10.25(c)
LEUKOSITE, INC.
AMENDMENT, MODIFICATION AND CONVERSION AGREEMENT
This AMENDMENT, MODIFICATION AND CONVERSION AGREEMENT, dated as of June
26, 1997 (this "Agreement"), is between LEUKOSITE, INC., a Delaware corporation
(the "Company"), and WARNER-LAMBERT COMPANY, a Delaware corporation ("Warner").
W I T N E S S E T H:
WHEREAS, the Company and Warner are parties to that certain Research,
Development and Marketing Agreement dated September 30, 1994 (as amended or
modified from time to time, the "MCP-1 Collaborative Agreement");
WHEREAS, the Company and Warner are parties to that certain Research,
Development and Marketing Agreement dated July 1, 1995 (as amended or modified
from time to time, the "IL-8 Collaborative Agreement");
WHEREAS, the Company and Warner are parties to that certain Series C
Convertible Preferred Stock Purchase Agreement dated November 8, 1994 (as
amended or modified from time to time, the "Series C Stock Purchase Agreement");
WHEREAS, the Company and Warner are parties to that certain Series E
Convertible Preferred Stock Purchase Agreement dated January 3, 1996 (as amended
or modified from time to time, the "Series E Stock Purchase Agreement");
WHEREAS, Warner is a holder of 285,715 shares (the "Warner Series G
Shares") of Series G Convertible Preferred Stock, $0.0001 par value per share
(the "Series G Preferred Stock"), of the Company;
WHEREAS, pursuant to the provisions of the Company's Restated
Certificate of Incorporation (as amended and/or further restated from time to
time, the "Restated Certificate"), the shares of Series G Preferred Stock are
convertible into shares of common stock, $0.0001 par value per share ("Common
Stock"), of the Company;
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WHEREAS, Section G.7(j) of Part G of Article III of the Restated
Certificate provides that, upon the consummation of the Company's initial public
offering of Common Stock (the "Initial Public Offering"), all of the outstanding
shares of Series G Preferred Stock shall automatically (without any action on
the part of the holders thereof) be converted into a number of shares of Common
Stock to be determined pursuant to the provisions of such Section G.7(j); and
WHEREAS, the parties desire to enter into this Agreement for purposes
of, among other things, (i) amending each of the MCP-1 Collaboration Agreement,
the IL-8 Collaboration Agreement, the Series C Stock Purchase Agreement and the
Series E Stock Purchase Agreement (collectively, the "Warner Agreements" and,
individually, a "Warner Agreement") to eliminate certain anti-dilution rights
granted by the Company to Warner thereunder, (ii) providing for the conversion
of the Warner Series G Shares into a number of shares of Common Stock that is
different from the number of shares of Common Stock into which the Warner Series
G Shares would otherwise convert pursuant to the provisions of Section G.7(j)
upon the consummation of the Initial Public Offering, and (iii) partially offset
Warner's obligation to pay royalties to the Company pursuant to the MCP-1
Collaboration Agreement and the IL-8 Collaboration Agreement.
NOW, THEREFORE, in consideration of the foregoing premises, the parties
hereto hereby agree as follows:
1. Amendment of MCP-1 Collaboration Agreement. The MCP-1 Collaboration
Agreement is hereby amended as follows:
(i) The last sentence of the first paragraph of Section 1.4(b)
thereof (which last sentence begins with the words "If LeukoSite completes an
initial public offering of Common Stock for its own account at a public offering
price per share of less than $4.00 ...") is hereby deleted in its entirety and
shall have no force or effect whatsoever.
(ii) The fourth sentence of Section 1.4(c) thereof (which
fourth sentence begins with the words "If LeukoSite completes an initial public
offering of Common Stock for its own account at a public offering price per
share of less than $3.00 ...") is hereby deleted in its entirety and shall have
no force or effect whatsoever.
(iii) The fifth sentence of Section 1.4(c) thereof (which
fifth sentence begins with the words "Warner will be issued additional
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Common Stock, promptly after the initial public offering is completed...") is
hereby deleted in its entirety and shall have no force or effect whatsoever.
(iv) The fifth sentence of the first paragraph of Section
1.4(d) thereof (which fifth sentence begins with the words "If LeukoSite
completes an initial public offering of Common Stock for its own account at a
public offering price per share of less than $3.00 ...") is hereby deleted in
its entirety and shall have no force or effect whatsoever.
(v) The sixth sentence of the first paragraph of Section
1.4(d) thereof (which sixth sentence begins with the words "Warner will be
issued additional Common Stock, promptly after the initial public offering is
completed...") is hereby deleted in its entirety and shall have no force or
effect whatsoever.
(vi) The final sentence of Section 2 of the First Amendment to
the MCP-1 Collaborative, dated July 1, 1995 is hereby deleted in its entirety
and shall have no force or effect whatsoever.
2. Amendment of IL-8 Collaboration Agreement. The IL-8 Collaboration
Agreement is hereby amended as follows:
(i) The last sentence of the first paragraph of Section 1.4(b)
thereof (which last sentence begins with the words "If LeukoSite completes an
initial public offering of Common Stock for its own account at a public offering
price per share of less than $5.00 ...") is hereby deleted in its entirety and
shall have no force or effect whatsoever.
(ii) The last sentence of the first paragraph of Section
1.4(c) thereof (which fourth sentence begins with the words "If LeukoSite
completes an initial public offering of Common Stock for its own account at a
public offering price per share of less than $5.00 ...") is hereby deleted in
its entirety and shall have no force or effect whatsoever.
3. Amendment of Series C Stock Purchase Agreement. The Series C Stock
Purchase Agreement is hereby amended by deleting Section 3.2 thereof in its
entirety. Such Section 3.2 shall have no force or effect whatsoever.
4. Amendment of Series E Stock Purchase Agreement. The Series E Stock
Purchase Agreement is hereby amended by deleting
<PAGE> 4
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Section 3.3 thereof in its entirety. Such Section 3.3 shall have no force or
effect whatsoever.
5. Intent of Foregoing Amendments. The parties hereby acknowledge that
the intent of the foregoing amendments to the Warner Agreements is to terminate
all anti-dilution rights provided to Warner under the Warner Agreements with
respect to those shares of capital stock of the Company owned or held by Warner
as of the date hereof. Furthermore, the parties hereby acknowledge the intent of
the Company to waive its right to co-promote products pursuant to the Warner
Agreements as further consideration for Warner's agreement to enter into this
Agreement. The terms and provisions of such waiver will be determined in a
definitive agreement to be negotiated between the parties in good faith.
6. Conversion of Warner Series G Shares into Common Stock Upon the
Initial Public Offering.
(a) Subject to the terms, provisions and conditions of this
Section 6 (including, without limitation, the waiver granted by Warner pursuant
to Section 6(b) below) and notwithstanding anything in Section G.7 of Part G of
Article III of the Restated Certificate to the contrary, each of the Company and
Warner (it being understood that Warner is acting for itself and on behalf of
any subsequent holder of Warner Series G Shares) hereby agrees that, upon the
consummation of the Initial Public Offering, each Warner Series G Share then
outstanding shall, by virtue of and immediately prior to the closing of the
Initial Public Offering and without any action on the part of holder thereof, be
deemed automatically converted into one share of Common Stock (subject to
proportionate and equitable adjustment upon the occurrence of any stock split,
stock dividend, reverse stock split, reclassification or recapitalization of the
Common Stock that becomes effective at any time during the period commencing
after the date of this Agreement and ending immediately prior to the closing of
the Initial Public Offering). The holder of any Warner Series G Shares converted
into Common Stock pursuant to this Section 6(a) shall be entitled to payment of
all declared but unpaid dividends, if any, payable on or with respect to such
shares up to and including the date of the closing of the Initial Public
Offering.
(b) Warner, for itself and its successors and assigns and for
all holders of Warner Series G Shares, hereby irrevocably and forever waives (i)
the application of the provisions of Section G.7(j) of Part G of Article III of
the Restated Certificate to the Warner Series G Shares and
<PAGE> 5
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(ii) any or all rights and/or entitlements that Warner, its successors and
assigns and any and all holders of Warner Series G Shares may have to receive
shares of Common Stock upon mandatory conversion of the Warner Series G Shares
pursuant to Section G.7(j) of Part G of Article III of the Restated Certificate.
Warner, for itself and its successors and assigns and for all holders of Warner
Series G Shares, hereby irrevocably and forever agrees that the only shares of
Common Stock to which any holder of Warner Series G Shares shall be entitled
upon conversion of the Warner Series G Shares pursuant to, or on account or as a
result of, the Initial Public Offering shall be the number of shares of Common
Stock determined pursuant to Section 6(a) of this Agreement.
7. Royalty Offset.
(a) For and in consideration of Warner's agreement to amend
the terms of each of the Warner Agreements in the manner provided in this
Agreement and to modify the conversion of the Warner Series G Shares into Common
Stock in the manner provided in this Agreement, the Company hereby provides
Warner a credit (the "Credit") that can be used solely to offset royalty
payments due under Section 5.6 of the MCP-1 Collaborative Agreement, Section 5.6
of the IL-8 Collaborative Agreement and/or Section 7.1 of the Research,
Development and Marketing Agreement between the Company and Kyowa Hakko Kogyo
Co., Ltd., a Japan corporation ("Kyowa"), dated April 24, 1997 (as amended or
modified from time to time, the "Kyowa Collaboration Agreement"). The aggregate
amount of the Credit shall be determined as set forth in Section 7(b) below.
Capitalized terms used in this Section 7 without definition shall have the
meaning ascribed to such terms in Section 7(e) below.
(b) The aggregate amount of the Credit shall be equal to (i)
2,535,715 (subject to proportionate and equitable adjustment upon the occurrence
of any stock split, stock dividend or reverse stock split of the Common Stock
that becomes effective at any time during the period commencing after the date
of this Agreement and ending immediately prior to the closing of the Initial
Public Offering) multiplied by (ii) the remainder of $3.00 (subject to
proportionate and equitable adjustment upon the occurrence of any stock split,
stock dividend or reverse stock split of the Common Stock that becomes effective
at any time during the period commencing after the date of this Agreement and
ending immediately prior to the closing of the Initial Public Offering) minus
the Initial Public Offering Price. This Section will have no force or effect if
the Credit is a negative number.
<PAGE> 6
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(c) In no event will Warner be entitled to utilize the Credit
to offset more than 50% of any single royalty payment due under the Warner
Agreements or the Kyowa Collaboration Agreement; provided, however, that in the
case of the Kyowa Collaboration Agreement, the Credit and this Agreement will
apply after application of Section 7.3 thereof.
(d) Warner may assign, sell or otherwise transfer its rights
under this Section 7 to any party (including, without limitation, Kyowa) that
may now or in the future be obligated to make any royalty payments under the
Warner Agreements or the Kyowa Collaboration Agreement.
(e) For purposes of this Section 7, the following terms shall
have the meanings provided therefor below:
"Initial Public Offering Price" shall mean the price per share (without
giving effect to any discount, reduction or offset on account of any
underwriters' or brokers' discount, fees or commissions) at which the Company
offers and sells shares of Common Stock pursuant to the Initial Public Offering.
8. Representations and Warranties. Warner hereby represents and
warrants to the Company that (i) Warner is the sole record and beneficial owner
of the Warner Series G Shares on the date hereof, (ii) Warner has not sold,
assigned, pledged or otherwise transferred or disposed of any shares of capital
stock of the Company or any interest therein, (iii) Warner has not granted to
any person any option, warrant or other contractual right to acquire any shares
of capital stock of the Company (including, without limitation, any of the
Warner Series G Shares) or any interest therein.
9. Obligations with respect to Transferees. Warner hereby agrees that,
prior to effecting a sale, assignment, pledge or other transfer or disposition
of any of the Warner Series G Shares or any interest therein, it shall provide a
copy of this Agreement to the proposed transferee and cause such proposed
transferee to agree in writing to become bound by all of the terms and
conditions set forth in this Agreement.
10. Miscellaneous Provisions. In the event of any conflict between this
Agreement and any provision of the Restated Certificate relating to conversion
of Warner Series G Shares, the provisions of this Agreement shall govern. This
Agreement may be executed in any number of counterparts which together shall
constitute one instrument, and shall
<PAGE> 7
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bind and inure to the benefit of (i) the parties hereto, (ii) their respective
successors and assigns and (iii) all transferees of Warner Series G Shares.
11. Termination. This Agreement will terminate ab initio and have no
force and effect if the Initial Public Offering is not closed before the later
of (i) September 1, 1997 or (ii) (if the registration statement relating to the
Initial Public Offering is filed with the Securities and Exchange Commission on
or before July 15, 1997) September 30, 1997.
IN WITNESS WHEREOF, and intending to become legally bound, the Company
and Warner have caused this Agreement to be duly executed as of the date first
above written.
LEUKOSITE, INC.
By: /s/ Christopher K. Mirabelli
---------------------------------------
Christopher K. Mirabelli, President
WARNER-LAMBERT COMPANY
By: _____________________________________
Name:
Title:
<PAGE> 1
Exhibit 10.26
SECOND AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
THIS SECOND AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT, dated this 20th
day of December, 1996 (this "Agreement"), is entered into by and among (i)
LEUKOSITE, INC., a Delaware corporation (the "Corporation"), (ii) those
stockholders of the Corporation listed on Schedule 1 hereto under the caption
"Holders of Series A Convertible Preferred Stock" (hereinafter referred to,
collectively, as the "Series A Investors"), (iii) those stockholders of the
Corporation listed on Schedule 1 hereto under the caption "Holders of Series B
Convertible Preferred Stock" (hereinafter referred to, collectively, as the
"Series B Investors"), (iv) those stockholders of the Corporation listed on
Schedule 1 hereto under the caption "Holders of Series D Convertible Preferred
Stock" (hereinafter referred to, collectively, as the "Series D Investors"), (v)
those stockholders of the Corporation listed on Schedule 1 hereto under the
caption "Holders of Series F Convertible Preferred Stock" (hereinafter referred
to, collectively, as the "Series F Investors"), (vi) those stockholders of the
Corporation listed on Schedule 1 hereto under the caption "Holders of Series G
Convertible Preferred Stock" (hereinafter referred to, collectively, as the
"Series G Initial Investors"), (vii) each person who shall, subsequent to the
date hereof, join in and become a party to this Agreement pursuant to, and in
accordance with, all of the provisions of Section 7 hereof (collectively, the
"Series G Additional Investors") (the Series G Initial Investors and the Series
G Additional Investors being referred to herein, collectively, as the "Series G
Investors"), (viii) Dr. Timothy Springer (the "Scientific Founder"), (ix) Jeane
Ungerleider Springer and (x) George Fishman, Trustee of The Springer Family
Trust (the "Trust") (the Scientific Founder, Jeane Ungerleider Springer and the
Trust being hereinafter referred to, collectively, as the "Founders").
