SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
December 18, 1997
LEUKOSITE, INC
(Exact Name of Registrant as Specified in Charter)
DELAWARE
(State or Other Jurisdiction of Incorporation)
0-22769 04-3173859
(Commission File Number) (IRS Employer
Identification No.)
215 First Street, Cambridge, MA 02142
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code:
(617) 621-9350
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ITEM 5. OTHER EVENTS.
On December 18, 1997, LeukoSite, Inc. ("LeukoSite") and Genentech, Inc.
("Genentech") announced that they had entered into a collaboration to develop
and commercialize LeukoSite's LDP-02, a humanized monoclonal antibody for the
treatment of inflammatory bowel disease. Copies of all of the agreements
executed and delivered by LeukoSite and Genentech in connection with such
collaboration are being filed as exhibits to this report on Form 8-K.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
(C) EXHIBITS.
4.1 Common Stock Purchase Warrant, dated as of December 18,
1997, issued by LeukoSite, Inc. to Genentech, Inc.
10.1 Development Collaboration and License Agreement, dated
as of December 18, 1997, between LeukoSite, Inc. and
Genentech, Inc. (confidential treatment has been requested
for portions of this agreement)
10.2 Securities Purchase Agreement, dated as of December 18,
1997, between LeukoSite, Inc. and Genentech, Inc.
(confidential treatment has been requested for portions of
this agreement)
10.3 Loan Agreement, dated as of December 18, 1997, between
LeukoSite, Inc. and Genentech, Inc.
10.4 Registration Rights Agreement, dated as of December 18,
1997, between LeukoSite, Inc. and Genentech, Inc.
10.5 Letter Agreement, dated as of December 18, 1997,
between LeukoSite, Inc. and Genentech, Inc.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
LEUKOSITE, INC.
By: /s/ Augustine Lawlor
Augustine Lawlor,
Vice President and Chief Financial Officer
Dated: January 23, 1998
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EXHBIT INDEX
4.1 Common Stock Purchase Warrant, dated as of December 18,
1997, issued by LeukoSite, Inc. to Genentech, Inc.
10.1 Development Collaboration and License Agreement, dated
as of December 18, 1997, between LeukoSite, Inc. and
Genentech, Inc. (confidential treatment has been requested
for portions of this agreement)
10.2 Securities Purchase Agreement, dated as of December 18,
1997, between LeukoSite, Inc. and Genentech, Inc.
(confidential treatment has been requested for portions of
this agreement)
10.3 Loan Agreement, dated as of December 18, 1997, between
LeukoSite, Inc. and Genentech, Inc.
10.4 Registration Rights Agreement, dated as of December 18,
1997, between LeukoSite, Inc. and Genentech, Inc.
10.5 Letter Agreement, dated as of December 18, 1997,
between LeukoSite, Inc. and Genentech, Inc.
NEITHER THIS WARRANT NOR THE SHARES ISSUED OR ISSUABLE UPON EXERCISE OF THIS
WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE OFFERED, SOLD, TRANSFERRED,
ASSIGNED, PLEDGED, HYPOTHECATED, MORTGAGED OR OTHERWISE CONVEYED, DISPOSED OF
OR ENCUMBERED UNLESS THEY ARE SO REGISTERED, UNLESS AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE AND, IF REQUESTED BY THE COMPANY, AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY IS DELIVERED TO THE COMPANY TO THE EFFECT
THAT SUCH REGISTRATION IS NOT UNDER THE CIRCUMSTANCES REQUIRED OR UNLESS THE
WARRANT OR SUCH SHARES ARE SOLD PURSUANT TO RULE 144 PROMULGATED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. THIS WARRANT AND ANY SHARES ISSUED OR
ISSUABLE UPON EXERCISE OF THIS WARRANT ARE SUBJECT TO CERTAIN RESTRICTIONS ON
TRANSFER SET FORTH IN SECTION 9 OF THIS WARRANT AND IN SECTION 7 OF THAT
CERTAIN SECURITIES PURCHASE AGREEMENT DATED DECEMBER 18, 1997, AND NO TRANSFER
OF THIS WARRANT AND/OR SUCH SHARES SHALL BE VALID OR EFFECTIVE IF IT IS NOT
EFFECTED IN COMPLIANCE WITH ALL OF SUCH RESTRICTIONS ON TRANSFER. COPIES OF
SUCH SECURITIES PURCHASE AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN
REQUEST MADE BY THE HOLDER OF RECORD OF THIS WARRANT AND/OR SUCH SHARES TO THE
SECRETARY OF LEUKOSITE, INC.
No. ______ Dated: December 18, 1997
LEUKOSITE, INC.
COMMON STOCK PURCHASE WARRANT
THIS IS TO CERTIFY THAT, for value received, GENENTECH, INC., a Delaware
corporation ("Genentech"), is entitled, subject to the terms and conditions set
forth below, to purchase from LEUKOSITE, INC., a Delaware corporation
("LeukoSite"), at any time or from time to time after 9:00 A.M., Boston,
Massachusetts time, on December 18, 1999 (the "Initial Exercise Date") and
prior to 5:00 P.M., Boston, Massachusetts time, on the Expiration Date (as
defined in Section 1 below), any or all of 250,000 shares (the "Initial Warrant
Shares") of common stock, $0.01 par value per share, of LeukoSite, at a
purchase price per share equal to $16.22 (the "Initial Exercise Price"). The
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number and character of the Initial Warrant Shares and the Initial Exercise
Price are subject to adjustment as provided herein.
This Common Stock Purchase Warrant (as amended and in effect from time to
time, this "Warrant") is being issued pursuant to that certain Securities
Purchase Agreement, dated as of the date hereof (as amended and in effect from
time to time, the "Securities Purchase Agreement"), between LeukoSite and
Genentech. A copy of the Securities Purchase Agreement is on file at the
principal office of LeukoSite.
1. DEFINITIONS. As used in this Warrant, the following terms shall have
the respective meanings set forth below or elsewhere in this Warrant as
referred to below:
"Affiliate" shall mean, with respect to any Person, any other Person
controlled by, controlling or under common control with such Person.
"Collaboration Agreement" shall mean that certain Development
Collaboration and Licensing Agreement, dated as of the date hereof, between
LeukoSite and Genentech, as amended and in effect from time to time.
"Common Stock" shall mean common stock, $0.01 par value per share, of
LeukoSite.
"Company" shall mean LeukoSite and/or any Person that shall succeed to,
or assume the obligations hereunder of, LeukoSite.
"Exercise Date" shall have the meaning set forth in Section
2.2 hereof.
"Exercise Price" shall mean Initial Exercise Price, as adjusted from time
to time pursuant to the terms of this Warrant.
"Expiration Date" shall mean December 18, 2007.
"Fair Market Value" shall mean (i) the last reported sale price per share
of Stock on the Nasdaq-NMS or any national securities exchange in which such
Stock is quoted or listed, as the case may be, on the date immediately
preceding the Exercise Date or, if no such sale price is reported on such date,
such price on the next preceding business day in which such price was reported,
or (ii) if such Stock is not quoted or listed on the Nasdaq-NMS or any national
securities exchange, the fair market value of a share of such Stock, as
determined in good faith by the Board of Directors of the Company.
"Holder" shall mean Genentech.
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"Nasdaq-NMS" shall mean The National Association of Securities Dealers'
Automated Quotation National Market System.
"Person" shall mean an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, governmental authority or other entity of whatever
nature.
"Prohibited Transferee" shall mean any Person that, immediately after the
acquisition of any Shares or any interest therein by such Person, its
Affiliates or nominees, directly or indirectly owns or holds of record or
beneficially securities of the Company representing (or convertible into or
exercisable or exchangeable for other securities of the Company that represent)
at least fifteen percent (15%) of the voting power of all voting securities of
the Company that are outstanding immediately after such acquisition.
"Property" shall have the meaning set forth in Section 4.2 hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Stock" shall mean (i) Common Stock, (ii) capital stock of LeukoSite
(other than Common Stock) or any other Person or any other securities of
LeukoSite or any other Person that the Holder is entitled to receive, or
receives, upon exercise of this Warrant, in lieu of or in addition to Common
Stock, and/or (iii) capital stock of LeukoSite (other than Common Stock) or any
other Person or any other securities of LeukoSite or any other Person that may
be issued in replacement of, substitution, exchange or redemption for, or upon
reclassification or conversion of, Common Stock or any other Stock, in each
case whether as a result of a reorganization, reclassification, merger,
consolidation, sale of substantially all of the assets of LeukoSite or
otherwise.
"Warrant Shares" shall mean (A) at 9:00 A.M. on the Initial Exercise
Date, the Initial Warrant Shares and (B) at any time after 9:00 A.M. on the
Initial Exercise Date, the total number and kind of shares of Stock for which
this Warrant is exercisable at such time, after giving effect to the number of
shares of Stock previously purchased by the Holder pursuant to any and all
exercises of this Warrant prior to such time and after giving effect to all
adjustments provided for in Sections 3 and 4 hereof prior to such time.
2. EXERCISE OF WARRANT.
2.1 METHOD OF EXERCISE.
(a) Subject to and upon all of the terms and conditions set forth in
this Warrant, the Holder may exercise this Warrant, in whole or in part with
respect to any Warrant Shares, at any time and from time to time during the
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period commencing on the Initial Exercise Date and ending on the Expiration
Date, by presentation and surrender of this Warrant to the Company at its
principal office, together with (i) a properly completed and duly executed
subscription form, in the form attached hereto, which subscription form shall
specify the number of Warrant Shares for which this Warrant is then being
exercised, (ii) if requested by the Company, a duly executed instrument or
certificate, in form and substance satisfactory to the Company, pursuant to
which the Holder makes such representations and warranties to the Company, and
provides or confirms such information concerning the Holder, as the Company may
reasonably request in order to confirm compliance with applicable securities
laws, (iii) payment of the aggregate Exercise Price payable hereunder in
respect of the number of Warrant Shares being purchased upon exercise of this
Warrant, and (iv) if applicable, the payment of any transfer taxes required to
be paid by the Holder pursuant to Section 2.7 hereof. Payment of such aggregate
Exercise Price and any such transfer taxes shall be made in cash or by money
order, certified or bank cashier's check or wire transfer (in each case in
lawful currency of the United States of America).
(b) Notwithstanding anything expressed or implied in this Warrant
(including, without limitation, Section 2.1(a) above) to the contrary, prior to
any exercise by the Holder of this Warrant, the Holder shall make a
determination as to whether any such proposed exercise requires, prior to the
consummation thereof, that filings under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, or the rules and regulations promulgated
thereunder (said Act and said rules and regulations being referred to herein,
collectively, as the "HSR Act"), be made. If the Holder shall make the
determination that any such proposed exercise requires, prior to the
consummation thereof, that filings under the HSR Act be made, then the Holder
shall give prompt written notice of such determination to the Company and such
written notice shall state the portion, if any, of the Warrant Shares
originally subject to such proposed exercise that could be exercised without
having to make any filings under the HSR Act (the "Non-HSR Warrant Shares"),
and the portion of Warrant Shares originally subject to such proposed exercise
that require, prior to the consummation of such proposed exercise, that filings
under the HSR Act be made (the "HSR Warrant Shares"). In the event that the
Holder shall give such written notice to the Company, the proposed exercise of
the Non-HSR Warrant Shares shall be consummated pursuant to, and in accordance
with, the provisions of Warrant, and, notwithstanding anything in this Warrant
to the contrary, the proposed exercise of the HSR Warrant Shares shall not be
consummated unless and until (i) the Holder gives written notice to the Company
that the Holder desires to cause to be made the filings required under the HSR
Act in order to effect the proposed exercise of the HSR Warrant Shares (the
"HSR Filing Notice"), (ii) such filings required under the HSR Act are made and
(iii) the waiting period under the HSR Act with respect to such proposed
exercise shall have expired or been subject to early termination. Upon receipt
by the Company of the HSR Filing Notice, the Company and the Holder (x) shall
cooperate, and shall use commercially reasonable efforts to cause their
respective ultimate parent entities (if any) to cooperate, in preparing the
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filings required under the HSR Act in order to effect the proposed exercise of
the HSR Warrant Shares and (y) shall cooperate, and shall use commercially
reasonable efforts to cause their respective ultimate parent entities (if any)
to cooperate, in preparing all supplemental material that is required to
accompany such filings, and both parties shall coordinate, and shall use
commercially reasonable efforts to cause their respective ultimate parent
entities (if any) to coordinate, the making of such filings so that such
filings are made concurrently. The Company and the Holder shall perform their
respective obligations under this Section 2.1(b) with reasonable care and in
good faith. It is hereby understood that the provisions of this Section 2.1(b)
shall be applied with respect to any Warrant Shares more than once such that
any categorization of such Warrant Shares as HSR Warrant Shares shall not
preclude any later categorization of the same shares as Non-HSR Warrant Shares.
(c) Notwithstanding anything expressed or implied in this Warrant
(including, without limitation, Section 2.1(a) above) to the contrary, in no
event shall the Holder be entitled to exercise this Warrant at any time after
the termination of the Collaboration Agreement pursuant to Section 12.6
thereof. This Warrant shall terminate and be of no force or effect from and
after any such termination of the Collaboration Agreement, except for the
provisions of Section 9 hereof which shall survive the termination of this
Warrant.
2.2 EFFECTIVENESS OF EXERCISE; OWNERSHIP. Each exercise of this Warrant
by the Holder shall be deemed to have been effected immediately prior to the
close of business on the date upon which all of the requirements of Section 2.1
hereof with respect to such exercise shall have been complied with in full
(each such date, an "Exercise Date"). On the applicable Exercise Date with
respect to any exercise of this Warrant by the Holder, the Company shall be
deemed to have issued to the Holder, and the Holder shall be deemed to have
become the holder of record and legal owner of, the number of Warrant Shares
being purchased upon such exercise of this Warrant, notwithstanding that the
stock transfer books of the Company shall then be closed or that certificates
representing such number of Warrant Shares being purchased shall not then be
actually delivered to the Holder.
2.3 DELIVERY OF STOCK CERTIFICATES ON EXERCISE. As soon as practicable
after the exercise of this Warrant, and in any event within thirty (30) days
thereafter, the Company, at its expense, will cause to be issued in the name of
and delivered to the Holder, a certificate or certificates for the number of
Warrant Shares purchased by the Holder on such exercise, plus, in lieu of any
fractional share to which the Holder would otherwise be entitled, cash equal to
such fraction multiplied by the Fair Market Value on the applicable Exercise
Date.
2.4 SHARES TO BE FULLY PAID AND NONASSESSABLE. All Warrant Shares issued
upon the exercise of this Warrant shall be validly issued, fully paid and
nonassessable, free of all liens, taxes, charges and other encumbrances or
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restrictions on sale (other than those set forth herein) and free and clear of
all preemptive rights.
2.5 FRACTIONAL SHARES. No fractional shares of Stock or scrip
representing fractional shares of Stock shall be issued upon the exercise of
this Warrant. With respect to any fraction of a share of Stock called for upon
any exercise hereof, the Company shall make a cash payment to the Holder as set
forth in Section 2.3 hereof.
2.6 ISSUANCE OF NEW WARRANTS; COMPANY ACKNOWLEDGMENT. Upon any partial
exercise of this Warrant, the Company, at its expense, will forthwith issue and
deliver to the Holder a new warrant or warrants of like tenor, registered in
the name of the Holder, exercisable, in the aggregate, for the balance of the
Warrant Shares. Moreover, the Company shall, at the time of any exercise of
this Warrant, upon the request of the Holder, acknowledge in writing its
continuing obligation to afford to the Holder any rights to which the Holder
shall continue to be entitled after such exercise in accordance with the
provisions of this Warrant; provided, however, that if the Holder shall fail to
make any such request, such failure shall not affect the continuing obligation
of the Company to afford to the Holder any such rights.
2.7 PAYMENT OF TAXES AND EXPENSES; CLOSING OF BOOKS. Notwithstanding
anything to the contrary expressed or implied in this Warrant, the issuance of
certificates for Warrant Shares upon exercise hereof shall be made without
charge to the Holder for any issuance tax in respect thereof, provided that the
Company shall not be required to pay any tax which may be payable in respect of
any transfer involved in the issuance and delivery of any certificate in a name
other than that of the Holder. Also notwithstanding anything to the contrary
expressed or implied in this Warrant, the Company will at no time close its
stock transfer books against the transfer of the Warrant Shares issued or
issuable upon the exercise of this Warrant in any manner which interferes with
the timely exercise of this Warrant.
2.8 EXPIRATION. Subject to the provisions of Section 2.1(c) hereof, this
Warrant and the Holder's rights hereunder, to the extent not previously
exercised, shall expire as of 5:00 P.M., Boston, Massachusetts time, on the
Expiration Date.
3. ADJUSTMENTS FOR STOCK DIVIDENDS, SUBDIVISIONS AND COMBINATIONS. In the
event that, at any time and from time to time after the Initial Exercise Date,
the Company shall (a) issue additional shares of Common Stock as a dividend or
other distribution on outstanding shares of Common Stock, (b) subdivide its
outstanding shares of Common Stock into a greater number of shares of Common
Stock or (c) combine its outstanding shares of Common Stock into a smaller
number of shares of Common Stock, then, in each such event, (x) the Exercise
Price shall, simultaneously with the happening of such event, be adjusted by
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multiplying the then current Exercise Price by a fraction, (i) the numerator of
which shall be the number of shares of Common Stock outstanding immediately
prior to such event, and (ii) the denominator of which shall be the number of
shares of Common Stock outstanding immediately after such event, and the
product so obtained shall thereafter be the Exercise Price then in effect, and
(y) the number of Warrant Shares shall be adjusted by increasing or decreasing,
as the case may be, the number of shares of Common Stock included within the
Warrant Shares by the percentage increase or decrease in the total number of
shares of Common Stock outstanding immediately after such event over the total
number of shares of Common Stock outstanding immediately prior to such event
and the result so obtained shall be the number of shares of Common Stock
included in the Warrant Shares then in effect. The Exercise Price and the
Warrant Shares, as so adjusted, shall be readjusted in the same manner upon the
happening of any successive event or events described in this Section 3.
4. ADJUSTMENT FOR REORGANIZATION, CONSOLIDATION OR MERGER.
4.1 REORGANIZATION, CONSOLIDATION OR MERGER. In case that, at any time or
from time to time after the Initial Exercise Date, the Company shall (a) effect
a reorganization, (b) consolidate with or merge into any other Person, or (c)
transfer all or substantially all of its properties or assets to any other
Person under any plan or arrangement contemplating the dissolution of the
Company, then, in each such case, the Holder, on the exercise of this Warrant
as provided in Section 2 hereof at any time or from time to time after the
consummation of such reorganization, consolidation or merger or (subject to the
limitations on exercise set forth in Section 4.2 below) the effective date of
such dissolution, as the case may be, shall receive, in lieu of the Warrant
Shares issuable on such exercise immediately prior to such consummation or such
effective date, as the case may be, the stock and other securities and property
(including cash) to which the Holder would have been entitled upon such
consummation or in connection with such dissolution, as the case may be, if the
Holder had so exercised this Warrant immediately prior thereto, all subject to
successive adjustments thereafter from time to time pursuant to, and in
accordance with, the provisions of Section 3 hereof and this Section 4.
4.2 DISSOLUTION. In the event of any dissolution of the Company following
the transfer of all or substantially all of its properties or assets at any
time after the Initial Exercise Date, the Company shall retain for a period of
at least thirty (30) days after the effective date of such dissolution the
stock and other securities and property (including cash, where applicable)
(collectively, the "Property") receivable by the Holder pursuant to Section 4.1
hereof upon exercise of this Warrant at any time after the effective date of
such dissolution. If the Holder fails to exercise this Warrant within the
thirty (30) day period following the Holder's receipt of written notice of the
effective date of such dissolution, then such Property shall be distributed pro
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rata to those Persons who were stockholders of record of the Company on the
effective date of such dissolution or as otherwise provided by the Company.
4.3 CONTINUATION OF TERMS. Upon any reorganization, consolidation, merger
or transfer (and any dissolution following any such transfer) referred to in
this Section 4, this Warrant shall continue in full force and effect and the
terms hereof shall be applicable to the shares of stock and other securities
and property receivable upon the exercise of this Warrant after the
consummation of such reorganization, consolidation or merger or the effective
date of dissolution following any such transfer, as the case may be, and shall
be binding upon the issuer of any such stock or other securities, including, in
the case of any such transfer, the Person acquiring all or substantially all of
the properties or assets of the Company, whether or not such Person shall have
expressly assumed the terms of this Warrant.
5. OFFICER'S CERTIFICATE AS TO ADJUSTMENTS. In each case of any
adjustment or readjustment in the number and kind of Warrant Shares issuable
hereunder from time to time, or the Exercise Price, the Company, at its
expense, will promptly cause an officer of the Company to compute such
adjustment or readjustment in accordance with the terms of this Warrant and
prepare a certificate setting forth such adjustment or readjustment and showing
the facts upon which such adjustment or readjustment is based. The Company will
forthwith mail a copy of each such certificate to the Holder.
6. NOTICES OF RECORD DATE. In the event of
(a) any taking by the Company of a record of the holders of Common Stock
for the purpose of determining the holders thereof who are entitled to receive
any shares of Common Stock as a dividend or other distribution or pursuant to a
stock split, or
(b) any reorganization of the Company or any transfer of all or
substantially all the assets of the Company to or consolidation or merger of
the Company into any other Person, or
(c) any voluntary or involuntary dissolution, liquidation or winding-up
of the Company,
then and in each such event the Company will mail or cause to be mailed to the
Holder a notice specifying (i) the date on which any such record is to be taken
for the purpose of such dividend, distribution or stock split, and stating the
amount and character of such dividend, distribution or stock split, and (ii)
the date on which any such reorganization, transfer, consolidation, merger,
dissolution, liquidation or winding-up is to take place, and the time, if any
is to be fixed, as of which the holders of record of Common Stock shall be
entitled to exchange their shares of Common Stock for securities or other
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property deliverable on such reorganization, transfer, consolidation, merger,
dissolution, liquidation or winding-up. Such notice shall be mailed at least
ten (10) days prior to the date specified in such notice on which any such
action is to be taken.
7. EXCHANGE OF WARRANT. Subject to the provisions of Section 9 hereof (if
and to the extent applicable), this Warrant shall be exchangeable, upon the
surrender hereof by the Holder at the principal office of the Company, for new
warrants of like tenor, each registered in the name of the Holder. Each of such
new warrants shall be exercisable for such number of Warrant Shares as the
Holder shall direct, provided that all of such new warrants shall represent, in
the aggregate, the right to purchase the same number of Warrant Shares which
may be purchased by the Holder upon exercise of this Warrant at the time of its
surrender.
8. REPLACEMENT OF WARRANT. On receipt of evidence reasonably satisfactory
to the Company of the loss, theft, destruction or mutilation of this Warrant
and, in the case of any such loss, theft or destruction of this Warrant, on
delivery of an indemnity agreement or security reasonably satisfactory in form
and amount to the Company or, in the case of any such mutilation, on surrender
and cancellation of this Warrant, the Company at its expense will execute and
deliver, in lieu thereof, a new warrant of like tenor.
9. RESTRICTIONS ON TRANSFER; COMPLIANCE WITH SECURITIES ACT; MECHANICS OF
TRANSFER.
9.1. CONTRACTUAL RESTRICTIONS ON TRANSFER OF WARRANT. Notwithstanding
anything expressed or implied in this Warrant (including, without limitation,
Section 9.3 hereof) to the contrary, the Holder shall not sell, assign,
transfer, pledge, mortgage, hypothecate or otherwise convey, dispose of or
encumber all or any portion of the Warrant or any interest therein to any
Affiliate of the Holder or any Prohibited Transferee unless such Affiliate or
Prohibited Transferee, as the case may be, agrees in writing to be bound by all
of the terms and conditions of this Section 9 and Sections 6 and 7 of the
Securities Purchase Agreement to the same extent as the Holder has agreed to be
bound or unless the Company shall consent in writing to any such sale,
assignment, transfer, pledge, mortgage, hypothecation or other conveyance,
disposition or encumbrance. The restrictions on transfer set forth in this
Section 9.1 shall not apply to the sale (other than to an Affiliate of the
Purchaser) of all or any portion of the Warrant in the public market pursuant
to a "brokers' transaction" (as defined under subsection (g) of Rule 144.)
9.2. CONTRACTUAL RESTRICTIONS ON TRANSFER OF WARRANT Shares.
Notwithstanding anything expressed or implied in this Warrant (including,
without limitation, Section 9.3 hereof) to the contrary, the Holder shall not
sell, assign, transfer, pledge, mortgage, hypothecate or otherwise convey,
dispose of or encumber any of the Warrant Shares or any interest therein to any
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Affiliate of the Holder or any Prohibited Transferee unless such Affiliate or
such Prohibited Transferee, as the case may be, agrees in writing to be bound
by all of the terms and conditions of this Section 9 and Sections 6 and 7 of
the Securities Purchase Agreement to the same extent as the Holder has agreed
to be bound or unless the Company shall consent in writing to any such sale,
assignment, transfer, pledge, mortgage, hypothecation or other conveyance,
disposition or encumbrance. The restrictions on transfer set forth in this
Section 9.2 shall not apply to (i) the sale of any Warrant Shares to any
Prohibited Transferee pursuant to an underwritten public offering registered
under the Securities Act, (ii) the sale (other than to an Affiliate of the
Holder) of any Warrant Shares in the public market pursuant to a "brokers'
transaction" (as defined under subsection (g) of Rule 144.) and (iii) any hedge
position established by the Holder.
9.3. SECURITIES LAWS RESTRICTIONS ON TRANSFER. Notwithstanding anything
expressed or implied in this Warrant (including, without limitation, Section
9.1 or Section 9.2 hereof) to the contrary, the Holder shall not offer, sell,
assign, transfer, pledge, mortgage, hypothecate or otherwise convey, dispose of
or encumber this Warrant, any of the Warrant Shares or any interest in this
Warrant or in any of the Warrant Shares, except (i) pursuant to an effective
registration statement under the Securities Act, (ii) pursuant to an available
exemption from registration under the Securities Act and applicable state
securities laws and, if requested by the Company, upon delivery by the Holder
of an opinion of counsel (satisfactory to the Company as to such counsel and as
to the substance of such opinion) to the effect that the proposed offer, sale,
assignment, transfer, pledge, mortgage, hypothecation or other conveyance,
disposition or encumbrance is exempt from registration under the Securities Act
and applicable state securities laws or (iii) pursuant to Rule 144.
9.4. EFFECT OF VIOLATION OF TRANSFER RESTRICTIONS; PREVENTIVE MEASURES.
Any offer, sale, assignment, transfer, endorsement, pledge, mortgage,
hypothecation, or other conveyance or disposition of all or any portion of this
Warrant, any Warrant Shares or of any interest in this Warrant or any of such
Warrant Shares, in violation of this Section 9 shall be null and void. The
Company may make a notation on its records or give instructions to any of its
transfer agents in order to implement the restrictions on transfer set forth in
this Section 9. The Company shall not incur any liability for any delay in
recognizing any transfer of this Warrant or any of the Warrant Shares if and
only for so long as the Company reasonably believes that any such transfer may
have been or would be in violation of the provisions of the Securities Act,
applicable blue sky laws or this Section 9.
9.5. LEGENDS.
(a) Each certificate representing any Warrant Shares issued upon
exercise of this Warrant shall bear the following legend:
<PAGE>
"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 OFFERED, SOLD, TRANSFERRED, ASSIGNED, PLEDGED,
HYPOTHECATED, MORTGAGED OR OTHERWISE CONVEYED, DISPOSED OF OR ENCUMBERED
UNLESS THEY ARE SO REGISTERED, UNLESS AN EXEMPTION FROM SUCH REGISTRATION
IS AVAILABLE AND, IF REQUESTED BY LEUKOSITE, AN OPINION OF COUNSEL
(SATISFACTORY TO LEUKOSITE AS TO SUCH COUNSEL AND AS TO THE SUBSTANCE OF
SUCH OPINION) IS DELIVERED TO LEUKOSITE TO THE EFFECT THAT SUCH
REGISTRATION IS NOT UNDER THE CIRCUMSTANCES REQUIRED OR UNLESS SUCH
SHARES ARE SOLD PURSUANT TO RULE 144 PROMULGATED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED. THE SHARES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER SET FORTH IN SECTION 7 OF
THAT CERTAIN SECURITIES PURCHASE AGREEMENT DATED DECEMBER 18, 1997 AND IN
SECTION 9 OF THAT CERTAIN WARRANT DATED DECEMBER 18, 1997, AND NO
TRANSFER OF SUCH SHARES SHALL BE VALID OR EFFECTIVE IF IT IS NOT EFFECTED
IN COMPLIANCE WITH ALL OF SUCH RESTRICTIONS ON TRANSFER. COPIES OF SUCH
SECURITIES PURCHASE AGREEMENT AND WARRANT MAY BE OBTAINED AT NO COST BY
WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF SUCH SHARES TO THE
SECRETARY OF LEUKOSITE, INC."
(b) Each certificate representing any shares of Common Stock issued
from time to time upon exercise of this Warrant shall also bear any legend
required under any applicable state securities or blue sky laws.
9.6. SURVIVAL. The obligations of the Holder (and/or of any transferee of
any Warrant Shares issued from time to time upon exercise of this Warrant)
under this Section 9 shall, with respect to any Warrant Shares issued from time
to time upon exercise of this Warrant, survive the exercise, expiration or
other termination, or transfer, of this Warrant indefinitely.
10. GENERAL.
10.1. STATEMENT ON WARRANT. Irrespective of any adjustments in the
Exercise Price or the number or kind of Warrant Shares, this Warrant may
continue to express the same kind of Warrant Shares as are stated on the front
page hereof.
10.2. AUTHORIZED SHARES; RESERVATION OF SHARES FOR ISSUANCE. At all times
while this Warrant is outstanding, the Company shall maintain its corporate
<PAGE>
authority to issue, and shall have authorized and reserved for issuance upon
exercise of this Warrant, such number of shares of Common Stock as shall be
sufficient to perform its obligations under this Warrant (after giving effect
to any and all adjustments to the number and kind of Warrant Shares purchasable
upon exercise of this Warrant).
10.3. NO IMPAIRMENT. The Company will not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issuance or sale of securities, sale or
other transfer of any of its assets or properties, or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the
terms of this Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of the Holder hereunder
against impairment. Without limiting the generality of the foregoing, the
Company (a) will not increase the par value of any shares of Stock receivable
upon the exercise of this Warrant above the amount payable therefor on such
exercise, and (b) will take all action that may be necessary or appropriate in
order that the Company may validly and legally issue fully paid and
nonassessable shares of Stock on the exercise of this Warrant.
10.4. NO RIGHTS AS STOCKHOLDER. The Holder shall not be entitled to vote
or to receive dividends or to be deemed the holder of Stock that may at any
time be issuable upon exercise of this Warrant for any purpose whatsoever, nor
shall anything contained herein be construed to confer upon the Holder any of
the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action
(whether upon any recapitalization, issuance or reclassification of stock,
change of par value or change of stock to no par value, consolidation, merger
or conveyance or otherwise), or to receive notice of meetings (except to the
extent otherwise provided in this Warrant), or to receive dividends or
subscription rights, until the Holder shall have exercised the Warrant and been
issued Warrant Shares in accordance with the provisions hereof.
10.5. NOTICES. Any notice, demand, request or other communication under
this Warrant shall be deemed to be sufficient if contained in a written
instrument delivered in person or duly sent by overnight courier service or by
first class, registered or certified mail, postage prepaid, or telecopied with
a confirmation copy by regular, certified or overnight mail, addressed or
telecopied, as the case may be, to the Company or the Holder 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:
<PAGE>
LeukoSite, Inc.
215 First Street
Cambridge, MA 02142
Attention:President (one copy)
Chief Financial Officer (another copy)
Telecopier: (617) 621-9349
and a copy to:
Bingham Dana LLP
150 Federal Street
Boston, Massachusetts 02110
Attention: Justin P. Morreale, Esq.
Telecopier: (617) 951-8736
Genentech, Inc.
1 DNA Way
South San Francisco, CA 94080
Attention: Corporate Secretary
Telecopier: 650-952-9881
All of such notices, requests and other communications shall be deemed to
have been received: (i) in the case of personal delivery, on the date of such
delivery; (ii) in the case of overnight courier service, the business day
following the date of receipt by the overnight courier; (iii) in the case of
first class, registered or certified mail, on the earlier of (A) receipt
thereof or (B) the fifth business day after deposit in the mail; and (iv) in
the case of facsimile transmission, when confirmed by facsimile machine report.
10.6. AMENDMENT AND WAIVER. No failure or delay of the Holder in
exercising any power or right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Holder are cumulative and not
exclusive of any rights or remedies which it would otherwise have. The
provisions of this Warrant may be amended, modified or waived with (and only
with) the written consent of the Company and the Holder.
10.7. GOVERNING LAW. This Warrant shall be governed by and construed in
accordance with the internal and substantive laws of the State of Delaware and
without regard to any conflicts of laws concepts which would apply the
substantive law of some other jurisdiction.
<PAGE>
10.8. COVENANTS TO BIND SUCCESSOR AND ASSIGNS. All covenants,
stipulations, promises and agreements in this Warrant contained by or on behalf
of the Company shall bind its successors and assigns, whether so expressed or
not.
10.9. SEVERABILITY. In case any one or more of the provisions contained
in this Warrant shall be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby. The parties shall
endeavor in good faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
10.10. CONSTRUCTION. The definitions of this Warrant shall apply equally
to both the singular and the plural forms of the terms defined. Wherever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The section and paragraph headings used herein are
for convenience of reference only, are not part of this Warrant and are not to
affect the construction of or be taken into consideration in interpreting this
Warrant.
[Intentionally Left Blank]
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed in
its corporate name by one of its officers thereunto duly authorized, all as of
the day and year first above written.
LEUKOSITE, INC.
By:__________________________
Christopher K. Mirabelli,
President
<PAGE>
FORM OF SUBSCRIPTION
(To be executed upon exercise of Warrant)
To: LEUKOSITE, INC.
The undersigned hereby irrevocably elects to exercise the right of
purchase represented by the attached Warrant for, and to exercise thereunder,
_______ shares of [common stock, $0.01 par value per share ("Common
Stock")/DESCRIBE OTHER STOCK], of LeukoSite, Inc., a Delaware corporation, and
tenders herewith payment of $__________, representing the aggregate purchase
price for such shares based on the price per share provided for in such
Warrant. Such payment is being made in lawful money of the United States by
certified or bank cashier's check or wire transfer.
Please issue a certificate or certificates for such shares of [Common
Stock/other Stock] in the following name or names and denominations and deliver
such certificate or certificates to the person or persons listed below at their
respective addresses set forth below:
If said number of shares of [Common Stock/other Stock] shall not be all
the shares of [Common Stock/other Stock] issuable upon exercise of the attached
Warrant, a new Warrant is to be issued in the name of the undersigned for the
balance remaining of such shares of [Common Stock/other Stock] less any
fraction of a share of [Common Stock/other Stock] paid in cash.
Dated: ____________, 19__ ____________________________________
NOTE: The above signature should correspond
exactly with the name on the face of the
attached Warrant or with the name of the
assignee appearing in the assignment form below.
CONFIDENTIAL TREATMENT
DEVELOPMENT COLLABORATION AND LICENSE AGREEMENT
This Agreement is effective December 18, 1997 ("the EFFECTIVE DATE") by
and between Genentech, Inc. ("GNE"), a Delaware corporation located at 1 DNA
Way, South San Francisco, CA 94080, and LeukoSite, Inc., a Delaware
Corporation, located at 215 First Street, Cambridge, MA 02142 ("LKS").
WHEREAS, GNE 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 LICENSED PRODUCTS as hereinafter defined;
and
WHEREAS, GNE desires to obtain and LKS desires to grant an exclusive
right and/or license in and to such technology and proprietary know-how in the
TERRITORY as hereinafter defined; and
WHEREAS, the parties desire to collaborate in DEVELOPMENT as hereinafter
defined; and
WHEREAS, LKS is willing to grant the exclusive right and/or license
desired by GNE and to participate with GNE in DEVELOPMENT.
NOW, THEREFORE, in consideration of the mutual promises and other good
and valuable consideration, the parties agree as follows:
SECTION 1 - DEFINITIONS.
The terms used in this Agreement have the following meaning:
<PAGE>
1.1 The term "ADMINISTRATION COSTS" shall mean costs chargeable to LKS
for administration and shall equal to * of GNE's MARKETING COSTS and SALES
COSTS.
1.2 The term "AFFILIATE" as applied to GNE shall mean any company or
other legal entity in whatever country organized, owned or controlled by GNE.
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.
1.3 The term "AGREEMENT YEAR" shall mean the twelve month period
beginning on the EFFECTIVE DATE, and each subsequent twelve (12) month period
thereafter.
1.4 The term "ALLOCABLE OVERHEAD" shall mean costs incurred by GNE or for
its account which are attributable to its supervisory, services, occupancy
costs, corporate bonus (to the extent not charged directly to department), and
its payroll, information systems, human relations or purchasing functions and
which are allocated to company departments based on space occupied or head
count or other activity-based method. ALLOCABLE OVERHEAD shall not include any
costs attributable to general corporate activities including, by way of
example, executive management, investor relations, business development, legal
affairs and finance.
1.5 The term "CABILLY PATENTS" shall mean US Patent No. 4,816,567 issued
March 28, 1989 and any and all patents maturing from applications that are
- -------------------
*Confidential treatment requested; material has been omitted and filed
separately with the Commission.
<PAGE>
divisionals, continuations or continuations-in-part of the parent application
or otherwise claim priority, directly or indirectly, from the priority document
or documents on which the disclosure of any of the foregoing is based; all
non-United States counterparts, including inventors' certificates, of any of
the foregoing, and any reissues or extensions of any of the foregoing.
1.6 The term "COLLABORATION" shall have the meaning set forth in Section
5.1.
1.7 The term "COMBINATION PRODUCT ADJUSTMENT" shall mean the following:
in the event a LICENSED PRODUCT is sold in the form of a combination product
containing one or more active ingredients in addition to a LICENSED PRODUCT,
ROYALTY-BEARING SALES or NET SALES for such combination product will be
adjusted by multiplying actual ROYALTY-BEARING SALES, or NET SALES as
applicable, of such combination product by the fraction A/(A+B) where A is the
invoice price of the LICENSED PRODUCT, if sold separately, and B is the invoice
Price of any other active component or components in the combination, if sold
separately. If, on a country-by-country basis, the other active component or
components in the combination are not sold separately in said country,
ROYALTY-BEARING SALES or NET SALES shall be calculated by multiplying actual
ROYALTY-BEARING SALES or NET SALES of such combination product by the fraction
A/C where A is the invoice price of the LICENSED PRODUCT if sold separately,
and C is the invoice price of the combination product. If, on a
country-by-country basis, neither the LICENSED PRODUCT nor the other active
component or components of the combination product is sold separately in said
<PAGE>
country, ROYALTY-BEARING SALES or NET SALES shall be determined by the Parties
in good faith.
1.8 The term "CONFIDENTIAL INFORMATION" shall have the meaning set forth
in Section 4.1.
1.9 The term "COST OF SALES" shall mean the sum of (a): the cost of goods
produced, determined in accordance with generally accepted accounting
principles in the United States as consistently applied by GNE, including but
not limited to direct labor, material and product testing costs as well as
Allocable Overhead, (b) any allocable intellectual property acquisition and
licensing costs, and (c) any other costs borne by GNE for the transport,
customs, clearance and storage of LICENSED PRODUCT (e.g., freight, duties,
insurance and warehousing).
1.10 The term "DEADLOCK" shall have the meaning set forth in Section 5.4.
1.11 The term "DEVELOPMENT" shall mean the performance by either party
hereto of preclinical and clinical activities necessary for the development and
registration of a LICENSED PRODUCT throughout the TERRITORY and/or the OPTION
TERRITORY, if applicable, including, but not limited to, genetic engineering,
cell line development, process development, 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 REGULATORY APPROVAL performed by either party hereto in
accordance with the DEVELOPMENT PLAN.
1.12 The term "DEVELOPMENT COMMITTEE" shall have the meaning set forth in
Section 5.2.
<PAGE>
1.13 The term "DEVELOPMENT PLAN" shall mean the written plan attached
hereto and made a part hereof as Exhibit A, as modified from time to time by
the parties,
1.14 The term "DISTRIBUTION COSTS" shall mean the costs, including
ALLOCABLE OVERHEAD, specifically identifiable to the distribution of a LICENSED
PRODUCT including customer services, collection of data of sales to hospitals
and other end users (e.g., DDD sales data), order entry, billing, credit and
collection and returns.
1.15 The term "DRUG APPROVAL APPLICATION" shall mean an application for
REGULATORY APPROVAL required for commercial sale or use of a LICENSED PRODUCT
as a drug in the FIELD in a regulatory jurisdiction.
1.16 The term "EU" shall mean the countries of the European Union as of
the EFFECTIVE DATE.
1.17 The term "FIELD" shall mean any human therapeutic or prophylactic
use of a LICENSED PRODUCT.
1.18 The term "FIRST COMMERCIAL SALE" shall mean in each country of the
TERRITORY, the first sale to a THIRD PARTY, in connection with a general
introduction of any LICENSED PRODUCT by GNE, its AFFILIATES or SUBLICENSEES
following REGULATORY APPROVAL for the country in which the sale is to be made
and, when REGULATORY APPROVAL is not required, the first sale in that country
in connection with the general introduction of a LICENSED PRODUCT in that
country.
1.19 The term "FDA" shall mean the United States Food and Drug
Administration.
<PAGE>
1.20 The term "GNE 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 GNE's interest in JOINT PATENTS
which is owned by or licensed to GNE and in and to which GNE has a transferable
interest during the term of this Agreement insofar as it contains one or more
claims to GNE TECHNOLOGY.
1.21 The term "GNE 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 GNE or to which GNE 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 LICENSED PRODUCT in the FIELD.
1.22 The term "GROSS SALES" shall mean the gross amount invoiced by GNE
or its AFFILIATES or permitted SUBLICENSEES for sales of a LICENSED PRODUCT to
THIRD PARTIES in the OPTION TERRITORY.
1.23 The term "IBD" shall have the meaning set forth in Section 5.1.
<PAGE>
1.24 The term "JOINT PATENTS" shall have the meaning set forth in Section
5.11(b)(ii).
1.25 The term "LDP-02" small mean the anti-alpha 4/beta 7 (MadCAM
receptor) monoclonal antibody with the amino acid sequence set forth in Exhibit
B attached hereto and made a part hereof.
1.26 The term "LICENSED PRODUCT(S)" shall mean LDP-02, any monoclonal
antibody that binds to MadCAM or alpha 4/beta 7 integrin and any fragment,
subunit, derivative or variant of either antibody, including the DNA encoding
such products for use in the FIELD. During the COLLABORATION, LKS will not
develop or commercialize any monoclonal antibody product competitive with a
LICENSED PRODUCT as described in the foregoing sentence.
1.27 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 PATENTS
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 TECHNOLOGY. The LKS PATENTS in effect on the EFFECTIVE DATE are
set forth in Exhibit C, attached hereto and made a part hereof.
1.28 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
<PAGE>
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 LICENSED PRODUCT in the FIELD.
1.29 The term "LOAN AGREEMENT" shall have the meaning set forth in
Section 5.6.
1.30 The term "MARKETING COSTS" shall mean the costs, excluding ALLOCABLE
OVERHEAD, of marketing, promotion, advertising, professional education, product
related public relations, relationships with opinion leaders and professional
societies, market research, healthcare economics studies and other similar
activities directly related to the LICENSED PRODUCT. Such costs will include
both internal costs (e.g., salaries, benefits, supplies and materials, etc.) as
well as outside services and expenses (e.g., consultants, agency fees, meeting
costs, etc.). MARKETING COSTS shall also include activities related to
obtaining reimbursement from payers and costs of sales and marketing data.
1.31 The term "NET SALES" shall mean Gross Sales less the sum of (a), (b)
and (c) where (a) is a provision, determined under generally accepted
accounting principles in the United States, for (i) trade, cash and quantity
discounts or rebates (other than price discounts granted at the time of
invoicing and which are included in the determination of Gross Sales), (ii)
credits or allowances given or made for rejection or return of, and for
uncollectible amounts on, previously sold products or for retroactive price
<PAGE>
reductions (including Medicare and similar types of rebates), (iii) taxes,
duties or other governmental charges levied on or measured by the billing
amount, as adjusted for rebates and refunds, (iv) charges for freight and
insurance directly related to the distribution of LICENSED PRODUCTS, and (v)
credits or allowances given or made for wastage replacement, indigent patient
and any other sales programs, (b) is a periodic adjustment of the provision
determined in (a) to reflect amounts actually incurred for (i) through (v) and
(c) is the Combination Product Adjustment.
1.32 The term "OPERATING PROFIT OR LOSS" shall mean NET SALES less the
following items: COST OF SALES, MARKETING COSTS, SALES COSTS, POST APPROVAL
DEVELOPMENT COSTS, OTHER OPERATING INCOME/EXPENSE, DISTRIBUTION COSTS and
ADMINISTRATIVE COSTS, for a given period, and all of the foregoing only as they
relate to the OPTION TERRITORY.
1.33 The term "OPTION" shall mean the profit sharing option described in
Section 7.2(c).
1.34 The term "OPTION TERRITORY" shall mean, if the OPTION is timely
exercised, the United States. Otherwise the United States shall be included in
the TERRITORY. If the OPTION is not timely exercised there shall not be an
OPTION TERRITORY.
1.35 The term "OTHER OPERATING INCOME/EXPENSE" shall mean other operating
income or expense from or to THIRD PARTIES which is not part of the primary
business activity of GNE, but is reasonably considered by GNE as income or
expense related to LICENSED PRODUCTS and limited to the following:
<PAGE>
- Inventory Write-Offs
- Patent Costs
- Product liability insurance
- Indemnification costs (as defined in
Section 9.2 of this Agreement)
1.36 The term "OTHER ROYALTIES" shall have the meaning set forth in
Section 7.3.
1.37 The term "OTHER PARTY AGREEMENTS" shall have the meaning set forth
in Section 3.3.
1.38 The term "PATENT COSTS" shall mean the fees and expenses paid to
outside legal counsel and experts, and filing, prosecution and maintenance
expenses, incurred after the EFFECTIVE DATE in connection with the
establishment and maintenance of rights under patents covering any LICENSED
PRODUCT, including costs of patent interference, reexamination, reissue,
opposition and revocation proceedings.
1.39 The term "PATENT RIGHT(S)" shall mean individually and collectively
, GNE PATENTS, LKS PATENTS and JOINT PATENTS.
1.40 The term "PHASE III CLINICAL TRIAL" shall mean a pivotal clinical
trial designed to demonstrate statistically whether the LICENSED PRODUCT is
safe and effective for use in treating IBD in a manner sufficient to obtain
REGULATORY APPROVAL.
1.41 The term "POST-APPROVAL DEVELOPMENT COSTS" shall mean all costs
incurred after first REGULATORY APPROVAL of a LICENSED PRODUCT in the OPTION
TERRITORY for any development activities related to such LICENSED PRODUCT or
any subsequent LICENSED PRODUCT to be developed by the parties. POST-APPROVAL
DEVELOPMENT COSTS in the OPTION TERRITORY for any post approval clinical trial
<PAGE>
shall include all expenses for compensation, benefits and travel and other
employee-related expenses, as well as data management, statistical designs and
studies, document preparation, and other expenses associated therewith. If
additional indications or any new REGULATORY APPROVAL are sought for a LICENSED
PRODUCT by the parties in the OPTION TERRITORY, POST-APPROVAL DEVELOPMENT COSTS
shall include but are not limited to (i) all costs for research and
development, including manufacturing, required to initiate and support clinical
trials, (ii) costs of clinical studies for a LICENSED PRODUCT conducted
internally or by individual investigators, or consultants directed toward
obtaining and/or maintaining REGULATORY APPROVAL of a LICENSED PRODUCT for such
additional indication in the OPTION TERRITORY, (iii) costs for preparing,
submitting, reviewing or developing data or information for the purpose of
submission to the FDA to obtain and/or maintain REGULATORY APPROVAL of a
LICENSED PRODUCT for such additional indication or new indication in the OPTION
TERRITORY, (iv) costs incurred after REGULATORY APPROVAL of a LICENSED PRODUCT
in the OPTION TERRITORY in support of post-launch clinical studies for the
LICENSED PRODUCT, and (v) any related costs of process development, scale-up,
quality control and quality assurance and recovery (including allocable
depreciation and plant operating costs). POST-APPROVAL DEVELOPMENT COSTS shall
include ALLOCABLE OVERHEAD in accordance with Generally Accepted Accounting
Principles as consistently applied by GNE.
<PAGE>
1.42 The term "PRE-APPROVAL DEVELOPMENT COSTS" shall mean all expenses
incurred after SUCCESSFUL PHASE II CLINICAL TRIAL COMPLETION and through the
first REGULATORY APPROVAL of a LICENSED PRODUCT in the U.S. for all development
activities related to such LICENSED PRODUCT. PRE-APPROVAL DEVELOPMENT EXPENSES
shall include but not be limited to (i) expenses related to research,
pre-clinical studies, development, manufacturing and related activities,
required to initiate and support clinical trials, including all costs of
LICENSED PRODUCTS used for such trials, (ii) expenses related to clinical
studies of LICENSED PRODUCTS including any incidental expenses and overhead
paid to clinical investigators and their institutions, (iii) expenses related
to preparing, submitting, reviewing or developing data or information for the
purpose of filing submissions to the FDA to obtain REGULATORY APPROVAL of a
LICENSED PRODUCT, and (iv) expenses related to process development, scale-up,
quality control and quality assurance, recovery and formulation work (such
permitted expenses are to include ALLOCABLE OVERHEAD). All PRE-APPROVAL
DEVELOPMENT EXPENSES shall include ALLOCABLE OVERHEAD pursuant to Generally
Accepted Accounting Principles as consistently applied by GNE..
1.43 The term "REGULATORY APPROVAL" shall mean any approvals (including
pricing and reimbursement approvals), licenses, registrations or authorizations
of any federal, state or local regulatory agency, department, bureau or other
governmental entity, necessary for the manufacture and sale of a LICENSED
PRODUCT in a regulatory jurisdiction.
<PAGE>
1.44 The term "REPORTS" shall mean, to the extent applicable to the party
performing activities under the DEVELOPMENT PLAN, copies of minutes of all
meetings with the FDA, copies of all Investigational New Drug Applications
filed for a LICENSED PRODUCT excluding the Chemistry, manufacturing and
Controls sections and related updates, copies of all investigator brochures,
copies of all clinical study protocols (prior to submission to the FDA), notice
of when the first and last patients in a clinical trial have first been treated
with LICENSED PRODUCT and received their last treatment with LICENSED PRODUCT
in such clinical trial, copies, including a draft copy, of any interim clinical
trial analyses, and the final report on any clinical trial.
1.45 The terms "RESULTS"; "LKS RESULTS"; "GNE RESULTS" and "JOINT
RESULTS" shall have the meanings set forth in Section 5.10.
1.46 The term "ROCHE AFFILIATE" as applied to ROCHE HOLDING LTD, a Swiss
corporation, shall mean any company or other legal entity other than ROCHE
HOLDING LTD and GNE and its AFFILIATES in whatever country organized,
controlling, controlled by or under common control with ROCHE HOLDING LTD. The
term "control" means possession 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.
1.47 The term "ROYALTY-BEARING SALES" shall mean the gross amount
invoiced by GNE, its AFFILIATES and its permitted SUBLICENSEES for sales to an
unrelated THIRD PARTY of a LICENSED PRODUCT in the TERRITORY, less (i) trade,
cash and quantity discounts or rebates, (ii) credits or allowances given or
made for rejections or return of, and for uncollectible amounts on, previously
<PAGE>
sold products or for retroactive price reductions (including rebates similar to
Medicare), (iii) taxes, duties or other governmental charges levied on or
measured by the billing amount, as adjusted for rebates and refunds, (iv)
charges for freight and insurance directly related to the distribution of
LICENSED PRODUCTs (to the extent not paid by the THIRD PARTY customer), and (v)
credits or allowances given or made for wastage replacement, indigent patient
and similar programs (but only to the extent such amounts were included in the
gross amount invoiced). The amount obtained by deducting (i) through (v) from
the gross amount invoiced shall then be adjusted by the COMBINATION PRODUCT
ADJUSTMENT, if applicable.
1.48 The term "SALES COSTS" shall mean costs, including ALLOCABLE
OVERHEAD, specifically identifiable to the sales of LICENSED PRODUCTs to all
markets in the OPTION TERRITORY including the managed care market. SALES COSTS
shall include costs associated with sales representatives, including
compensation, benefits and travel, supervision and training of the sales
representatives, sales meetings, other sales expenses, and the start-up costs
associated with GNE's sales force, including recruiting, relocation and other
similar costs.
1.49 The term "SPA" shall have the meaning set forth in Section 7.1.
1.50 The term "SUBLICENSEE" shall mean any non-AFFILIATE THIRD PARTY
licensed by GNE to make, have made, import, use or sell any LICENSED PRODUCT.
<PAGE>
1.51 The term "SUCCESSFUL PHASE II CLINICAL TRIAL COMPLETION" shall mean
the date when both of the following have occurred (i) one or more Phase II
clinical trials are completed for the LICENSED PRODUCT which demonstrate its
safety and efficacy, including statistical evaluation of the results, such that
both parties agree that sufficient data has been generated to proceed to a
Phase III Clinical Trial and the Phase II clinical results are likely to be
confirmed in a PHASE III CLINICAL TRIAL, and (ii) the parties have met with the
U.S. FDA and the FDA has provided guidance regarding the design of the PHASE
III CLINICAL TRIAL and has not given any reason why the PHASE III CLINICAL
TRIAL should not be initiated.
1.52 The term "TERRITORY" shall mean the entire world, excluding the
United States, if the OPTION is timely exercised.
1.53 The term "THIRD PARTY(IES)" shall mean a person or entity who or
which is not a party hereto.
1.54 The term "WARRANT" shall have the meaning set forth in Section 7.1.
1.55 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 LKS hereby grants to GNE and GNE accepts from LKS an exclusive, even
as to LKS, and subject to Section 7.2(c), royalty bearing right and license
under LKS' interest in LKS TECHNOLOGY, LKS PATENTS and JOINT PATENTS to make,
<PAGE>
have made, use, sell, have sold, offer to sell or import LICENSED PRODUCTS in
the TERRITORY and the OPTION TERRITORY, if applicable.
2.2 (a) Subject to Paragraphs 2.2(b) GNE shall be entitled to sublicense
THIRD PARTIES, including AFFILIATES, with the consent of LKS (which consent
shall not be unreasonably withheld); provided that GNE shall be entitled,
without the consent of LKS, to sublicense Roche Holding Ltd, a Swiss
corporation and ROCHE AFFILIATES. In the case of a license which has been
sublicensed to AFFILIATES or SUBLICENSEES, such AFFILIATES or SUBLICENSEES
shall be bound by all applicable terms and conditions of this Agreement. GNE
shall advise LKS of any sublicense and provide LKS with a copy of any
sublicense (with financial terms, GNE or THIRD PARTY technical information, and
other matters unrelated to the sublicense of the rights hereunder redacted)
within sixty (60) days of execution of such sublicense.
(b) GNE shall guarantee and be responsible for the payment of all
royalties and other compensation due hereunder and the making of reports under
this Agreement by reason of sales of any LICENSED PRODUCTS by its AFFILIATES
and SUBLICENSEES and their compliance with all applicable terms of this
Agreement. Performance or satisfaction of any obligations of GNE under this
Agreement by any of its AFFILIATES or SUBLICENSEES shall be deemed performance
or satisfaction of such obligations by GNE.
2.3 GNE agrees to use LKS TECHNOLOGY and the LKS PATENTS only for the
manufacture, use or sale of LICENSED PRODUCTS and only and to the extent
licensed under this Agreement. Upon termination of this Agreement or of the
rights and licenses granted to GNE in any country by LKS, pursuant to Sections
<PAGE>
12.2 and 12. 3, GNE agrees not to use the LKS TECHNOLOGY and LKS PATENTS or
information or technology derived therefrom for the manufacture, use or sale of
LICENSED PRODUCTS in any country by LKS other than those countries in which GNE
retains a license under this Agreement.
SECTION 3 - Due Diligence.