W I T N E S S E T H
WHEREAS, the Corporation, the Series A Investors, the Series B Investors,
the Series D Investors, the Series F Investors and the Founders are parties to
that certain Amended and Restated Stockholders' Agreement, dated February 29,
1996, as heretofore amended (the "Stockholders' Agreement");
WHEREAS, the Corporation and the Series G Investors are parties to a
Securities Purchase Agreement, dated the date hereof (as amended and in effect
from time to time, the "Series G Securities Purchase Agreement"), pursuant to
which the Corporation has agreed to sell to the Series G Investors up to
4,285,715 shares of the Corporation's Series G Convertible Preferred Stock, par
value $.0001 per share, and to issue to the Series G Investors warrants
exercisable for shares of the Corporation's Common Stock, par value $.0001 per
share;
<PAGE> 2
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WHEREAS, the Series G Securities Purchase Agreement provides that it is a
condition precedent to the closing of the transactions contemplated thereunder
that the parties hereto execute and deliver this Agreement; and
WHEREAS, the Corporation, the Series A Investors, the Series B Investors,
the Series D Investors, the Series F Investors, the Series G Investors and the
Founders desire to amend and restate the Stockholders' Agreement in the manner
provided below.
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and undertakings of the Corporation and of the Series A Investors, the
Series B Investors, the Series D Investors, the Series F Investors and the
Series G Investors hereunder, the parties hereto do hereby agree as follows:
SECTION 1. Definitions. As used herein, the following terms shall have the
following respective meanings:
Additional Warner Common Shares shall mean any shares of Common Stock
issued or issuable pursuant to the Series C Stock Purchase Agreement, the Series
E Stock Purchase Agreement and/or either of the Warner Agreements.
Additional Warner Preferred Shares shall mean any shares of any class or
series of Preferred Stock issued or issuable pursuant to either of the Warner
Agreements.
Affiliate shall have the meaning set forth in Rule 405 promulgated under
the Securities Act.
Board shall mean the Board of Directors of the Corporation.
Budget shall have the meaning set forth in Section 2.8 hereof.
Certificate shall mean the Restated Certificate of Incorporation of the
Corporation.
Commission shall mean the U.S. Securities and Exchange Commission.
Common Stock shall mean the Common Stock, par value $.0001 per share, of
the Corporation.
Environmental Laws shall mean all applicable federal, state and local
laws, ordinances, rules and regulations that regulate, fix liability for, or
otherwise relate to, the handling, use (including use in industrial processes,
in construction, as building materials, or otherwise), storage and disposal of
hazardous and toxic
<PAGE> 3
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wastes and substances, and to the discharge, leakage, presence, migration,
threatened release or release (whether by disposal, a discharge into any water
source or system or into the air, or otherwise) of any pollutant or effluent.
Without limiting the preceding sentence, the term "Environmental Laws" shall
specifically include the following federal and state laws, as amended:
FEDERAL
Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. 9601 et. seq.;
Resource Conservation and Recovery Act of
1976, 42 U.S.C. 6901 et. seq.;
Federal Water Pollution Control Act, 33
U.S.C.1251 et. seq.; and
Clean Air Act, 42 U.S.C. 7401 et.seq.
STATE
MASSACHUSETTS ENVIRONMENTAL STATUTES
Massachusetts Clean Waters Act, Mass. Gen. L. Ch. 21, Section 26, et. seq., and
regulations thereto;
Massachusetts Solid Waste Disposal Laws, Mass. Gen. L. Ch. 16, Section 18, et.
seq., and Ch. 111, Section 105A, and regulations thereto;
Massachusetts Oil and Hazardous Materials Release Prevention and Response
Act, Mass. Gen. L., Ch. 21E, Section 1, et. seq., and regulations thereto;
Massachusetts Solid Waste Facilities Law, Mass. Gen. L., Ch. 21H, Section 1, et.
seq., and regulations thereto;
Massachusetts Toxic Use Reduction Act, Mass.
Gen. L., Ch. 21I, Section 1, et. seq., and regulations thereto;
Massachusetts Litter Control Laws, Mass. Gen.
L., Ch. 111, Section 150A, et seq., and regulations thereto;
Massachusetts Wetlands Protection Laws, Mass. Gen. L., Ch. 130, Section 105, et.
seq., and regulations thereto;
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Massachusetts Environmental Air Pollution Control Law, Mass. Gen. L., Ch.
101, Section 2B, et seq., and regulations thereto;
Massachusetts Environmental Policy Act, Mass. Gen. L. 30, Section 61, et. seq.,
and regulations thereto; and
Massachusetts Hazardous Waste Laws, Mass. Gen. L. Ch. 21C, Section 1, et seq.,
and regulations thereto.
Equity Percentage shall mean, as to any Investor or any of the Founders,
that percentage figure which expresses the ratio that (a) the number of shares
of outstanding Common Stock then owned by such Investor or such Founder bears to
(b) the aggregate number of shares of Common Stock then issued and outstanding.
For purposes solely of the computation set forth in clauses (a) and (b) above,
all outstanding securities held by the Investors or the Founders that are
convertible into or exercisable or exchangeable for shares of Common Stock
(including, without limitation, any issued or issuable shares of Preferred
Stock) or for any such convertible, exercisable or exchangeable securities,
shall be treated as having been so converted, exercised or exchanged at the rate
at which such securities are convertible, exercisable or exchangeable for shares
of Common Stock in effect at the time in question (which, for purposes of
Section 2.3 of this Agreement, shall be at the time of delivery by the
Corporation of the notice of the Offer contemplated by Section 2.3(b)), whether
or not such securities are at such time immediately convertible, exercisable or
exchangeable.
Equity Percentage Securities shall have the meaning set forth in Section
2.3(a) hereof.
Exchange Act shall mean the Securities Exchange Act of 1934, as amended.
Exchange Act Registration Statement shall have the meaning set forth in
Section 2.5 hereof.
Excess Securities shall have the meaning set forth Section 2.3(d) hereof.
Excluded Forms shall have the meaning given such term in Section 3.5
hereof.
Excluded Securities shall mean, collectively:
(i) Investment Shares;
(ii) the Reserved Shares;
<PAGE> 5
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(iii) the Series C Preferred Shares, the Series E Preferred Shares
and the Additional Warner Preferred Shares;
(iv) the Additional Warner Common Shares and the shares of Common
Stock issued or issuable upon conversion of the Series C Preferred Shares, the
Series E Preferred Shares and/or the Additional Warner Preferred Shares;
(v) Common Stock issued or issuable to officers, directors or
employees of or consultants or independent contractors to the Corporation: (A)
pursuant to any written agreement, plan or arrangement, to purchase, or rights
to subscribe for, such Common Stock, that has been approved in form and in
substance by the holders of a majority of the combined voting power of the
Series A Preferred Shares, the Series B Preferred Shares, the Series D Preferred
Shares, the Series F Preferred Shares and the Series G Preferred Shares then
outstanding, voting together as one class (which voting power shall be
determined, in the case of the Series A Preferred Shares, in accordance with
Section A.6(a) of Article III of the Certificate, in the case of the Series B
Preferred Shares, in accordance with Section B.6(a) of Article III of the
Certificate, in the case of the Series D Preferred Shares, in accordance with
Section D.6(a) of Article III of the Certificate, in the case of the Series F
Preferred Shares, in accordance with Section F.6(a) of Article III of the
Certificate and in the case of the Series G Preferred Shares, in accordance with
Section G.6(a) of Article III of the Certificate, and in each case, by including
any outstanding Restricted Shares held by such holders), and which, as a
condition precedent to the issuance of such shares, provides for the vesting of
such shares and subjects such shares to restrictions on transfers and rights of
first offer in favor of the Corporation; (B) pursuant to the agreements that are
listed on Schedule 4.2 to the Series G Securities Purchase Agreement; or (C)
upon exercise of any and all stock options referred to in Subsection (vi) below;
provided, however, that the maximum number of shares of Common Stock heretofore
or hereafter issuable pursuant to the 1993 Stock Option Plan and all such
agreements, plans and arrangements described in the foregoing clause (B) shall
not exceed 3,916,970 shares (subject to adjustment as required to comply with
any anti-dilution rights set forth in any such agreement, plan or arrangement)
(vi) any and all stock options granted from time to time pursuant to
the 1993 Stock Option Plan or pursuant to any other stock option plan of the
Corporation adopted and approved in accordance with Sections A.6(d), B.6(c),
D.6(c), F.6(c) and G.6(c) of the Restated Certificate;
(vii) Common Stock issued as a stock dividend, or capital stock of
any class issuable upon any stock split, subdivision, recombination or reverse
stock split of all the outstanding shares of such class of capital stock of the
Corporation;
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(viii) any securities issued or issuable in connection with any
strategic alliance or joint venture or pursuant to the acquisition by the
Corporation of any other corporation, partnership, joint venture, trust, other
entity, business or property, or of any interest in any of the foregoing, in
each case if approved by the holders of a majority of the combined voting power
of the Series A Preferred Shares, the Series B Preferred Shares, the Series D
Preferred Shares, the Series F Preferred Shares and the Series G Preferred
Shares then outstanding, voting together as one class (which voting power shall
be determined, in the case of the Series A Preferred Shares, in accordance with
Section A.6(a) of Article III of the Certificate, in the case of the Series B
Preferred Shares, in accordance with Section B.6(a) of Article III of the
Certificate, in the case of the Series D Preferred Shares, in accordance with
Section D.6(a) of Article III of the Certificate, in the case of the Series F
Preferred Shares, in accordance with Section F.6(a) of Article III of the
Certificate and in the case of the Series G Preferred Shares, in accordance with
Section G.6(a) of Article III of the Certificate, and in each case, by including
any outstanding Restricted Shares held by such holders);
(ix) options to purchase up to 135,000 shares of Series A Preferred
Stock (subject to adjustment as required to comply with any anti-dilution rights
granted in connection with such options) granted to Dr. William A. Haseltine,
the shares of Series A Preferred Stock issued or issuable upon exercise of such
options and the shares of Common Stock issued or issuable upon conversion of
such shares of Series A Preferred Stock;
(x) warrants to purchase up to 210,000 shares of Series A Preferred
Stock granted to Comdisco, Inc., any and all shares of Series A Preferred Stock
issued or issuable upon exercise of such warrants and any and all shares of
Common Stock issued or issuable upon conversion of such shares of Series A
Preferred Stock; or
(xi) the Series G Warrants, any and all shares of Common Stock
and/or other capital stock issued or issuable upon exercise of the Series G
Warrants.
Founders shall mean, collectively, Dr. Timothy Springer, Ms. Jeane
Ungerleider Springer and The Springer Family Trust.
Founder Shares means (i) those shares of Common Stock issued by the
Corporation to each of the Founders upon conversion of all shares of Series A
Common Stock (as defined in the Founders Stock Restriction Agreement) issued to
such Founder pursuant to the Founders Stock Restriction Agreement and (ii) all
shares of Common Stock issued in respect thereof by way of stock splits, stock
dividends, stock combinations, recapitalizations or like occurrences.
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Founders Stock Restriction Agreement means the Stock Restriction
Agreement, dated November 5, 1993, among the Corporation, the Series A Investors
and the Founders, as amended by the First Amendment to Stock Restriction
Agreement, dated September 13, 1994, among the Corporation, the Series A
Investors, the Series B Investors and the Founders, and the Second Amendment to
Stock Restriction Agreement, dated September 12, 1995, among the Corporation,
the Series A Investors, the Series B Investors, the Series D Investors and the
Founders.
Group shall mean: (i) as to an Investor that is a limited partnership: (A)
any and all of the venture capital limited partnerships now existing or
hereafter formed that are affiliated with or under common control with one or
more of the general partners of such Investor or one or more general partners of
the general partner of such Investor and any predecessor or successor thereto,
(B) any limited partner of such Investor, (C) in the case of HCV III or HCV IV,
the HCV Group; (ii) in the case of Everest Trust, any grantor or beneficiary
thereof, or any other trust, corporate entity, or partnership under common
control with Everest Trust for which Rho Management Company, Inc. acts as
investment adviser; (iii) in the case of Hudson Trust, any grantor or
beneficiary thereof, or any other trust, corporate entity, or partnership under
common control with Hudson Trust for which Pyrenees Management Co., Inc. acts as
investment adviser; (iv) as to IS Partners, L.P., any person or entity for whom
or which the Clark Estates, Inc. is acting as an administrative agent in
connection with any investment; (v) as to Schroder L.P. I, Schroder L.P. II,
Schroder Trust, Schroders Incorporated, and Schroder Venture Managers, any
member of the Schroder Group; and (vi) as to any Investor, any other Investor.
Hazardous Materials shall include, without limitation, any flammable
explosives, petroleum products, petroleum byproducts, radioactive materials,
hazardous wastes, hazardous substances, toxic substances or other similar
materials regulated by Environmental Laws.
HCV Group shall mean, collectively, (i) HCV I, (ii) HCV II, (iii) HCV III,
(iv) HCV IV, (v) any venture capital limited partnership now existing or
hereafter formed which is affiliated with or under common control with one or
more general partners of any general partner of HCV III or HCV IV (including,
without limitation, HCV I and HCV II) (an "HCV Fund"); (vi) any limited partners
or affiliates of HCV I, HCV II, HCV III, HCV IV or any other HCV Fund; and (vii)
any successors or assigns of any of the foregoing persons.
HCV I shall mean HealthCare Ventures I, L.P., a Delaware limited
partnership, including any successor thereto or any assignee of the interest, in
whole or in part, of HCV I under this Agreement.
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HCV II shall mean HealthCare Ventures II, L.P., a Delaware limited
partnership, including any successor thereto or any assignee of the interest, in
whole or in part, of HCV II under this Agreement.
HCV III shall mean HealthCare Ventures III, L.P., a Delaware Limited
partnership, including any successor thereto or any assignee of the interest, in
whole or in part, of HCV III under this Agreement.
HCV IV shall mean HealthCare Ventures IV, L.P., a Delaware limited
partnership, including any successor thereto or any assignee of the interest, in
whole or in part, of HCV IV under this Agreement.
Investment Shares shall collectively mean the issued and outstanding
Preferred Shares and the issued and outstanding shares of Common Stock issued
upon conversion of any of the Preferred Shares.
Investors shall mean, collectively, the Series A Investors, the Series B
Investors, the Series D Investors, the Series F Investors and the Series G
Investors, severally, but not jointly and severally; and Investor shall mean any
one of the Series A Investors, Series B Investors, Series D Investors, Series F
Investors or Series G Investors.
Notice of Acceptance shall have the meaning set in Section 2.3(c) hereof.
Offer shall have the meaning set forth in Section 2.3(b) hereof.
Offered Securities shall mean, except for the Excluded Securities, (i) any
shares of Common Stock, Preferred Stock or any other equity security of the
Corporation, (ii) any debt security or capitalized lease having, in either case,
an equity feature with respect to the Corporation, or (iii) any option, warrant
or other right to subscribe for, purchase or otherwise acquire any such equity
security, debt security or capitalized lease.
Other Shares shall have the meaning set forth in Section 3.5(e) hereof.
Preferred Shares shall mean, collectively, the Series A Preferred Shares,
the Series B Preferred Shares, the Series D Preferred Shares, the Series F
Preferred Shares and the Series G Preferred Shares.
Preferred Stock shall mean the Preferred Stock, par value $.0001 per
share, of the Corporation, including, without limitation, the Series A Preferred
Stock, the Series B Preferred Stock, the Series D Preferred Stock, the Series F
Preferred Stock and the Series G Preferred Stock.
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Preferred Stockholders shall mean, collectively, all holders of shares of
Preferred Stock of the Corporation.
Property shall include, without limitation, land, buildings and laboratory
facilities owned or leased by the corporation or as to which the Corporation now
has any duties, responsibilities (for clean-up, remedy or otherwise) or
liabilities under any Environmental Laws, or as to which the Corporation or any
subsidiary of the Corporation may have such duties, responsibilities or
liabilities because of past acts or omissions of the Corporation or any such
subsidiary or their predecessors, or because the Corporation or any such
subsidiary or their processors in the past was such an owner or operator of, or
bore some other relationship with, such land, buildings and/or laboratory
facilities.
Refused Securities shall have the meaning set forth in Section 2.3(f)
hereof.
Reserved Shares shall collectively mean the shares of Common Stock
reserved by the Corporation for issuance upon the conversion of the Preferred
Shares.
Restricted Securities shall mean any of the Preferred Shares and the
Common Stock issued or issuable upon the conversion of the Preferred Shares, and
any other shares of Preferred Stock which may be issued hereafter to any
Investor or any member of its Group, and the Common Stock issued or issuable
upon conversion of such Preferred Stock, in each case to the extent not
previously sold (a) in connection with an effective registration statement filed
pursuant to the Securities Act, or (b) pursuant to Rule 144 or Rule 144A
promulgated by the Commission under the Securities Act.
Restricted Shares shall mean the shares of Common Stock issued or issuable
upon the conversion or exchange of the Restricted Securities or otherwise
constituting a portion of the Restricted Securities and all shares of Common
Stock issued or issuable in respect thereof by way of stock splits, stock
dividends, stock combinations, recapitalizations, or like occurrences.
Schroder Group shall mean, collectively, (i) Schroder L.P. 1; (ii)
Schroder L.P. 2; (iii) Schroder Trust; (iv) Schroders Incorporated; (v) Schroder
Venture Managers; (vi) any venture capital limited partnership now existing or
hereafter formed (a "Schroder Fund") which is affiliated with or under common
control with (x) one or more general partners of the general partner of Schroder
L.P. 1 or Schroder L.P. 2, or (y) Schroder Trust, Schroders Incorporated or
Schroder Venture Managers; (vii) any limited partners, stockholders or
affiliates of Schroder L.P. 1, Schroder L.P. 2, Schroder Trust, Schroders
Incorporated, Schroder Venture Managers or any other Schroder Fund; and (viii)
any successor or assignor of any of the foregoing persons.
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Schroder L.P. 1 shall mean Schroder Ventures International Life
Sciences Fund L.P. 1, a Delaware limited partnership, including any successor
thereto or any assignee of the interest, in whole or in part, of Schroder
L.P. 1 under this Agreement.
Schroder L.P. 2 shall mean Schroder Ventures International Life
Sciences Fund L.P. 2, a Delaware limited partnership, including any successor
thereto or any assignee of the interest, in whole or in part, of Schroder
L.P. 2 under this Agreement.
Schroder Trust shall mean Schroder Ventures International Life Sciences
Trust, a Bermudan unit trust, including any successor thereto or any assignee of
the interest, in whole or in part, of Schroder Trust under this Agreement.
Schroder Venture Managers shall mean Schroder Venture Managers Limited, a
Bermuda corporation acting in its capacity as investment manager for the
Schroder Ventures International Life Sciences Fund Co-Investment Scheme,
including any successor thereto or any assignee of the interest, in whole or in
part, of Schroder Venture Managers, in its capacity as investment manager, under
this Agreement.
Schroders Incorporated shall mean Schroders Incorporated, a Delaware
corporation, including any successor thereto or any assignee of the interest, in
whole or in part, of Schroders Incorporated under this Agreement.
Scientific Founder shall mean Dr. Timothy Springer.
Securities Act shall mean the Securities Act of 1933, as amended.
Series A Investors shall mean those stockholders of the Corporation listed
on Schedule 1 hereto under the caption "Holders of Series A Convertible
Preferred Stock."
Series A Preferred Shares shall mean shares of Series A Preferred Stock
issued pursuant to the Series A Stock Purchase Agreement.
Series A Preferred Stock shall mean the Series A Convertible Preferred
Stock, par value $.0001 per share, of the Corporation.
Series A Stock Purchase Agreement shall mean the Convertible Preferred
Stock Purchase Agreement, dated November 5, 1993, among the Corporation and the
Series A Investors, as amended by that certain Waiver, Consent and Modification
Agreement, dated June 9, 1994, among the Corporation and the Series A Investors.
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Series B Investors shall mean those stockholders of the Corporation listed
on Schedule 1 hereto under the caption "Holders of Series B Convertible
Preferred Stock."
Series B Preferred Shares shall mean shares of Series B Preferred Stock
issued pursuant to the Series B Stock Purchase Agreement.
Series B Preferred Stock shall mean the Series B Convertible Preferred
Stock, par value $.0001 per share, of the Corporation.
Series B Stock Purchase Agreement shall mean the Series B Convertible
Preferred Stock Purchase Agreement, dated September 13, 1994, among the
Corporation and the Series B Investors.
Series C Preferred Shares shall mean shares of Series C Preferred Stock
issued pursuant to the Series C Stock Purchase Agreement.
Series C Preferred Stock shall mean the Series C Convertible Preferred
Stock, par value $.0001 per share, of the Corporation.
Series C Stock Purchase Agreement shall mean that certain Series C
Convertible Preferred Stock Purchase Agreement, dated as of November 8, 1994, by
and between the Corporation and Warner-Lambert Company, as amended from time to
time.
Series D Investors shall mean those stockholders of the Corporation listed
on Schedule 1 hereto under the caption "Holders of Series D Convertible
Preferred Stock."
Series D Preferred Shares shall mean shares of Series D Preferred Stock
issued pursuant to the Series D Stock Purchase Agreement.
Series D Preferred Stock shall mean the Series D Convertible Preferred
Stock, par value $.0001 per share, of the Corporation.
Series D Stock Purchase Agreement shall mean the Series D Convertible
Preferred Stock Purchase Agreement, dated September 12, 1995, among the
Corporation and the Series D Investors.
Series E Preferred Shares shall mean shares of Series E Preferred Stock
issued or issuable pursuant to the Series E Stock Purchase Agreement.
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Series E Preferred Stock shall mean the Series E Convertible Preferred
Stock, par value $.0001 per share, of the Corporation.
Series E Stock Purchase Agreement shall man that certain Series E
Convertible Preferred Stock Purchase Agreement, dated as of January 3, 1996, by
and between the Corporation and Warner-Lambert Company, as amended from time to
time.
Series F Investors shall mean those stockholders of the Corporation listed
on Schedule 1 hereto under the caption "Holders of Series F Convertible
Preferred Stock."
Series F Preferred Shares shall mean shares of Series F Preferred Stock
issued or issuable pursuant to the Series F Stock Purchase Agreement.
Series F Preferred Stock shall mean the Series F Convertible Preferred
Stock, par value $.0001 per share, of the Corporation.
Series F Stock Purchase Agreement shall mean the Series F Convertible
Preferred Stock Purchase Agreement, dated February 29, 1996, among the
Corporation and those purchasers of Series F Preferred Shares specified therein,
as amended and supplemented by that certain Modification Agreement, dated June
17, 1996, by and among the Corporation and those purchasers of
Series F Preferred Shares specified therein.
Series G Additional Investors shall mean, collectively, those Persons who,
at any time and from time to time after the date hereof, purchase shares of
Series G Preferred Stock pursuant to, and in accordance with, Section 3.2 of the
Series G Securities Purchase Agreement.
Series G Initial Investors shall mean those stockholders of the
Corporation listed on Schedule 1 hereto under the caption "Holders of Series G
Convertible Preferred Stock."
Series G Investors shall mean, collectively, the Series G Initial
Investors and the Series G Additonal Investors.
Series G Preferred Shares shall mean shares of Series G Preferred Stock
issued or issuable pursuant to the Series G Securities Purchase Agreement.
Series G Preferred Stock shall mean the Series G Convertible Preferred
Stock, par value $.0001 per share, of the Corporation.
<PAGE> 13
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Series G Securities Purchase Agreement shall mean the Securities Purchase
Agreement, dated December 20, 1996, among the Corporation and the Series G
Investors.
Series G Warrants shall mean warrants to purchase shares of Common Stock
issued or issuable to the Series G Investors pursuant to the Series G Securities
Purchase Agreement.
Stockholders shall mean all holders of capital stock of the Corporation.
Target Month shall have the meaning set forth in Section 2.7(a) hereof.
30-Day Period shall have the meaning set forth in Section 2.3(b) hereof.
Transfer shall include any disposition of any Restricted Securities or of
any interest therein which would constitute a sale thereof within the meaning of
the Securities Act.
Unsold Securities shall have the meaning set forth in Section 2.3(e)
hereof.
Unsold Securities Notice shall have the meaning set forth in Section
2.3(e) hereof.
Unsold Securities Period shall have the meaning set forth in Section
2.3(e) hereof.
Warner Agreements shall mean, collectively, (i) that certain Research,
Development and Marketing Agreement, dated as of September 30, 1994, between the
Corporation and Warner-Lambert Company, as amended from time to time, and (ii)
that certain Research, Development and Marketing Agreement, dated as of July 1,
1995, between the Corporation and Warner-Lambert Company, as amended from time
to time.
SECTION 2 Certain Covenants of the Corporation.
2.1 Meetings of the Board of Directors. The Corporation shall call, and
use its best efforts to have, regular meetings of the Board not less often than
quarterly. The Corporation shall pay all reasonable and appropriately documented
travel expenses and other out-of-pocket expenses incurred by directors who are
not employed by the Corporation in connection with attendance at meetings to
transact the business of the Corporation or attendance at meetings of the Board
or any committee thereof.
<PAGE> 14
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2.2 Reservation of Shares of Common Stock and Preferred Stock, Etc. The
Corporation shall at all times have authorized and reserved out of its
authorized but unissued shares of Common Stock, a sufficient number of shares of
Common Stock to provide for the conversion of the Preferred Shares. Neither the
issuance of the Preferred Shares nor the shares of Common Stock upon the
conversion of the Preferred Shares shall be subject to a preemptive right of any
other Stockholder.
2.3 Right of First Refusal.
(a) The Corporation shall not issue, sell or exchange, agree to
issue, sell or exchange, or reserve or set aside for issuance, sale or exchange,
any Offered Securities unless in each case the Corporation shall have first
offered to sell to each Investor and each Founder such Investor's and such
Founder's Equity Percentage of such Offered Securities (collectively, and in the
aggregate, as to all Investors and all Founders, the "Equity Percentage
Securities"), on the terms set forth herein. Each Investor may, by giving
written notice to the Corporation, delegate its rights and responsibilities with
respect to such offer to one or more members of its Group, which members shall
thereafter be deemed to be "Investors" for the purpose of applying this Section
2.3 to such offer.
(b) The Corporation shall deliver to each Investor and each Founder
written notice of the offer to sell to such Investor and such Founder its or his
Equity Percentage of the Offered Securities, specifying the price and terms and
conditions of the offer (the "Offer"). The Offer by its terms shall remain open
and shall be irrevocable for a period of 30 days from the date of its delivery
to such Investor and such Founder (the "30-Day Period"), subject to extension to
include the Unsold Securities Period (as such term is hereinafter defined).
(c) Each Investor and each Founder shall evidence its, his or her
intention to accept the Offer by delivering a written notice, signed by such
Investor or such Founder, as the case may be, setting forth the number of shares
that such Investor or such Founder elects to purchase (the "Notice of
Acceptance"), whereupon such Investor and/or such Founder, as the case may be,
shall become legally obligated to purchase such number of shares at the closing
referred to in Section 2.3(d) below. The Notice of Acceptance must be delivered
to the Corporation prior to the end of the 30-Day Period.
(d) If the Investors and the Founders tender their Notices of
Acceptance prior to the end of the 30-Day Period indicating their intention to
purchase, in the aggregate, all of the Equity Percentage Securities, then, upon
and subject to the closing of the sale of the remaining portion of the Offered
Securities (the "Excess Securities"), which, in addition to the Equity
Percentage Securities, comprise the aggregate amount of Offered Securities, in
accordance with the provisions set forth in Section 2.3(f)(i) and (ii) hereof,
the Corporation shall schedule
<PAGE> 15
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and effect a simultaneous closing of the sale of the Equity Percentage
Securities. At the closing of the sale of the Equity Percentage Securities, (i)
each Investor and each Founder shall purchase from the Corporation that portion
of the Equity Percentage Securities for which it, he or she tendered a Notice of
Acceptance, upon the terms specified in the Offer, and (ii) each Investor shall
execute and deliver an agreement further restricting transfer of such Equity
Percentage Securities substantially as set forth in Sections 3.1, 3.2 and 3.3 of
this Agreement. In addition, with respect to the Equity Percentage Securities
being purchased by the Investors, the Corporation shall provide each such
Investor with the rights and benefits set forth in this Agreement, and with
respect to the Equity Percentage Securities being purchased by a Founder, the
Corporation shall provide such Founder with the rights and benefits set forth in
Sections 3.5 through 3.10 of this Agreement. The obligation of each such
Investor and each such Founder to purchase such Equity Percentage Securities is
further conditioned upon the preparation of a purchase agreement embodying the
terms of the Offer, which shall be reasonably satisfactory in form and substance
to such Investor, such Founder, counsel for such Investor and counsel for such
Founder. Notwithstanding anything in this Section 2.3(d) and Section 2.3(a)
hereof to the contrary, it shall be a condition precedent to the sale of any of
the Equity Percentage Securities to any member of an Investor's Group who shall
not have previously become a party to this Agreement that such member of an
Investor's Group shall have executed and delivered its written agreement to
become bound by all of the terms and provisions of Section 5 hereof, said
agreement to be in form and substance reasonably satisfaction to the Corporation
and its counsel.
(e) If any Investor or any Founder fails to exercise its, his or her
right hereunder to purchase its, his or her full Equity Percentage of the
Offered Securities (each, a "Nonexercising Party"), the Corporation shall so
notify the other Investors and Founders, by written notice (the "Unsold
Securities Notice"). The Unsold Securities Notice shall be given by the
Corporation promptly after it learns of any Nonexercising Party's intention not
to purchase all of its, his or her Equity Percentage of the Offered Securities,
but in no event later than ten (10) days after the expiration of the 30-Day
Period. Each Investor and Founder who has agreed to purchase its, his or her
full Equity Percentage of the Offered Securities (each, an "Exercising Party")
shall have the right to purchase all or any portion of the Equity Percentage
Securities not purchased by such Nonexercising Parties (the "Unsold
Securities"), on a pro rata basis (determined in accordance with its, his or her
Equity Percentage without giving effect to its, his or her purchase or agreement
to purchase any of the Offered Securities), by giving written notice within ten
(10) days after receipt of the Unsold Securities Notice from the Corporation.