3.1 Consistent with the DEVELOPMENT PLAN, LKS shall initiate and
diligently use its best efforts to develop LICENSED PRODUCTS from the EFFECTIVE
DATE through SUCCESSFUL PHASE II CLINICAL TRIAL COMPLETION. LKS shall provide
the REPORTS to GNE in a timely manner and shall provide GNE with any additional
information reasonably requested by GNE with regard to development of LICENSED
PRODUCTS.
3.2 Consistent with the DEVELOPMENT PLAN, GNE shall initiate and
diligently use its best efforts to develop and seek REGULATORY APPROVAL for
LICENSED PRODUCTS after the SUCCESSFUL PHASE II CLINICAL TRIAL COMPLETION and
continue to use its best efforts to manufacture, market and sell LICENSED
PRODUCTS.
(i) From the SUCCESSFUL PHASE II CLINICAL TRIAL COMPLETION through
the first REGULATORY APPROVAL in the United States or any country within the
countries of the EU, GNE shall provide REPORTS to LKS in a timely manner. In
addition, GNE shall provide LKS with any additional information reasonably
requested by LKS with regard to development of LICENSED PRODUCTS.
<PAGE>
(ii) Upon SUCCESSFUL PHASE II CLINICAL TRIAL COMPLETION for the
first LICENSED PRODUCT, GNE shall (i) initiate a PHASE III CLINICAL TRIAL for
such LICENSED PRODUCT consistent with the DEVELOPMENT PLAN as soon as
practicable after SUCCESSFUL PHASE II CLINICAL TRIAL COMPLETION, and (ii) use
its best efforts to file simultaneously for REGULATORY APPROVAL for such
LICENSED PRODUCT in the United States and the EU.
(iii) As part of GNE's obligations under this Section, GNE shall
provide to LKS, both prior to and after marketing LICENSED PRODUCT, its
marketing plans and sales forecasts for each LICENSED PRODUCT to be sold in the
TERRITORY and/or OPTION TERRITORY, if applicable.
3.3 (a) To the extent LKS TECHNOLOGY and/or LKS PATENT RIGHTS licensed to
GNE under this Agreement have been licensed by LKS from a THIRD PARTY under an
agreement with such party ("OTHER PARTY AGREEMENT(S)"), GNE understands and
agrees as follows:
(i) The rights licensed to GNE by LKS are subject to the terms,
limitations, restrictions and obligations of the OTHER PARTY AGREEMENT(S). GNE
will comply with the applicable sublicense terms, obligations, limitations and
restrictions of the OTHER PARTY AGREEMENT(S), except that GNE shall have no
financial obligations under such OTHER PARTY AGREEMENT.
(ii) A list of the OTHER PARTY AGREEMENTS is set forth in Exhibit D,
attached hereto, and made a part hereof.
<PAGE>
(b) LKS shall maintain the OTHER PARTY AGREEMENTS in full force and
effect to the extent necessary to maintain GNE's rights sublicensed hereunder.
LKS shall not intentionally terminate any of the OTHER PARTY AGREEMENTS without
notifying GNE of its intention to do so and permitting GNE, if it desires to do
so, to enter into an agreement with the other party continuing the OTHER PARTY
AGREEMENTS on substantially the same terms in effect prior to such termination.
In addition, if GNE requests, LKS will use its best efforts to amend the OTHER
PARTY AGREEMENTS to ensure that GNE will enjoy the full benefits of this
Agreement, including sublicense rights.
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. For seven (7)
years from the initial receipt of the specific 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
<PAGE>
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
(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.
(vi) is developed by the receiving party independent of the
CONFIDENTIAL INFORMATION received hereunder.
4.3 The obligations of Section 4.1 notwithstanding, GNE 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 or file, prosecute or maintain patent applications with respect to
LICENSED PRODUCT, (ii) who need to know the same in order to work towards the
<PAGE>
commercial development of LICENSED PRODUCT, including SUBLICENSEES and
potential SUBLICENSEES, or (iii) who are approved by LKS or GNE, 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 Adverse Drug Events. The parties recognize that the holder of a DRUG
APPROVAL APPLICATION may be required to submit information and file reports to
various governmental agencies on compounds under clinical investigation,
compounds proposed for marketing, or marketed drugs. Information must be
submitted at the time of initial filing for investigational use in humans and
at the time of a request for market approval of a new drug. In addition,
supplemental information must be provided on compounds at periodic intervals
and adverse drug experiences must be reported at more frequent intervals
depending on the severity of the experience. Consequently, each party agrees
to:
(a) provide to the other for initial and/or periodic submission to
government agencies significant information on the drug from preclinical
laboratory, animal toxicology and pharmacology studies, as well as adverse drug
experience reports from clinical trials and commercial experiences with the
compound;
(b) in connection with investigational drugs, report to the other
within three (3) days of the initial receipt of a report of any unexpected or
serious experience with the drug, or sooner if required for either party to
comply with regulatory requirements; and
<PAGE>
(c) in connection with marketed drugs, report promptly to the other
any adverse experience with the drug that is serious and unexpected. Serious
adverse experiences mean any experience that suggests a significant hazard,
contra-indication, side effect or precaution, or any experience that is fatal
or life threatening, is permanently disabling, requires or prolongs inpatient
hospitalization, or is a congenital anomaly, cancer, or overdose. An unexpected
adverse experience is one not identified in nature, specificity, severity or
frequency in the current investigator brochure or the U.S. labeling for the
drug. Each party also agrees that if it contracts with a THIRD PARTY for
research to be performed by such THIRD PARTY on the drug, that party agrees to
require such THIRD PARTY to report to contracting party the information set
forth in subparagraph (a), (b), and (c) above. Non-compliance with this Section
4.5(c) shall not be deemed a material breach of this Agreement.
SECTION 5 - DEVELOPMENT COLLABORATION.
5.1 Object. Upon the EFFECTIVE DATE, a DEVELOPMENT collaboration shall be
established to develop and commercialize the first LICENSED PRODUCT (the
"COLLABORATION"). The DEVELOPMENT PLAN set forth in Exhibit A sets forth the
plan and the budget as of the EFFECTIVE DATE for development of the first
LICENSED PRODUCT through SUCCESSFUL PHASE II CLINICAL TRIAL COMPLETION and
shall include the work to be performed. The initial clinical indication to be
pursued for the first LICENSED PRODUCT shall be Inflammatory Bowel Disease
("IBD") and the initial LICENSED PRODUCT to be developed shall be LDP-02. GNE
<PAGE>
and LKS agree to support and fund the DEVELOPMENT in accordance with the
DEVELOPMENT PLAN and budget and the terms and conditions set forth below.
5.2 Oversight of the DEVELOPMENT
(a) Oversight. The COLLABORATION will be overseen and monitored by
the Committee described herein (the "DEVELOPMENT COMMITTEE").
(b) Membership. As soon as practical after the EFFECTIVE DATE, LKS
and GNE shall each appoint three (3) persons (or such other number of persons
as the parties may determine) to serve on the DEVELOPMENT COMMITTEE. Such
representatives will be qualified, by reason of background and experience, to
assess the scientific progress of the DEVELOPMENT. Each party will have the
right to change its representation on the DEVELOPMENT COMMITTEE upon written
notice sent to the other.
(c) Chair. The DEVELOPMENT COMMITTEE will be chaired by one
representative of each party as follows: Until the SUCCESSFUL COMPLETION OF
PHASE II CLINICAL TRIAL with a LICENSED PRODUCT as described in Section 5.5,
the DEVELOPMENT COMMITTEE will be chaired by a representative of LKS.
Thereafter, the DEVELOPMENT COMMITTEE will be chaired by a representative of
GNE.
(d) Responsibilities. The DEVELOPMENT COMMITTEE will have authority
to:
(i) review the DEVELOPMENT PLAN and approve any revisions to such
DEVELOPMENT PLAN for each AGREEMENT YEAR for LDP-02 for IBD, including the
<PAGE>
clinical strategy, budget, technical criteria for clinical success and a
timeline for clinical development; and
(ii) make recommendations regarding the performance and the conduct
of the DEVELOPMENT PLAN and monitor performance thereunder;
5.3 Meetings. The DEVELOPMENT COMMITTEE will meet not less than two (2)
times a year, at such dates, times and places as agreed to by the parties. All
decisions made or actions taken by the DEVELOPMENT COMMITTEE will be made
unanimously by its members with the LKS members cumulatively having one vote
and the GNE members cumulatively having one vote each. The DEVELOPMENT
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, after exhaustive discussion of all available
data and information, there are issues on which the DEVELOPMENT COMMITTEE
cannot reach agreement because of a DEADLOCK (as hereinafter defined), such
matters will be submitted to the President and CEO of both LKS and GNE or their
officer designees. In the event agreement cannot be reached at this level, the
DEADLOCK shall be resolved, in good faith, as follows: (i) by LKS through the
SUCCESSFUL PHASE II CLINICAL TRIAL COMPLETION and (ii) thereafter by GNE.
Notwithstanding the foregoing, a DEADLOCK with respect to the number of
patients required for SUCCESSFUL PHASE II CLINICAL TRIAL COMPLETION and/or an
increase in the line of credit provided by GNE above $15 million dollars shall
be resolved by mutual agreement of the parties.
<PAGE>
For the purpose of this Section 5.4, "DEADLOCK" will mean, (i) with
respect to any matter considered and voted upon by the DEVELOPMENT 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 Development Responsibilities. LKS shall be responsible, at its
expense, to carry out DEVELOPMENT pursuant to the DEVELOPMENT PLAN until
SUCCESSFUL PHASE II CLINICAL TRIAL COMPLETION for a LICENSED PRODUCT. Upon
SUCCESSFUL PHASE II CLINICAL TRIAL COMPLETION or at such time it is reasonably
necessary to ensure a smooth transition to GNE's development responsibilities
hereunder, LKS shall transfer or assign its IND for IBD and foreign equivalents
thereof for the LICENSED PRODUCT to GNE. In addition, upon SUCCESSFUL PHASE II
CLINICAL TRIAL COMPLETION, GNE and/or its AFFILIATES and SUBLICENSEES shall
complete and be responsible for development and commercialization worldwide of
such LICENSED PRODUCT, pursuant to the DEVELOPMENT PLAN covering GNE's
activities in the COLLABORATION, including, without limitation, the filing of
all DRUG APPROVAL APPLICATIONS. When GNE files a DRUG APPROVAL APPLICATION, LKS
will provide reasonable assistance to GNE to make such filing. Each party
understands, acknowledges and agrees that the collaboration is experimental and
work under the DEVELOPMENT PLAN may not achieve the overall goals in any year
or the overall goals of the DEVELOPMENT PLAN. Subject to the parties' due
<PAGE>
diligence obligations, neither party shall have liability with respect to any
failure of the COLLABORATION to develop a LICENSED PRODUCT.
5.6 Developmental Funding. In order to assist LKS to conduct its
obligations under the DEVELOPMENT PLAN, GNE shall provide LKS with a
$15-million-dollar line of credit, payable in accordance with a loan agreement
between the parties entered into contemporaneously with this Agreement (the
"LOAN AGREEMENT"). The parties initially believe that * patients are required
for SUCCESSFUL PHASE II CLINICAL TRIAL COMPLETION. Should the parties agree
that more than * patients will be required, GNE and LKS will mutually agree
upon any increase in the size of the available line of credit, if necessary,
for the incremental cost above the $15 million dollar credit limit for such
additional patients required to complete LKS portion of the DEVELOPMENT PLAN.
5.7 Manufacturing. LKS shall be responsible, at its expense, to make or
have made all requirements of the initial LICENSED PRODUCT for pre-clinical
studies and clinical studies through the first SUCCESSFUL PHASE II CLINICAL
TRIAL COMPLETION. Thereafter, GNE shall be responsible for worldwide production
of LICENSED PRODUCTS for all other clinical trials and commercial requirements.
If GNE requests, LKS will provide GNE with the necessary cell lines and LKS
TECHNOLOGY, free of charge, to manufacture LICENSED PRODUCT. In the event LKS
is contracting manufacturing to a THIRD PARTY and in the event LKS determines
- -------------------
*Confidential treatment requested; material has been omitted and filed
separately with the Commission.
<PAGE>
to change its contract manufacturer, LKS shall discuss such change with the
DEVELOPMENT COMMITTEE before it makes such change, and obtain approval, not to
be unreasonably withheld.
5.8 Small Molecule Programs. The parties acknowledge that both GNE and
LKS have independent small molecule alpha4/beta7 antagonist programs. The
parties agree that these programs will be kept separate from this COLLABORATION
and that the parties will not share with each other any aspect of development
of their respective small molecule programs.
5.9 Term and termination of the DEVELOPMENT COMMITTEE.
The DEVELOPMENT COMMITTEE will cease its activities upon receipt of
REGULATORY APPROVAL to sell the initial LICENSED PRODUCT in the United States
and the EU. However, the COLLABORATION will continue so long as GNE is
developing additional LICENSED PRODUCTS or further indications for the initial
LICENSED PRODUCT.
5.10 Results of the Development 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 GNE shall be owned solely by
<PAGE>
GNE ("GNE RESULTS") in each case following the rules of inventorship pursuant
to U.S. Patent law.
(b) The Parties recognize that as a result of the COLLABORATION
between GNE and LKS a joint invention may be made ("JOINT RESULTS"). In that
event, the parties shall jointly own patents, inventor's certificates and
applications therefor covering such JOINT RESULTS ("JOINT PATENTS"). Both GNE
and LKS agree that such joint inventions will be jointly owned and GNE and LKS
hereby agree to obligate their respective employee and consultant inventors to
assign joint inventions jointly to GNE and LKS.
(c) To the extent that any LKS RESULTS or JOINT RESULTS are
necessary to make, have made, use or sell LICENSED PRODUCTS, LKS' interest in
such RESULTS shall be included in LKS PATENTS and LKS TECHNOLOGY licensed to
GNE in the TERRITORY and the OPTION TERRITORY, if applicable.
SECTION 6 - PATENTS.
6.1 All proposed publications or communications relating to the
COLLABORATION and the RESULTS therefrom shall be reviewed and approved by the
parties hereto prior to submission for publication. A party will, upon request
by the other party, delay publication to enable patent rights to be perfected
and CONFIDENTIAL INFORMATION of the other party to be deleted, but in no event
shall such delay exceed sixty (60) days from the time the publication was
submitted to the receiving party, unless there will be a material impairment of
PATENT RIGHTS.
<PAGE>
6.2 (a) LKS shall disclose promptly to GNE the complete texts of all LKS
PATENTS in existence on the EFFECTIVE DATE, which claim the manufacture, use or
sale of a LICENSED PRODUCT as well as all information received concerning the
institution or possible institution of any interference, opposition,
re-examination, reissue, revocation, nullification or any official proceeding
involving any such LKS PATENT. LKS agrees to keep GNE promptly and fully
informed of the course of patent prosecution or other proceedings of such LKS
PATENTS including by providing GNE with copies of substantive communications,
search reports and THIRD PARTY observations submitted to or received from
patent offices.
(b) All reasonable PATENT COSTS which LKS will incur in the
TERRITORY after the EFFECTIVE DATE for LKS PATENTS in existence on the
EFFECTIVE DATE shall be reimbursed one-half by GNE within forty-five (45) days
of receipt of an invoice reasonably describing the services performed provided,
however, that (i) GNE and LKS shall mutually agree as to which countries within
the TERRITORY to file, prosecute and maintain LKS PATENTS, and (ii) GNE shall
have an equal say over all material matters related to the filing, prosecution
and maintenance of the LKS PATENTS. All reasonable PATENT COSTS that LKS incurs
after the EFFECTIVE DATE for such LKS PATENTS in the OPTION TERRITORY shall be
reimbursed one-half by GNE as provided herein until the date of REGULATORY
APPROVAL in the OPTION TERRITORY. Thereafter such PATENT COSTS shall be charged
to OTHER OPERATING INCOME EXPENSE only if the OPTION is timely exercised,
<PAGE>
otherwise such PATENT COSTS shall continue to be paid by LKS and reimbursed
one-half by GNE.
(c) GNE shall have the right to assume responsibility for
prosecution of any LKS PATENT or any part of any such LKS PATENT which LKS
intends to abandon or otherwise cause or allow to be forfeited provided that
the claims of such LKS PATENT covers LICENSED PRODUCT or any aspect of the
manufacture, use or sale of LICENSED PRODUCTS.
(d) GNE shall have no liability for reimbursing LKS for PATENT COSTS
incurred by LKS prior to the EFFECTIVE DATE nor for LKS PATENTS (except JOINT
PATENTS) filed by LKS but not in existence on the EFFECTIVE DATE.
(e) GNE shall have the right to cause LKS to file divisional
applications under LKS PATENTS for which GNE is providing reimbursement and
which relate to subject matter that GNE, at its discretion, believes is
important or essential to the manufacture, use or sale of LICENSED PRODUCT, and
to share equally with LKS the PATENT COSTS of prosecution and maintenance of
that subject matter. Subject matter not deemed important to GNE may be returned
to LKS and prosecution and maintenance costs will be borne solely by LKS for
the returned subject matter.
6.3 (a) GNE shall have the first right for JOINT PATENTS and the sole
right for GNE PATENTS, using in-house or outside legal counsel selected at
GNE's sole discretion, to prepare, file, prosecute, maintain and obtain
extensions of GNE PATENTS or JOINT PATENTS in countries of GNE's choice
throughout the TERRITORY and in the OPTION TERRITORY, including the naming of
<PAGE>
LKS inventors where appropriate in the case of JOINT PATENTS. GNE shall bear
the PATENT COSTS relating to such activities in the TERRITORY and in the OPTION
TERRITORY. Such PATENT COSTS in the OPTION TERRITORY after REGULATORY APPROVAL
in the United States shall be charged by GNE to OTHER OPERATING INCOME/EXPENSE
if the OPTION is timely exercised. GNE shall use reasonable efforts to solicit
LKS's advice and review of the nature and text of JOINT PATENTS and material
prosecution matters related thereto in reasonably sufficient time prior to
filing thereof, and GNE shall consider in good faith LKS's reasonable comments
related thereto.
(b) LKS shall have the first right, using in-house or outside legal
counsel selected at LKS's sole discretion, to prepare, file prosecute, maintain
and obtain extensions of LKS PATENTS filed after the EFFECTIVE DATE in the
OPTION TERRITORY and in countries of LKS' choice in the TERRITORY. LKS shall
take into account GNE's reasonable comments related to such actions. All
reasonable PATENT COSTS related to preparing, filing, prosecuting, maintaining
and extending such LKS PATENTS shall be paid by LKS and after REGULATORY
APPROVAL in the United States, such PATENT COSTS which relate to the OPTION
TERRITORY may be charged by LKS to OTHER OPERATING INCOME/EXPENSE if the OPTION
is timely exercised, otherwise such PATENT COSTS shall continue to be paid by
LKS.
(c) If GNE, prior or subsequent to filing any JOINT PATENTS, elects
not to file, prosecute or maintain JOINT PATENTS or any claims encompassed by
such JOINT PATENTS, GNE shall give LKS notice thereof within a reasonable
<PAGE>
period prior to allowing such JOINT PATENTS or such claims encompassed by such
JOINT PATENTS to lapse or become abandoned or unenforceable, and LKS shall
thereafter have the right, at its sole expense, to prepare, file, prosecute and
maintain JOINT PATENTS or such claims encompassed by such JOINT PATENTS
concerning all such inventions and discoveries in countries of its choice
throughout the world. If LKS, prior or subsequent to filing LKS PATENTS, elects
not to file, prosecute or maintain such LKS PATENTS or any claims encompassed
by such LKS PATENTS, LKS shall give GNE notice thereof within a reasonable
period prior to allowing such LKS PATENTS or such claims encompassed by such
LKS PATENTS to lapse or become abandoned or unenforceable, and GNE shall
thereafter have the right, at its sole expense, to prepare, file prosecute and
maintain such LKS PATENTS or certain claims encompassed by such LKS PATENTS
concerning all such inventions and discoveries in countries of its choice
throughout the world.
Notwithstanding the foregoing, neither GNE for the JOINT PATENTS nor LKS
for the LKS PATENTS may abandon any subject matter reasonably related to the
manufacture, use or sale of a LICENSED PRODUCT, without the consent of the
other party.
(d) The party filing JOINT PATENTS shall do so in the name of and on
behalf of both GNE and LKS. Each of LKS and GNE shall hold all information it
presently knows or acquires under this Section 6 which is related to all such
PATENT RIGHTS as confidential subject to the provisions of Section 4 of this
Agreement.
<PAGE>
6.4 (a) In the event that a party becomes aware of significant actual or
threatened infringement of an LKS PATENT or JOINT PATENT, anywhere in the
world, that party shall promptly notify the other party in writing. GNE shall
have the first right but not the obligation to bring an infringement action or
file any other appropriate action or claim directly related to infringement of
an LKS PATENT or a JOINT PATENT, wherein such infringement relates to LICENSED
PRODUCT, against any THIRD PARTY and to use LKS's name in connection therewith.
The costs of patent enforcement and related recoveries associated with the
OPTION TERRITORY incurred by GNE shall be included in OTHER OPERATING
INCOME/EXPENSE, if the OPTION has been timely exercised. Such patent
enforcement costs in the TERRITORY shall be borne by GNE. If GNE does not
commence a particular infringement action hereunder within ninety (90) days
after it received such written notice, LKS, after notifying GNE in writing,
shall be entitled to bring such infringement action or any other appropriate
action or claim at its own expense and to use GNE's name in connection
therewith. The party conducting such action shall consider in good faith the
other party's comments on the conduct of such action. Recovery from any
settlement or judgment from such action in the TERRITORY shall go first to
reimburse the expenses of the parties in the infringement action and the
remainder shall be shared by the parties in proportion to their respective
economic interests in the specific LICENSED PRODUCT in the country subject to
dispute. In any event, LKS and GNE shall assist one another and reasonably
cooperate in any such litigation at the other's request without expense to the
requesting party.
<PAGE>
(b) GNE shall have the sole right but not the obligation to bring an
infringement action or file any other appropriate action or claim directly
related to infringement of a GNE PATENT, wherein such infringement relates to
LICENSED PRODUCT, against any THIRD PARTY and to use LKS' name in connection
therewith. The costs of patent enforcement shall be incurred by and any related
recovery shall be paid to GNE.
6.5 If a THIRD PARTY asserts that a patent or other right owned by it is
infringed by any LICENSED PRODUCT in the OPTION TERRITORY or TERRITORY, GNE
will be solely responsible for deciding how and whether to defend against any
such assertions; provided, however, that to the extent that any such
infringement action is filed or threatened in the OPTION TERRITORY, GNE shall
discuss its strategy with LKS and consider LKS' comments in good faith. The
costs of any such action in the OPTION TERRITORY (including the costs of any
judgment, award, decree or settlement) will be chargeable to OTHER OPERATING
INCOME/EXPENSE, if the OPTION has been timely exercised. The costs of defending
any such action in the TERRITORY (excluding the costs of any judgment, award,
decree or settlement) will be paid by GNE. If GNE is required to make any
payments to such THIRD PARTY as a result of such action, such payments shall be
considered OTHER ROYALTIES as defined and described in Section 7.3.
SECTION 7 - COMPENSATION.
7.1 (a) Upon the EFFECTIVE DATE, GNE shall make an equity investment in
LKS pursuant to a Securities Purchase Agreement ("SPA") and a Registration
<PAGE>
Rights Agreement entered into by the parties contemporaneously with this
Agreement.
(b) Upon the EFFECTIVE DATE, LKS shall issue to GNE a warrant
("WARRANT") to purchase two-hundred and fifty thousand shares (250,000) of LKS
common stock pursuant to the SPA and the WARRANT executed by the parties
contemporaneously with this Agreement.
7.2 (a) GNE shall pay the following amounts upon the occurrence of the
following milestone events, which may be achieved by GNE through a SUBLICENSEE
or AFFILIATE.
(i) Upon the first REGULATORY APPROVAL in the United States of the
initial LICENSED PRODUCT, GNE shall make a one-time payment to LKS of *;
(ii) upon first REGULATORY APPROVAL of the initial LICENSED PRODUCT
in the United Kingdom, Germany or France, GNE shall make a one-time payment to
LKS of *.
(b) As soon as practical after the SUCCESSFUL PHASE II CLINICAL TRIAL
COMPLETION, GNE shall deliver to LKS a projected budget of the PRE-APPROVAL
DEVELOPMENT COSTS.
(c) After receipt by LKS of the budget provided in Section 7.2(b) LKS
shall have the option during the next ninety (90)-days to elect to pay
twenty-five percent (25%) of all subsequent PRE-APPROVAL DEVELOPMENT COSTS (the
___________________
*Confidential treatment requested; material has been omitted and filed
separately with the Commission.
<PAGE>
"OPTION"). If LKS timely exercises the OPTION and repays the loan in full, (1)
LKS shall share in * of the OPERATING PROFIT OR LOSS relative to the LICENSED
PRODUCT in the OPTION TERRITORY and (2) subject to Section 7.3, GNE shall pay
LKS a royalty of * of ROYALTY-BEARING SALES of LICENSED PRODUCTS on the first *
in annual ROYALTY-BEARING SALES in all countries of the TERRITORY (which shall
exclude the United States) and * on greater than * annual ROYALTY-BEARING SALES
in all countries of the TERRITORY (which shall exclude the United States). In
addition, if the OPTION is timely exercised and Subject to Section 7.2(d), GNE
will provide a loan to LKS of sufficient funds to cover its twenty-five percent
(25%) of PRE-APPROVAL DEVELOPMENT COSTS on the terms set forth in the LOAN
AGREEMENT. If the OPTION is not timely exercised and subject to Section 7.3,
GNE shall pay LKS (i) a royalty of * of ROYALTY-BEARING SALES of LICENSED
PRODUCTS on the first * in annual ROYALTY-BEARING SALES in the United States
and * on annual ROYALTY-BEARING SALES in the United States greater than *; and
(ii) a royalty of * of ROYALTY-BEARING SALES of LICENSED PRODUCTS on the first
* in annual ROYALTY-BEARING SALES in all countries of the TERRITORY except the
United States and * on greater than * annual ROYALTY-BEARING SALES in all
countries of the TERRITORY except the United States. OPERATING PROFIT OR LOSS
in the OPTION TERRITORY, if applicable, and royalties shall be payable on a
country-by-country, LICENSED PRODUCT-by-LICENSED PRODUCT basis, for * from
FIRST COMMERCIAL SALE in a country.
- -------------------
*Confidential treatment requested; material has been omitted and filed
separately with the Commission.
<PAGE>
(d) If a second PHASE III CLINICAL TRIAL is required for the first
REGULATORY APPROVAL of a LICENSED PRODUCT, LKS may elect, within sixty (60)
days following receipt from GNE of a revised budget for the revised
PRE-APPROVAL DEVELOPMENT COSTS to continue to pay twenty-five percent (25%) of
PRE-APPROVAL DEVELOPMENT COSTS, in which case, LKS shall continue to share in
the OPERATING PROFIT OR LOSS for such LICENSED PRODUCT in the OPTION TERRITORY,
if the loan is repaid in full. If LKS elects not to share in such costs, then
LKS will be deemed to have elected not to share in such OPERATING PROFIT or
LOSS and the royalty provisions in Section 7.2(c) shall be applicable thereto;
provided, however, that in such instance LKS will repay all amounts previously
loaned to LKS pursuant to the terms of the LOAN AGREEMENT.
7.3 In the event that royalties are required to be paid by GNE or its
AFFILIATES or SUBLICENSEES in a particular country to a THIRD PARTY who is not
an AFFILIATE of GNE in such country in order for GNE or its AFFILIATES or
SUBLICENSEES in such country to make, have made, use, import, offer for sale,
sell or have sold a LICENSED PRODUCT without infringing such THIRD PARTY'S
patents in such country and for which royalties are also due to LKS on
ROYALTY-BEARING SALES pursuant to this Agreement (such royalties to such THIRD
PARTY are hereinafter "OTHER ROYALTIES"), then the royalties to be paid to LKS
in such country by GNE hereunder shall be reduced by * of the amount of such
- -------------------
*Confidential treatment requested; material has been omitted and filed
separately with the Commission.
<PAGE>
OTHER ROYALTIES, but in no event shall any royalties payable to LKS under this
Agreement be reduced by more than *.