Upon the giving of such notice by the Exercising Party to the Corporation, the
additional shares desired to be purchased shall be deemed added to an included
in such Exercising Party's Notice of Acceptance, and such Exercising Party shall
become legally obligated to purchase such additional shares upon the same terms
applicable
<PAGE> 16
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to such Exercising Party's purchase of its, his or her Equity Percentage of
Offered Securities, said purchase of such additional shares by such Exercising
Party to take place at, and to be subject to, a closing effected in accordance
with the terms set forth in Section 2.3(f) hereof. The period during which (i)
the Corporation must give the Unsold Securities Notice to the Exercising
Parties, and (ii) each of the Exercising Parties has the right to give the
Corporation notice of its intention to purchase all or any portion of its or his
pro rata share of the Unsold Securities, is referred to as the "Unsold
Securities Period".
(f) The Corporation shall have ninety (90) days from the expiration
of the 30-Day Period or the Unsold Securities Period, as the case may be, to
sell all or any part of the Equity Percentage Securities refused by the
Investors and the Founders (the "Refused Securities") to other persons upon
terms and conditions which are in all material respects (including, without
limitation, price and interest rates) no more favorable to such other persons,
or no less favorable to the Corporation, than those set forth in the Offer. Upon
and subject to the closing of the sale of all of the Excess Securities and all
of the Refused Securities (which shall include full payment to the Corporation),
the Corporation shall conduct a simultaneous closing of the sale of the Equity
Percentage Securities agreed to be purchased by those Investors and/or Founders
who tendered a Notice of Acceptance (including the sale of the Unsold Securities
agreed to be purchased by the Exercising Parties). At such closing, (i) each of
the Investors and Founders who tendered a Notice of Acceptance shall purchase
from the Corporation those Offered Securities for which it tendered a Notice of
Acceptance upon the terms specified in the Offer, and (ii) such Investors shall
execute and deliver an agreement restricting transfer of such Offered Securities
substantially as set forth in Sections 3.1, 3.2 and 3.3 of this Agreement. The
Corporation agrees, as a condition precedent to accepting payment for and making
delivery of any Excess Securities or Refused Securities to any executive
officer, employee, consultant or independent contractor of or to the
Corporation, to have each and every such person execute and deliver a stock
restriction agreement substantially in the form attached hereto as Exhibit A or
as otherwise modified and approved by the holders of a majority of the combined
voting power of the Series A Preferred Shares, the Series B Preferred Shares,
the Series D Preferred Shares, the Series F Preferred Shares and the Series G
Preferred Shares then outstanding, voting together as one class (which voting
power shall be determined, in the case of the Series A Preferred Shares, in
accordance with Section A.6(a) of Article III of the Certificate, in the case of
the Series B Preferred Shares, in accordance with Section B.6(a) of Article III
of the Certificate, in the case of the Series D Preferred Shares, in accordance
with Section D.6(a) of Article III of the Certificate, in the case of the Series
F Preferred Shares, in accordance with Section F.6(a) of Article III of the
Certificate, in the case of the Series G Preferred Shares, in accordance with
Section G.6(a) of Article III of the Certificate and, in each case, by including
any outstanding Restricted Shares held by such holders) (a "Stock Restriction
Agreement"), to the extent such purchaser
<PAGE> 17
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has not already executed such Stock Restriction Agreement. In addition, with
respect to the Offered Securities being purchased by the Investors, the
Corporation shall provide each such Investor with the rights and benefits set
forth in this Agreement, and with respect to the Offered Securities being
purchased by a Founder, the Corporation shall provide such Founder with the
rights and benefits set forth in Sections 3.5 through 3.10 of this Agreement.
The obligation of the Exercising Party to purchase such Offered Securities is
further conditioned upon the preparation of a purchase agreement embodying the
terms of the Offer, which shall be reasonably satisfactory in form and substance
to such Exercising Party and the Exercising Party's counsel. Notwithstanding
anything in this Section 2.3(f) and Section 2.3(a) hereof to the contrary, it
shall be a condition precedent to the sale of any of the Equity Percentage
Securities to any member of an Investor's Group who shall not have previously
become a party to this Agreement that such member of an Investor's Group shall
have executed and delivered its written agreement to become bound by all of the
terms and provisions of this Agreement, including, without limitation, the terms
and provisions of Section 5 hereof, said agreement to be in form and substance
reasonably satisfactory to the Corporation and its counsel.
(g) In each case, any Offered Securities not purchased by the
Investors, the Founders or by any other person in accordance with this Section
2.3 may not be sold or otherwise disposed of until they are again offered to the
Investors and the Founders under the procedures specified in Paragraphs (a),
(b), (c), (d), (e) and (f) of this Section 2.3.
(h) Each Investor and each Founder may, by prior written consent,
waive its rights under this Section 2.3. Such a waiver shall be deemed a limited
waiver and shall only apply to the extent specifically set forth in the written
consent of such Investor and/or Founder, as the case may be.
(i) This Section 2.3 and the rights and obligations of the parties
under this Section 2.3 shall automatically terminate upon the closing of the
Corporation's initial public offering, the parties hereby agreeing that the
provisions of this Section 2.3 shall not be applicable to the offer and sale of
any securities of the Corporation pursuant to such initial public offering.
Prior to such termination, this Section 2.3 and the rights and obligations of
each Investor and Founder under this Section 2.3 shall terminate, with respect
to each Investor, at such time as such Investor shall cease to own any
Restricted Shares, and, with respect to each Founder, at such time as such
Founder shall cease to own any Founder Shares.
2.4 Negative Covenants.
(a) Supermajority Approvals. The Corporation shall not merge or
consolidate with or into any corporation, partnership, joint venture, trust or
other entity that is a member of the HCV Group without the consent of the
<PAGE> 18
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majority of the non-HCV Directors (as such term is defined in Section 5.1(b)
below). The Corporation shall not, directly or indirectly, take any of the
actions specified in Article III, Section A.6(c), clauses (ii) or (iii) without
the consent of each Series A Investor.
(b) Stock and Option Agreements. Without the prior written consent
or vote of the holders of 66 2/3% of the combined voting power of the Series A
Preferred Stock, the Series B Preferred Stock, the Series D Preferred Stock, the
Series F Preferred Stock and the Series G Preferred Stock then outstanding,
voting together as one class (which voting power shall be determined, in the
case of the Series A Preferred Stock, in accordance with Section A.6(a) of
Article III of the Certificate, in the case of the Series B Preferred Stock, in
accordance with Section B.6(a) of Article III of the Certificate, in the case of
the Series D Preferred Stock, in accordance with Section D.6(a) of Article III
of the Certificate, in the case of the Series F Preferred Stock, in accordance
with Section F.6(a) of Article III of the Certificate, in the case of the Series
G Preferred Stock, in accordance with Section G.6(a) of Article III of the
Certificate and, in each case, by including any outstanding Restricted Shares
held by such holders), the Corporation shall not issue any shares of Common
Stock or options (except for those options outstanding on the date hereof),
warrants or other rights to acquire Common Stock or other securities of the
Corporation to any employee, officer, director, consultant, independent
contractor or other person or entity, except for Excluded Securities or pursuant
to a written agreement providing for the vesting of the shares and subjecting
such shares to restrictions on transfers and rights of first offer in favor of
the Corporation that have been approved in form and in substance by the holders
of 66 2/3% of the combined voting power of the Series A Preferred Stock, the
Series B Preferred Stock, the Series D Preferred Stock, the Series F Preferred
Stock and the Series G Preferred Stock then outstanding, voting together as one
class (which voting power shall be determined, in the case of the Series A
Preferred Stock, in accordance with Section A.6(a) of Article III of the
Certificate, in the case of the Series B Preferred Stock, in accordance with
Section B.6(a) of Article III of the Certificate, in the case of the Series D
Preferred Stock, in accordance with Section D.6(a) of Article III of the
Certificate, in the case of the Series F Preferred Stock, in accordance with
Section F.6(a) of Article III of the Certificate, in the case of the Series G
Preferred Stock, in accordance with Section G.6(a) of Article III of the
Certificate and, in each case, by including any outstanding Restricted Shares
held by such holders), as a condition precedent to the issuance of such
securities.
(c) Registration Rights. The Corporation shall not hereafter grant
to any persons any rights to register or qualify stock of the Corporation under
federal or state securities laws, unless it shall have first obtained the
written consent of Investors holding 66 2/3% of the combined voting power of the
Series A Preferred Shares, the Series B Preferred Shares, the Series D Preferred
Shares, the Series F Preferred Shares and the Series G Preferred Shares then
outstanding,
<PAGE> 19
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voting together as one class (which voting power shall be determined, in the
case of the Series A Preferred Shares, in accordance with Section A.6(a) of
Article III of the Certificate, in the case of the Series B Preferred Shares, in
accordance with Section B.6(a) of Article III of the Certificate, in the case of
the Series D Preferred Shares, in accordance with Section D.6(a) of Article III
of the Certificate, in the case of the Series F Preferred Shares, in accordance
with Section F.6(a) of Article III of the Certificate, in the case of the Series
G Preferred Shares, in accordance with Section G.6(a) of Article III of the
Certificate and, in each case, by including any outstanding Restricted Shares
held by such holders).
2.5 Filing of Reports Under the Exchange Act.
(a) The Corporation shall give prompt notice to the holders of
Preferred Stock of (i) the filing of any registration statement (an "Exchange
Act Registration Statement") pursuant to the Exchange Act, relating to any class
of equity securities of the Corporation, (ii) the effectiveness of such Exchange
Act Registration Statement, and (iii) the number of shares of such class of
equity securities outstanding, as reported in such Exchange Act Registration
Statement, in order to enable the holders of Preferred Stock to comply with any
reporting requirements under the Exchange Act or the Securities Act. Upon the
written request of a majority in interest of the holders of Preferred Shares,
the Corporation shall, at any time after the Corporation has registered any
shares of Common Stock under the Securities Act, file an Exchange Act
Registration Statement relating to any class of equity securities of the
Corporation then held by the holders of Preferred Shares or issuable upon
conversion or exercise of any class of debt or equity securities or warrants or
options of the Corporation then held by the Investors, whether or not the class
of equity securities with respect to which such request is made shall be held by
the number of persons which would require the filing of a registration statement
under Section 12(g)(1) of the Exchange Act.
(b) If the Corporation shall have filed an Exchange Act Registration
Statement or a registration statement (including an offering circular under
Regulation A promulgated under the Securities Act) pursuant to the requirements
of the Securities Act, which shall have become effective (and in any event, at
all times following the initial public offering of any of the securities of the
Corporation), then the Corporation shall comply with all of the reporting
requirements of the Exchange Act (whether or not it shall be required to do so)
and shall comply with all other public information reporting requirements of the
Commission as a condition to the availability of an exemption from the
Securities Act for the sale of any of the Restricted Securities by any holder of
Restricted Securities (including any such exemption pursuant to Rule 144 or Rule
144A thereof, as amended from time to time, or any successor rule thereto or
otherwise). The Corporation shall cooperate with each holder of Restricted
Securities in supplying such information as may be necessary for such holder of
Restricted Securities to complete and file any
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information reporting form presently or hereafter required by the Commission as
a condition to the availability of an exemption from the Securities Act (under
Rule 144 or Rule 144A thereunder or otherwise) for the sale of any of the
Restricted Securities by any holder of Restricted Securities.
2.6 Access to Records. The Corporation shall afford to each Investor that
is a holder of any Investment Shares and such Investor's employees, counsel and
other authorized representatives, free and full access, at all reasonable times
and for reasonable periods of time, to all of the books, records and properties
of the Corporation and to all officers and employees of the Corporation.
2.7 Financial Reports. Until such time that the Corporation has a class of
its equity securities registered under the Exchange Act and is required to file
reports thereunder pursuant to Sections 13 or 15(d) of the Exchange Act, except
with respect to the obligation set forth in Section 2.7(e)(i) hereunder which
shall survive such time, the Corporation shall furnish each Investor that is a
holder of any Investment Shares with the financial information described below,
and shall furnish to each Founder that is a holder of any Founder Shares with
the financial information described in Sections 2.7(b) and (c) below:
(a) Within 20 days after the last day of each month (each, a "Target
Month") (or such other calendar period as is approved by the Board), financial
statements, including a balance sheet as of the last date of such Target Month,
a statement of income (or monthly operating expenses) for such month, together
with a cumulative statement of income from the first day of the current year to
the last day of such month, which statements shall be prepared from the books
and records of the Corporation, a cash flow analysis, together with cumulative
cash flow analyses from the first day of the current year to the last day of
such month, and a comparison between the actual monthly operating expenses and
the projected figures for such month and the comparable figures for the prior
year, subject to the provisions of Section 2.9 hereof.
(b) Within 45 days after the end of each quarterly accounting
period, unaudited financial statements for such quarterly accounting period,
certified by the Chief Financial Officer or the Treasurer of the Corporation, as
presenting fairly the financial condition and results of operations of the
Corporation and as having been prepared on a basis consistent with the
accounting principles reflected in the Corporation's annual audited financial
statements, accompanied by a report, signed by the Chief Financial Officer or
the Treasurer of the Corporation, summarizing the operating and financial
highlights of the Corporation for such quarterly accounting period, which report
shall include (a) a comparison between the actual quarterly operating and
financial results, the Budget (as defined in Section 2.8 hereof) and the results
of the similar quarterly accounting period for the prior fiscal year of the
Corporation, together with an explanation of material
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variances from the Budget and such similar quarterly accounting period, as the
case may be, and (b) a narrative analysis of operations and trends in the
business of the Corporation during such quarterly accounting period.
(c) Within 90 days after the end of each fiscal year of the
Corporation, audited financial statements of the Corporation, which shall
include an income statement and a statement of cash flow for such fiscal year
and a balance sheet as of the last day thereof, each prepared in accordance with
generally accepted accounting principles consistently applied, and accompanied
by the report of such independent certified public accountants as shall have
been approved by the Board.
(d) If for any period the Corporation shall have any subsidiary or
subsidiaries whose accounts are consolidated with those of the Corporation, then
the financial statements delivered for such period pursuant to paragraphs (a),
(b) and (c) of this Section 2.7 shall be the consolidated and consolidating
financial statements of the Corporation for all such consolidated subsidiaries.
(e) Promptly upon becoming available:
(i) copies of all financial statements, reports, press
releases, notices, proxy statements and other documents sent by the Corporation
to its Stockholders or released to the public and copies of all regular and
periodic reports, if any, filed by the Corporation with the Commission or any
securities exchange or self-regulatory organization; and
(ii) any other financial or other information available to
management of the Corporation that any Investor that is a holder of any
Investment Shares shall have reasonably requested on a timely basis.
2.8 Budget and Operating Forecast. The Corporation shall prepare and
submit to the Board and each Investor that is a holder of any Investment Shares
an operating plan with monthly and quarterly breakdowns (the "Budget") for each
fiscal year at least 45 days prior to the beginning of each fiscal year of the
corporation. The Budget shall be deemed accepted as the Budget for such fiscal
year only when it has been approved by the Board. The budget shall be reviewed
by the Corporation periodically and all changes therein, and all material
deviations therefrom, shall be reviewed by the Board on at least a quarterly
basis.
2.9 System of Accounting. The Corporation shall maintain, and cause each
of its subsidiaries, when and if any shall exist, to maintain, its books of
accounts, related records and system of accounting in accordance with good
business practices and generally accepted accounting principles, and shall cause
the matters contained therein to be appropriately and accurately reflected in
the
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financial reports (which shall be prepared in accordance with generally accepted
accounting principles) furnished pursuant to this Agreement.