7.4 GNE 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 LICENSED PRODUCTS that may be necessary
for the purpose of calculating all royalties and other compensation 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 three (3) 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 GNE, upon reasonable notice during normal business hours at LKS's expense
for the sole purpose of verifying royalty and other compensation statements or
compliance with this Agreement. In the event the inspection determines that
payments due LKS for any period have been underpaid by five percent (5%) or
more, then GNE shall pay for all costs of the inspection. In all cases, GNE
shall pay to LKS any underpaid royalties or other compensation promptly and
with interest at the prime rate set forth in the Wall Street Journal, plus two
percent (2%). In the event of an overpayment by GNE, LKS shall promptly
refund that overpayment. All information and data reviewed in the inspection
shall be used only for the purpose of verifying royalties and other
- -------------------
*Confidential treatment requested; material has been omitted and filed
separately with the Commission.
<PAGE>
compensation due hereunder and shall be treated as GNE 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 or other compensation 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
sixty (60) days next following such date. Every such payment shall be supported
by the accounting prescribed in Section 7.6 and shall be made in United States
currency.
7.6 With each quarterly payment, GNE shall deliver to LKS a full and
accurate accounting to include at least the following information:
(a) ROYALTY BEARING SALES for each LICENSED PRODUCT (by country),
including a calculation explaining the deductions to reach ROYALTY BEARING
SALES;
(b) Total royalties payable to LKS; and
(c) A calculation of the conversion of local currency sales to U.S.
Dollars;
(d) OPERATING PROFIT OR LOSS analysis of compensation due LKS in the
U.S., if applicable. Accordingly, within sixty (60) days following the end of
each calendar quarter, GNE shall (i) provide LKS with a report calculating
OPERATING PROFIT or LOSS for the quarter, and (ii) pay LKS its share of any
OPERATING PROFIT or bill LKS for its share of any OPERATING LOSS. If there is
an OPERATING LOSS, LKS will pay GNE for LKS' portion of the OPERATING LOSS
within thirty (30) days of receiving the OPERATING LOSS report.
<PAGE>
7.7 In each country where the local currency is blocked and cannot be
removed from the country, at the election of LKS, royalties accrued in that
country shall be paid to LKS in the country in local currency by deposit in a
local bank designated by LKS or shall be paid to LKS on the ROYALTY BEARING
SALES to the importer of the LICENSED PRODUCT in that country rather than on
such sales in that country.
7.8 For the purpose of computing ROYALTY-BEARING SALES for LICENSED
PRODUCTS sold in a currency other than United States Dollars, such currency
shall be converted into United States Dollars in accordance with GNE's
customary and usual translation procedures consistently applied. Such
procedures shall, at LKS request, be provided to LKS
7.9 LKS shall pay any and all taxes levied on account of, or measured
exclusively by, any payment including royalties it receives under this
Agreement. If laws or regulations require that taxes be withheld, GNE will (i)
deduct those taxes from the remittable amount, (ii) timely pay the taxes to the
proper taxing authority, and (iii) send proof of payment to LKS within sixty
(60) days following that payment and reasonably cooperate with LKS, at LKS's
expense, in any proceeding with such taxing authorities.
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 the
terms of or cause a breach of any other agreement to which it is a party; and
(iii) it has taken all corporate action necessary to authorize the execution
<PAGE>
and delivery of this Agreement and the performance of its obligations under
this Agreement.
8.2 LKS hereby represents and warrants to GNE that:
(a) It is the owner of, or is the licensee of the proprietary information
related to LICENSED PRODUCTS which it has provided to GNE under this Agreement,
and accordingly has the right to grant licenses or sublicenses therefor.
(b) LKS has not, and during the term of this Agreement, will not, grant
any right to any THIRD PARTY relating to the LICENSED PRODUCT in the FIELD
which would conflict with the rights granted to GNE hereunder.
(c) Except pursuant to the Other Party Agreements, LKS is not obligated
under any agreement with a THIRD PARTY to pay such THIRD PARTY royalties
regarding the LICENSED PRODUCT.
8.3 LKS agrees that during the term of the COLLABORATION, LKS will not
develop, manufacture or sell a monoclonal antibody that competes with LICENSED
PRODUCT.
8.4 EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT NEITHER
PARTY MAKES ANY 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, GNE PATENT OR OTHER INTELLECTUAL PROPERTY RIGHTS.
<PAGE>
SECTION 9 - INDEMNIFICATION.
9.1 Indemnification by GNE in the TERRITORY
(a) GNE 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 the DEVELOPMENT, manufacture, sale or use of any LICENSED
PRODUCT performed by GNE, its AFFILIATES or its SUBLICENSEES in the TERRITORY
(other than those claims which result from the negligence or willful misconduct
of an LKS Indemnified Party).
Indemnification by LKS in the TERRITORY
(b) LKS will defend, indemnify and hold harmless GNE,
its AFFILIATES and SUBLICENSEES and their employees, agents, officers,
shareholders and directors and each of them (the "GNE 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 GNE Indemnified Parties
resulting from or arising out of the DEVELOPMENT, testing, manufacturing or use
of any LICENSED PRODUCT performed by LKS or its AFFILIATES in the TERRITORY
(other than those claims which result from the negligence or willful misconduct
of a GNE Indemnified Party).
<PAGE>
Conditions to Indemnification in the TERRITORY
(c) 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 may assume direction and control of the defense thereof
(including the right to settle solely for monetary consideration) with counsel
chosen by the Indemnitor whether or not such claim is rightfully brought;
provided, however, that an Indemnitee shall have the right to retain its own
counsel, at its own expense. The Indemnitor may not settle any claims for other
than monetary consideration without the consent of the Indemnitee, which
consent will not be unreasonably withheld. 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
and defense of any action, claim or liability covered by this indemnification
at the cost of the Indemnitor.
OPTION TERRITORY Indemnification
9.2 If applicable, each party hereby agrees to save,
defend and hold the other party and its agents, officers, employees, directors,
shareholders and AFFILIATES and SUBLICENSEES harmless from and against any and
all THIRD PARTY claims, causes of action and costs (including reasonable
<PAGE>
attorneys fees) of any nature made or lawsuits or other proceedings filed or
otherwise instituted against each party resulting from or arising out of the
DEVELOPMENT, manufacture, use or sale of any LICENSED PRODUCT in the OPTION
TERRITORY by the indemnifying party, its AFFILIATES, agents, or SUBLICENSEES,
but only to the extent such losses result from the negligence or willful
misconduct of the indemnifying party or its employees, agents, affiliates or
SUBLICENSEES and do not also result from the negligence or willful misconduct
of the party seeking indemnification. Any other losses (including reasonable
attorneys fees) resulting from or arising out of the DEVELOPMENT, manufacture,
use or sale of any LICENSED PRODUCT in the OPTION TERRITORY shall be charged to
OTHER OPERATING INCOME/EXPENSE at the time such claim is finally determined,
whether by judgment, award, decree or settlement. In the event that either
party receives notice of a claim with respect to a LICENSED PRODUCT in the
OPTION TERRITORY, such party shall inform the other party as soon as reasonably
practicable. The parties shall confer as to how to respond to the claim and how
to handle the claim in an efficient manner.
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.
<PAGE>
10.2 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 the parties. 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 and such assignment
shall not relieve the assignor of any of its obligations under this Agreement.
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
earthquake, 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 and provided in no event shall a party be required to settle any labor
dispute or disturbance. In the event the force majeure event extends for more
than six (6) months, and could have been cured by a party's best efforts, then
the other party may terminate this Agreement upon written notice to the
non-performing party so long as the other party is not then in material breach
of this Agreement.
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
<PAGE>
and the licenses and rights granted hereunder shall remain in full force and
effect until GNE's obligations to pay royalties and/or profit share hereunder
expires. Upon expiration of GNE's obligations to pay royalties and/or profit
share hereunder with respect to a specific country and specific LICENSED
PRODUCT as to which GNE's license is then in effect, the license granted to GNE
with respect to such country and such LICENSED PRODUCT pursuant to Section 2.1
shall be deemed to be fully paid and GNE shall thereafter have an exclusive,
sublicensable, royalty-free right and license under the LKS Patents and the LKS
Technology to make, have made, use, sell, offer to sell, have sold and import
such LICENSED PRODUCT in such country.
12.2 Upon breach of any material provisions of this Agreement by either
party to this Agreement, which 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 itself then in material breach
of this Agreement. The rights and obligations of the parties upon termination
are described in Sections 12.4, 12.5, 12.6 and 12.7.
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, or has consented to an involuntary petition purporting to be pursuant
to any reorganization or insolvency law of any jurisdiction, or has made an
<PAGE>
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 In the event of termination of this Agreement by LKS under Section
12.2 or 12.3 or by GNE under Section 12.6:
(a) all licenses granted to GNE hereunder shall terminate.
(b) GNE shall assign or permit reference (at its option) to all
regulatory filings for LICENSED PRODUCTS as appropriate and shall grant to LKS,
all to the extent legally available, a non-exclusive, sublicensable, worldwide,
royalty-bearing, license within the FIELD to make, have made, use sell, have
sold, offer for sale or import LDP-02 under (1)issued GNE patents and GNE
TECHNOLOGY which were applied to the development of LDP-02 under the
Collaboration, (2) the CABILLY PATENTS, (3) issued THIRD PARTY patents licensed
by GNE after the EFFECTIVE DATE and under which GNE has the right to grant a
license to LKS hereunder, and (4) GNE's interest in the JOINT PATENTS within
the FIELD, provided, however, that (i) such license shall be on commercially
reasonable terms; (ii) LKS shall pay all royalties and payments due under and
shall comply with the terms of the CABILLY PATENTS and the THIRD PARTY patent
licenses as pass-through payments due thereunder, (iii) no license shall be
granted to any intellectual property developed under the small molecule program
described in Section 5.8, and (iv) the license described above in this Section
12.4(b) shall only be for patents required to make, have made, use, sell, have
sold, offer for sale or import LDP-02 in the FIELD.
(c) So long as the license described in Section 12.4(b) has been granted
and is in full force and effect, LKS shall not bring any legal action against
<PAGE>
GNE for any losses or damages associated with and GNE shall have no other
liability to LKS regarding termination of this Agreement, except losses and
damages described in Section 9 - Indemnification.
12.5 In the event of a termination of this Agreement by GNE under Section
12.2 or 12.3:
(a) there shall be deemed an event of default under the LOAN AGREEMENT
and all principal and interest outstanding under the LOAN AGREEMENT shall be
immediately due and payable.
(b) LKS shall assign or permit (at its option) reference to all
regulatory filings for LICENSED PRODUCTS as appropriate and shall grant to GNE
an exclusive (even as to LKS), worldwide, royalty-bearing, license under the
LKS PATENTS and the LKS TECHNOLOGY to make, have made, use, sell, have sold,
offer for sale or import LICENSED PRODUCTS; provided, however, that GNE shall
pay LKS a * royalty on ROYALTY BEARING SALES (using for this purpose the
definition set forth in this Agreement), as well as any milestone payments due
to THIRD PARTIES under the LKS PATENTS and the LKS TECHNOLOGY directly
attributable to LDP-02 development (but GNE shall not pay LKS any milestone
payments due to LKS under this Agreement), GNE shall diligently pursue
development and commercialization of the LICENSED PRODUCTS, and GNE shall
comply with all but the financial terms of the OTHER PARTY AGREEMENTS and other
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*Confidential treatment requested; material has been omitted and filed
separately with the Commission.
<PAGE>
THIRD PARTY licenses included in the LKS PATENTS and the LKS TECHNOLOGY and LKS
shall pay all royalties due under such OTHER PARTY AGREEMENTS and other THIRD
PARTY licenses.
(c) So long as the license described in 12.5(b) has been granted and is
in full force and effect, GNE shall not bring any legal action against LKS for
any losses or damages associated with and LKS shall have no other liability to
GNE regarding termination of this Agreement, except losses and damages
described in Section 9 - Indemnification.
12.6 Notwithstanding anything to the contrary herein, GNE may, after the
first twelve (12) months after the EFFECTIVE DATE, terminate this Agreement by
giving nine (9) months' prior written notice to LKS (e.g., earliest termination
hereunder effective on or after twenty-one (21) months after the EFFECTIVE
DATE). Such termination may be for any reason, provided that, in the event of
such termination, GNE may not research, develop, manufacture or sell a
competitive monoclonal antibody to LDP-02 for three (3) years thereafter. In
addition, in the event of such termination, (i) the provisions of Section 12.4
shall be applicable, (ii) any loan made under the LOAN AGREEMENT through
termination of this Agreement shall be repaid in accordance with the terms of
the LOAN AGREEMENT, and (iii) the WARRANT, to the extent not previously
exercised, shall terminate.
12.7 Upon any termination of this Agreement by LKS, GNE shall be entitled
to, but shall not be obligated to finish any work-in-progress for which GNE has
received firm purchase orders and to sell any completed or bulk inventory of a
LICENSED PRODUCT covered by this Agreement which remains on hand as of the date
of the termination, so long as GNE pays to LKS the royalties and/or profit
<PAGE>
share applicable to said subsequent sales in accordance with the same terms and
conditions as set forth in this Agreement.
12.8 The obligations of Sections 4, 8 and 9, as well as Sections 12.4,
12.5, 12.6, 12.7, 12.8, 12.9, 13.3 and 13.8 shall survive any termination of
this Agreement.
12.9 In the event that this Agreement and/or the rights and licenses
granted under this Agreement are terminated by LKS under 12.2 or 12.3, or by
GNE under Section 12.6 any sublicense granted under this Agreement shall remain
in full force and effect as a direct license between LKS and the SUBLICENSEE
under the terms and conditions of the sublicense agreement, subject to the
SUBLICENSEE agreeing to be bound to LKS under such terms and conditions within
thirty (30) days after LKS provides written notice to the SUBLICENSEE of the
termination of GNE's rights and licenses under this Agreement.
SECTION 13 - GENERAL PROVISIONS.
13.1 The relationship between LKS and GNE is that of independent
contractors. LKS and GNE 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 GNE in any manner. Likewise, GNE 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
<PAGE>
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 State of Delaware, 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 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 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 a LICENSED PRODUCT, each party 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) when sent, if sent, by facsimile, as
confirmed by certified or registered mail or overnight carrier. Notices shall
be delivered to the respective parties as indicated:
<PAGE>
If To LKS: LeukoSite, Inc.
215 First Street
Cambridge, MA 02142
Fax No. 617-621-9349
Attn: CEO
Copy to: Carella, Byrne, Bain, Gilfillan,
Cecchi, Stewart & Olstein
6 Becker Farm Road
Roseland, New Jersey 07068
Fax No. (973) 994-1744
Attn: Elliot M. Olstein, Esq.
If To GNE: 1 DNA Way South
San Francisco, CA 94080
Fax No. 650-952-9881
Attn: Corporate Secretary
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 panel
of three (3) arbitrators to so decide any such matter or disagreement. The
panel of arbitrators shall conduct the arbitration in accordance with the Rules
of the American Arbitration Association (the "AAA"), unless the parties agree
otherwise. Each party shall select one arbitrator and the two arbitrators shall
then select a third arbitrator pursuant to the AAA rules. If the two
arbitrators are unable to mutually select a third arbitrator, the third
arbitrator shall be selected in accordance with the procedures of the AAA. The
decision and award rendered by the panel of arbitrators 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, if requested by GNE and in San Francisco, California, if
<PAGE>
requested by LKS, 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.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date set forth above.
LEUKOSITE, INC. GENENTECH, INC.
By:__________________________ By:___________________________
Name and Title:______________ Name and Title:_______________
LEUKOSITE, INC.
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT is dated as of the 18th day of
December, 1997 (this "Agreement") by and between LEUKOSITE, INC., a Delaware
corporation with its principal office at 215 First Street, Cambridge,
Massachusetts 02142 (the "Company"), and GENENTECH, INC., a Delaware
corporation with its principal office at 1 DNA Way, South San Francisco,
California 94080 (the "Purchaser").
WHEREAS, the Company desires to issue and sell to the Purchaser an
aggregate of up to 336,135 shares (the "Common Shares") of the authorized but
unissued shares of common stock, $.01 par value per share, of the Company (the
"Common Stock"), and desires to issue to the Purchaser a Common Stock Purchase
Warrant exercisable for 250,000 shares of Common Stock (the "Warrant Shares");
and
WHEREAS, the Purchaser, wishes to purchase the Common Shares and to
acquire such Common Stock Purchase Warrant on the terms and subject to the
conditions set forth in this Agreement.
NOW THEREFORE, in consideration of the mutual agreements,
representations, warranties and covenants herein contained, the parties hereto
agree as follows:
1. Definitions. As used in this Agreement, the following terms shall have
the following respective meanings:
(a) "Affiliate" of a Person means any other Person controlled by,
controlling or under common control with such Person.
(b) "Closing" shall have the meaning thereto ascribed in Section 2.4
hereof.
(c) "Closing Date" means the date of the Closing.
(d) "Collaboration Agreement" shall mean that certain Development
Collaboration and Licensing Agreement, dated as of the date hereof, between the
Company and the Purchaser, as amended and in effect from time to time.
<PAGE>
(e) "Common Shares" shall have the meaning ascribed thereto in the
preamble hereto.
(f) "Controlled Affiliate" of a Person means any other Person that is
directly or indirectly controlled by such Person.
(g) "Conversion Common Shares" shall mean those shares of Common Stock
issued or issuable upon conversion of (i) any or all Development Loans and/or
Profit-Sharing Option Loans outstanding at any time and from time to time or
(ii) any and all Conversion Preferred Shares outstanding at any time and from
time to time.
(h) "Conversion Preferred Shares" shall mean those shares of any series
of preferred stock, $0.01 par value per share, of the Company that are issued
upon conversion of any or all Development Loans and/or Profit-Sharing Option
Loans outstanding
at any time and from time to time.
(i) "Conversion Shares" shall mean the Conversion Common Shares and the
Conversion Preferred Shares, collectively.
(j) "Development Loans" shall have the meaning ascribed to such term in
the Loan Agreement.
(k) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(l) "Loan Agreement" shall mean that certain Loan Agreement, dated as of
the date hereof, between the Company and the Purchaser, as amended and in
effect from time to time.
(m) "Person" shall mean an individual, partnership, limited liability
company, corporation, association, trust, joint venture, unincorporated
organization, and any government, governmental department or agency or
political subdivision thereof.
(n) "Prohibited Transferee" shall mean any Person that, immediately after
the acquisition of any Shares or any interest therein by such Person, its
Affiliates or nominees, directly or indirectly owns or holds of record or
beneficially securities of the Company representing (or convertible into or
exercisable or exchangeable for other securities of the Company that represent)
at least fifteen percent (15%) of the voting power of all voting securities of
the Company that are outstanding immediately after such acquisition.
(o) "Profit-Sharing Option Loans" shall have the meaning ascribed to such
term in the Loan Agreement.
<PAGE>
(p) "Registration Rights Agreement" shall mean that certain Registration
Rights Agreement, dated as of the date hereof, between the Company and the
Purchaser, as amended and in effect from time to time.
(q) "Rule 144" shall mean Rule 144 promulgated under the Securities Act
and any successor or substitute rule, regulation or law.
(r) "SEC" shall mean the Securities and Exchange Commission.
(s) "Securities" shall mean, collectively the Shares and the Warrant.
(t) "Securities Act" shall mean the Securities Act of 1933, as amended.
(u) "Shares" shall mean, collectively, the Common Shares, the Warrant
Shares and the Conversion Shares.
(v) "Warrant" shall have the meaning ascribed to such term in Section 2.2
hereof.
(w) "Warrant Shares" shall mean those shares of capital stock of the
Company issued or issuable upon exercise of the Warrant.
2. Purchase and Sale of Common Shares; Issuance of Common Stock Purchase
Warrant.
2.1 Purchase and Sale. Subject to and upon the terms and conditions set
forth in this Agreement, the Company agrees to issue and sell to the Purchaser,
and the Purchaser hereby agrees to purchase from the Company, at the Closing,
336,135 shares of Common Stock, at a purchase price of $11.90 per share. The
aggregate purchase price payable by the Purchaser to the Company for all of the
Common Shares shall be $4,000,000.
2.2 Issuance of Common Stock Purchase Warrants. Subject to and upon the
terms and conditions set forth in this Agreement, the Company agrees to issue
to the Purchaser, at the Closing, a Common Stock Purchase Warrant,
substantially in the form attached as Exhibit A hereto (as amended and in
effect from time to time, the "Warrant"), exercisable for 250,000 shares of
Common Stock, at an exercise price of $16.22 per share. No additional
consideration shall be payable by the Purchaser in respect of the issuance by
the Company of the Warrant to the Purchaser at the Closing.
2.3 Reservation of Warrant Shares. Prior to the Closing Date, the Company
will have duly authorized and reserved, free of preemptive rights and other
<PAGE>
preferential rights, an aggregate of 250,000 shares of Common Stock for
issuance upon exercise of the Warrant.
2.4 Closing. The closing of the transactions contemplated under this
Agreement (the "Closing") shall take place at the offices of Bingham Dana LLP,
150 Federal Street, Boston, Massachusetts 02110 at 1:00 p.m. on December 18,
1997 or at such other location, date and time as may be mutually agreed upon by
the Purchaser and the Company. At the Closing, the Company shall deliver to the
Purchaser (i) a single stock certificate representing the number of shares of
Common Stock purchased by the Purchaser, against payment of the purchase price
therefor by wire transfer of immediately available funds to such account or
accounts as the Company shall designate in writing and (ii) a duly executed
original of the Warrant issued by the Company to the Purchaser.
3. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Purchaser as follows:
3.1 Incorporation. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and is
qualified to do business in each jurisdiction in which the character of its
properties or the nature of its business requires such qualification, except
where the failure to so qualify would not have a material adverse effect upon
the Company. The Company has all requisite corporate power and authority to
carry on its business as now conducted.
3.2 Capitalization. The authorized capital stock of the Company consists
of (i) 25,000,000 shares of Common Stock, of which 9,538,692 shares are
outstanding on the date hereof (without giving effect to any of the
transactions contemplated hereby), (ii) 5,000,000 shares of preferred stock,
$0.01 par value per share, of which no shares are outstanding on the date
hereof and (iii) outstanding options and warrants to purchase 1,343,391 shares
of Common Stock.
3.3 Authorization. Except as set forth on Schedule 3.3 hereto, all
corporate action on the part of the Company that is necessary for the due
authorization, execution, delivery and performance of this Agreement, the
Registration Rights Agreement, the Warrant and the Loan Agreement and the
consummation of the transactions contemplated herein and therein has been
taken. When executed and delivered by the Company, each of this Agreement, the
Registration Rights Agreement, the Warrant and the Loan Agreement shall
constitute the legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except as such may be limited
by bankruptcy, insolvency, reorganization or other laws affecting creditors'
rights generally and by general equitable principles. The Company has all
requisite corporate power to enter into this Agreement, the Registration Rights
<PAGE>
Agreement, the Warrant and the Loan Agreement and to carry out and perform its
obligations under the terms of this Agreement, the Registration Rights
Agreement, the Warrant and the Loan Agreement.
3.4 Valid Issuance of the Common Shares, Warrant Shares and Conversion
Shares. The Common Shares being purchased by the Purchaser hereunder will, upon
issuance pursuant to the terms hereof, be duly authorized and validly issued,
fully paid and nonassessable. The reservation, issuance, sale and delivery by
the Company of the Warrant Shares have been duly authorized by all requisite
corporate action of the Company, and the Warrant Shares have been duly reserved
in accordance with Section 2.3 of this Agreement. The Warrant Shares, upon
issuance pursuant to the terms of the Warrant, will be duly authorized and
validly issued, fully paid and nonassessable. Except as set forth in Schedule
3.4 hereto, the issuance, sale and delivery by the Company of the Conversion
Shares have been duly authorized by all requisite corporate action of the
Company, and the Conversion Shares, when issued in accordance with the terms of
the Loan Agreement or the terms of the Conversion Preferred Shares, as the case
may be, will be duly authorized and validly issued, fully paid and
nonassessable.
3.5 Financial Statements. The Company has furnished or prior to the
Closing will furnish to the Purchaser its unaudited Statements of Income,
Stockholders' Equity and Cash Flows for the period from January 1, 1997 to
September 30, 1997, and its unaudited Balance Sheet dated September 30, 1997.
All such financial statements are hereinafter referred to collectively as the
"Financial Statements". The Financial Statements have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis during the periods involved, except for the absence of
footnotes normally contained therein and except that the Financial Statements
may be subject to normal year-end audit adjustments which, individually and in
the aggregate, will not be material. The Financial Statements fairly present,
in all material respects, the financial position of the Company and the results
of its operations as of the date and for the periods indicated thereon.
3.6 Consents. Except as set forth in Schedule 3.6 hereto, all consents,
approvals, orders and authorizations required on the part of the Company in
connection with the execution, delivery or performance of this Agreement, the
Registration Rights Agreement, the Warrant and the Loan Agreement and the
consummation of the transactions contemplated hereby and thereby have been
obtained and will be effective as of the Closing Date.
3.7 Brokers or Finders. The Company has not dealt with any broker or
finder in connection with the transactions contemplated by this Agreement, and
the Company has not incurred, and shall not incur, directly or indirectly, any
liability for any brokerage or finders' fees or agents' commissions or any
<PAGE>
similar charges in connection with this Agreement or any transaction
contemplated hereby.
3.8 Nasdaq National Market. The Common Stock is listed on the Nasdaq
National Market System, and there are no proceedings to revoke or suspend such
listing.
3.9. SEC Documents. The Common Stock of the Company is registered
pursuant to Section 12(g) of the Exchange Act and the Company has filed all
reports, schedules, forms, statements and other documents required to be filed
by it with the SEC pursuant to the reporting requirements of the Exchange Act,
including material filed pursuant to Section 13(a) or 15(d), in addition to one
or more registration statements and amendments thereto heretofore filed by the
Company with the SEC pursuant to the Securities Act (all of the foregoing,
including filings incorporated by reference therein, being referred to herein
as the "SEC Documents"). The Company has delivered or made available to the
Purchaser true and complete copies of all SEC Documents (including, without
limitation, proxy information and solicitation materials and registration
statements) filed with the SEC. As of their respective dates, none of the SEC
Documents contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
3.10 No Material Adverse Change. Since the date the registration
statement relating to the Company's initial public offering was filed with the
SEC, no material adverse event has occurred with respect to the Company or its
subsidiaries, except as otherwise disclosed or reflected in other SEC Documents
prepared through or as of a date subsequent to such filing.
3.11 No Undisclosed Liabilities. The Company and its direct and indirect
subsidiaries have no liabilities or obligations incurred since September 30,
1997, except for liabilities or obligations incurred in the ordinary course of
business or liabilities or obligations which, individually or in the aggregate,
do not or would not have a material adverse effect on the financial condition
or business of the Company and its direct or indirect subsidiaries.
3.12 No Undisclosed Events or Circumstances. No event or circumstance has
occurred or exists with respect to the Company or its direct or indirect
subsidiaries or their respective businesses, properties, prospects, operations
or financial condition, which, under applicable law, rule or regulation,
requires public disclosure or announcement by the Company but which has not
been so publicly announced or disclosed.
<PAGE>
3.13.Intellectual Property. The Company (and/or its wholly-owned
subsidiaries) owns or has licenses to use certain patents, copyrights and
trademarks ("intellectual property") associated with its business. To the best
of the Company's knowledge, the Company and its subsidiaries own or have the
right to use all intellectual property rights which are needed to conduct the
business of the Company and its subsidiaries as it is now being conducted. The
Company and its subsidiaries have no reason to believe that the intellectual
property rights which it owns are invalid or unenforceable or that the use of
such intellectual property by the Company or its subsidiaries infringes upon or
conflicts with any right of any third party, and neither the Company nor any of
its subsidiaries has received notice of any such infringement or conflict. The
Company and its subsidiaries have no knowledge of any infringement of its
intellectual property by any third party.
3.14.No Litigation. No litigation against the Company or any of its
subsidiaries is pending or, to the Company's knowledge, threatened.
3.15.Compliance With Applicable Laws and Other Instruments;
Non-Contravention. The business and operations of the Company have been and are
being conducted in accordance with all applicable laws, rules and regulations
of all governmental authorities, except for such violations of applicable laws,
rules and regulations which would not, individually or in the aggregate, have a
material adverse effect on the financial condition or business of the Company.
Neither the execution and delivery of, nor the performance of or compliance
with, this Agreement, the Registration Rights Agreement, the Warrant and the
Loan Agreement, and the transactions contemplated hereby and thereby, will,
with or without the giving of notice or passage of time, (i) result in any
breach of, or constitute a default under, or result in the imposition of any
lien or encumbrance upon any asset or property of the Company pursuant to any
agreement or other instrument to which the Company is a party or by which it or
any of its properties, assets or rights is bound or affected, except for any
such breach or default or the imposition of any such lien or encumbrance which,
either individually or in the aggregate, would not have a material adverse
effect on the financial condition or business of the Company or (ii) violate
the Certificate of Incorporation or By-Laws of the Company, or, except as set
forth in Schedule 3.15 hereto any law, rule, regulation, judgment order or
decree applicable to the Company (assuming, for this purpose, that any filings
required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, are made). The Company is not in violation of its Certificate of
Incorporation or By-Laws nor in violation of, or in default under, any lien,
indenture, mortgage, lease, agreement, instrument, commitment or arrangement,
except for such violations or defaults which would not, individually or in the
aggregate, have a material adverse effect on the financial condition or
business of the Company. The Company is not subject to any restriction in its
<PAGE>
Certificate of Incorporation or By-Laws or in any agreement to which the
Company is party that would prohibit the Company from entering into or
performing its obligations under this Agreement, the Registration Rights
Agreement, the Warrant and the Loan Agreement.
3.16 Securities Laws; Governmental Approvals. Based in part upon the
representations and warranties of the Purchaser contained in Section 4 of this
Agreement, the offer, sale, issuance and delivery to Purchaser of the Shares as
contemplated by this Agreement are exempt from the registration requirements of
the Securities Act and from the registration or qualification requirements of
the securities laws of any applicable state or other U.S. jurisdiction. Based
in part on the representations and warranties of the Purchaser contained in
Section 4 of this Agreement, no authorization, consent, approval, license,
exemption of or filing or registration with any court or governmental
instrumentality, domestic or foreign, under any applicable laws, rules or
regulations is or will be necessary for or in connection with the offer, sale,
issuance and delivery by the Company to Purchaser of the Shares as contemplated
by this Agreement or for the performance by the Company of its obligations
under this Agreement, the Registration Rights Agreement, the Warrant and the
Loan Agreement, except for (i) filings under applicable securities laws which
will be made by the Company (or in the case of Section 13 of the Exchange Act,
by the Purchaser) within the prescribed periods, (ii) any filings that may be
required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and (iii) except as set forth in Schedule 3.16 hereto.
4. Representations and Warranties of the Purchasers. The Purchaser
represents and warrants to the Company as follows:
4.1 Incorporation. The Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. The
Company has all requisite corporate power and authority to carry on its
business as now conducted.
4.2 Authorization. All corporate action on the part of the Purchaser that
is necessary for the due authorization, execution, delivery and performance of
this Agreement, the Registration Rights Agreement and the Loan Agreement and
the consummation of the transactions contemplated herein and therein has been
taken. When executed and delivered, each of this Agreement, the Registration
Rights Agreement and the Loan Agreement will constitute the legal, valid and
binding obligation of the Purchaser, enforceable against the Purchaser in
accordance with its terms, except as such may be limited by bankruptcy,
insolvency, reorganization or other laws affecting creditors' rights generally
and by general equitable principles. The Purchaser has all requisite corporate
power to enter into each of this Agreement, the Registration Rights Agreement
<PAGE>
and the Loan Agreement and to carry out and perform its obligations under the
terms of this Agreement, the Registration Rights Agreement and the Loan
Agreement.
4.2 Purchase Entirely for Own Account. The Purchaser is acquiring the
Common Shares and the Warrant for investment for its own account and not for
resale or with a view to distribution of all or any portion of such Securities
in violation of the Securities Act. In the event that the Purchaser acquires
any Conversion Shares or any Warrant Shares, the Purchaser will be acquiring
such Conversion Shares or such Warrant Shares, as the case may be, for
investment for its own account and not for resale or with a view to
distribution of all or any portion of such Securities in violation of the
Securities Act.
4.3 Accredited Investor Status; Etc. The Purchaser certifies and
represents to the Company that it is an "Accredited Investor" as defined in
Rule 501 of Regulation D promulgated under the Securities Act and was not
organized for the purpose of acquiring any of the Securities. The Purchaser's
financial condition is such that it is able to bear the risk of holding the
Securities for an indefinite period of time and the risk of loss of its entire
investment. The Purchaser has been afforded the opportunity to ask questions of
and receive answers from the management of the Company concerning this
investment and has sufficient knowledge and experience in investing in
companies similar to the Company in terms of the Company's stage of development
so as to be able to evaluate the risks and merits of its investment in the
Company.
4.4 Securities Not Registered. The Purchaser understands that the
Securities have not been registered under the Securities Act, by reason of
their issuance by the Company in a transaction exempt from the registration
requirements of the Securities Act, and that the Securities must continue to be
held by the Purchaser unless a subsequent disposition thereof is registered
under the Securities Act or is exempt from such registration. The Purchaser
understands that the exemptions from registration afforded by Rule 144 (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.
4.5 No Conflict. The execution and delivery of this Agreement, the
Registration Rights Agreement and the Loan Agreement by the Purchaser and the
consummation of the transactions contemplated hereby and thereby will not
conflict with or result in any violation of or default (with or without notice
or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to a loss of a material
benefit under (i) any provision of the Certificate of Incorporation or By-Laws
of the Purchaser or (ii) any agreement or instrument, permit, franchise,
<PAGE>
license, judgment, order, statute, law, ordinance, rule or regulation,
applicable to the Purchaser or its properties or assets.
4.6 Brokers. The Purchaser has not dealt with any broker or finder in
connection with the transactions contemplated by this Agreement, and the
Purchaser has not incurred, and shall not incur, directly or indirectly, any
liability for any brokerage or finders' fees or agents' commissions or any
similar charges in connection with this Agreement or any transaction
contemplated hereby.
4.7 Consents. Except as set forth in Schedule 4.7 hereto, all consents,
approvals, orders and authorizations required on the part of the Purchaser in
connection with the execution, delivery or performance of this Agreement, the
Registration Rights Agreement and the Loan Agreement and the consummation of
the transactions contemplated hereby and thereby have been obtained and are
effective as of the Closing Date.
4.8 Investment Representations. The Purchaser represents and warrants to
the Company that (i) it is a Delaware corporation, (ii) was not formed for the
specific purposes of acquiring any of the Securities, (iii) it has assets in
excess of $5,000,000 and (iv) its principal office is in South San Francisco,
California.
5. Conditions Precedent.
5.1. Conditions to the Obligation of the Purchaser to Consummate the
Closing. The obligation of the Purchaser to consummate the Closing and to
purchase and pay for the Common Shares at the Closing is subject to the
satisfaction of the following conditions precedent:
(a) The representations and warranties contained herein of the
Company 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.
(b) The Registration Rights Agreement, the Loan Agreement, the
Warrant and the Collaboration Agreement shall have been duly executed and
delivered by the Company.
(c) The Company shall have performed all obligations herein required
to be performed or observed by the Company on or prior to the Closing Date.
(d) No proceeding challenging this Agreement or the transactions
contemplated hereby, or seeking to prohibit, alter, prevent or materially delay
<PAGE>
the Closing, shall have been instituted before any court, arbitrator or
governmental body, agency or official and shall be pending.
(e) The acquisition of any of the Securities by the Purchaser shall
not be prohibited by any law or governmental order or regulation. All necessary
consents, approvals, licenses, permits, orders and authorizations of, or
registrations, declarations and filings with, any governmental or
administrative agency or of any other person with respect to any of the
transactions contemplated under this Agreement to be consummated at the Closing
shall have been duly obtained or made and shall be in full force and effect.
(f) All instruments and corporate proceedings in connection with the
transactions contemplated by this Agreement to be consummated at the Closing
shall be reasonably satisfactory in form and substance to the Purchaser, and
the Purchaser shall have received copies (executed or certified, as may be
appropriate) of all documents which the Purchaser may have reasonably requested
in connection with such transactions.
(g) The Purchaser shall have received from Bingham Dana LLP, counsel
to the Company, an opinion addressed to it, dated the Closing Date and
substantially in the form of Exhibit B hereto.
5.2. Conditions to the Obligation of the Company to Consummate the
Closing. The obligation of the Company to consummate the Closing and to issue
to the Purchaser the Common Shares and the Warrant at the Closing is subject to
the satisfaction of the following conditions precedent:
(a) The representations and warranties contained herein of the
Purchaser 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.
(b) The Registration Rights Agreement, the Loan Agreement, and the
Collaboration Agreement shall have been duly executed and delivered by the
Purchaser.
(c) The Purchaser shall have performed all obligations herein
required to be performed or observed by the Purchaser on or prior to the
Closing Date.
(d) No proceeding challenging this Agreement or the transactions
contemplated hereby, or seeking to prohibit, alter, prevent or materially delay
the Closing, shall have been instituted before any court, arbitrator or
governmental body, agency or official and shall be pending.
<PAGE>
(e) The sale and/or issuance of the Securities by the Company shall
not be prohibited by any law or governmental order or regulation. All necessary
consents, approvals, licenses, permits, orders and authorizations of, or
registrations, declarations and filings with, any governmental or
administrative agency or of any other person with respect to any of the
transactions contemplated under this Agreement to be consummated at the Closing
shall have been duly obtained or made and shall be in full force and effect.
(f) All instruments and corporate proceedings in connection with the
transactions contemplated by this Agreement to be consummated at the Closing
shall be reasonably satisfactory in form and substance to the Company, and the
Company 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. *
7. Restrictions on Transfer.
7.1 Contractual Restrictions on Transfer of Warrant. Notwithstanding
anything expressed or implied in this Agreement (including, without limitation,
Section 7.3 hereof) to the contrary, the Purchaser shall not sell, assign,
transfer, pledge, mortgage, hypothecate or otherwise convey, dispose of or
encumber all or any portion of the Warrant or any interest therein to any
Affiliate of the Purchaser or any Prohibited Transferee unless such Affiliate
or such Prohibited Transferee, as the case may be, agrees in writing to be
bound by all of the terms and conditions of this Section 7 and Section 6 hereof
to the same extent as the Purchaser has agreed to be bound or unless the
Company shall consent in writing to any such sale, assignment, transfer,
pledge, mortgage, hypothecation or other conveyance, disposition or
encumbrance. The restrictions on transfer set forth in this Section 7.1 shall
not apply to the sale (other than to an Affiliate of the Purchaser) of all or
any portion of the Warrant in the public market pursuant to a "brokers'
transaction" (as defined under subsection (g) of Rule 144.)
7.2 Contractual Restrictions on Transfer of Shares. Notwithstanding
anything expressed or implied in this Agreement (including, without limitation,
* Confidential treatment requested; material has been omitted and filed
separately with the Commission.
<PAGE>
Section 7.3 hereof) to the contrary, the Purchaser shall not sell, assign,
transfer, pledge, mortgage, hypothecate or otherwise convey, dispose of or
encumber any of the Shares or any interest therein to any Affiliate of the
Purchaser or any Prohibited Transferee unless such Affiliate or such Prohibited
Transferee, as the case may be, agrees in writing to be bound by all of the
terms and conditions of this Section 7 and Section 6 hereof to the same extent
as the Purchaser has agreed to be bound or unless the Company shall consent in
writing to any such sale, assignment, transfer, pledge, mortgage, hypothecation
or other conveyance, disposition or encumbrance. The restrictions on transfer
set forth in this Section 7.2 shall not apply to (i) the sale of any Shares to
a Prohibited Transferee pursuant to an underwritten public offering registered
under the Securities Act, (ii) the sale (other than to an Affiliate of the
Purchaser) of any Shares in the public market pursuant to a "brokers'
transaction" (as defined under subsection (g) of Rule 144) and (iii) any hedge
position established by the Purchaser.
7.3. Securities Laws Restrictions on Transfer. Notwithstanding anything
expressed or implied in this Agreement (including, without limitation, Section
7.1 or Section 7.2 hereof) to the contrary, the Purchaser shall not offer,
sell, assign, transfer, pledge, mortgage, hypothecate or otherwise convey,
dispose of or encumber any of the Securities or any interest therein, except
(i) pursuant to an effective registration statement under the Securities Act,
(ii) pursuant to an available exemption from registration under the Securities
Act and applicable state securities laws and, if requested by the Company, upon
delivery by the Purchaser of an opinion of counsel (satisfactory to the Company
as to such counsel and as to the substance of such opinion) to the effect that
the proposed offer, sale, assignment, transfer, pledge, mortgage, hypothecation
or other conveyance, disposition or encumbrance is exempt from registration
under the Securities Act and applicable state securities laws or (iii) pursuant
to Rule 144.
7.4 Effect of Violation of Transfer Restrictions; Preventive Measures.
Any offer, sale, assignment, transfer, endorsement, pledge, mortgage,
hypothecation, or other conveyance or disposition of any or all of the
Securities or any interest therein in violation of this Section 7 shall be null
and void. The Company may make a notation on its records or give instructions
to any of its transfer agents in order to implement the restrictions on
transfer set forth in this Section 7. The Company shall not incur any liability
for any delay in recognizing any transfer of any Security if and only for so
long as the Company reasonably believes that any such transfer may have been or
would be in violation of the provisions of the Securities Act, applicable blue
sky laws or this Section 7.
<PAGE>
7.5. Legends.
(a) To the extent applicable, each certificate or other document
evidencing any of the Common Shares or the Conversion Shares shall be endorsed
with the legend set forth below, and the Purchaser covenants that, except to
the extent such restrictions are waived by the Company, it shall not transfer
the shares represented by any such certificate without complying with the
restrictions on transfer described in this Agreement and the legends endorsed
on such certificate:
"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 OFFERED, SOLD, TRANSFERRED, ASSIGNED, PLEDGED,
HYPOTHECATED, MORTGAGED OR OTHERWISE CONVEYED, DISPOSED OF OR ENCUMBERED
UNLESS THEY ARE SO REGISTERED, UNLESS AN EXEMPTION FROM SUCH REGISTRATION
IS AVAILABLE AND, IF REQUESTED BY LEUKOSITE, AN OPINION OF COUNSEL
(SATISFACTORY TO LEUKOSITE AS TO SUCH COUNSEL AND AS TO THE SUBSTANCE OF
SUCH OPINION) IS DELIVERED TO LEUKOSITE TO THE EFFECT THAT SUCH
REGISTRATION IS NOT UNDER THE CIRCUMSTANCES REQUIRED OR UNLESS SUCH
SHARES ARE SOLD PURSUANT TO RULE 144 PROMULGATED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED. THE SHARES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER SET FORTH IN SECTION 7 OF
THAT CERTAIN SECURITIES PURCHASE AGREEMENT, DATED DECEMBER 18, 1997, AND
NO TRANSFER OF SUCH SHARES SHALL BE VALID OR EFFECTIVE IF IT IS NOT
EFFECTED IN COMPLIANCE WITH ALL OF SUCH RESTRICTIONS ON TRANSFER. COPIES
OF SUCH SECURITIES PURCHASE AGREEMENT MAY BE OBTAINED AT NO COST BY
WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF SUCH SHARES TO THE
SECRETARY OF LEUKOSITE, INC."
(b) To the extent applicable, each certificate or other document
evidencing any of the Warrant Shares shall be endorsed with the legend set
forth below, and the Purchaser covenants that, except to the extent such
restrictions are waived by the Company, it shall not transfer the shares
represented by any such certificate without complying with the restrictions on
transfer described in this Agreement and the Warrant and the legends endorsed
on such certificate:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF
<PAGE>
ANY STATE AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, ASSIGNED, PLEDGED,
HYPOTHECATED, MORTGAGED OR OTHERWISE CONVEYED, DISPOSED OF OR ENCUMBERED
UNLESS THEY ARE SO REGISTERED, UNLESS AN EXEMPTION FROM SUCH REGISTRATION
IS AVAILABLE AND, IF REQUESTED BY LEUKOSITE, AN OPINION OF COUNSEL
(SATISFACTORY TO LEUKOSITE AS TO SUCH COUNSEL AND AS TO THE SUBSTANCE OF
SUCH OPINION) IS DELIVERED TO LEUKOSITE TO THE EFFECT THAT SUCH
REGISTRATION IS NOT UNDER THE CIRCUMSTANCES REQUIRED OR UNLESS SUCH
SHARES ARE SOLD PURSUANT TO RULE 144 PROMULGATED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED. THE SHARES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER SET FORTH IN SECTION 7 OF
THAT CERTAIN SECURITIES PURCHASE AGREEMENT DATED DECEMBER 18, 1997 AND IN
SECTION 9 OF THAT CERTAIN WARRANT DATED DECEMBER 18, 1997, AND NO
TRANSFER OF SUCH SHARES SHALL BE VALID OR EFFECTIVE IF IT IS NOT EFFECTED
IN COMPLIANCE WITH ALL OF SUCH RESTRICTIONS ON TRANSFER. COPIES OF SUCH
SECURITIES PURCHASE AGREEMENT AND WARRANT MAY BE OBTAINED AT NO COST BY
WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF SUCH SHARES TO THE
SECRETARY OF LEUKOSITE, INC."
(c) The Warrant shall be endorsed with the legend set forth below,
and the Purchaser covenants that, except to the extent such restrictions are
waived by the Company, it shall not transfer the Warrants without complying
with the restrictions on transfer described in this Agreement and the Warrant
and the legend endorsed on the Warrant:
"NEITHER THIS WARRANT NOR THE SHARES ISSUED OR ISSUABLE UPON EXERCISE OF
THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE OFFERED,
SOLD, TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED, MORTGAGED OR
OTHERWISE CONVEYED, DISPOSED OF OR ENCUMBERED UNLESS THEY ARE SO
REGISTERED, UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE AND,
IF REQUESTED BY LEUKOSITE, AN OPINION OF COUNSEL (SATISFACTORY TO
LEUKOSITE AS TO SUCH COUNSEL AND AS TO THE SUBSTANCE OF SUCH OPINION) IS
DELIVERED TO LEUKOSITE TO THE EFFECT THAT SUCH REGISTRATION IS NOT UNDER
THE CIRCUMSTANCES REQUIRED OR UNLESS THIS WARRANT OR SUCH SHARES ARE SOLD
PURSUANT TO RULE 144 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. THIS WARRANT AND THE SHARES ISSUED OR ISSUABLE UPON EXERCISE OF
THIS WARRANT ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER SET FORTH IN
<PAGE>
SECTION 9 OF THIS WARRANT AND IN SECTION 7 OF THAT CERTAIN SECURITIES
PURCHASE AGREEMENT DATED DECEMBER 18, 1997, AND NO TRANSFER OF THIS
WARRANT AND/OR SUCH SHARES SHALL BE VALID OR EFFECTIVE IF IT IS NOT
EFFECTED IN COMPLIANCE WITH ALL OF SUCH RESTRICTIONS ON TRANSFER. COPIES
OF SUCH SECURITIES PURCHASE AGREEMENT MAY BE OBTAINED AT NO COST BY
WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS WARRANT AND/OR SUCH
SHARES TO THE SECRETARY OF LEUKOSITE, INC."
8. Miscellaneous Provisions.
8.1 Public Statements or Releases. None of the parties to this Agreement
shall make, issue, or release any announcement, whether to the public
generally, or to any of its employees, suppliers, or customers, with respect to
the financial terms of this Agreement or the transactions provided for herein
or with respect to a description of the provisions of Section 6 hereof without
the prior consent of the other party, which shall not be unreasonably withheld
or delayed, provided, that nothing in this Section 8.1 shall prevent any of the
parties hereto from making such public announcements as it may consider
necessary in order to satisfy its legal obligations, but to the extent not
inconsistent with such obligations, it shall provide the other party with an
opportunity to review and comment on any such proposed public announcement
before it is made.
8.2 Further Assurances. Each party agrees to cooperate fully with the
other party and to execute such further instruments, documents and agreements
and to give such further written assurances, as may be reasonably requested by
the other party to better evidence and reflect the transactions described
herein and contemplated hereby, and to carry into effect the intents and
purposes of this Agreement.
8.3 Rights Cumulative. Each and all of the various rights, powers and
remedies of the parties shall be considered to be cumulative with and in
addition to any other rights, powers and remedies which such parties may have
at law or in equity in the event of the breach of any of the terms of this
Agreement. The exercise or partial exercise of any right, power or remedy shall
neither constitute the exclusive election thereof nor the waiver of any other
right, power or remedy available to such party.
<PAGE>
8.4 Pronouns. All pronouns or any variation thereof shall be deemed to
refer to the masculine, feminine or neuter, singular or plural, as the identity
of the person, persons, entity or entities may require.
8.5 Notices. Any notice, demand, request or other communication hereunder
to either party shall be deemed to be sufficient if contained in a written
instrument delivered in person or duly sent by overnight courier service or by
first class, registered or certified mail, postage prepaid, or telecopied with
a confirmation copy by regular, certified or overnight 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:
LeukoSite, Inc.
215 First Street
Cambridge, MA 02142
Attention:President (one copy)
Chief Financial Officer (another copy)
Telecopier: (617) 621-9349
and a copy to:
Bingham Dana LLP
150 Federal Street
Boston, Massachusetts 02110
Attention: Justin P. Morreale, Esq.
Telecopier: (617) 951-8736
Genentech, Inc.
1 DNA Way
South San Francisco, CA 94080
Attention: Corporate Secretary
Telecopier: 650-952-9881
All of such notices, requests and other communications shall be deemed to
have been received: (i) in the case of personal delivery, on the date of such
delivery; (ii) in the case of overnight courier service, the business day
following the date of receipt by the overnight courier; (iii) in the case of
first class, registered or certified mail, on the earlier of (A) receipt
thereof or (B) the fifth business day after deposit in the mail; and (iv) in
the case of facsimile transmission, when confirmed by facsimile machine report.
<PAGE>
8.6 Captions. The captions and paragraph headings of this Agreement are
solely for the convenience of reference and shall not affect its
interpretation.
8.7 Severability. Should any part or provision of this Agreement be held
unenforceable or in conflict with the applicable laws or regulations of any
jurisdiction, the invalid or unenforceable part or provisions shall be replaced
with a provision which accomplishes, to the extent possible, the original
business purpose of such part or provision in a valid and enforceable manner,
and the remainder of this Agreement shall remain binding upon the parties
hereto.
8.8 Governing Law; Injunctive Relief.
(a) This Agreement shall be governed by and construed in accordance with
the internal and substantive laws of the State of Delaware and without regard
to any conflicts of laws concepts which would apply the substantive law of some
other jurisdiction.
(b) Each of the parties hereto acknowledges and agrees that damages will
not be an adequate remedy for any material breach or violation of this
Agreement if such material breach or violation would cause immediate and
irreparable harm (an "Irreparable Breach"). Accordingly, in the event of a
threatened or ongoing Irreparable Breach, each party hereto shall be entitled
to seek, in any state or federal court in the Commonwealth of Massachusetts or
the State of California, equitable relief of a kind appropriate in light of the
nature of the ongoing or threatened Irreparable Breach, which relief may
include, without limitation, specific performance or injunctive relief. Such
remedies shall not be the parties' exclusive remedies, but shall be in addition
to all other remedies provided in this Agreement.
(c) In any action or proceeding brought to enforce any provision of this
Agreement or where any provision hereof is validly asserted as a defense, the
successful party to such action or proceeding shall be entitled to recover
reasonable attorney's fees and disbursements in connection with such action or
proceeding.
8.9 Waiver. No waiver of any term, provision or condition of this
Agreement, whether by conduct or otherwise, in any one or more instances, shall
be deemed to be, or be construed as, a further or continuing waiver of any such
term, provision or condition or as a waiver of any other term, provision or
condition of this Agreement.
8.10 Expenses. Each party will bear its own costs and expenses in
connection with the preparation, negotiation and execution of this Agreement.
<PAGE>
8.11 Assignment. The rights and obligations of either party hereto shall
inure to the benefit of and shall be binding upon any successor of the business
of such party (whether by merger or otherwise) and the permitted assigns of
such party. Except to the extent otherwise expressly provided or contemplated
elsewhere in this Agreement, neither party may assign its rights or obligations
under this Agreement or designate another person (i) to perform all or part of
its obligations under this Agreement or (ii) to have all or part of its rights
and benefits under this Agreement, without the prior written consent of the
other party.
8.12 Survival. The respective representations and warranties given by the
parties hereto, and the other covenants and agreements contained herein, shall
survive the Closing Date and the consummation of the transactions contemplated
herein for a period of two years, without regard to any investigation made by
any party.
8.13 Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto respecting the subject matter hereof and supersedes
all prior agreements, negotiations, understandings, representations and
statements respecting the subject matter hereof, whether written or oral.
8.14 Amendments. No modification, alteration, waiver or change in any of
the terms of this Agreement shall be valid or binding upon the parties hereto
unless made in writing and duly executed by the parties hereto.
8.15 Hart-Scott-Rodino Compliance. Prior to the Closing, the Purchaser
shall make a determination as to whether the execution and delivery of, or the
performance of the obligations of the Company or the Purchaser under, this
Agreement and the Collaboration Agreement (including, without limitation, the
consummation of the Closing and the issuance of the Common Shares and Warrant
to the Purchaser at the Closing) shall require that filings under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), or the rules and regulations promulgated thereunder, be made prior to
the Closing by the Company, the Purchaser or any of their respective Affiliates
or ultimate parent entities, if any. If the Purchaser makes a determination
that such filings are required, the Purchaser shall give written notice of such
determination to the Company prior to the Closing.
8.16 Counterparts. This Agreement may be executed in a number of
counterparts, all of which together shall for all purposes constitute one
Agreement binding on all the parties hereto notwithstanding that all of such
parties have not signed the same counterpart.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement under
seal as of the day and year first above written.
LEUKOSITE, INC.
By:__________________________
Christopher K. Mirabelli,
President
GENENTECH, INC.
By:__________________________
Name:________________________
Title:_______________________
LEUKOSITE, INC.
LOAN AGREEMENT
This LOAN AGREEMENT is made as of the 18th day of December, 1997, by and
between LEUKOSITE, INC., a Delaware corporation (the "Company"), and GENENTECH,
INC., a Delaware corporation (the "Lender").
ARTICLE I
DEFINITIONS
1.1 CAPITALIZED TERMS. All capitalized terms not specifically defined
herein shall have the respective meanings given to them under that certain
Development Collaboration and License Agreement, dated as of the date hereof,
by and between the Company and the Lender, as amended and in effect from time
to time (the "Collaboration Agreement").
1.2. CERTAIN DEFINED TERMS. As used in this Agreement, the following
terms shall have the following respective meanings (such meanings, as well as
the meanings of other terms hereinafter defined, to be equally applicable both
to the singular and the plural forms of the terms defined):
"Affiliate" of a Person means any other Person controlled by,
controlling or under common control with such Person.
"Agreement" shall mean this Loan Agreement, as it may from time to
time be amended, supplemented or otherwise modified.
"Business Day" shall mean a day which is not a Saturday, Sunday or
other day on which commercial banking institutions in San Francisco,
California, New York, New York, or Boston, Massachusetts, are permitted or
required by law to remain closed.
"Common Stock" shall mean common stock, $0.01 par value per share,
of the Company.
"Conversion Price" shall mean the average closing price per share of
the Common Stock as quoted on the Nasdaq National Market System for the fifteen
(15) trading days immediately prior to the Section 5.1 Conversion Date or
Section 5.2 Conversion Date, as the case may be.
<PAGE>
"Development Budget" shall mean the budget included as part of the
Development Plan attached as Exhibit E to the Collaboration Agreement, as such
budget may be amended or modified from time to time by mutual consent of the
parties.
"Development Loan Available Commitment" shall mean, as of the date
that any Development Loan Request is made by the Company pursuant to Section
2.1(a), an amount equal to (i) the cumulative amount of budgeted development
expenses to be incurred by the Company in connection with the development of
Licensed Products through and including such date, as set forth or reflected in
the Development Budget, less (ii) the aggregate principal amount of all
Development Loans made by the Lender prior to such date. In no event shall the
Development Loan Available Commitment be a number less than zero.
"Development Loan Drawdown Date" shall mean, with respect of any
Development Loan, the date on which such Development Loan is made by the Lender
to the Company.