2.10 Restriction on Transfer Rights: Confidentiality. The rights granted
to each Investor that is a holder of any Investment Shares pursuant to Sections
2.6 through 2.8 hereof shall not be transferred or assigned by such Investor to,
and shall not inure to the benefit of, any successor, transferee or assignee of
such Investor, which is engaged in any business directly competitive with the
Corporation or any line of business engaged in by the Corporation.
2.11 Confidentiality and Non-Competition Agreements for Key Employees. The
Corporation shall cause each person who is presently an employee of or a
consultant or independent contractor to the Corporation or who becomes an
employee of or a consultant to the Corporation subsequent to the date hereof and
who shall have or be proposed to have access to confidential or proprietary
information of the Corporation to execute a confidentiality and non-competition
agreement in form and substance attached hereto or otherwise approved by the
Board prior to the commencement of such person's employment by the Corporation
in such capacity.
2.12 Stock Restriction Agreement for Directors, Officers, Employees and
Consultants who are or become Stockholders. The Corporation shall cause each of
its directors, officers, employees, consultants or independent contractors who
own any shares of capital stock of the Corporation, or who may own in the future
any such shares, including, without limitation, upon exercise of options,
warrants or other rights to purchase such shares, to execute a Stock Restriction
Agreement substantially in the form attached hereto, and as may be modified and
amended from time to time with the approval of the holders of a majority of the
combined voting power of the Series A Preferred Shares, the Series B Preferred
Shares, the Series D Preferred Shares, the Series F Preferred Shares and the
Series G Preferred Shares then outstanding, voting together as one class (which
voting power shall be determined, in the case of the Series A Preferred Shares,
in accordance with Section A.6(a) of Article III of the Certificate, in the case
of the Series B Preferred Shares, in accordance with Section B.6(a) of Article
III of the Certificate, in the case of the Series D Preferred Shares, in
accordance with Section D.6(a) of Article III of the Certificate, in the case of
the Series F Preferred Shares, in accordance with Section F.6(a) of Article III
of the Certificate, in the case of the Series G Preferred Shares, in accordance
with Section G.6(a) of Article III of the Certificate and, in each case, by
including any outstanding Restricted Shares held by such holders), prior and as
a condition to the acquisition of such shares by such person.
2.13 Marketing and Promotional Material. Each of the Investors will have
the right to review and approve, in advance of publication, distribution or
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dissemination, any reference to such Investor or any entity affiliated with such
Investor (other than the Corporation), contained in any document, instrument,
report or filing or in any advertising, marketing, promotional and similar
materials.
2.14 Environmental Matters. The Corporation shall promptly advise the
Investors in writing of any pending or threatened claim, demand or action by any
governmental authority or third party relating to any Hazardous Materials
affecting the Property of which it has knowledge. The Corporation shall not
discharge, place, release, spill or dispose of any Hazardous Materials or any
other pollutants or effluents upon the Property or elsewhere (including, but not
limited to, underground injection of such substances), and the Corporation shall
not discharge into the air any emission which would require a permit under the
Clean Air Act or its state counterparts or any other Environmental Laws, except
in compliance with the Environmental Laws. The Stockholders of the Corporation
shall have no control over, or authority with respect to, the waste disposal
operations of the Corporation. The Corporation hereby indemnifies, defends and
holds harmless the Investors from and against any and all manner of actions,
causes of action, suits, debts, accounts, controversies, judgments, claims,
demands, losses or liabilities of any nature (including reasonable attorneys'
fees) directly or indirectly arising out of or attributable to (a) any
misrepresentation or breach of the representations and covenants set forth in
Section 5.18 of the Series A Stock Purchase Agreement, or (b) the use,
generation, storage, release, threatened release, discharge, disposal or
presence of Hazardous Materials on, under or about the Property by any person
during the period that the Corporation was the legal or equitable owner of the
Property or which occurred prior to such time and was otherwise actually known
by, or should have been known by, the Corporation. The obligation of the
Corporation to Indemnify the Investors shall specifically cover and include,
without limitation, all fines and penalties imposed by federal, state or local
authorities, costs of removing or neutralizing the Hazardous Materials, injury
to the property adjoining the Property, injury to persons living or working on
or about the Property or adjoining or otherwise affecting property, and all
other indirect or consequential damages incurred by the Investors.
SECTION 3. Transfer of Securities.
3.1 Restriction on Transfer. The Restricted Securities shall not be
transferable, except upon the conditions specified in this Section 3, which
conditions are intended solely to ensure compliance with the provisions of the
Securities Act in respect of the Transfer thereof and to ensure compliance with
the provisions of Section 5 hereof. It shall be a condition precedent to the
transfer of any Restricted Securities by any Investor (other than pursuant to
the exercise of such Investor's registration rights as provided in Section 3.4,
3.5 or 3.6 below) that the proposed transferee of such Investor shall have
agreed (pursuant to a written agreement in form and substance reasonably
satisfactory to the Corporation) to assume and
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become legally obligated to perform all of the obligations of such Investor
under this Section 3.1 and Section 5 hereof.
3.2 Restrictive Legend. Each certificate evidencing any Restricted
Securities and each certificate evidencing any such securities issued to
subsequent transferees of any Restricted Securities shall (unless otherwise
permitted by the provisions of Section 3.3 or 3.10 hereof) be stamped or
otherwise imprinted with a legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED
FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAW. THE SECURITIES MAY
NOT BE PLEDGED, HYPOTHECATED, SOLD OR TRANSFERRED IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OF 1933 OR ANY APPLICABLE STATE SECURITIES LAW OR AN
EXEMPTION THEREFROM UNDER SUCH ACT OR LAW. ADDITIONALLY, THE
TRANSFER OF THESE SECURITIES IS SUBJECT TO THE CONDITIONS SPECIFIED
IN THE STOCKHOLDERS' AGREEMENT, DATED NOVEMBER 5, 1993, AMONG
LEUKOSITE, INC. AND CERTAIN OTHER SIGNATORIES THERETO, AS AMENDED,
AND IN THE STOCK RESTRICTION AGREEMENT, DATED NOVEMBER 5, 1993,
AMONG LEUKOSITE, INC. AND CERTAIN OTHER SIGNATORIES THERETO, AS
AMENDED, AND NO TRANSFER OF SUCH SECURITIES SHALL BE VALID OR
EFFECTIVE UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED. COPIES OF SUCH
AGREEMENTS MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE
HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF LEUKOSITE,
INC.
3.3 Notice of Transfer. By acceptance of any Restricted Securities, the
holder thereof agrees to give prior written notice to the Corporation of such
holder's intention to effect any Transfer and to comply in all other respects
with the provisions of this Section 3.3. Each such notice shall describe the
manner and circumstances of the proposed Transfer and shall be accompanied by:
a) the written opinion of counsel for the holder of such Restricted Securities,
or, at such holder's option, a representation letter of such holder, addressed
to the Corporation (which opinion and counsel, or representation letter, as the
case may be, shall be reasonably acceptable to the Corporation), as to whether,
in the case of a written opinion, in the opinion of such counsel, such proposed
Transfer involves a transaction requiring registration of such Restricted
Securities under the Securities Act and applicable state securities laws or an
exemption thereunder is available, or,
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in the case of a representation letter, such letter sets forth a factual basis
for concluding that such proposed transfer involves a transaction requiring
registration of such Restricted Securities under the Securities Act and
applicable State Securities laws or that an exemption thereunder is available,
or (b) if such registration is required and if the provisions of Section 3.4
hereof are applicable, a written request addressed to the Corporation by the
holder of such Restricted Securities, describing in detail the proposed method
of disposition and requesting the Corporation to effect the registration of such
Restricted Shares pursuant to the terms and provisions of Section 3.4 hereof;
provided, however, that (y) in the case of a transfer by a holder to a member of
such holder's Group, no such opinion of counsel or representation letter of the
holder shall be necessary, provided that the transferee agrees in writing to be
subject to Sections 3.1, 3.2, 3.3 and 3.10 hereof to the same extent as if such
transferee were originally a signatory to this Agreement, and (z) in the case of
any holder of Restricted Securities that is a partnership, no such opinion of
counsel or representation letter of the holder shall be necessary for a transfer
by such holder to a partner of such holder, or a retired partner of such holder
who retires after the date hereof, or the estate of any such partner or retired
partner if, with respect to such transfer by a partnership, (i) such transfer is
made in accordance with the partnership agreement of such partnership, and (ii)
the transferee agrees in writing to be subject to the terms of Sections 3.1,
3.2, 3.3 and 3.10 hereof to the same extent as if such transferee were
originally a signatory to this Agreement. If in such opinion of counsel or as
reasonably concluded from the facts set forth in the representation letter of
the holder (which opinion and counsel, or representation letter, as the case may
be, shall be reasonably acceptable to the Corporation), the proposed Transfer
may be effected without registration under the Securities Act and any applicable
state securities laws or blue sky laws, then the holder of Restricted Securities
shall thereupon be entitled to effect such Transfer in accordance with the terms
of the notice delivered by it to the Corporation. Each certificate or other
instrument evidencing the securities issued upon such Transfer (and each
certificate or other instrument evidencing any such securities not Transferred)
shall bear the legend set forth in Section 3.2 hereof unless: (a) in such
opinion of such counsel or as can be concluded from the representation letter of
such holder (which opinion and counsel representation letter shall be reasonably
acceptable to the Corporation) the registration of future Transfers is not
required by the applicable provisions of the Securities Act and state securities
laws, or (b) the Corporation shall have waived the requirement of such legend;
provided, however, that such legend shall not be required on any certificate or
other instrument evidencing the securities issued upon such Transfer in the
event such Transfer shall be made in compliance with the requirements of Rule
144 (as amended from time to time or any similar or successor rule) promulgated
under the Securities Act. The holder of Restricted Securities shall not effect
any Transfer until such opinion of counsel or representation letter of such
holder has been given to and accepted by the Corporation (unless waived by the
Corporation) or until registration of the Restricted Shares involved in the
above-mentioned request has become effective
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under the Securities Act. In the event that an opinion of counsel is required by
the registrar or transfer agent of the Corporation to effect a transfer of
Restricted Securities in the future, the Corporation shall seek and obtain such
opinion from its counsel, and the holder of such Restricted Securities shall
provide such reasonable assistance as is requested by the Corporation (other
than the furnishing of an opinion of counsel) to satisfy the requirements of the
registrar or transfer agent to effectuate such transfer.
3.4 Required Registration. If the Corporation shall be requested (i) by
Investors holding at least 50% of the outstanding Restricted Securities (based
on the shares of Common Stock that constitute Restricted Securities and, in the
case of those Restricted Securities that are Preferred Shares, on the underlying
Common Stock for which the Preferred Shares are convertible) held by the
Investors to effect the registration under the Securities Act of Restricted
Shares, or (ii) after the first registration pursuant to this Section 3.4, by
one or more of the Investors holding Restricted Securities to effect the
registration under the Securities Act of Restricted Shares having a proposed
aggregate offering price equal to or greater than $5,000,000, then the
Corporation shall promptly give written notice of such proposed registration to
all holders of Restricted Securities, and thereupon the Corporation shall
promptly use its best efforts to effect the registration under the Securities
Act of the Restricted Shares that the Corporation has been requested to register
for disposition as described in the request of such holders of Restricted
Securities and in any response received from any of the holders of Restricted
Securities within 30 days after the giving of the written notice by the
Corporation; provided, however, that the Corporation shall not be obligated to
effect any registration under the Securities Act except in accordance with the
following provisions and Section 3.6:
(a) Subject to Section 3.6, the Corporation shall not be obligated to file
and cause to become effective more than two (2) registration statements in which
Restricted Shares are registered under the Securities Act pursuant to this
Section 3.4, if all of the Restricted Shares offered pursuant to such
registration statements are sold thereunder upon the price and terms offered.
(b) Notwithstanding the foregoing, the Corporation may include in each
such registration requested pursuant to this Section 3.4 any authorized but
unissued shares of Common Stock (or authorized treasury shares) for sale by the
Corporation or any issued and outstanding shares of Common Stock for sale by
others; provided, however, that, if the number of shares of Common Stock so
included pursuant to this clause (b) exceeds the number of Restricted Shares
requested by the holders of Restricted Shares requesting such registration, then
such registration shall be deemed to be a registration in accordance with and
pursuant to Section 3.5; and provided further, however, that the inclusion of
such previously authorized but unissued shares (or authorized treasury shares)
by the
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Corporation or issued and outstanding shares of Common Stock by others in such
registration does not adversely affect, in the sole opinion of the holders of
Restricted Securities requesting such registration, the ability of the holders
of Restricted Securities requesting such registration to market the entire
number of Restricted Shares requested by them, in which case the Corporation
shall include in such registration only so many of such shares to be offered for
the account of the Corporation and/or others (in accordance with the priorities,
if any, then existing among the Corporation and such others) as will not so
adversely affect the ability of holders of Restricted Securities requesting such
registration to market the entire number of Restricted Securities requested by
them.
(c) Notwithstanding the provisions of subparagraph (a) above in this
Section 3.4, no Investor may request any registration of Restricted Shares
pursuant to this Section 3.4 within six (6) months of the effective date of any
registration statement in connection with any other registration pursuant to
this Section 3.4.
3.5 Piggyback Registration.
(a) Each time that the Corporation proposes for any reason to
register any of its securities under the Securities Act, other than pursuant to
a registration statement on Form S-4 or Form S-8 or similar or successor forms
(collectively, "Excluded Forms"), the Corporation shall promptly give written
notice of such proposed registration to the Investors and the Founders, which
shall offer such holders the right to request inclusion of any Restricted Shares
or Founder Shares in the proposed registration.
(b) Each Investor and each Founder shall have 30 days from the
receipt of such notice to deliver to the Corporation a written request
specifying the number of Restricted Shares and Founder Shares such holder
intends to sell and the holder's intended method of disposition.
(c) In the event that the proposed registration by the Corporation
is, in whole or in part, an underwritten public offering of securities of the
Corporation, any request under Section 3.5(b) may specify that the Restricted
Shares and Founder Shares be included in the underwriting on the same terms and
conditions as the shares of Common Stock, if any, otherwise being sold through
underwriters under such registration.
(d) Upon receipt of a written request pursuant to Section 3.5(b),
the Corporation shall promptly use its best efforts to cause all such Restricted
Shares and Founder Shares to be registered under the Securities Act, to the
extent required to permit sale or disposition as set forth in the written
request.
(e) Notwithstanding the foregoing, if the managing underwriter
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determines and advises in writing that the inclusion of all Restricted Shares
and Founder Shares proposed to be included in the underwritten public offering,
together with any other issued and outstanding shares of Common Stock proposed
to be included therein by holders other than the holders of Restricted
Securities and Founder Shares (such other shares hereinafter collectively
referred to as the "Other Shares") would interfere with the successful marketing
of the securities proposed to be included in the underwritten public offering,
then the number of such shares to be included in such underwritten public
offering shall be reduced, and shares shall be excluded from such underwritten
public offering in a number deemed necessary by such managing underwriter, by
excluding Restricted Shares, Founder Shares and Other Shares, pro-rata, based on
the number of Restricted Shares, Founder Shares and Other Shares, as the case
may be, that each holder proposed to include in the underwritten public
offering. The shares of Common Stock that are excluded from the underwritten
public offering pursuant to the preceding sentence shall be withheld from the
market by the holders thereof for a period, not to exceed 180 days or any
shorter period applicable to Affiliates of the Corporation, from the closing of
such underwritten public offering, that the managing underwriter reasonably
determines as necessary in order to effect the underwritten public offering.
3.6 Registrations on Form S-3. At such time as the Corporation shall have
qualified for the use of Form S-3 (or any successor form promulgated under the
Securities Act), each of those Investors that are holders of Restricted
Securities shall have the right to demand in writing an unlimited number of
registrations on Form S-3; provided, however, that the Corporation shall not be
required to effect more than two (2) such registrations on Form S-3 in any given
year; and provided further, however, that the Corporation shall not be required
to effect any such registration on Form S-3 within three (3) months of the
effective date of any registration statement in connection with any other
registration pursuant to Section 3.4 hereof. Each such request by any such
Investor shall: (a) specify the number of Restricted Shares which the holder
intends to sell or dispose of, (b) state the intended method by which the holder
intends to sell or dispose of such Restricted Shares, and (c) request
registration of Restricted Shares having a proposed aggregate offering price of
at least $500,000. Upon receipt of a request pursuant to this Section 3.6, the
Corporation shall use its best efforts to effect such registration or
registrations on Form S-3.
3.7 Preparation and Filing. If and whenever the Corporation is under an
obligation pursuant to the provisions of this Section 3 to use its best efforts
to effect the registration of any Restricted Shares or Founder Shares, the
Corporation shall, as expeditiously as practicable:
(a) prepare and file with the Commission a registration statement
with respect to such securities and use its best efforts to cause such
registration statement to become and remain effective in accordance with Section
3.7(b) hereof;
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(b) prepare and file with the Commission 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
nine (9) months and to comply with the provisions of the Securities Act with
respect to the sale or other disposition of all Restricted Shares and to comply
with the provisions of the Securities Act with respect to the sale or other
disposition of all Restricted Shares and Founder Shares covered by such
registration statement;
(c) furnish to each holder whose Restricted Shares or Founder Shares
are being registered pursuant to this Section 3 such number of copies of any
summary prospectus or other prospectus, including a preliminary prospectus, in
conformity with the requirements of the Securities Act, and such other documents
as such holder may reasonably request in order to facilitate the public sale or
other disposition of such Restricted Shares and Founder Shares;
(d) use its best efforts to register or qualify the Restricted
Shares and Founder Shares covered by such registration statement under the
securities or blue sky laws of such jurisdictions as each holder whose
Restricted Shares and Founder Shares are being registered pursuant to this
Section 3 shall reasonably request and do any and all other acts or things which
may be necessary or advisable to enable such holder to consummate the public
sale or other disposition in such jurisdictions of such Restricted Shares and
Founder Shares; provided, however, that the Corporation shall not be required to
consent to general service of process for all purposes in any jurisdiction where
it is not then subject to process, qualify to do business as a foreign
corporation where it would not be otherwise required to qualify or submit to
liability for state or local taxes where it is not otherwise liable for such
taxes;
(e) at any time when a prospectus related thereto covered by such
registration statement is required to be delivered under the Securities Act
within the appropriate period mentioned in Section 3.7(b) hereof, notify each
holder whose Restricted Shares or Founder Shares are being registered pursuant
to this Section 3 of the happening of any event as a result of which the
prospectus included in such registration, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in the
light of the circumstances then existing and, at the request of such seller,
prepare, file and furnish to such seller a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such shares, 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 the statements therein not
misleading in the light of the circumstances then existing;
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(f) if the Corporation has delivered preliminary or final
prospectuses to the holders of Restricted Shares or Founder Shares that are
being registered pursuant to this Section 3 and after having done so the
prospectus is amended to comply with the requirements of the Securities Act, the
Corporation shall promptly notify such holders and, if requested, such holders
shall immediately cease making offers of Restricted Shares or Founder Shares and
return all prospectuses to the Corporation. The Corporation shall promptly
provide such holders with revised prospectuses and, following receipt of the
revised prospectuses, such holders shall be free to resume making offers of the
Restricted Shares and Founder Shares; and
(g) furnish, at the request of any holder whose Restricted Shares or
Founder Shares are being registered pursuant to this section 3, on the date that
such Restricted Shares or Founder Shares are delivered to the underwriters for
sale in connection with a registration pursuant to this Section 3, if such
securities are being sold through underwriters, or, if such securities are not
being sold through underwriters, on the date that the registration statement
with respect to such securities becomes effective, (i) an opinion, dated such
date, of the counsel representing the Corporation for the purposes of such
registration, in form and substance as is customarily given to underwriters in
an underwritten public offering, addressed to the underwriters, if any, and to
the holder or holders making such request, and (ii) a letter dated such date,
from the independent certified public accountants of the Corporation, in form
and substance as is customarily given by independent certified public
accountants to underwriters in an underwritten public offering, addressed to the
underwriters, if any, and to the holder or holders making such request.
3.8 Expenses. The Corporation shall pay all expenses incurred by the
Corporation in complying with this Section 3, including, without limitation, all
registration and filing fees (including all expenses incident to filing with the
National Association of Securities Dealers, Inc.), fees and expenses of
complying with securities and blue sky laws, printing expenses and fees and
disbursements of counsel (including with respect to each registration effected
pursuant to Sections 3.4, 3.5 and 3.6, the reasonable fees and disbursements of
counsel for the Investors, as selling stockholder(s) thereunder); provided,
however, that all underwriting discounts and selling commissions applicable to
the Restricted Shares and the Founder Shares covered by registrations effected
pursuant to Section 3.4, 3.5 or 3.6 hereof shall be borne by the seller or
sellers thereof, in proportion to the number of Restricted Shares or Founder
Shares sold by such seller or sellers.
3.9 Indemnification.
(a) In the event of any registration of any Restricted Shares or
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Founder Shares under the Securities Act pursuant to this Section 3 or
registration or qualification of any Restricted Shares or Founder Shares
pursuant to Section 3.7(d) hereof, the Corporation shall indemnify and hold
harmless the seller of such shares, each underwriter of such shares, if any,
each broker or any other person acting on behalf of such seller and each other
person, if any, who controls any of the foregoing persons, within the meaning of
the Securities Act, against any losses, claims, damages or liabilities, joint or
several, to which any of the foregoing persons may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
registration statement under which such Restricted Shares or Founder Shares were
registered under the Securities Act, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereto, or any
document incident to registration or qualification of any Restricted Shares or
Founder Shares pursuant to section 3.7(d) hereof, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading
or, with respect to any prospectus, necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, or any
violation by the Corporation of the Securities Act or state securities or blue
sky laws applicable to the Corporation and leading to action or inaction
required of the Corporation in connection with such registration or
qualification under the Securities Act or such state securities or blue sky
laws. The Corporation shall reimburse on demand such seller, underwriter, broker
or other person acting on behalf of such seller and each such controlling person
for any legal or any other expenses reasonably incurred by any of them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Corporation shall not be liable
in any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in said registration statement, said
preliminary prospectus, said prospectus or said amendment or supplement or any
document incident to registration or qualification of any Restricted Shares or
Founder Shares pursuant to Section 3.7(d) hereof in reliance upon and in
conformity with written information furnished to the Corporation by such seller,
such underwriter or such controlling person specifically for use in the
preparation thereof.
(b) Except to the extent prohibited by law, in the event of any
registration of any Restricted Shares or Founder Shares under the Securities Act
pursuant to this Section 3 or registration or qualification of any Restricted
Shares or Founder Shares pursuant to Section 3.7(d) hereof, the prospective
seller or sellers of such Restricted Shares and/or Founder Shares and any
underwriter acting on its or his behalf shall indemnify and old harmless (in the
same manner and to the same extent as set forth in paragraph (a) of this Section
3.9) the Corporation, each director of the Corporation, each officer of the
Corporation who signs such
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registration statement, any underwriter for the Corporation, and each person, if
any, who controls the Corporation or such underwriter, within the meaning of the
Securities Act, with respect to any untrue statement or omission or alleged
untrue statement or omission from such registration statement, any preliminary
prospectus or final prospectus contained therein, any amendment or supplement
thereto, or any document incident to the registration and qualification of any
Restricted Shares or Founder Shares pursuant to Section 3.7(d) hereof, if such
untrue statement or omission was made in reliance upon and in conformity with
written information furnished to the Corporation through an instrument duly
executed by such seller or such underwriter specifically for use in the
preparation of such registration statement, preliminary prospectus, final
prospectus, amendment or supplement, or document; provided, however, that the
maximum amount of liability in respect of such indemnification shall be limited,
in the case of each prospective seller, to an amount equal to the net proceeds
actually received by such prospective seller from the sale of Restricted Shares
or Founder Shares effected pursuant to such registration.
(c) Promptly after receipt by an indemnified party of notice of the
commencement of any action involving a claim referred to in Section 3.9(a) or
(b) hereof, such indemnified party will, if a claim in respect thereof is made
against an indemnifying party, give written notice to the latter of the
commencement of such action. In case any such action is brought against an
indemnified party, the indemnifying party will be entitled to participate in and
to assume the defense thereof, jointly with any other indemnifying party
similarly notified to the extent that it may wish, with counsel reasonably
satisfactory to such indemnified party, and, after notice to such indemnified
party from the indemnifying party of its election to assume the defense thereof,
the indemnifying party shall be responsible for any legal or other expenses
subsequently incurred by the latter in connection with the defense thereof;
provided, however, that, if any indemnified party shall have reasonably
concluded that there may be one or more legal defenses available to such
indemnified party which are different from or additional to those available to
the indemnifying party, or that such claim or litigation involves or could have
an effect upon matters beyond the scope of the indemnity agreement provided in
this Section 3.9, the indemnifying party shall not have the right to assume the
defense of such action on behalf of such indemnified party, and such
indemnifying party shall reimburse such indemnified party and any person
controlling such indemnified party for the fees and expenses of counsel retained
by the indemnified party which are reasonably related to the matters covered by
the indemnity agreement provided in this Section 3.9. The indemnifying party
shall not make any settlement of any claims indemnified against hereunder
without the written consent of the indemnified party or parties, which consent
shall not be unreasonably withheld.
(d) In order to provide for just and equitable contribution to joint
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liability under the Securities Act in any case in which either (i) any holder of
Restricted Shares or Founder Shares exercising rights under this Agreement, or
any controlling person of any such holder, makes a claim for indemnification
pursuant to this Section 3.9, but it is judicially determined (by the entry of a
final judgment or decree by a court of competent jurisdiction and the expiration
of time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
this Section 3.9 provides for indemnification in such case, or (ii) contribution
under the Securities Act may be required on the part of any such holder or any
such controlling person in circumstances for which indemnification is provided
under this Section 3.9; then, in each such case, the Corporation and such holder
will contribute to the aggregate losses, claims, damages or liabilities to which
they may be subject as is appropriate to reflect the relative fault of the
Corporation and such holder in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities, it being understood
that the parties acknowledge that the overriding equitable consideration to be
given effect in connection with this provision is the ability of one party or
the other to correct the statement or omission which resulted in such losses,
claims, damages or liabilities, and that it would not be just and equitable if
contribution pursuant hereto were to be determined by pro rata allocation or by
any other method of allocation which does not take into consideration the
foregoing equitable considerations. Notwithstanding the foregoing, (i) no such
holder will be required to contribute any amount in excess of the proceeds to it
of all Restricted Shares or Founder Shares sold by it or him pursuant to such
registration statement, and (ii) no person or entity guilty of fraudulent
misrepresentation, within the meaning of Section 11(f) of the Securities Act,
shall be entitled to contribution from any person or entity who is not guilty of
such fraudulent misrepresentation.
(e) Notwithstanding any of the foregoing, if, in connection with an
underwritten public offering of the Restricted Shares and Founder Shares, the
Corporation, the selling stockholders and the underwriters enter into an
underwriting or purchase agreement relating to such offering which contains
provisions covering indemnification among the parties, then the indemnification
provision of this Section 3.9 shall be deemed inoperative for purposes of such
offering.
3.10 Removal of Legends. Etc. Notwithstanding the foregoing provisions of
this Section 3, the restrictions imposed by this Section 3 upon the
transferability of any Restricted Securities or Founder Shares shall cease and
terminate when (a) any such Restricted Securities or Founder Shares are sold or
otherwise disposed of in accordance with the intended method of disposition by
the seller or sellers thereof set forth in a registration statement or such
other method contemplated by Section 3.3 thereof that does not require that the
securities transferred bear the legend set forth in Section 3.2 hereof,
including a Transfer pursuant to Rule 144 or a successor
<PAGE> 34
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rule hereof (as amended from time to time), or (b) the holder of Restricted
Securities or Founder Shares has met the requirements for transfer of such
Restricted Securities or Founder Shares pursuant to subparagraph (k) of Rule 144
or a successor rule thereof (as amended from time to time) promulgated by the
Commission under the Securities Act. Whenever the restrictions imposed by this
Section 3 have terminated, a holder of a certificate for Restricted Securities
or Founder Shares as to which such restrictions have terminated shall be
entitled to receive from the Corporation, without expense, a new certificate not
bearing the restrictive legend set forth in Section 3.2 hereof and not
containing any other reference to the restrictions imposed by this Section 3.
SECTION 4. Securities Act Registration Statements. Except for securities
of the Corporation registered on Excluded Forms, the Corporation shall not file
any registration statement under the Securities Act covering any securities
unless it shall first have given each holder of Restricted Securities written
notice thereof. The Corporation further covenants that each holder of Restricted
Securities shall have the right, at any time when it may be deemed to be a
controlling person, within the meaning of the Securities Act, of the Corporation
to participate in the preparation of such registration statement and to request
the insertion therein of material furnished to the Corporation in writing which
in such holder's judgment should be included. In connection with any
registration statement referred to in this Section 4, the Corporation shall
indemnify, to the extent permitted by law, each holder of Restricted Securities,
its officers, partners and directors and each person, if any, who controls any
such holder within the meaning of the Securities Act in the same manner and to
the same extent as the Corporation is required to indemnify a seller of
Restricted Securities in Section 3.9 hereof. If, in connection with any such
registration statement, any holder of Restricted Securities shall furnish
written information to the Corporation expressly for use in the registration
statement, then such holder shall indemnify the Corporation, each director of
the Corporation, each officer of the Corporation who signs such registration
statement and each person, if any, who controls the Corporation within the
meaning of the Securities Act to the same extent as a seller of Restricted
Securities is required to indemnify such persons in Section 3.9 hereof.
SECTION 5. Election of Directors.