"Development Loan Maturity Date" shall mean the date which is the
earlier of (i) the date on which the first Phase III Clinical Trial is
completed in accordance with the Collaboration Agreement or (ii) December 18,
2004.
"Development Loan Request" shall have the meaning specified in
Section 2.1 hereof.
"Development Loans" shall have the meaning specified in Section 2.1
hereof.
"Event of Default" shall have the meaning specified in Section 6
hereof.
"Market Capitalization" shall mean, as of any date during which any
of the Development Loans or the Profit-Sharing Option Loans is outstanding, the
product of (i) the average closing price per share of the Common Stock as
quoted on the Nasdaq National Market System for the ten (10) trading days
immediately preceding such date, multiplied by (ii) the total number of issued
and outstanding shares of Common Stock as of such date.
"Person" shall mean an individual, partnership, limited liability
company, corporation, association, trust, joint venture, unincorporated
<PAGE>
organization, and any government, governmental department or agency or
political subdivision thereof.
"Pre-Approval Development Period" shall mean the period beginning on
the date of Successful Phase II Clinical Trial Completion of any Licensed
Product with respect to which the Company makes a Profit-Sharing Election and
ending on the Regulatory Approval Date with respect to such Licensed Product.
"Preferred Stock" shall mean preferred stock, $0.01 par value per
share, of the Company.
"Profit-Sharing Option Election" shall mean the Company's timely
exercise of the Option in accordance with the terms of the Collaboration
Agreement.
"Profit-Sharing Option Loan Maturity Date" shall mean the date which
is the earlier of (i) the seventh anniversary of Profit-Sharing Option Election
or (ii) the first anniversary of the Regulatory Approval Date.
"Profit-Sharing Option Loans" shall have the meaning specified in
Section 3.1 hereof.
"Registration Rights Agreement" shall mean that certain Registration
Rights Agreement, dated as of the date hereof, by and between the Company and
the Lender, as amended and in effect from time to time.
"Regulatory Approval Date" shall mean the date on which the Company
or the Lender shall have received Regulatory Approval in the United States.
"Section 5.1 Conversion Date" shall have the meaning specified in
Section 5.1 hereof.
"Section 5.2 Conversion Date" shall have the meaning specified in
Section 5.2 hereof.
"Securities Purchase Agreement" shall mean that certain Securities
Purchase Agreement, dated as of the date hereof, by and between the Company and
the Lender, as amended and in effect from time to time.
<PAGE>
ARTICLE II
DEVELOPMENT CREDIT LINE
2.1. COMMITMENT TO LEND.
(a) Upon the terms and subject to the conditions of this Agreement,
the Lender agrees to lend to the Company, and the Company may borrow,
such amounts as the Company may request at any time and from time to time
(but no more frequently than once in each calendar quarter) during the
period beginning on the date hereof and ending on Successful Phase II
Clinical Trial Completion with respect to any Licensed Product, provided
that any such amount or amounts requested by the Company pursuant to this
Section 2.1(a) may not exceed the Development Loan Available Commitment
in effect at the time the Company makes such request, and provided,
further, that the maximum aggregate principal amount that the Company may
borrow pursuant to this Section 2.1(a) shall not exceed $15,000,000,
subject to adjustment as provided below in this Section 2.1(a). Amounts
prepaid pursuant to Section 2.4 may not be reborrowed. For purposes of
this Agreement, any amount loaned by the Lender to the Company pursuant
to this Section 2.1(a) is hereinafter referred to as a "Development
Loan", and all amounts loaned by the Lender to the Company pursuant to
this Section 2.1(a) are hereinafter referred to, collectively, as the
"Development Loans". In the event that the Company and the Lender
mutually agree that the aggregate amount of development expenses to be
incurred by the Company in connection with the development of Licensed
Products through and including the date of the first Successful Phase II
Clinical Trial Completion of any Licensed Product shall be greater than
$15,000,000 (such excess being hereinafter referred to as the "Excess
Development Costs"), then the maximum aggregate principal amount that the
Lender may be required to loan to the Company under this Section 2.1(a)
shall increase from $15,000,000 to an amount equal to the sum of
$15,000,000 plus the amount of the Excess Development Costs.
Notwithstanding any provision in this Agreement to the contrary, if the
Lender terminates the Collaboration Agreement under Section 12.6 thereof,
the Lender shall no longer be obligated under this Article II to make any
further Development Loans to the Company after the effective date of
termination of the Collaboration Agreement.
<PAGE>
(b) The Company shall notify the Lender in writing, not later than
12:00 p.m. Boston time on the third Business Day immediately preceding
the Development Loan Drawdown Date specified in such notice (which must
be a Business Day), of the principal amount of the Development Loan that
the Company is requesting to borrow on such Development Loan Drawdown
Date (such notice being referred to as a "Development Loan Request");
provided, however, that if the the principal amount of the Development
Loan that the Company requests shall be equal to or greater than
$5,000,000, then the Company shall send to the Lender the Development
Loan Request with respect thereto not later than 12:00 p.m. Boston time
on the fifth Business Day immediately preceding the Development Loan
Drawdown Date specified in such Development Loan Request. Subject to the
Company making a Development Loan Request on a timely basis pursuant to
the foregoing provisions of this Section 2.1(b) and so long as no Event
of Default shall have occurred and then be continuing, the Lender shall
lend to the Company, in immediately available funds, the principal amount
of the Development Loan requested by the Company in such Development Loan
Request not later than the close of business on the Development Loan
Drawdown Date specified in such Development Loan Request.
(c) Notwithstanding anything expressed or implied in this Agreement
(including, without limitation, this Section 2.1) to the contrary, no
Development Loan shall be made under this Section 2.1 if and to the
extent that, on the Development Loan Drawdown Date that would otherwise
be applicable to such Development Loan, (A) the number of shares of
Common Stock into which all then outstanding Development Loans (including
any Development Loan proposed to be made on such Development Loan
Drawdown Date) would otherwise be convertible by either the Company or
the Lender pursuant to Section 5.1 or 5.2 hereof (without giving effect,
for purposes of this Section 2.1(c), to the provisions of Section 5.1(f)
hereof or Section 5.2(f) hereof, respectively) shall represent twenty
percent (20%) or more of the shares of Common Stock outstanding as of the
close of business on the date that the first Development Loan is made
pursuant to this Section 2.1 (the "First Development Loan Drawdown Date")
or twenty percent (20%) or more of the voting power of all shares of
capital stock of the Company that are issued and outstanding as of the
close of business on the First Development Loan Drawdown Date and (B) the
Conversion Price in effect on such Development Loan Drawdown Date (it
being understood that, for purposes of this Section 2.1(c), such
<PAGE>
Development Loan Drawdown Date shall be deemed to be the Section 5.1
Conversion Date or the Section 5.2 Conversion Date, as the case may be)
shall not be less than the greater of the then book value or market value
per share of Common Stock. This Section 2.1(c) and all of the
restrictions and limitations set forth herein shall automatically
terminate upon any vote by the stockholders of the Company authorizing
the conversion of any and all Development Loans into shares of Common
Stock in accordance with the provisions of this Agreement.
Notwithstanding any provision herein or in the Collaboration Agreement to
the contrary, if the Lender is not required, pursuant to this Section
2.1(c), to make Development Loans, the Company shall continue to
commercialize and develop Licensed Products pursuant to the Collaboration
Agreement.
2.2. USE OF PROCEEDS. The proceeds of any and all Development Loans shall
be used to fund any and all expenses incurred by the Company in connection with
the development of the Licensed Product.
2.3. PAYMENT OF PRINCIPAL OF THE DEVELOPMENT LOANS. On the Development
Loan Maturity Date, the Company shall pay to the Lender the then outstanding
aggregate principal amount of all Development Loans, said payment to be made in
accordance with the provisions of Article 4 hereof.
2.4. PREPAYMENT OF THE DEVELOPMENT LOANS. Subject to the provisions of
Section 4.1(a) hereof, the Company shall have the right, without premium or
penalty, to prepay all or any portion of the principal or interest due and
payable under the Development Loans, provided that the maximum number of times
that the Company may prepay all or any portion of such principal or interest by
converting all or any portion of such principal or interest into shares of
Common Stock and/or Preferred Stock pursuant to Section 5.1 hereof shall be two
(2) (it being understood that the number of prepayments that the Company may
effect in cash shall be unlimited). Subject to the provisions of Section 5.1
hereof, the Company shall give at least three (3) Business Days prior written
notice of each, if any, proposed date of prepayment and shall specify the
portion of any or all Development Loans to be prepaid on such date, which
amount shall become due and payable on the date specified in such notice. The
Company shall make payment of any amounts being prepaid by it pursuant to this
Section 2.4 in accordance with the provisions of Article 4 hereof.
<PAGE>
2.5. INTEREST PAYABLE ON DEVELOPMENT LOANS. Subject to the provisions of
Section 4.1(a) hereof, the Company shall accrue interest on the Development
Loans at an annual rate which at all times shall equal two percentage points
(2.0%) above the prime rate of interest published in The Wall Street Journal
(the "Prime Rate"). Any change in the interest due and payable on the
Development Loans resulting from a change in the Prime Rate shall be effective
on the date of such change as published in The Wall Street Journal. Interest
shall be compounded quarterly. Subject to the provisions of Section 2.4 and
Section 5.2 hereof, all of such accrued and unpaid interest shall be due and
payable to the Lender on the Development Loan Maturity Date. On the Development
Loan Maturity Date, the Company shall make payment of all of such accrued and
unpaid interest in accordance with the provisions of Article 4 hereof.
ARTICLE III
PROFIT-SHARING OPTION CREDIT LINE
3.1. COMMITMENT TO FUND.
(a) In the event that the Company makes a Profit-Sharing Option
Election with respect to any Licensed Product, the Lender agrees to lend
to the Company, and the Company shall borrow, subject to and upon the
terms and conditions set forth in this Section 3.1(a), twenty five
percent (25%) of the Pre-Approval Development Expenses to be incurred
during the Pre-Approval Development Period, which is the percentage of
the Pre-Approval Development Expenses for which the Company is
responsible pursuant to, and in accordance with, the terms of the
Collaboration Agreement. Notwithstanding any provision in this Agreement
to the contrary, if the Lender terminates the Collaboration Agreement
under Section 12.6 thereof, the Lender shall no longer be obligated under
this Article III to make any further Profit-Sharing Option Loans to the
Company after the effective date of termination of the Collaboration
Agreement.
(b) On or before the fifteenth (15th) day prior to the first day of
each calendar quarter following a Profit-Sharing Election and throughout
the Pre-Approval Development Period, the Lender shall send to the Company
a statement detailing (i) all of the Pre-Approval Development Expenses
estimated to be incurred during such calendar quarter, (ii) the
third-party vendors to whom payment of Pre-Approval Development Expenses
are to be made during such calendar quarter and (iii) the estimated
<PAGE>
amount of the payment to be made to each such third party vendor. Upon
receipt of such statement from the Lender, the Lender and the Company
shall promptly (but in any event prior to the first day of such calendar
quarter) mutually agree on (x) those of the third party vendors
identified in such statement to whom the Lender shall make payment, (y)
those of the third party vendors identified in such statement to whom the
Company shall make payment (each a "Company Third Party Vendor"),
provided that in no event shall the amount payable by the Company to all
of such Company Third Party Vendors in the aggregate exceed the Company's
twenty five percent (25%) portion of the Pre-Approval Development
Expenses identified in such statement. On the first day of such calendar
quarter, the Lender shall advance to the Company, in immediately
available funds, an amount equal, in the aggregate, to the Company's
twenty five percent (25%) portion of the Pre-Approval Development
Expenses identified in such statement. Upon receipt of such amount by the
Company, the Company shall make payment to each Company Third Party
Vendor of the amount to be paid to such Company Third Party Vendor, as
mutually agreed to by the Lender and the Company above. In the event
that, after making payment to all of the Company Third Party Vendors, a
balance remains of such amount loaned by the Lender to the Company, then
the Company shall make payment of such remaining balance to the Lender in
order to reimburse the Lender for the portion of the Pre-Approval
Development Expenses identified in such statement that were incurred by
the Lender for and on behalf of the Company.
(c) For purposes of this Agreement, any amount that is advanced
by the Lender to the Company, in accordance with the provisions of this
Section 3.1, is hereinafter referred to as a "Profit-Sharing Option
Loan", and all amounts that are advanced by the Lender to the Company, in
accordance with the provisions of this Section 3.1, are hereinafter
referred to, collectively, as the "Profit-Sharing Option Loans".
(d) Notwithstanding anything expressed or implied in this
Agreement (including, without limitation, this Section 3.1) to the
contrary, no Profit-Sharing Option Loan shall be made under this Section
3.1 if and to the extent that, on the date that such Profit-Sharing
Option Loan is to be made (each a "Profit-Sharing Option Loan Date"), (A)
the number of shares of Common Stock into which all then outstanding
Profit-Sharing Option Loans would otherwise be convertible by either the
Company or the Lender pursuant to Section 5.1 or 5.2 hereof (without
<PAGE>
giving effect, for purposes of this Section 3.1(d), to the provisions of
Section 5.1(f) hereof or Section 5.2(f) hereof, respectively) shall
represent twenty percent (20%) or more of the shares of Common Stock
outstanding as of the close of business on the date that the first
Profit-Sharing Option Loan is made pursuant to this Section 3.1 (the
"First Profit-Sharing Loan Drawdown Date") or twenty percent (20%) or
more of the voting power of all shares of capital stock of the Company
that are issued and outstanding as of the close of business on the First
Profit-Sharing Loan Drawdown Date and (B) the Conversion Price in effect
on such Profit-Sharing Option Loan Date (it being understood that, for
purposes of this Section 3.1(d), such Profit-Sharing Option Loan Date
shall be deemed to be the Section 5.1 Conversion Date or the Section 5.2
Conversion Date, as the case may be) shall not be less than the greater
of the then book value or market value per share of Common Stock. This
Section 3.1(d) and all of the restrictions and limitations set forth
herein shall automatically terminate upon any vote by the stockholders of
the Company authorizing the conversion of any and all Profit-Sharing
Option Loans into shares of Common Stock in accordance with the
provisions of this Agreement. Notwithstanding any provision herein or in
the Collaboration Agreement to the contrary, if Lender is not required,
pursuant to this Section 3.1(d), to make Profit-Sharing Option Loans, the
Company shall continue to pay Company Third Party Vendors for its share
of the Pre-Approval Development Expenses pursuant to, and in accordance
with, the provisions of Section 3.1(b) hereof.
3.2. PAYMENT OF PRINCIPAL OF THE PROFIT-SHARING OPTION LOANS. On the
Profit-Sharing Option Loan Maturity Date, the Company shall pay to the Lender
the then outstanding aggregate principal amount of all Profit-Sharing Option
Loans, said payment to be made in accordance with the provisions of Article 4
hereof.
3.3. PREPAYMENT OF THE PROFIT-SHARING OPTION LOANS. The Company shall
have the right, without premium or penalty, to prepay all or any portion of the
principal or interest due and payable under the Profit-Sharing Option Loans in
cash only. The Company shall give at least three (3) Business Days prior
written notice of each, if any, proposed date of prepayment and shall specify
the portion of any or all Profit-Sharing Option Loans to be prepaid on such
date, which amount shall become due and payable on the date specified in such
notice. The Company shall make payment of any amounts being prepaid by it
<PAGE>
pursuant to this Section 3.3 in accordance with the provisions of Article 4
hereof.
3.4. INTEREST PAYABLE ON PROFIT-SHARING OPTION LOANS. The Company shall
accrue interest on the Profit-Sharing Option Loans at an annual rate which at
all times shall equal two percentage points (2.0%) above the Prime Rate. Any
change in the interest due and payable on the Profit-Sharing Option Loans
resulting from a change in the Prime Rate shall be effective on the date of
such change as published in The Wall Street Journal. Interest shall be
compounded quarterly. Subject to the provisions of Section 3.3 and Section 5.2
hereof, all of such accrued and unpaid interest shall be due and payable to the
Lender on the Profit-Sharing Option Loan Maturity Date. On the Profit-Sharing
Option Loan Maturity Date, the Company shall make payment of all of such
accrued and unpaid interest in accordance with the provisions of Article 4
hereof.
ARTICLE IV
PAYMENT METHODS; COMPUTATIONS
4.1. PAYMENT METHODS.
(a) Subject to the provisions of Section 2.4 and Section 5.2 hereof, the
Company shall have the option to make payment or prepayment of any or all
outstanding principal or accrued and unpaid interest under or in connection
with any or all Development Loans either (i) in cash or (ii) by converting such
outstanding principal or accrued and unpaid interest into shares of Common
Stock and/or Preferred Stock pursuant to, and in accordance with, the
provisions of Section 5.1 hereof. Notwithstanding the foregoing, no such
prepayment shall be made by converting such outstanding principal or accrued
and unpaid interest into shares of Common Stock and/or Preferred Stock pursuant
to, and in accordance with, the provisions of Section 5.1 hereof if the Lender
would become, immediately after such conversion, a beneficial owner (which term
shall have the meaning set forth under Section 13(d) of the Securities Exchange
Act of 1934, as amended, and the rules and regulations promulgated by the
Securities and Exchange Commission under said Section 13(d)) of ten percent
(10%) or more of the outstanding shares of Common Stock (it being understood
that the Lender currently believes that Common Stock beneficially owned by
Roche Finance Ltd. or any Affiliate of Roche Finance Ltd. shall be disregarded
in calculating such ten percent threshhold). In the event that the Company
provides notice of its intent to make a prepayment of principal or accrued but
unpaid interest on the Development Loans by effecting a conversion pursuant to
Section 5.1 hereof and the Lender exercises its right not to allow prepayment
of all or a portion of such prepayment in order to limit the Lender's
<PAGE>
beneficial ownership of Common Stock to less than ten percent (10%) as
described in the preceding sentence, interest shall be suspended on only the
amount of the prepayment with respect to which Lender exercised its rights
under the preceding sentence. Interest shall only be suspended from the date
that the prepayment otherwise would have occurred until the date that the
Lender notifies the Company that such prepayment may be made. Notwithstanding
any provision herein to the contrary, interest shall not be suspended with
respect to any portion of such prepayment to the extent that the Company could
not have otherwise made such prepayment due to the twenty percent (20%)
restrictions described in Section 2.1(c) hereof.
(b) Subject to the provisions of Section 5.2 hereof, the Company shall
have the option to make payment (but not prepayment) of any or all outstanding
principal or accrued and unpaid interest under or in connection with any or all
Profit-Sharing Option Loans either (i) in cash or (ii) by converting such
outstanding principal or accrued and unpaid interest into shares of Common
Stock and/or Preferred Stock pursuant to, and in accordance with, the
provisions of 5.1 hereof. Any prepayment pursuant to Section 3.3 hereof of any
or all outstanding principal or accrued and unpaid interest under or in
connection with any or all Profit-Sharing Option Loans shall be made in cash
only.
(c) Notwithstanding any provision herein to the contrary, if, when either
the Development Loans or the Profit-Sharing Option Loans and all accrued but
unpaid interest thereon are due and payable pursuant to the Loan Agreement, the
Company desires but is unable to make any portion of such payment in Common
Stock or Preferred Stock due to the twenty percent (20%) limitations of either
Section 2.1(c) or 3.1(d) hereof or any related rule or requirement of the
Nasdaq Stock Market, the portion of such payment that could not be made in
Common Stock or Preferred Stock shall be made in cash when otherwise due.
4.2. PAYMENTS AND COMPUTATIONS.
(a) Any cash payments of interest and principal payable under this
Agreement shall be made by the Company in immediately available and fully
transferable funds at the principal business address of the Lender.
(b) Whenever any payment to be made by the Company under this Agreement
shall be stated to be due on a date which is not a Business Day, such payment
may be made on the next succeeding Business Day, and the interest payment on
<PAGE>
each such date shall include the amount thereof which shall accrue during the
period of such extension of time.
(c) All computations of interest payable in connection with any
Development Loan or any Profit-Sharing Option Loan shall be made on the basis
of the actual number of days elapsed divided by 365.
(d) All payments made in connection with any Development Loan or any
Profit-Sharing Option Loan shall be applied first to the payment of all accrued
and unpaid interest under such Development Loan or Profit-Sharing Option Loan,
as the case may be, and second to repayment of principal outstanding under such
Development Loan or Profit-Sharing Option Loan, as the case may be.
ARTICLE V
CONVERSION
5.1 THE COMPANY'S RIGHT TO CONVERT.
(a) Subject to and upon the terms and conditions of this Section 5.1 and
of Sections 2.4 and 4.1(a) hereof, the Company may, at its option, convert any
or all outstanding principal or accrued and unpaid interest under or in
connection with any or all Development Loans or any or all Profit-Sharing
Option Loans into shares of Common Stock; provided, however, that the Company
shall not have the right to effect such conversion with respect to
Profit-Sharing Option Loans under certain circumstances specified in Section
4.1(b) hereof. As provided in Section 4.1(b) hereof, the Company shall have the
right to prepay any and all of the Profit-Sharing Loan only in cash.
(b) The Company may elect to effect a conversion pursuant to this Section
5.1 by giving written notice of such election to the Lender (in each case, a
"Section 5.1 Conversion Notice") at least fifteen trading days prior to the
proposed effective date of such conversion (in each case, a "Section 5.1
Conversion Date"). Each Section 5.1 Conversion Notice shall be given in
accordance with the provisions of Section 7.1 hereof and shall specify (i) the
proposed Section 5.1 Conversion Date, (ii) the aggregate amount of outstanding
principal or accrued and unpaid interest under or in connection with any or all
Development Loans or any or all Profit-Sharing Option Loans that will be
converted on such proposed Section 5.1 Conversion Date (such aggregate amount
being referred to herein, in each case, as the "Section 5.1 Conversion
Amount"), (iii) each Development Loan and each Profit-Sharing Option Loan to
<PAGE>
which all or any portion of such Section 5.1 Conversion Amount relates, and
(iv) consistent with the provisions of Sections 4.2(d) hereof, the portion of
such Section 5.1 Conversion Amount that consists of principal outstanding or
accrued and unpaid interest under such Development Loans or such Profit-Sharing
Option Loans.
(c) In the event that a Section 5.1 Conversion Notice is given by the
Company to the Lender on a timely basis pursuant to Section 5.1(b) above, then,
subject to the provisions of Section 5.1(f) below, the Section 5.1 Conversion
Amount specified in such Section 5.1 Conversion Notice shall convert (without
any further action being required therefor by the Company or the Lender), at
the close of business on the Section 5.1 Conversion Date specified in such
Section 5.1 Conversion Notice, into that number of shares of Common Stock as
shall be equal to the quotient obtained by dividing (I) such Section 5.1
Conversion Amount by (II) the Conversion Price in effect as of the close of
business on such Section 5.1 Conversion Date.
(d) Subject to the provisions of Section 5.1(f) hereof, as soon as
practicable after any Section 5.1 Conversion Date, and in any event within
thirty days (30) thereafter, the Company, at its expense, will cause to be
delivered to the Lender a stock certificate, registered in the name of the
Lender, representing the number of shares of Common Stock issued to the Lender
on such Section 5.1 Conversion Date in connection with the conversion effected
pursuant to this Section 5.1, plus, in lieu of any fractional share of Common
Stock to which the Lender would otherwise be entitled, cash equal to such
fraction multiplied by the Section 5.1 Conversion Price in effect as of the
close of business on such Section 5.1 Conversion Date.
(e) Any shares of Common Stock issued to the Lender pursuant to this
Section 5.1 shall be subject to certain restrictions on transfer and other
restrictions set forth in the Securities Purchase Agreement.
(f) Notwithstanding anything expressed or implied in this Agreement
(including, without limitation, this Section 5.1) to the contrary, prior to the
effectiveness and consummation of any proposed conversion pursuant to this
Section 5.1, the Lender shall make a determination as to whether such proposed
conversion requires, prior to the consummation thereof, that filings under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, or the rules
and regulations promulgated thereunder (said Act and said rules and regulations
being referred to herein, collectively, as the "HSR Act"), be made. If the
Lender shall make the determination that such proposed conversion requires,
<PAGE>
prior to the consummation thereof, that filings under the HSR Act be made, then
the Lender shall give prompt written notice of such determination to the
Company (but in no event less than 5 trading days prior to the proposed
conversion date specified in the Section 5.1 Conversion Notice) and such
written notice shall state the portion, if any, of any Section 5.1 Conversion
Amount originally subject to such proposed conversion that could be converted
into Common Stock without having to make any filings under the HSR Act (the
"Non-HSR Section 5.1 Conversion Amount"), and the portion of such Section 5.1
Conversion Amount originally subject to such proposed conversion that requires,
prior to the consummation of such proposed conversion, that filings under the
HSR Act be made (the "HSR Section 5.1 Conversion Amount"). In the event that
the Lender shall give such written notice to the Company, the proposed
conversion of the Non-HSR Section 5.1 Conversion Amount into Common Stock shall
be consummated pursuant to, and in accordance with, the provisions of this
Section 5.1 and, notwithstanding anything in this Section 5.1 to the contrary,
the proposed conversion of the HSR Section 5.1 Conversion Amount into Common
Stock shall not be effected but, instead, the proposed conversion of the HSR
Section 5.1 Conversion Amount shall be effected into shares of a series of
Preferred Stock to be designated by the Board of Directors of the Company prior
to the effective date of such proposed conversion (the "Conversion Preferred
Stock Series"). The terms of such Conversion Preferred Stock Series shall be as
set forth in Exhibit A attached hereto. Any conversion of any HSR Section 5.1
Conversion Amount into shares of the Conversion Preferred Stock Series pursuant
to this Section 5.1(f) shall be on the same terms and conditions as if such
conversion had been effected into shares of Common Stock. The Company and the
Lender shall perform their respective obligations under this Section 5.1(f)
with reasonable care and in good faith. It is hereby understood that the
provisions of this Section 5.1(f) shall be applied with respect to all or any
portion of any Section 5.1 Conversion Amount more than once such that any
categorization of such Section 5.1 Conversion Amount, or portion thereof, as
HSR Section 5.1 Conversion Amount shall not preclude any later categorization
of such Section 5.1 Conversion Amount, or portion thereof, as Non-HSR Section
5.1 Conversion Amount.
5.2 THE LENDER'S RIGHT TO CONVERT.
(a) In the event that, at any time while any Development Loan or
Profit-Sharing Option Loan is outstanding, the ratio (the "Leverage Ratio") of
(A) the Market Capitalization of the Company to (B) the aggregate amount of the
then outstanding principal and accrued but previously unpaid interest under or
<PAGE>
in connection with any and all Development Loans and Profit-Sharing Option
Loans, shall be less than two (2), then, subject to and upon the terms and
conditions of this Section 5.2, (i) the Lender may, at its option (which option
may be exercisable only by giving to the Company the written notice
contemplated under Section 5.2(b) below at any time during the period
commencing on the date that the Lender receives notice from the Company that
the Leverage Ratio is less than two (2) and ending on the thirtieth (30th) day
thereafter), convert into Common Stock any or all outstanding principal or
accrued and unpaid interest under or in connection with any or all Development
Loans or any or all Profit-Sharing Option Loans, or (ii) in the event that the
Lender does not timely exercise its option under the foregoing clause (i), the
Lender may, at its option (which option may be exercisable only by giving to
the Company the written notice contemplated under Section 5.2(b) below at any
time after the expiration of the Lender's option under clause (i) above),
convert into Common Stock up to that portion of any or all outstanding
principal or accrued and unpaid interest under or in connection with any or all
Development Loans or any or all Profit-Sharing Option Loans as shall be
necessary so that, immediately after such conversion, the Leverage Ratio (as
recomputed immediately after such conversion) shall be two (2). Notwithstanding
anything in this Section 5.2 to the contrary, in the event that, immediately
prior to the effectiveness of any conversion pursuant to this Section 5.2, the
Leverage Ratio (as recalculated immediately prior to the effectiveness of such
conversion) shall be equal or greater than two (2), then such conversion shall
not occur or be consummated and the right of the Lender to effect such specific
conversion (but not any subsequent conversion that would meet the criteria set
forth in this Section 5.2(a)) shall expire.