5.1 Voting for Directors. At each annual meeting of the stockholders
of the Corporation and at each special meeting of the stockholders of the
Corporation called for the purposes of electing directors of the Corporation,
and at any time at which stockholders of the Corporation shall have the right
to, or shall, vote for the election of directors, then, in each such event, each
Investor shall vote all shares of Preferred Stock and any other shares of voting
stock of the Corporation then owned (or controlled as to voting rights) by it,
whether by purchase, exercise of rights, warrants or options, stock dividends or
otherwise:
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(a) to fix and maintain the number of directors on the Board
of Directors of the Corporation at seven (7);
(b) to elect to the Board one (1) director designated by HCV
III and one (1) director designated by HCV IV (collectively, the "HCV
Directors")
(c) to elect to the Board one (1) director designated by IS
Partners, L.P.;
(d) to elect to the Board the Scientific Founder or his
designee, which designee shall be reasonably satisfactory to the Investors, and
in the event that the Scientific Founder chooses a designee to serve on the
Board in his place, the Scientific Founder shall have observation rights with
respect to meetings of the Board as set forth in Section 5.2 below;
(e) to elect to the Board two (2) directors designated by the
Corporation that are reasonably satisfactory to the Investors, one of whom shall
be the Chief Executive Officer of the Corporation; and
(f) to elect to the Board one (1) director designated by those
members of the Schroder Group that hold a majority of the Series B Preferred
Shares and other shares of voting stock of the Corporation owned by all of the
members of the Schroder Group.
5.2 Board Observation Rights.
(a) In the event that the Scientific Founder chooses a designee to
serve on the Board in his place, the Corporation shall provide the Scientific
Founder with written notice of each regular meeting of the Board, and shall
permit the Scientific Founder to attend such meeting; provided, however, that
the Scientific Founder shall, except as otherwise required by law, hold all
matters discussed at any such meeting in strict confidence as if the Scientific
Founder were a voting member of the Board; and provided further that the
Scientific Founder's rights pursuant to this Section 5.2 shall terminate upon
the earlier of the Expiration Date or the occurrence of an Event of Termination,
both as defined in Section 5.6 below. The Scientific Founder and his designee
shall be entitled to reimbursement from the Company for their respective
reasonable expenses incurred in connection with attendance at Board meetings
pursuant to this Section 5.
(b) Upon the termination of the rights of the Schroder Group under
this Section 5 (but not this Section 5.2(b)) pursuant to clause (c) of Section
5.6 hereof, the Schroder Group shall have the right to have one representative
receive notice of and attend meetings of the Board. Any such representative
shall not have
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any right to participate in discussions or vote at any meeting of the Board
which he or she attends (his or her role or participation at any such meeting
being limited to that of an observer) and such representative shall not have any
of the rights of a director of the Corporation. Such representative shall,
except as otherwise required by law, hold matters discussed at any meeting of
the Board in strict confidence as if he or she were a director of the
Corporation. The rights of the Schroder Group under this Section 5.2(b) shall
terminate on the earlier of (i) the Expiration Date (as defined in Section 5.6
hereof) or (ii) the date upon which all members of the Schroder Group shall
cease to own any shares of Series B Preferred Stock. The Corporation shall not
reimburse any representative of the Schroder Group for expenses incurred by such
representative in attending meetings of the Board in an observer capacity
pursuant to this Section 5.2(b).
5.3 Cooperation of the Corporation. The Corporation shall use its best
efforts to effectuate the purposes of this Section 5, including promoting the
adoption of any necessary amendment of the By-laws of the Corporation and the
Certificate.
5.4 Notices. The Corporation shall provide the Investors and the
Scientific Founder with at least twenty (20) days' prior notice in writing of
any intended mailing of notice to the stockholders of the Corporation of any
meeting at which directors are to be elected, and such notice shall include the
names of the persons designated by the Corporation pursuant to this Section 5.
HCV III, HCV IV, IS Partners, L.P., the Schroder Group (or any authorized
representative thereof) and the Scientific Founder shall notify the Corporation
in writing at least three (3) days prior to such mailing of the persons
designated by them pursuant to Section 5.1 above as nominees for election to the
Board. In the absence of any notice from HCV III, HCV IV, IS Partners, L.P., the
Schroder Group (or any authorized representative thereof) or the Scientific
Founder, the director(s) then serving and previously designated by HCV III, HCV
IV, IS Partners, L.P., the Schroder Group or the Scientific Founder, as the case
may be, shall be renominated.
5.5 Removal. Except as contemplated in Section 5.6 below, no Investor
shall vote to remove any member of the Board designated in accordance with the
foregoing provisions of this Section 5 unless the party who designated such
director (the "Designating Party") shall so vote or otherwise consent, and, if
the Designating Party shall so vote or otherwise consent, then the
non-designating Investors shall likewise so vote. Any vacancy on the Board
created by the resignation, removal, incapacity or death of any person
designated under the foregoing provisions of this Section 5 shall be filled by
another person designated by the original Designating Party. Each Investor shall
vote all voting shares of Preferred Stock of the Corporation and all other
shares of voting stock of the Corporation owned or controlled by such Investor
in accordance with each such new designation, and no such vacancy shall be
filled in the absence of a new designation by the original Designating Party.
<PAGE> 37
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5.6 Duration of Section. This Section 5 and the rights and obligations of
the parties hereunder shall automatically terminate on the first to occur of
November 5, 2003 or the closing of the Corporation's initial public offering
(the "Expiration Date"). Prior to such termination: (a) the rights (but not the
obligations) of HCV III and HCV IV under this Section 5 shall terminate on the
date upon which HCV III and HCV IV no longer are collectively the holders of at
least 10% of the outstanding Common Stock on a fully diluted basis, provided
that such rights shall not terminate if HCV III or HCV IV, as the case may be,
holds any shares of Series A Preferred Stock; (b) the rights (but not the
obligations) of IS Partners, L.P. under this Section shall terminate on the date
upon which IS Partners, L.P. no longer is the holder of at least 3.3% of the
outstanding Common Stock on a fully diluted basis; (c) the rights (but not the
obligations) of the Schroder Group under this Section 5 (other than the rights
set forth in Section 5.2(b) hereof which shall terminate as provided therein)
shall terminate on the date upon which the Schroder Group no longer holds,
collectively, at least 5% of the outstanding Common Stock on a fully diluted
basis; (d) as to each Investor, the obligations of such Investor under this
Section 5 shall terminate on the date upon which such Investor no longer is the
holder of any Restricted Securities; and (e) the obligations of the Investors to
vote in favor of the Scientific Founder or his designee, and not to vote to
remove the Scientific Founder or his designee from the Board, under this Section
5 shall terminate upon the earlier of the date that the Scientific Founder: (i)
is no longer a consultant to the Corporation, (ii) is in breach of any material
provision of that certain Consulting Agreement dated January 22, 1993 between
the Corporation and the Scientific Founder, which breach remains uncured for
thirty (30) days after the Scientific Founder receives written notice of such
breach from the Corporation or (iii) ceases to be a holder of capital stock of
the Corporation (each, an "Event of Termination"). Upon the termination of HCV
III's, HCV IV's, IS Partners, L.P.'s and/or the Schroder Group's, as the case
may be, rights under this Section 5, the obligation of all Investors to vote in
favor of the designee of HCV III, HCV IV, IS Partners, L.P. and/or the Schroder
Group, as the case may be, shall also terminate.
SECTION 6. Remedies. In case that any one or more of the covenants and/or
agreements set forth in this Agreement shall have been breached by any party
hereto, the party or parties entitled to the benefit of such covenants or
agreements may proceed to protect and enforce its or their rights, either by
suit in equity and/or action at law, including, but not limited to, an action
for damages as a result of any such breach and/or an action for specific
performance of any such covenant or agreement contained in this Agreement.
Notwithstanding the generality of the foregoing, in the event of a material
breach by the Corporation of any of its covenants and/or agreements set forth
herein, the Series A Investors, the Series B Investors and the Series D
Investors shall have the additional remedy, in their sole discretion, provided
that such material breach has not been cured by the
<PAGE> 38
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later to occur of 15 days after receipt of notice of such material breach by the
Corporation or 30 days after the occurrence of such material breach, of electing
to immediately exercise their right of redemption set forth in Article III,
Section A.5 of the Certificate, as provided therein, irrespective of whether
such right of redemption otherwise is mature. The rights, powers and remedies of
the parties under this Agreement are cumulative and not exclusive of any other
right, power or remedy which such parties may have under any other agreement or
law. No single or partial assertion or exercise of any right, power or remedy of
a party hereunder shall preclude any other or further assertion or exercise
thereof.
SECTION 7. Additional Investor Parties. Any Series G Additional Investor
that executes an Instrument of Adherence in the form of Exhibit B annexed hereto
(which Instrument of Adherence shall thereupon become a part of this Agreement),
shall become a Series G Additional Investor party to this Agreement, shall
become entitled to all of the benefits that inure or apply to Investors under
this Agreement, shall become bound by all of the terms, provisions, restrictions
and limitations that apply to Investors under this Agreement and shall be
treated as an Investor for all purposes of this Agreement.
SECTION 8. Successors and Assigns. Except as otherwise expressly provided
herein, this Agreement shall bind and inure to the benefit of the Corporation,
the Founders (solely with respect to Section 2.3 and Sections 3.5 through 3.10
herein) and each of the Investors and the respective successors and assigns of
the Corporation, each of the Founders and each of the Investors. Subject to the
requirements of Sections 3 and 5 hereof, this Agreement and the rights and
duties of the Investors set forth herein may be freely assigned, in whole or in
part, by each Investor. Any transferee (other than an Investor) to whom rights
under this Agreement are transferred shall, as a condition to such transfer,
deliver to the Corporation a written instrument by which such transferee
identifies itself, gives the Corporation notice of the transfer of such rights,
identifies the securities of the Corporation owned or acquired by it and agrees
to be bound by the obligations imposed hereunder to the same extent as if such
transferee were an Investor hereunder. A transferee of an Investor to whom
rights are transferred pursuant to this Section 8 will be thereafter deemed to
be an Investor for the purpose of the execution of such transferred rights and
may not again transfer such rights to any other person or entity, other than as
provided in this Section 8. Neither this Agreement nor any of the rights or
duties of any of the Founders or the Corporation set forth herein shall be
assigned by such Founder or the Corporation, in whole or in part, without having
first received the written consent of the Investors holding 66 2/3 percent in
voting power of the outstanding Restricted Securities, with each such holder
entitled, in the case of those Restricted Securities which are shares of
Preferred Stock, to the number of votes for each such share of Preferred Stock
as equals the number of shares of Common Stock (including fractional shares)
into which each such share of Preferred Stock is then convertible, rounded up to
the
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nearest one-tenth of a share; provided, however, that the rights and duties of a
Founder hereunder may be assigned by such Founder to a Related Transferee (as
defined in the Founders Stock Restriction Agreement) in connection with the
transfer of shares of stock of the Corporation from such Founder to the Related
Transferee without the consent of the holders of Restricted Securities described
in this sentence.
SECTION 9. Duration of Agreement. The rights and obligations of the
Corporation, the Founders and each Investor set forth herein shall survive
indefinitely, unless and until, by their respective terms, they are no longer
applicable.
SECTION 10. Entire Agreement. This Agreement, together with the other
writings referred to herein or delivered pursuant hereto which form a part
hereof, contains the entire agreement among the parties with respect to the
subject matter hereof and amends, restates and supersedes all prior and
contemporaneous arrangements or understandings with respect thereto, including,
without limitation, the Stockholders' Agreement.
SECTION 11. Notices. All notices, requests, consents and other
communications hereunder to any party shall be deemed to be sufficient if
contained in a written instrument delivered in person or duly sent by first
class registered, certified or overnight mail, postage prepaid, or telecopied
with a confirmation copy by regular mail, addressed or telecopied, as the case
may be, to such party at the address or telecopier number, as the case may be,
set forth below or such other address or telecopier number, as the case may be,
as may hereafter be designated in writing by the addressee to the addressor
listing all parties:
(i) If to the Corporation, to:
LeukoSite, Inc.
215 First Street
Cambridge, MA 02139
Attention: Dr. Christopher Mirabelli,
Chief Executive Officer
Telecopier:(617) 621-9349
with a copy to:
Bingham, Dana & Gould LLP
150 Federal Street
Boston, MA 02110-1726
Attention: Justin P. Morreale, Esquire
Telecopier:(617) 951-8736
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(ii) If to any Investor that is a member of the HCV Group, as set forth on
Schedule 1.
with a copy to:
Pepper, Hamilton & Scheetz
235 Westlakes Drive, Suite 400
Berwyn, PA 19312-2401
Attention: Jeffrey P. Libson, Esquire
Telecopier:(215) 640-7835
(iii) If to any other Investors, as set forth on Schedule 1 or in any Instrument
of Adherence executed and delivered pursuant to Section 7 hereof.
(iii) If to any of the Founders, to:
Dr. Timothy Springer
Center for Blood Research
Harvard Medical School
200 Longwood Avenue Room 251
Boston, MA 02115
All such notices, requests, consents and communications shall be deemed to have
been received (a) in the case of personal delivery, on the date of such
delivery, (b) in the case of mailing, on the third business day following the
date of such mailing, (c) in the case of overnight mail, on the first business
day following the date of such mailing, and (d) in the case of facsimile
transmission, when confirmed by facsimile machine report.
SECTION 12. Changes. Except as otherwise set forth herein, the terms and
provisions of this Agreement may not be modified or amended, or any of the
provisions hereof waived, temporarily or permanently, except pursuant to the
written consent of the Corporation and of a majority in voting power of the
outstanding Restricted Securities held by the Investors, with each such holder
entitled, in the case of those Restricted Securities which are shares of
Preferred Stock, to the number of votes for each share of Preferred Stock as
equals the number of shares of Common Stock (including fractional shares) into
which each such share of Preferred Stock is then convertible, rounded up to the
nearest one-tenth of a share; provided, however, that, (i) the first sentence of
Section 2.4(a) hereof may be modified only upon the written consent of 66 2/3%
in voting power of the outstanding Restricted Securities held by the Series A
Investors, with each such
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holder entitled, in the case of those Restricted Securities which are shares of
Series A Preferred Stock, to the number of votes for each share of Series A
Preferred Stock as equals the number of shares of Common Stock (including
fractional shares) into which each such share of Series A Preferred Stock is
then convertible, rounded up to the nearest one-tenth of a share, and (ii) the
second sentence of Section 2.4(a) hereof may be modified only upon the written
consent of all of the Series A Investors; and provided further, that no
modification or amendment to this Agreement that adversely affects the rights
and duties of the Founders hereunder may be made except pursuant to the written
consent of each of the Founders.
SECTION 13. Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
SECTION 14. Headings. The headings of the various sections of this
Agreement have been inserted for convenience of reference only and shall not be
deemed to be a part of this Agreement.
SECTION 15. Nouns and Pronouns. Whenever the context may require, any
pronouns used herein shall include the corresponding masculine, feminine or
neuter forms, and the singular form of names and pronouns shall include the
plural and vice-versa.
SECTION 16. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 17. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, excluding
choice of law rules thereof.
IN WITNESS WHEREOF the parties hereto have executed this Agreement on the
date first above written.
LEUKOSITE, INC.
By:_______________________________________
Christopher K. Mirabelli, President
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Founders:
__________________________________________
Timothy Springer
__________________________________________
Jeane Ungerleider Springer
THE SPRINGER FAMILY TRUST
By:_______________________________________
George Fishman, Trustee
Holders of Series A Convertible Preferred Stock:
HEALTHCARE VENTURES III, L.P.
By: HealthCare Partners III, L.P.
as General Partner
By:______________________________________
Title: General Partner
HEALTHCARE VENTURES IV, L.P.
By: HealthCare Partners IV, L.P.
as General Partner
By:______________________________________
Title: General Partner
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IS PARTNERS, L.P.
By: Eighth Floor Corporation,
as General Partner
By:_____________________________________
Its:
HUDSON TRUST
By:______________________________________________
Holders of Series B Convertible Preferred Stock:
SCHRODER VENTURES INTERNATIONAL
LIFE SCIENCES FUND L.P. 1
By: Schroder Venture Managers Inc.,
General Partner
By:_____________________________________
Peter Everson, Vice President
SCHRODER VENTURES INTERNATIONAL
LIFE SCIENCES FUND L.P. 2
By: Schroder Venture Managers Inc.,
General Partner
By:_____________________________________
Peter Everson, Vice President
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SCHRODER VENTURES INTERNATIONAL
LIFE SCIENCES TRUST
By: Codan Trust Company Limited, as Trustee
By:_____________________________________
Title:
SCHRODERS INCORPORATED
By:______________________________________________
Jeffrey J. Collinson, Attorney-In-Fact
SCHRODER VENTURE MANAGERS LIMITED,
as Investment Manager for the Schroder
Ventures International Life Sciences Fund
Co-Investment Scheme
By:______________________________________________
Peter Everson
Its:
IS PARTNERS, L.P.
By: Eighth Floor Corporation,
as General Partner
By:_____________________________________
Its:
EVEREST TRUST
By:______________________________________________
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Holders of Series D Convertible Preferred Stock
HEALTHCARE VENTURES III, L.P.
By: HealthCare Partners III, L.P.
as General Partner
By:_____________________________________
Title: General Partner
HEALTHCARE VENTURES IV, L.P.
By: HealthCare Partners IV, L.P.
as General Partner
By:_____________________________________
Title: General Partner
IS PARTNERS, L.P.
By: Eighth Floor Corporation,
as General Partner
By:_____________________________________
Its:
HUDSON TRUST
By:______________________________________________
EVEREST TRUST
By:______________________________________________
<PAGE> 46
-46-
SCHRODER VENTURES INTERNATIONAL
LIFE SCIENCES FUND L.P. 1
By: Schroder Venture Managers Inc.,
General Partner
By:_____________________________________
Peter Everson, Vice President
SCHRODER VENTURES INTERNATIONAL LIFE SCIENCES
FUND L.P. 2
By: Schroder Venture Managers Inc.,
General Partner
By:_____________________________________
Peter Everson, Vice President
SCHRODER VENTURES INTERNATIONAL
LIFE SCIENCES TRUST
By: Codan Trust Company Limited, as Trustee
By:_____________________________________
Title:
SCHRODERS INCORPORATED
By:______________________________________________
Jeffrey J. Collinson, Attorney-In-Fact
<PAGE> 47
-47-
SCHRODER VENTURE MANAGERS LIMITED,
as Investment Manager for the Schroder
Ventures International Life Sciences Fund
Co-Investment Scheme
By:______________________________________________
Peter Everson
Its:
ESTATE OF FRANCIS H. SPIEGEL, JR.
_________________________________________________
Name: Nancy J. Spiegel.
Title: Executrix
Holders of Series F Convertible Preferred Stock
HEALTHCARE VENTURES III, L.P.
By: HealthCare Partners III, L.P.
as General Partner
By:_____________________________________
Title: General Partner
HEALTHCARE VENTURES IV, L.P.
By: HealthCare Partners IV, L.P.
as General Partner
By:_____________________________________
Title: General Partner
<PAGE> 48
-48-
IS PARTNERS, L.P.
By: Eighth Floor Corporation,
as General Partner
By:_____________________________________
Its:
HUDSON TRUST
By:______________________________________________
EVEREST TRUST
By:______________________________________________
SCHRODER VENTURES INTERNATIONAL
LIFE SCIENCES FUND L.P. 1
By: Schroder Venture Managers Inc.,
General Partner
By:_____________________________________
Peter Everson, Vice President
SCHRODER VENTURES INTERNATIONAL LIFE SCIENCES
FUND L.P. 2
By: Schroder Venture Managers Inc.,
General Partner
By:_____________________________________
Peter Everson, Vice President
<PAGE> 49
-49-
SCHRODER VENTURES INTERNATIONAL
LIFE SCIENCES TRUST
By: Codan Trust Company Limited, as Trustee
By:_____________________________________
Title:
SCHRODERS INCORPORATED
By:______________________________________________
Jeffrey J. Collinson, Attorney-In-Fact
SCHRODER VENTURE MANAGERS LIMITED,
as Investment Manager for the Schroder
Ventures International Life Sciences Fund
Co-Investment Scheme
By:______________________________________________
Peter Everson
Its:
ESTATE OF FRANCIS H. SPIEGEL, JR.
_________________________________________________
Name: Nancy J. Spiegel.
Title: Executrix
_________________________________________________
Christopher T. Walsh
<PAGE> 50
-50-
LOMBARD ODIER & CIE
By:______________________________________________
Holders of Series G Convertible Preferred Stock
ROCHE FINANCE LTD
By:______________________________________________
Name:
Title:
<PAGE> 51
SCHEDULE 1
INVESTORS
Holders of Series A Convertible Preferred Stock
HealthCare Ventures III, L.P.
c/o HealthCare Investment Corporation
379 Thornall Street
Edison, NJ 08837
HealthCare Ventures IV, L.P.
c/o HealthCare Investment Corporation
379 Thornall Street
Edison, NJ 08837
IS Partners, L.P.
c/o Clark Estates
30 Wall Street
New York, NY 10005
Hudson Trust
c/o Pyrenees Management Co., Inc.
666 Plainsboro Road, Suite 445
Plainsboro, NJ 08536
Holders of Series B Convertible Preferred Stock
Schroder Ventures International Life
Sciences Fund L.P. I
c/o Schroder Ventures
20 Southampton Street
London, WC2E 7QG England
Schroder Ventures International Life
Sciences Fund L.P. II
c/o Schroder Ventures
20 Southampton Street
London, WC2E 7QG England
<PAGE> 52
-52-
Schroder Ventures International
Life Sciences Trust
c/o Schroder Ventures
20 Southampton Street
London, WC2E 7QG England
Schroders Incorporated
1055 Washington Boulevard, 5th Floor
Stamford, CT 06901
Schroder Venture Managers Limited,
as Investment Manager for the Schroder
Ventures International Life Sciences Fund
Co-Investment Scheme
22 Church Street
Hamilton HM 11, Bermuda
IS Partners, L.P.
c/o Clark Estates
30 Wall Street
New York, NY 10005
Everest Trust
c/o Rho Management
767 Fifth Avenue, 43rd Floor
New York, NY 10053
Holders of Series D Convertible Preferred Stock
HealthCare Ventures III, L.P.
c/o HealthCare Investment Corporation
379 Thornall Street
Edison, NJ 08837
HealthCare Ventures IV, L.P.
c/o HealthCare Investment Corporation
379 Thornall Street
Edison, NJ 08837
IS Partners, L.P.
c/o Clark Estates
30 Wall Street
New York, NY 10005
<PAGE> 53
-53-
Hudson Trust
c/o Pyreness Management Co., Inc.
666 Plainsboro Road, Suite 445
Plainsboro, NJ 08536
Everest Trust
c/o Rho Management
767 Fifth Avenue, 43rd Floor
New York, NY 10053
Schroder Ventures International Life
Sciences Fund L.P. I
c/o Schroder Ventures
20 Southampton Street
London, WC2E 7QG England
Schroder Ventures International Life
Sciences Fund L.P. II
c/o Schroder Ventures
20 Southampton Street
London, WC2E 7QG England
Schroder Ventures International
Life Sciences Trust
c/o Schroder Ventures
20 Southampton Street
London, WC2E 7QG England
Schroders Incorporated
1055 Washington Boulevard, 5th Floor
Stamford, CT 06901
Schroder Venture Managers Limited,
as Investment Manager for the Schroder
Ventures International Life Sciences Fund
Co-Investment Scheme
22 Church Street
Hamilton HM 11, Bermuda
Estate of Francis H. Spiegel, Jr.
c/o William C. Walsh, Esq.
Seven Becher Farm Road
Roseland, NJ 07068-1757
<PAGE> 54
-54-
Holders of Series F Convertible Preferred Stock
HealthCare Ventures III, L.P.
c/o HealthCare Investment Corporation
379 Thornall Street
Edison, NJ 08837
HealthCare Ventures IV, L.P.
c/o HealthCare Investment Corporation
379 Thornall Street
Edison, NJ 08837
IS Partners, L.P.
c/o Clark Estates
30 Wall Street
New York, NY 10005
Hudson Trust
c/o Pyreness Management Co., Inc.
666 Plainsboro Road, Suite 445
Plainsboro, NJ 08536
Everest Trust
c/o Rho Management
767 Fifth Avenue, 43rd Floor
New York, NY 10053
Schroder Ventures International Life
Sciences Fund L.P. I
c/o Schroder Ventures
20 Southampton Street
London, WC2E 7QG England
Schroder Ventures International Life
Sciences Fund L.P. II
c/o Schroder Ventures
20 Southampton Street
London, WC2E 7QG England
<PAGE> 55
-55-
Schroder Ventures International
Life Sciences Trust
c/o Schroder Ventures
20 Southampton Street
London, WC2E 7QG England
Schroders Incorporated
1055 Washington Boulevard, 5th Floor
Stamford, CT 06901
Schroder Venture Managers Limited,
as Investment Manager for the Schroder
Ventures International Life Sciences Fund
Co-Investment Scheme
22 Church Street
Hamilton HM 11, Bermuda
Estate of Francis H. Spiegel, Jr.
c/o William C. Walsh, Esq.
Seven Becher Farm Road
Roseland, NJ 07068-1757
Dr. Christopher T. Walsh
Harvard Medical School
240 Longwood Avenue
Boston, MA 02115
Lombard Odier & Cie
Toedistrasse 36
CH8027
Zurich, Switzerland
Holders of Series G Convertible Preferred Stock
Roche Finance Ltd
c/o F. Hoffman-LaRoche, Ltd.
124 Grensacherstrasse
CH-4002 Basel
Switzerland
<PAGE> 56
-56-
Exhibit B
Instrument of Adherence
Reference is made to that certain Second Amended and Restated
Stockholders' Agreement, dated December 20, 1996, a copy of which is attached
hereto (as amended and in effect from time to time, the "Stockholders'
Agreement"), among LeukoSite, Inc., a Delaware corporation (the "Corporation"),
the Investors (as defined therein) and the Founders (as defined therein).
Capitalized terms used herein without definition shall have the respective
meanings ascribed thereto in the Stockholders' Agreement.
The undersigned, , in connection with its purchase of shares (the
"Acquired Shares") of Series G Preferred Stock pursuant to Section 3.2 of the
Series G Securities Purchase Agreement, hereby agrees that, from and after the
date hereof, (i) the undersigned has become a Series G Additional Investor party
to the Stockholders' Agreement and is entitled to all of the benefits under, and
is subject to all of the obligations, restrictions, limitations, provisions and
conditions set forth in, the Stockholders' Agreement that are applicable to
Investors, and (ii) all of the Acquired Shares are entitled to all of the
benefits, and are subject to all of the obligations, restrictions, limitations,
provisions and conditions, under the Stockholders' Agreement that are applicable
to the securities of the Corporation held by the Investors. This Instrument of
Adherence shall take effect and shall become a part of the Stockholders'
Agreement immediately upon execution.
Executed as of the date set forth below under the domestic substantive
laws of the State of Delaware without giving effect to any choice or conflict of
law provision or rule that would cause the application of the domestic
substantive laws of any other state.
Signature:_______________________________
Address:_______________________________
_______________________________
_______________________________
Date:_______________________________
<PAGE> 57
-2-
Accepted:
LEUKOSITE, INC.
By:_____________________________________
Christopher K. Mirabelli, President
Date:_____________________
<PAGE> 1
EXHIBIT 11.1
LEUKOSITE, INC.
COMPUTATION OF PRO FORMA NET LOSS PER COMMON SHARE (1)
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS
DECEMBER 31, ENDED MARCH 31,
1996 1997
------------ ---------------
<S> <C> <C>
Net loss.......................................................... $6,021,690 $ 2,179,494
=========== ==========
Shares used in computing pro forma net loss per common share:
Weighted average common stock outstanding during the
period...................................................... 1,066,210 1,091,469
Conversion of redeemable convertible preferred stock and
convertible preferred stocks(2)............................. 4,594,657 5,087,935
Dilutive effect of common equivalent shares issued subsequent
to June 26, 1996(3)......................................... 109,222 109,222
----------- ----------
5,770,089 6,288,626
=========== ==========
Pro forma net loss per common share............................... $ (1.04) $ (.35)
=========== ==========
</TABLE>
- ---------------
(1) Historical net loss per common share has not been separately presented, as
the amounts would not be meaningful.
(2) Effective upon the closing of the Company's proposed initial public offering
of common stock, all shares of redeemable convertible preferred stock and
convertible preferred stock will automatically convert into common stock.
Accordingly these shares have been included as outstanding for all periods
presented.
(3) Pursuant to Securities and Exchange Commission Staff Accounting Bulletin No.
83, common stock, preferred stock, stock options and warrants issued at
prices below the initial public offering price per share ("cheap stock")
during the twelve month period immediately preceding the filing date of the
Company's Registration Statement for its initial public offering have been
included as outstanding for all periods presented. The dilutive effect of
the common and common stock equivalents was computed in accordance with the
treasury stock method.
<PAGE> 1
Exhibit 21.1
Subsidiary of the Registrant
LeukoSite (U.K.) Limited is a wholly-owned subsidiary of the Registrant
incorporated under the laws of the United Kingdom.
<PAGE> 1
Exhibit 23.2
Upon the consummation of the reverse stock split and charter amendment
discussed in Note 9(a), we expect to be in a position to issue the following
consent.
Arthur Andersen LLP
Boston, Massachusetts
June 27, 1997
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
report and to all references to our Firm included in or made part of this
Registration Statement.
<PAGE> 1
Exhibit 23.3
[HAMILTON, BROOK, SMITH & REYNOLDS, P.C. LETTERHEAD]
CONSENT OF SPECIAL COUNSEL FOR LEUKOSITE, INC.
We hereby consent to the reference to our name, and to the statements
with respect to us, in LeukoSite, Inc.'s Registration Statement on Form S-1 and
the Prospectus relating thereto under the caption "Experts".
HAMILTON, BROOK, SMITH & REYNOLDS, P.C.
By: /s/ David E. Brook
--------------------------
David E. Brook
Dated: June 27, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
LEUKOSITE, INC.'S REGISTRATION STATEMENT ON FORM S-1.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 7,609
<SECURITIES> 3,966
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 11,699
<PP&E> 4,406
<DEPRECIATION> 2,232
<TOTAL-ASSETS> 13,901
<CURRENT-LIABILITIES> 2,712
<BONDS> 0
24,977
23
<COMMON> 11
<OTHER-SE> 8,717
<TOTAL-LIABILITY-AND-EQUITY> 13,901
<SALES> 0
<TOTAL-REVENUES> 906
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,161
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 43
<INCOME-PRETAX> (2,179)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,179)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,179)
<EPS-PRIMARY> (.35)
<EPS-DILUTED> 0
</TABLE>