(b) The Lender may elect to effect a conversion pursuant to this Section
5.2 by giving written notice of such election to the Company (in each case, a
"Section 5.2 Conversion Notice") at any time within the applicable time frames
set forth in Section 5.2(a) above. Each Section 5.2 Conversion Notice shall be
given in accordance with the provisions of Section 7.1 hereof and shall specify
(i) the proposed effective date of the conversion to which such Section 5.2
Conversion Notice relates (in each case, a "Section 5.2 Conversion Date"),
which Section 5.2 Conversion Date shall be, subject to the provisions of
Section 5.2(c) and Section 5.2(f) below, no earlier than the second Business
Day after the date on which the Lender gives the Section 5.2 Conversion Notice
to the Company and no later than the fifth Business Day after the date on which
the Lender gives the Section 5.2 Conversion Notice to the Company, (ii) the
aggregate amount of outstanding principal or accrued and unpaid interest under
or in connection with any or all Development Loans or any or all Profit-Sharing
<PAGE>
Option Loans that will be converted on such proposed Section 5.2 Conversion
Date in accordance with the provisions of Section 5.2(a) hereof (such aggregate
amount being referred to herein, in each case, as the "Section 5.2 Conversion
Amount"), (iii) each Development Loan and each Profit-Sharing Option Loan to
which all or any portion of such Section 5.2 Conversion Amount relates, and
(iv) consistent with the provisions of Section 4.2(d) hereof, the portion of
such Section 5.2 Conversion Amount that consists of principal outstanding or
accrued and unpaid interest under such Development Loans or such Profit-Sharing
Option Loans.
(c) In the event that a Section 5.2 Conversion Notice is given by the
Lender to the Company on a timely basis pursuant to Section 5.2(b) above, then,
subject to the provisions of Section 5.2(f) below, the Section 5.2 Conversion
Amount specified in such Section 5.2 Conversion Notice shall convert (without
any further action being required therefor by the Company or the Lender), at
the close of business on the Section 5.2 Conversion Date specified in such
Section 5.2 Conversion Notice, into that number of shares of Common Stock as
shall be equal to the quotient obtained by dividing (I) such Section 5.2
Conversion Amount by (II) the Conversion Price in effect as of the close of
business on such Section 5.2 Conversion Date; provided, however, that in the
event that the Lender delivers to the Company, together with such Section 5.2
Conversion Notice, a request pursuant to the Registration Rights Agreement to
have the Company register under the Securities Act of 1933, as amended (the
"Securities Act"), any or all of the shares of Common Stock into which such
Section 5.2 Conversion Amount would convert pursuant to this Section 5.2(c) and
in the event that the Company exercises its right under Section 2(f) of the
Registration Rights Agreement to defer registration of such shares of Common
Stock, then the proposed conversion of such Section 5.2 Conversion Amount
pursuant to this Section 5.2(c) shall also be deferred for up to seventy (70)
days (it being understood that the Company has an obligation to file at the end
of the 70-day deferral period contemplated under Section 2(f) of the
Registration Rights Agreement a registration statement registering under the
Securities Act the shares of Common Stock issuable upon conversion of such
Section 5.2 Conversion Amount pursuant to this Section 5.2(c)), whereupon such
Section 5.2 Conversion Amount shall convert into the greater of (A) the number
of shares of Common Stock determined in accordance with the provisions set
forth above in this Section 5.2(c) or (B) the number of shares of Common Stock
that is equal to the quotient obtained by dividing (i) such Section 5.2
Conversion Amount by (ii) the average closing price per share of the Common
Stock as quoted on the Nasdaq National Market System for the fifteen (15)
<PAGE>
trading days immediately prior to the date that the Company files such
registration statement.
(d) Subject to the provisions of Section 5.2(f) hereof, as soon as
practicable after any Section 5.2 Conversion Date, and in any event within
thirty days (30) thereafter, the Company, at its expense, will cause to be
delivered to the Lender a stock certificate, registered in the name of the
Lender, representing the number of shares of Common Stock issued to the Lender
on such Section 5.2 Conversion Date in connection with the conversion effected
pursuant to this Section 5.2, plus, in lieu of any fractional share of Common
Stock to which the Lender would otherwise be entitled, cash equal to such
fraction multiplied by the Section 5.2 Conversion Price in effect as of the
close of business on such Section 5.2 Conversion Date.
(e) Any shares of Common Stock issued to the Lender pursuant to this
Section 5.2 shall be subject to certain restrictions on transfer and other
restrictions set forth in the Securities Purchase Agreement.
(f) Notwithstanding anything expressed or implied in this Agreement
(including, without limitation, this Section 5.2) to the contrary, prior to the
effectiveness and consummation of any proposed conversion pursuant to this
Section 5.2, the Lender shall make a determination as to whether such proposed
conversion requires, prior to the consummation thereof, that filings under the
HSR Act be made. If the Lender shall make the determination that such proposed
conversion requires, prior to the consummation thereof, that filings under the
HSR Act be made, then the Lender shall give prompt written notice of such
determination to the Company (but in no event less than 5 trading days prior to
the proposed Section 5.2 Conversion Date) and such written notice shall state
the portion, if any, of any Section 5.2 Conversion Amount originally subject to
such proposed conversion that could be converted into Common Stock without
having to make any filings under the HSR Act (the "Non-HSR Section 5.2
Conversion Amount"), and the portion of such Section 5.2 Conversion Amount
originally subject to such proposed conversion that requires, prior to the
consummation of such proposed conversion, that filings under the HSR Act be
made (the "HSR Section 5.2 Conversion Amount"). In the event that the Lender
shall give such written notice to the Company, the proposed conversion of the
Non-HSR Section 5.2 Conversion Amount into Common Stock shall be consummated
pursuant to, and in accordance with, the provisions of this Section 5.2 and,
notwithstanding anything in this Section 5.2 to the contrary, the proposed
conversion of the HSR Section 5.2 Conversion Amount into Common Stock shall not
be effected but, instead, the proposed conversion of the HSR Section 5.2
Conversion Amount shall be effected into shares of the Conversion Preferred
Stock Series. The terms of such Conversion Preferred Stock Series shall be as
<PAGE>
set forth in Exhibit A attached hereto. Any conversion of any HSR Section 5.2
Conversion Amount into shares of the Conversion Preferred Stock Series pursuant
to this Section 5.2(f) shall be on the same terms and conditions as if such
conversion had been effected into shares of Common Stock. The Company and the
Lender shall perform their respective obligations under this Section 5.2(f)
with reasonable care and in good faith. It is hereby understood that the
provisions of this Section 5.2(f) shall be applied with respect to all or any
portion of any Section 5.2 Conversion Amount more than once such that any
categorization of such Section 5.2 Conversion Amount, or portion thereof, as
HSR Section 5.2 Conversion Amount shall not preclude any later categorization
of such Section 5.2 Conversion Amount, or portion thereof, as Non-HSR Section
5.2 Conversion Amount.
(g) Notwithstanding anything expressed or implied in this Agreement
(including, without limitation, this Section 5.2) to the contrary, in lieu of
allowing the Lender to exercise its conversion rights under this Section 5.2
with respect to any Section 5.2 Conversion Amount, the Company may elect to
make full payment of such Section 5.2 Conversion Amount in cash. The Company
shall make such election by giving written notice thereof to the Lender no
later than the Business Day immediately preceding the applicable Section 5.2
Conversion Date, whereupon the Company shall pay to the Lender all of such
Section 5.2 Conversion Amount in cash on such Section 5.2 Conversion Date.
ARTICLE VI
EVENTS OF DEFAULT
6. EVENTS OF DEFAULT. The entire unpaid principal of each Development
Loan and each Profit-Sharing Option Loan and all interest accrued thereon
shall, at the option of the Lender, become immediately due and payable without
presentment, demand, protest or notice upon the occurrence and continuation of
any of the following events (each, an "Event of Default"):
(a) the failure by the Company to pay any amounts due with respect
to such Development Loan and such Profit-Sharing Option Loan when the
same shall become due and payable, whether at maturity or any accelerated
maturity date or any other date fixed for payment;
<PAGE>
(b) any breach by the Company of any material provision of the
Collaboration Agreement that is not cured within sixty (60) days after
the Lender gives written notice to the Company of such breach, provided
that the Lender is not itself at that time in material breach of this
Agreement;
(c) the occurrence of any of the following with respect to the
Company: admission in writing of its inability to pay its debts as they
become due, dissolution, termination of existence, cessation of normal
business operations, insolvency, appointment of a receiver of any part of
the property of, any legal or equitable assignment, conveyance or
transfer of property for the benefit of creditors by, or the commencement
of any proceedings under any bankruptcy or insolvency laws by or against,
the Company; provided, that in the case of any of such actions
involuntarily suffered by the Company, the same shall not have been
dismissed within sixty days of their commencement.
ARTICLE VII
PROVISIONS OF GENERAL APPLICATION
7.1. NOTICES.
(a) Any notice, demand, request or other communication hereunder to
either party shall be deemed to be sufficient if contained in a written
instrument delivered in person or duly sent by overnight courier service or by
first class, registered or certified mail, postage prepaid, or telecopied with
a confirmation copy by regular, certified or overnight 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:
LeukoSite, Inc.
215 First Street
Cambridge, MA 02142
Attention: President (one copy)
Chief Financial Officer (another copy)
Telecopier:(617) 621-9349
and a copy to:
<PAGE>
Bingham Dana LLP
150 Federal Street
Boston, Massachusetts 02110
Attention: Justin P. Morreale, Esq.
Telecopier: (617) 951-8736
Genentech, Inc.
1 DNA Way
South San Francisco, CA 94080
Attention: Corporate Secretary
Telecopier: 650-952-9881
(b) All of such notices, requests and other communications shall be
deemed to have been received: (i) in the case of personal delivery, on the date
of such delivery; (ii) in the case of overnight courier service, the business
day following the date of receipt by the overnight courier; (iii) in the case
of first class, registered or certified mail, on the earlier of (A) receipt
thereof or (B) the fifth business day after deposit in the mail; and (iv) in
the case of facsimile transmission, when confirmed by facsimile machine report.
7.2. AMENDMENTS AND VARIATIONS. This Agreement may be modified, amended,
supplemented, waived or changed only pursuant to an instrument in writing duly
executed by the Company and the Lender.
7.3. SEAL; GOVERNING LAW. This Agreement is intended to take effect as a
sealed instrument. This Agreement and the respective rights and obligations
hereunder of the parties hereto shall be governed by and interpreted,
determined and enforced in accordance with the internal laws of the State of
Delaware, without regard to its conflict of laws rules or principles.
7.4. HEADINGS. The headings of the Articles, Sections and paragraphs of
this Agreement are solely for convenience of reference and shall not affect its
interpretation.
7.5. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which shall constitute but one agreement. In making proof
of this Agreement, it shall not be necessary to produce or account for more
than one counterpart hereof signed by each of the parties hereto.
7.6. SEVERABILITY. In the event that any court of competent jurisdiction
determines that any term or provision of this Agreement, or any part thereof,
is invalid or unenforceable to any extent, such part, term or provision shall
<PAGE>
continue to be valid and enforceable except to the extent it has been
determined to be invalid or unenforceable and it shall be reformed to the
extent that it can be validated or enforced, and such determination shall not
affect the validity or enforceability of any other part, term or provision
hereof.
7.7. SUCCESSORS AND ASSIGNS. This Agreement shall represent the valid and
binding obligations of, and inure to the benefit of, each party's successors
and permitted assigns. Neither this Agreement nor the rights or obligations of
either party hereunder may be assigned without the prior written consent of the
non-assigning party.
7.8. TERM OF AGREEMENT. This Agreement shall remain in full force and
effect until the payment in full by the Company of all amounts due and owing
under this Agreement, the Development Loans and the Profit-Sharing Option
Loans.
[Intentionally Left Blank]
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IN WITNESS WHEREOF, the Company and the Lender have caused this Agreement
to be executed and delivered on their behalf by their respective duly
authorized officers, as of the date first written above.
LEUKOSITE, INC.
By:___________________________________
Christopher K. Mirabelli, President
GENENTECH, INC.
By:__________________________________
Name:
Title:
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Exhibit A
LEUKOSITE, INC.
TERMS, RIGHTS, PREFERENCES AND PRIVILEGES OF
SERIES A CONVERTIBLE PREFERRED STOCK, $0.01 PAR VALUE
The following is a description of the Series A Convertible Preferred
Stock of LeukoSite, Inc. (the "Company") and a statement of the preferences,
qualifications, privileges, limitations, restrictions, and other special or
relative rights granted to or imposed upon the shares of such series:
Series A Convertible Preferred Stock.
1. Designation: Number of Shares.
There is hereby established a series of Preferred Stock, $0.01 par value
per share, of the Company, consisting of [________] shares. The designation of
such series shall be "Series A Convertible Preferred Stock".
2. Definitions. As used herein, the following terms shall
have the following meanings:
(a) The term "Common Stock" shall mean the Company's common stock,
$0.01 par value per share.
(b) The term "Liquidation" shall mean any voluntary or involuntary
liquidation, dissolution or winding-up of the Company.
(c) The term "Original Issue Date" shall mean the date as of which
the first share of Series A Preferred Stock has been issued.
(d) The term "Other Preferred Stock Series" shall mean any class or
series of Preferred Stock other than Series A Preferred Stock.
(e) The term "Preferred Stock" shall mean preferred stock, $0.01 par
value per share, of the Company.
(f) The term "Series A Preferred Stock" shall mean the Company's
Series A Convertible Preferred Stock, $0.01 par value
per share.
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3. Dividends
The holder of each share of Series A Preferred Stock shall be entitled to
receive dividends in cash, stock or otherwise, if, when and as declared by the
Board of Directors of the Company, out of funds legally available for that
purpose; provided, however, that, so long as any shares of Series A Preferred
Stock shall be outstanding, the Company shall not declare or pay any dividend
upon any Common Stock (other than a dividend payable in Common Stock) unless
the Company shall simultaneously pay, or simultaneously therewith declare and
set apart a sum sufficient for the payment of, a dividend upon the Series A
Preferred Stock in a per share amount (computed on an as-converted to Common
Stock basis in the manner provided in the next sentence) at least equal to the
per share amount of any such dividend that the Company proposes to declare or
pay upon the Common Stock . For purposes hereof, the per share amount of any
dividend paid or payable in respect of each outstanding share of Series A
Preferred Stock shall be deemed equal to the quotient obtained by dividing the
amount of such dividend paid or payable in respect of such outstanding share of
Series A Preferred Stock divided by the number of shares of Common Stock into
which such outstanding share of Series A Preferred Stock shall be convertible.
4. Liquidation Preference.
In the event of a Liquidation, the assets of the Company available for
distribution to its stockholders, whether from capital, surplus or earnings,
shall be distributed in the following order of priority:
(a) The holders of outstanding shares of each Other Preferred
Stock Series, if any, shall be entitled to receive, prior and in
preference to any distribution to the holders of Series A Preferred Stock
and Common Stock, any and all amounts to which such holders shall be
entitled to receive upon Liquidation in accordance with the terms of such
Other Preferred Stock Series.
(b) After distribution to the holders of outstanding shares of
each Other Preferred Stock Series, if any, of the respective amounts to
which such holders are entitled to receive upon Liquidation, the holders
of Series A Preferred Stock shall be entitled to receive, prior and in
preference to any distribution to the holders of Common Stock, an amount
equal to one cent ($0.01) per share (subject to appropriate adjustment
upon the occurrence of any stock split, stock dividend, reverse stock
split or combination of the outstanding shares of Series A Preferred
Stock) and, in addition, an amount equal to any dividends declared but
unpaid on the Series A Preferred Stock. If the assets of the Company
available for distribution to the holders of Series A Preferred Stock
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shall be insufficient to permit the payment of the full preferential
amount set forth in this Section 4(b), then the holders of shares of
Series A Preferred Stock shall share ratably in any distribution of the
assets of the Company in proportion to their respective number of shares
of Series A Preferred Stock.
(c) After distribution to the holders of Series A Preferred
Stock of their respective liquidation preferences, the holders of Series
A Preferred Stock shall be entitled to share ratably (calculated with
respect to such Series A Preferred Stock as provided in the next
sentence) with the holders of Common Stock in all remaining assets of the
Company, if any, available for distribution to its stockholders. For
purposes of calculating any payment to be paid pursuant to this Section
4(c), each share of Series A Preferred Stock shall be deemed to be that
number of shares of Common Stock into which it is then convertible.
5. No Voting Rights.
Except to the extent otherwise required by the General Corporation Law of
the State of Delaware, the Series A Preferred Stock shall have no voting
rights, and the Company shall have no obligation to send to any holder of
Series A Preferred Stock notice of any meeting of stockholders of the Company.
6. Optional Conversion.
(a) Subject to the provisions of Section 8 hereof, each holder of
shares of Series A Preferred Stock shall have the right to convert, at any time
or from time to time, any share of Series A Preferred Stock held by such holder
into one (1) fully paid and nonassessable share of Common Stock, subject to
adjustment pursuant to Section 6(d) hereof, by surrender of the stock
certificate representing such share of Series A Preferred Stock to be so
converted in the manner provided in Section 6(b) hereof. The holder of shares
of Series A Preferred Stock exercising the aforesaid right to convert any of
such shares into shares of Common Stock shall be entitled to payment of any
dividends declared but unpaid with respect to those shares of Series A
Preferred Stock being converted. Without limiting the generality of the
foregoing provisions of this Section 6(a), each share of Series A Preferred
Stock shall automatically be converted into the number of shares of Common
Stock into which such share of Series A Preferred Stock is then convertible
pursuant to this Section 6, immediately upon the transfer of ownership by the
initial holder to a third party which is not an Affiliate of such initial
holder. For purposes hereof, the term "Affiliate" shall mean a party that,
directly or indirectly, through one or more intermediaries, controls or is
controlled by such initial holder. Any automatic conversion pursuant to the
provisions of the foregoing sentence shall not be subject to the provisions of
Section 8 hereof.
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(b) Subject to the provisions of Section 8 hereof, any holder of
shares of Series A Preferred Stock may exercise such holder's conversion rights
under Section 6(a) hereof as to any number of such shares of Series A Preferred
Stock by delivering to the Company during regular business hours, at the office
of the Company or any transfer agent of the Company for the Series A Preferred
Stock as may be designated by the Company, the certificate or certificates for
the shares to be converted, duly endorsed or assigned in blank or to the
Company (if required by it), accompanied by written notice stating that such
holder elects to convert such shares and stating the name or names (with
address) in which the certificate or certificates for the shares of Common
Stock are to be issued; provided, however, that in the event of an automatic
conversion pursuant to the third sentence of Section 6(a) above, the
outstanding shares of Series A Preferred Stock that are subject to such
automatic conversion shall be converted automatically without any further
action by the holder of such shares and whether or not the certificates
representing such shares are surrendered to the Company or its transfer agent;
and, provided, further, that the Company shall not be obligated to issue
certificates evidencing the shares of Common Stock issuable upon such automatic
conversion unless the certificates evidencing such shares of Series A Preferred
Stock are delivered to the Company or its transfer agent as provided herein.
Subject to the provisions of Section 8 hereof, conversion shall be deemed to
have been effected on the date (the "Conversion Date") when the delivery of the
certificate or certificates for the shares to be converted and the notice of
conversion referred to above is made, except in the case of any automatic
conversion of outstanding shares of Series A Preferred Stock which shall be
deemed to have been effected on the date that the initial holder transfers
ownership of such shares to a third party which is not an Affiliate of such
initial holder. As promptly as practicable after the Conversion Date, the
Company shall issue and deliver to or upon the written order of such holder, to
the place designated by such holder, a certificate or certificates for the
number of full shares of Common Stock to which such holder is entitled and a
check or cash in respect of any fractional interest in a share of Common Stock
as provided in Section 6(c) hereof and a check or cash in payment of all
dividends declared but unpaid, if any (to the extent permissible under law),
with respect to the shares of Series A Preferred Stock so converted. The person
in whose name the certificate or certificates for Common Stock are to be issued
shall be deemed to have become a holder of record of Common Stock on the
applicable Conversion Date unless the transfer books of the Company are closed
on that date, in which event he shall be deemed to have become a holder of
record of Common Stock on the next succeeding date on which the transfer books
are open. Upon conversion of only a portion of the number of shares covered by
a certificate representing shares of Series A Preferred Stock surrendered for
conversion, the Company shall issue and deliver to or upon the written order of
the holder of the certificate so surrendered for conversion, at the expense of
the Company, a new certificate covering the number of shares of Series A
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Preferred Stock representing the unconverted portion of the certificate so
surrendered, which new certificate shall entitle the holder thereof to
dividends on the shares of Series A Preferred Stock represented thereby to the
same extent as if the portion of the certificate theretofore covering such
unconverted shares had not been surrendered for conversion.
(c) No fractional shares of Common Stock or scrip shall be issued
upon conversion of shares of Series A Preferred Stock. If more than one share
of Series A Preferred Stock shall be surrendered for conversion at any one time
by the same holder, the number of full shares of Common Stock issuable upon
conversion thereof shall be computed on the basis of the aggregate number of
shares of Series A Preferred Stock so surrendered. Instead of any fractional
shares of Common Stock which would otherwise be issuable upon conversion of any
shares of Series A Preferred Stock, the Company shall pay a cash adjustment in
respect of such fractional interest in an amount equal to the then Current
Market Price (as hereinafter defined) of a share of Common Stock multiplied by
such fractional interest. Fractional interests shall not be entitled to
dividends, and the holders of fractional interests shall not be entitled to any
rights as stockholders of the Company in respect of such fractional interest.
For the purpose of any computation pursuant to this Section 6(c), the term
"Current Market Price" shall mean, as of the day in question, the closing price
of the Common Stock on any national securities exchange or the Nasdaq National
Market System, as the case may be, on such date, or, if the Common Stock was
not traded on such date, on the last trading date prior to such date.
(d) The number and kind of shares into which each outstanding share
of Series A Preferred Stock is convertible pursuant to this Section 6 shall be
subject to adjustment from time to time as follows:
(i) If the number of shares of Common Stock outstanding is
increased by a stock dividend payable in shares of Common Stock or by a
subdivision or split-up of shares of Common Stock, then, following the
record date fixed for the determination of holders of Common Stock
entitled to receive such stock dividend, subdivision or split-up, the
number of shares of Common Stock issuable on conversion of each share of
Series A Preferred Stock that is outstanding immediately prior to such
stock dividend, subdivision or split-up shall be increased in proportion
to such increase in outstanding shares of Common Stock.
(ii) If the number of shares of Common Stock outstanding is
decreased by a combination of the outstanding shares of Common Stock,
then, following the record date for such combination, the number of
shares of Common Stock issuable on conversion of each share of Series A
Preferred Stock that is outstanding immediately prior to such combination
<PAGE>
shall be decreased in proportion to such decrease in outstanding shares
of Common Stock.
(iii)In case of any capital reorganization, or any
reclassification of the stock of the Company (other than a change in par
value or from par value to no par value or from no par value to par value
or as a result of a stock dividend or subdivision, split-up or
combination of shares), or the consolidation or merger of the Company
with or into another person (other than a consolidation or merger in
which the Company is the continuing company) or of the sale or other
disposition of all or substantially all of the properties or assets of
the Company as an entirety to any other person, each share of Series A
Preferred Stock that is outstanding immediately prior to such
reorganization, reclassification, consolidation, merger, sale or other
disposition shall, after such reorganization, reclassification,
consolidation, merger, sale or other disposition, be convertible into the
kind and number of shares of stock or other securities or property of the
Company or of the corporation resulting from such consolidation or
surviving such merger or to which such properties and assets shall have
been sold or otherwise disposed, to which the holder of such share of
Series A Preferred Stock would have been entitled upon such
reorganization, reclassification, consolidation, merger, sale or other
disposition if such holder had converted such share of Series A Preferred
Stock into Common Stock immediately prior to the time of such
reorganization, reclassification, consolidation, merger, sale or other
disposition. The provisions of this Section 6(d)(iii) shall similarly
apply to successive reorganizations, reclassifications, consolidations,
mergers, sales or other dispositions.
(iv) All calculations under this Section 6(d) shall be made to
the nearest one tenth (1/10) of a cent or to the nearest one tenth (1/10)
of a share, as the case may be.
(v) In any case in which the provisions of this Section 6(d)
shall require that an adjustment shall become effective immediately after
a record date for an event, the Company may defer until the occurrence of
such event (A) issuing to the holder of any share of Series A Preferred
Stock converted after such record date and before the occurrence of such
event the additional shares of capital stock issuable upon such
conversion by reason of the adjustment required by such event over and
above the shares of capital stock issuable upon such conversion before
giving effect to such adjustment and (B) paying to such holder any amount
in cash in lieu of a fractional share of capital stock pursuant to
Section 6(c); provided, however, that the Company shall deliver to such
holder a due bill or other appropriate instrument evidencing such
<PAGE>
holder's right to receive such additional shares, and such cash, upon the
occurrence of the event requiring such adjustment.
(e) Whenever the number and kind of shares into which each
outstanding share of Series A Preferred Stock is convertible shall be adjusted
as provided in Section 6(d) hereof, the Company shall forthwith file, at the
office of Company or any transfer agent designated by the Company for the
Series A Preferred Stock, a statement, signed by its Chief Financial Officer,
showing in detail the facts requiring such adjustment and the number and kind
of shares into which each outstanding share of Series A Preferred Stock is then
convertible. The Company shall also cause a copy of such statement to be sent
by first-class certified mail, return receipt requested, postage prepaid, to
each holder of shares of Series A Preferred Stock at his or its address
appearing on the Company's records. Where appropriate, such copy may be given
in advance and may be included as part of a notice required to be mailed under
the provisions of Section 6(f) hereof.
(f) In the event the Company shall propose to take any action of the
types described in clauses (i), (ii) or (iii) of Section 6(d) hereof, the
Company shall give notice to each holder of shares of Series A Preferred Stock,
in the manner set forth in Section 6(e) above, which notice shall specify the
record date, if any, with respect to any such action and the date on which such
action is to take place. Such notice shall also set forth such facts with
respect thereto as shall be reasonably necessary to indicate the effect of such
action (to the extent such effect may be known at the date of such notice) on
the number, kind or class of shares or other securities or property which shall
be deliverable upon conversion of shares of Series A Preferred Stock that are
outstanding immediately prior to such action. In the case of any action which
would require the fixing of a record date, such notice shall be given at least
ten (10) days prior to the date so fixed, and in case of any other action, such
notice shall be given at least fifteen (15) days prior to the taking of such
proposed action. Failure to give such notice, or any defect therein, shall not
affect the legality or validity of any such action.
(g) The Company shall pay all documentary, stamp or other
transactional taxes attributable to the issuance or delivery of shares of
Common Stock upon conversion of any shares of Series A Preferred Stock.
(h) The Company shall reserve, free from preemptive rights, out of
its authorized but unissued shares of Common Stock a sufficient number of
shares of Common Stock to provide for the conversion of all outstanding shares
of Series A Preferred Stock.
(i) All shares of Common Stock which may be issued in connection
with the conversion provisions set forth herein will, upon issuance by the
<PAGE>
Company, be validly issued, fully paid and nonassessable, with no personal
liability attaching to the ownership thereof, and free from all taxes, liens or
charges with respect thereto.
7. Mandatory Conversion.
(a) Subject to the provisions of Section 8 below, the Company shall
have the right to convert, at any time or from time to time, any or all shares
of Series A Preferred Stock into that number of shares of Common Stock into
which such share or shares of Series A Preferred Stock are then convertible
pursuant to Section 6 hereof. The Company may exercise its conversion rights
under this Section 7 by giving the holder or holders of the shares of Series A
Preferred Stock to be converted at least thirty (30) days prior written notice
of the date on which such conversion shall become effective (a "Section 7
Conversion Date"), whereupon the share or shares of Series A Preferred Stock
shall, subject to the provisions of Section 8 below, be automatically converted
(without any action on the part of the holder or holders thereof) into shares
of Common Stock in accordance with the provisions of the first sentence of this
Section 7(a). The holder or holders of any shares of Series A Preferred Stock
converted into shares of Common Stock pursuant to this Section 7(a) shall be
entitled to payment of any dividends declared but unpaid with respect to the
respective number of such shares of Series A Preferred Stock owned by such
holder or holders.
(b) On each Section 7 Conversion Date, the holder or holders of the
shares of Series A Preferred Stock to be converted into Common Stock on such
Section 7 Conversion Date in accordance with the provisions of Section 7(a)
hereof, shall deliver to the Company, at the office of the Company or any
transfer agent of the Company for the Series A Preferred Stock as may be
designated by the Company, the certificate or certificates for such shares of
Series A Preferred Stock, duly endorsed or assigned in blank or to the Company
(if required by it). Conversion shall be deemed to have been effected on the
applicable Section 7 Conversion Date regardless of whether or not the holder or
holders of the shares of Series A Preferred Stock to be converted on such
Section 7 Conversion Date shall have complied with their respective obligations
provided for in the foregoing sentence of this Section 7(b). As promptly as
practicable after any Section 7 Conversion Date, the Company shall issue and
deliver to or upon the written order of the holder or holders of the shares of
Series A Preferred Stock converted on such Section 7 Conversion Date, to the
place designated by such holder or holders, a certificate or certificates for
the number of full shares of Common Stock to which such holder or holders are
entitled and a check or cash in respect of any fractional interest in a share
of Common Stock as provided in Section 7(c) hereof and a check or cash in
payment of all dividends declared but unpaid, if any (to the extent permissible
under law), with respect to the shares of Series A Preferred Stock so
<PAGE>
converted. The person in whose name the certificate or certificates for Common
Stock are to be issued shall be deemed to have become a holder of record of
Common Stock on the applicable Section 7 Conversion Date unless the transfer
books of the Company are closed on that date, in which event he shall be deemed
to have become a holder of record of Common Stock on the next succeeding date
on which the transfer books are open. Upon conversion of only a portion of the
number of shares covered by a certificate representing shares of Series A
Preferred Stock, the Company shall issue and deliver to or upon the written
order of the holder of such certificate, at the expense of the Company, a new
certificate covering the number of shares of Series A Preferred Stock that were
not converted.
(c) No fractional shares of Common Stock or scrip shall be issued
upon conversion of shares of Series A Preferred Stock pursuant to this Section
7. If more than one share of Series A Preferred Stock owned by any one holder
shall be subject to conversion pursuant to this Section 7, the number of full
shares of Common Stock issuable upon conversion thereof shall be computed on
the basis of the aggregate number of shares of Series A Preferred Stock so
converted. Instead of any fractional shares of Common Stock which would
otherwise be issuable upon conversion of any shares of Series A Preferred
Stock, the Company shall pay a cash adjustment in respect of such fractional
interest in an amount equal to the then Current Market Price of a share of
Common Stock multiplied by such fractional interest. Fractional interests shall
not be entitled to dividends, and the holders of fractional interests shall not
be entitled to any rights as stockholders of the Company in respect of such
fractional interest.
(d) Any conversion pursuant to this Section 7 shall also be subject
to all of the provisions of Section 6 (other than Sections 6(a), 6(b) and 6(c)
hereof) to the extent applicable and not inconsistent with the provisions of
this Section 7.
8. Limitations on Right to Convert. Notwithstanding anything in Section 6
or Section 7 to the contrary, prior to the effectiveness and consummation of
any proposed conversion pursuant to Section 6 or Section 7 hereof of shares of
Series A Preferred Stock owned by a holder (other than an automatic conversion
pursuant to the provisions of the third sentence of Section 6(a) hereof), such
holder shall make a determination as to whether such proposed conversion
requires, prior to the consummation thereof, that filings under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, or the rules
and regulations promulgated thereunder (said Act and said rules and regulations
being referred to herein, collectively, as the "HSR Act"), be made. If such
holder shall make the determination that such proposed conversion requires,
prior to the consummation thereof, that filings under the HSR Act be made, then
such holder shall give prompt written notice of such determination to the
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Company (but in no event less than 10 days prior to the proposed conversion
date) and such written notice shall state the portion, if any, of such shares
of Series A Preferred Stock originally subject to such proposed conversion that
could be converted into Common Stock without having to make any filings under
the HSR Act (the "Non-HSR Series A Preferred Shares"), and the portion of such
shares of Series A Preferred Stock originally subject to such proposed
conversion that require, prior to the consummation of such proposed conversion,
that filings under the HSR Act be made (the "HSR Series A Preferred Shares").
In the event that such holder shall give such written notice to the Company,
the proposed conversion of the Non-HSR Series A Preferred Shares into Common
Stock shall be consummated pursuant to, and in accordance with, the provisions
of Section 6 or Section 7 hereof, as applicable, and, notwithstanding anything
in Section 6 or Section 7 hereof to the contrary, the proposed conversion of
the HSR Series A Preferred Shares into Common Stock shall not be consummated
unless and until (i) such holder gives written notice to the Company that such
holder desires to cause to be made the filings required under the HSR Act in
order to effect the proposed conversion into Common Stock of the HSR Series A
Preferred Shares (the "HSR Filing Notice"), (ii) such filings required under
the HSR Act are made and (iii) the waiting period under the HSR Act with
respect to such proposed conversion shall have expired or been subject to early
termination. Upon receipt by the Company of the HSR Filing Notice, the Company
and such holder (x) shall cooperate, and shall use commercially reasonable
efforts to cause their respective ultimate parent entities (if any) to
cooperate, in preparing the filings required under the HSR Act in order to
effect the proposed conversion into Common Stock of the HSR Series A Preferred
Shares and (y) shall cooperate, and shall use commercially reasonable efforts
to cause their respective ultimate parent entities (if any) to cooperate, in
preparing all supplemental material that is required to accompany such filings,
and both parties shall coordinate, and shall use commercially reasonable
efforts to cause their respective ultimate parent entities (if any) to
coordinate, the making of such filings so that such filings are made
concurrently. The Company and such holder shall perform their respective
obligations under this Section 8 with reasonable care and in good faith. It is
hereby understood that the provisions of this Section 8 shall be applied with
respect to any shares of Series A Preferred Stock more than once such that any
categorization of such shares as HSR Series A Preferred Shares shall not
preclude any later categorization of the same shares as Non-HSR Series A
Preferred Shares.
LEUKOSITE, INC.
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made as of
December 18, 1997 by and between LEUKOSITE, INC., a Delaware corporation (the
"Company"), and GENENTECH, INC., a Delaware corporation (the "Investor").
W I T N E S S E T H:
WHEREAS, the Company has agreed to issue and sell to the Investor 336,135
shares (the "Common Shares") of the Company's common stock, $0.01 par value per
share (the "Common Stock"), and the Company has agreed to issue to the Investor
a Common Stock Purchase Warrant exercisable for 250,000 shares of Common Stock
(the "Warrant Shares"), all upon the terms and conditions set forth in that
certain Securities Purchase Agreement, dated as of the date hereof, between the
Company and the Investor (as amended and in effect from time to time, the
"Securities Purchase Agreement");
WHEREAS, the Investor has agreed to make available to the Company two
lines of credit upon the terms and conditions set forth in that certain Loan
Agreement, dated as of the date hereof, between the Company and the Investor
(as amended and in effect from time to time, the "Loan Agreement");
WHEREAS, the Company has agreed, under certain circumstances, to provide
for the conversion into shares of capital stock of the Company amounts that may
be outstanding at any time and from time to time under the Loan Agreement, said
conversion to be pursuant to, and in accordance with, the terms, conditions and
provisions of the Loan Agreement; and
WHEREAS, the terms of the Securities Purchase Agreement provide that it
shall be a condition precedent to the closing of the transactions thereunder,
for the Company and the Investor to execute and deliver this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the parties hereto hereby agree as follows:
<PAGE>
1. DEFINITIONS. The following terms shall have the meanings provided
therefor below or elsewhere in this Agreement as described below:
"Affiliate" of a Person means any other Person controlled by, controlling
or under common control with such Person.
"Board" shall mean the board of directors of the Company.
"Closing" shall have the meaning ascribed to such term in the Securities
Purchase Agreement.
"Common Shares" shall mean the 336,135 shares of Common Stock purchased
by the Investor from the Company, at the Closing, pursuant to the Securities
Purchase Agreement.
"Common Stock" shall mean common stock, $0.01 par value per share, of the
Company.
"Conversion Common Shares" shall mean those shares of Common Stock issued
upon conversion of (i) any or all Development Loans and/or Profit-Sharing
Option Loans outstanding at any time and from time to time or (ii) any and all
Conversion Preferred Shares outstanding at any time
and from time to time.
"Conversion Preferred Shares" shall mean those shares of any series of
preferred stock, $0.01 par value per share, of the Company that are issued upon
conversion of any or all Development Loans and/or Profit-Sharing Option Loans
outstanding at any time and from time to time.
"Conversion Shares" shall mean the Conversion Common Shares and the
Conversion Preferred Shares, collectively.
"Development Loans" shall have the meaning ascribed to such term in the
Loan Agreement.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Person" shall mean an individual, partnership, limited liability
company, corporation, association, trust, joint venture, unincorporated
organization, and any government, governmental department or agency or
political subdivision thereof.
"Profit-Sharing Loans" shall have the meaning ascribed to such term in
the Loan Agreement.
<PAGE>
"Registrable Shares" shall mean the Common Shares, the Warrant Shares and
the Conversion Common Shares; provided, however, that the term "Registrable
Shares" shall not include any of the Common Shares, the Warrant Shares or the
Conversion Common Shares that can be sold in any three (3) month period
pursuant to Rule 144.
"Rule 144" shall mean Rule 144 promulgated under the Securities Act and
any successor or substitute rule, regulation or law.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Shares" shall mean the Common Shares, the Warrant Shares and the
Conversion Shares.
"Warrant" shall mean the Common Stock Purchase Warrant, dated as of the
date hereof, issued by the Company to the Investor, at the Closing, pursuant to
the Securities Purchase Agreement, as such Common Stock Purchase Warrant may be
amended and in effect from time to time.
"Warrant Shares" shall mean those shares of Common Stock issued upon
exercise of the Warrant.
2. DEMAND REGISTRATION.
(a) Registration Upon Request. In the event that, at any time from
time to time after August 14, 1998, the Company shall receive a written request
from the Investor requesting that the Company effect the registration under the
Securities Act of all or any of the Registrable Shares and specifying the
intended method of disposition thereof (each such written request being
hereinafter referred to as a "Registration Request"), the Company shall, within
thirty (30) days after receipt of such notice, use commercially reasonable
efforts to file a registration statement under the Securities Act for purposes
of registering the number of Registrable Shares specified by the Investor in
such Registration Request; provided, however, that the obligations of the
Company under this Section 2 shall be subject to the limitations set forth in
Sections 2(b), 2(c), 2(d), 2(e), 2(f), 2(g) and 2(h) below. The Company may
include in any registration pursuant to this Section 2(a) additional shares of
Common Stock for sale for its own account or for the account of any other
Person.
(b) No Right to Underwritten Offering. The Investor shall have no
right to request that the offering, sale, disposition or distribution of any
Registrable Shares to be registered under the Securities Act pursuant to
<PAGE>
Section 2(a) hereof be effected pursuant to an underwritten offering. The
Company may, in its sole and absolute discretion, decide or determine that any
Registrable Shares to be registered under the Securities Act pursuant to
Section 2(a) hereof shall be offered, sold, disposed of or distributed in an
underwritten offering. If a registration pursuant to Section 2(a) hereof
involves an underwritten offering, the underwriter or underwriters thereof
shall be selected by the Company in its sole and absolute discretion.
(c) Priority of Demand Registrations. If a registration pursuant to
Section 2(a) hereof involves an underwritten offering, and the managing
underwriter shall advise the Company in writing that, in its opinion, the
number of shares of Common Stock requested to be included in such registration
exceeds the number which can be sold in such underwritten offering, the Company
will include in such registration, to the extent of the number of shares of
Common Stock which the Company is so advised can be sold in such offering, (i)
first, the number of Registrable Shares requested to be included in such
registration by the Investor and (ii) second, the other shares of Common Stock
proposed to be included in such registration, in accordance with the
priorities, if any, then existing among the Company and the holders of such
other shares of Common Stock.
(d) Limitation on Number of Requests. Subject to the provisions set
forth below in this Section 2(d), the Investor shall not be entitled to request
more than two (2) registrations, in the aggregate, pursuant to the provisions
of Section 2(a) hereof. In the event that the Investor shall exercise the
Warrant, then the Investor shall become entitled to request an additional
registration pursuant to the provisions of Section 2(a) hereof. In the event
that (i) the Company shall effect at least two prepayments of outstanding
principal or accrued and unpaid interest under or in connection with any or all
Development Loans and (ii) such prepayments shall be effected by converting the
amount or amounts being prepaid into Conversion Common Shares, then the
Investor shall become entitled to request an additional registration pursuant
to the provisions of Section 2(a) hereof. In the event that the Investor shall
acquire any Conversion Common Shares upon conversion of any or all outstanding
principal or accrued and unpaid interest under or in connection with any or all
Profit-Sharing Loans, then the Investor shall become entitled to request an
additional registration pursuant to the provisions of Section 2(a) hereof.
Notwithstanding anything in this Section 2(d) to the contrary, in no event
shall the Investor be entitled to request more than two (2) registrations
pursuant to the provisions of Section 2(a) hereof within any twelve (12) month
period.
<PAGE>
(e) Limitation on Timing of Requests. Notwithstanding anything
expressed or implied in this Section 2 to the contrary, the Investors may not
request a registration pursuant to Section 2(a) hereof (i) at any time during
the period commencing on the date that any other request for registration
pursuant to Section 2(a) has been made by the Investor and ending on the 180th
day following the effective date of any registration statement filed by the
Company with the SEC in connection with such other request or (ii) at any time
during the period commencing on the date that any registration has been filed
by the Company with the SEC in connection with an underwritten offering and
ending on the 180th day following the effective date of such registration
statement, provided that the Company is continuing to pursue such registration
with reasonable diligence.
(f) Deferral. Notwithstanding anything expressed or implied in this
Section 2 to the contrary, if, following receipt of any Registration Request
from the Investor, the Company shall furnish to the Investor a certificate
signed by the President or Chief Financial Officer of the Company stating that
the Board has made the good faith determination that the registration requested
by the Investor pursuant to such Registration Request would require premature
disclosure of material, nonpublic information concerning the Company, its
business or prospects and that it is therefore essential to defer such
registration, then the Company shall have the right to defer the filing of the
registration statement pursuant to such Registration Request for a period of
not more than (70) seventy days after receipt of such Registration Request from
the Investor. The Company undertakes to request that the SEC declare such
registration statement effective within two Business Days of the earlier of (i)
the date that the Company receives notice from the Staff of the SEC's Division
of Corporate Finance (the "Staff") to the effect that the Staff will not review
such registration statement or (ii) the date that the Company receives notice
from the Staff that it does not have any further comments to such registration
statement and that it is prepared to entertain a request for acceleration of
the effective date of such registration statement. The Company may not utilize
the deferral right provided for in this Section 2(f) more than once with
respect to each request made pursuant to, and in accordance with, this
Agreement for a registration pursuant to Section 2(a) hereof. In the event the
Company exercises its right of deferral under this Section 2(f), the Investor
will be entitled to withdraw its request for registration pursuant to Section
2(a) hereof and, if such request is so withdrawn pursuant to this Section 2(f),
such request will not count as a request for registration for purposes of
Section 2(d) hereof.
<PAGE>
(g) Availability of Form S-3. Unless the Company otherwise
determines in its sole and absolute discretion, any registration that the
Company is required to effect pursuant to Section 2(a) hereof shall be effected
pursuant to a registration statement on Form S-3 or any substitute or successor
Form. If the Company is not eligible to use Form S-3 or any substitute or
successor Form at the time that the Investor requests any registration pursuant
to Section 2(a) hereof, then the Company shall effect such registration
pursuant a registration statement on any other Form under the Securities Act
that is then available to effect such registration.
(h) Limitation on the Company's Obligation. Notwithstanding anything
expressed or implied in this Section 2 to the contrary, the Company shall not
be obligated to effect any registration pursuant to this Section 2 if the
Investor proposes to sell Registrable Shares at an aggregate price to the
public of less than Two Million Dollars ($2,000,000).
3. OBLIGATIONS OF THE COMPANY. Whenever the Company is required under
Section 2 hereof to use commercially reasonable efforts to effect the
registration of any of the Registrable Shares of the Investor, the Company
shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement with
respect to such Registrable Shares within thirty (30) days of receipt of
Investor's written request and use commercially reasonable efforts to
cause such registration statement to become and remain effective;
provided, however, that the Company shall in no event be obligated to
cause any such registration statement to remain effective for more than
90 days;
(b) Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection
therewith as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all Registrable Shares
covered by such registration statement;
(c) Furnish to the Investor such number of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements
of the Securities Act, and such other documents (including, without
limitation, prospectus amendments and supplements as are prepared by the
Company in accordance with Section 3(d) below) as the Investor may
reasonably request in order to facilitate the disposition of such
Registrable Shares;
<PAGE>
(d) Notify the Investor, at any time when a prospectus relating to
such registration statement is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in or relating to such registration statement
contains an untrue statement of a material fact or omits any fact
necessary to make the statements therein not misleading; and, thereafter,
the Company will promptly prepare (and, when completed, give notice to
the Investor) a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Registrable Shares, such
prospectus will not contain an untrue statement of a material fact or
omit to state any fact necessary to make the statements therein not
misleading; provided that upon such notification by the Company, the
Investor will not offer or sell Registrable Shares until the Company has
notified the Investor that it has prepared a supplement or amendment to
such prospectus and delivered copies of such supplement or amendment to
the Investor (it being understood and agreed by the Company that the
foregoing proviso shall in no way diminish or otherwise impair the
Company's obligation to promptly prepare a prospectus amendment or
supplement as above provided in this Section 3(d) and deliver copies of
same as above provided in Section 3(c) hereof).
4. FURNISH INFORMATION. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Agreement that
the Investor shall furnish to the Company such information regarding it and the
securities of the Company held by it as the Company shall reasonably request
and as shall be required in order to effect any registration by the Company
pursuant to this Agreement.
5. EXPENSES OF REGISTRATION. All expenses incurred in connection with a
registration pursuant to this Agreement (excluding underwriting commissions and
discounts and counsel fees of the Investor), including, without limitation, all
registration and qualification fees, printing fees and fees and disbursements
of counsel for the Company, shall be borne by the Company.
6. DELAY OF REGISTRATION. The Investor shall not take any action to
restrain, enjoin or otherwise delay any registration by the Company as the
result of any controversy which might arise with respect to the interpretation
or implementation of this Agreement.
7. INDEMNIFICATION. In the event that any Registrable Shares of the
Investor are included in a registration statement pursuant to this Agreement:
<PAGE>
(a) To the extent permitted by law, the Company will indemnify and
hold harmless the Investor, any underwriter (as defined in the Securities
Act) for the Company, and each officer and director of the Investor or
such underwriter and each person, if any, who controls the Investor or
such underwriter within the meaning of the Securities Act, against any
losses, claims, damages or liabilities, joint or several, to which they
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 any untrue or alleged untrue statement of
any material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, or arise out of or are based upon the
omission or alleged omission to state in such registration statement,
including any preliminary prospectus or final prospectus contained
therein or any amendments or supplements thereto, a material fact
required to be stated therein, or necessary to make the statements
therein not misleading; and the Company will reimburse the Investor, such
underwriter or such officer, director or controlling person for any legal
or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or
action if it is judicially determined that there were material
misstatements or omissions. Notwithstanding anything in the foregoing
provisions of this Section 7(a) to the contrary, (i) the indemnity
agreement contained in this Section 7(a) shall not apply to amounts paid
in settlement of any such loss, claim, damage, liability or action if
such settlement is effected without the consent of the Company (which
consent shall not be unreasonably withheld), and (ii) the Company shall
not be liable under this Section 7(a) for or in connection with any such
loss, claim, damage, liability or action to the extent that it arises out
of or is based upon an untrue statement or alleged untrue statement or
omission made in connection with such registration statement, preliminary
prospectus, final prospectus, or amendments or supplements thereto, in
reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by the Investor,
any underwriter or any controlling person with respect to the Investor or
such underwriter.
(b) To the extent permitted by law, the Investor will indemnify and
hold harmless the Company, each of its directors, each of its officers
who have signed such registration statement, each person, if any, who
controls the Company within the meaning of the Securities Act, any
<PAGE>
underwriter for the Company (within the meaning of the Securities Act),
against any losses, claims, damages or liabilities to which the Company
or any such director, officer, controlling person, or underwriter may
become subject to, under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereto)
arise out of or are based upon any untrue or alleged untrue statement of
any material fact contained in such registration statement, including any
preliminary prospectus contained therein or any amendments or supplements
thereto, or arise out of or are based upon the omission or alleged
omission to state in such registration statement, including any
preliminary prospectus contained therein or any amendments or supplements
thereto, a material fact required to be stated therein or necessary to
make the statements therein not misleading, in each case to the extent
that such untrue statement or alleged untrue statement or omission or
alleged omission was made in such registration statement, preliminary
prospectus, final prospectus, or amendments or supplements thereto, in
reliance upon and in conformity with written information furnished by the
Investor expressly for use in connection with such registration; and the
Investor will reimburse any legal or other expenses reasonably incurred
by the Company or any such director, officer, controlling person or
underwriter in connection with investigating or defending any such loss,
claim, damage, liability or action if it is judicially determined that
there were material misstatements or omissions. Notwithstanding anything
in the foregoing provisions of this Section 7(b) to the contrary, (i) the
liability of the Investor under this Section 7(b) shall be limited to the
proceeds (net of underwriting discounts and commissions, if any) received
by the Investor from the sale of Registrable Shares covered by such
registration statement, and (ii) the indemnity agreement contained in
this Section 7(b) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability or action if such settlement is
effected without the consent of the Investor (which consent shall not be
unreasonably withheld).
(c) Promptly after receipt by an indemnified party under this
Section 7 of notice of the commencement of any action against such
indemnified party, such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party under this Section
7, notify the indemnifying party in writing of the commencement thereof
and the indemnifying party shall have the right to participate in and, to
the extent the indemnifying party desires, to assume at its expense the
defense thereof with counsel mutually satisfactory to the parties. The
<PAGE>
failure to notify an indemnifying party promptly of the commencement of
any such action, if prejudicial to its ability to defend such action,
shall relieve such indemnifying party of any liability to the indemnified
party under this Section 7, but the omission so to notify the
indemnifying party will not relieve him of any liability which he may
have to the indemnified party other than under this Section 7.
8. LOCKUP AGREEMENT. The Investor hereby agrees that, at the written
request of the Company or any managing underwriter of any underwritten offering
of securities of the Company, such Investor shall not, without the prior
written consent of the Company or such managing underwriter, sell, make any
short sale of, loan, grant any option for the purchase of, pledge, encumber, or
otherwise dispose of, or exercise any registration rights with respect to, any
Shares during the 180 day period commencing on the effective date of the
registration statement relating to such underwritten offering of the Company's
securities. Notwithstanding the foregoing provisions of this Section 8, the
Investor may continue to maintain any hedge position which the Investor has
entered into prior to the 90th day preceding the effective date of such
registration statement.
9. NO TRANSFER OF REGISTRATION RIGHTS. Notwithstanding anything expressed
or implied in this Agreement to the contrary, the Investor shall not assign,
transfer or convey all or any of his rights under this Agreement, except with
the prior written consent of the Company.
10. MISCELLANEOUS.
(a) This Agreement may not be amended, modified or terminated, and
no rights, obligations or provisions hereunder or hereof may be waived, except
with the written consent of the Investor and the Company. Notwithstanding
anything in this Agreement to the contrary, if at any time the Investor shall
cease to own, or have any future right to acquire, any Shares, all of the
Investor's rights under this Agreement shall immediately terminate, except for
any rights that the Investor may have under Section 7 hereof.
(b) This Agreement shall be governed by and construed and enforced
in accordance with the laws of the State of Delaware (without giving effect to
any conflict-of-laws provisions that would result in the application of the
substantive law of a different jurisdiction), and shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.
<PAGE>
(c) Any notice, demand, request or other communication hereunder to
either party shall be deemed to be sufficient if contained in a written
instrument delivered in person or duly sent by overnight courier service or by
first class, registered or certified mail, postage prepaid, or telecopied with
a confirmation copy by regular, certified or overnight 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:
LeukoSite, Inc.
215 First Street
Cambridge, MA 02142
Attention:President (one copy)
Chief Financial Officer (another copy)
Telecopier: (617) 621-9349
and a copy to:
Bingham Dana LLP
150 Federal Street
Boston, Massachusetts 02110
Attention: Justin P. Morreale, Esq.
Telecopier: (617) 951-8736
Genentech, Inc.
1 DNA Way
South San Francisco, CA 94080
Attention: Corporate Secretary
Telecopier: 650-952-9881
All of such notices, requests and other communications shall be deemed to have
been received: (i) in the case of personal delivery, on the date of such
delivery; (ii) in the case of overnight courier service, the business day
following the date of receipt by the overnight courier; (iii) in the case of
first class, registered or certified mail, on the earlier of (A) receipt
thereof or (B) the fifth business day after deposit in the mail; and (iv) in
the case of facsimile transmission, when confirmed by facsimile machine report.
(d) The parties acknowledge and agree that, in the event of any
breach of this Agreement, remedies at law will be inadequate, and each party
hereto shall be entitled to specific performance of the obligations of the
<PAGE>
other party hereto and to such appropriate injunctive relief as may be granted
by a court of competent jurisdiction.
(e) This Agreement constitutes and contains the entire agreement and
understanding of the parties with respect to the subject matter hereof, and it
also supersedes any and all prior negotiations, correspondence, agreements or
understandings with respect to the subject matter hereof.
(f) This Agreement may be executed in a number of counterparts, all
of which together shall for all purposes constitute one Agreement binding on
all the parties hereto notwithstanding that all such parties have not signed
the same counterpart.
[Intentionally Left Blank]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.
LEUKOSITE, INC.
By:___________________________________
Christopher K. Mirabelli,
President
INVESTOR
GENENTECH, INC.
By:___________________________________
Name:
Title:
[Letterhead of Genentech, Inc.]
December 18, 1997
Mr. Augustine Lawlor
Vice President, Corporate Development
and Chief Financial Officer
LeukoSite, Inc.
215 First Street
Cambridge, Massachusetts 02142
Dear Gus:
With respect to the Loan Agreement between LeukoSite, Inc. ("LS") and
Genentech, Inc. ("GNE") dated December 18, 1997 (the "Loan Agreement"), LS
agrees to reasonably assist GNE in avoiding equity accounting in connection
with GNE's receipt of LS Common Stock or Preferred Stock under the Loan
Agreement. If at any time GNE expects its percentage stock ownership in LS
(assuming for the purposes of this letter agreement, the conversion of any LS
Preferred Stock held by GNE into Common Stock) to exceed 18%, as based on (i)
the outstanding balance of the Development Loans and/or Profit-Sharing Option
Loans (as defined under the Loan Agreement, collectively, the "Loans") on an
"as converted" to stock basis, (ii) GNE's then percentage stock ownership in
LS, (iii) any expected exercise of the Common Stock Purchase Warrant dated
December 18, 1997 and (iv) any additional amounts of LS Common Stock and/or
Preferred Stock expected to be received under the Loan Agreement within the
following eighteen (18) months with respect to draw downs under the Loans on an
"as converted" to stock basis, GNE shall give LS prompt written notice of its
expectation of greater than 18% ownership. Upon receipt of such notice, LS and
GNE shall reasonably cooperate so that GNE can sell shares of LS Common Stock
(assuming, for purposes of this letter agreement, the conversion of any LS
Preferred Stock held by GNE into LS Common Stock) to maintain its percentage
<PAGE>
stock ownership in LS below 18%. If, following the sale of LS Common Stock
(assuming, for purposes of this letter agreement, the conversion of any LS
Preferred Stock held by GNE into LS Common Stock) owned by GNE, GNE shall give
LS prompt written notice that its expectation of greater than 18% stock
ownership in LS continues, then LS agrees to negotiate in good faith with GNE
to provide GNE with the right to convert all or a portion of the outstanding
balance under the Loans into LS Common Stock and/or Preferred Stock, with such
Common Stock and/or Preferred Stock to be considered Registrable Shares under
the Registration Rights Agreement between LS and GNE dated December 18, 1997,
so that GNE could sell such shares and maintain its ownership percentage below
18%. It is understood that, for purposes of this letter agreement, any shares
owned by Roche Finance Ltd. or its affiliates (other than GNE) shall not count
towards GNE's percentage ownership in LS.
Very truly yours,
Nicholas J. Simon
Vice President, Business and
Corporate Development
Agreed to by:
LeukoSite, Inc.
By:_________________________________
Augustine Lawlor
Vice President, Corporate Development
and Chief Financial Officer
