<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
ON AUGUST 17, 1999
REGISTRATION NO. 333-______
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
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LEUKOSITE, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 2834 04-3173859
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Numbers) Identification No.)
215 FIRST STREET
CAMBRIDGE, MA 02142
(617) 621-9350
(Address, including zip code, and telephone number, including area
code, of registrant's principal executive offices)
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WITH COPIES TO:
CHRISTOPHER K. MIRABELLI, PH.D. JUSTIN P. MORREALE, ESQ.
CHAIRMAN OF THE BOARD OF DIRECTORS JULIO E. VEGA, ESQ.
LEUKOSITE, INC. Bingham Dana LLP
215 First Street 150 Federal Street
Cambridge, MA 02142 Boston, MA 02110
(617) 621-9350 (617) 951-8000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
FROM TIME TO TIME AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE
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If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|
<PAGE>
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. |_|
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ------------------------ ------------- --------------- ----------------- ------------
PROPOSED PROPOSED
MAXIMUM MAXIMUM AMOUNT OF
TITLE OF SECURITIES AMOUNT TO BE AGGREGATE PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED(1) PER UNIT(2) OFFERING PRICE(2) FEE
- ------------------------ ------------- --------------- ----------------- ------------
<S> <C> <C> <C> <C>
Common Stock,
par value $.01 per share 1,675,518 $19.125 $32,044,282 $8,909
- ------------------------ ------------- --------------- ----------------- ------------
</TABLE>
(1) The total amount of selling shares listed in the prospectus is
9,342,525. A Registration Statement filed on October 15, 1998 registered
7,071,810 shares, of which 6,731,382 shares are being carried forward as of the
date hereof and are covered by the combined prospectus contained herein. A
registration fee of $14,874.49 was paid on October 15, 1998. A second
Registration Statement declared effective on August 6, 1999, registered an
additional 935,625 shares, all of which are being carried forward as of the date
hereof and are covered by the combined prospectus contained herein. A
registration fee of $4,033.00 was paid on April 13, 1999. The number of new
shares to be registered under this Registration Statement is 1,675,518.
(2) Estimated solely to determine the registration fee. Calculated in
accordance with Rule 457(c), based on the offering of up to 1,675,518 shares at
a purchase price of $19.125 per share, which is the average of the high and low
sale prices reported in the consolidated reporting system of the Nasdaq National
Market on August 13, 1999. It is not known how many shares will be purchased
under this Registration Statement or at what price such shares will be
purchased.
----------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.
<PAGE>
PROSPECTUS
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
THESE SECURITIES SHALL NOT BE SOLD UNTIL THE REGISTRATION STATEMENT FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN
OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
9,342,525 SHARES
LEUKOSITE, INC.
COMMON STOCK
Selling stockholders identified in this prospectus may sell up to
9,342,525 shares of common stock of LeukoSite, Inc. LeukoSite will not receive
any of the proceeds from the sale of shares by the selling stockholders.
LeukoSite's common stock is listed on the Nasdaq National Market under the
symbol "LKST". On August 13, 1999, the closing sale price of the common stock,
as reported on the Nasdaq National Market, was $19.00 per share.
INVESTING IN THE COMMON STOCK INVOLVES A HIGH DEGREE
OF RISK. SEE "RISK FACTORS," BEGINNING ON PAGE 3.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES, OR DETERMINED IF
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The selling stockholders may sell the shares of common stock described in
this prospectus in public or private transactions, on or off the National Market
System of the Nasdaq Stock Market, at prevailing market prices, or at privately
negotiated prices. The selling stockholders may sell shares directly to
purchasers or through brokers or dealers. Brokers or dealers may receive
compensation in the form of discounts, concessions or commissions from the
selling stockholders. More information is provided in the section titled "Plan
of Distribution."
The date of this prospectus is August 17, 1999
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WHERE YOU CAN GET MORE INFORMATION
We are a reporting company and file annual, quarterly and current reports,
proxy statements and other information with the SEC. You may read and copy these
reports, proxy statements and other information at the SEC's public reference
rooms in Washington, DC, New York, NY and Chicago, IL. You can request copies of
these documents by writing to the SEC and paying a fee for the copying cost.
Please call the SEC at 1-800-SEC-0330 for more information about the operation
of the public reference rooms. Our SEC filings are also available at the SEC's
Web site at "http://www.sec.gov". In addition, you can read and copy our SEC
filings at the office of the National Association of Securities Dealers, Inc. at
1735 K Street, Washington, DC 20006.
The SEC allows us to "incorporate by reference" information that we file
with them, which means that we can disclose important information to you by
referring you to those other documents. The information incorporated by
reference is an important part of this prospectus, and information that we file
later with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings we
will make with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934:
-- Annual Report on Form 10-K/A for the year ended December 31, 1998
-- Quarterly Reports on Form 10-Q filed May 12, 1999 and
August 12, 1999.
-- Current Reports on Form 8-K filed January 5, 1999, February 26,
1999, April 6, 1999, April 27, 1999, June 24, 1999 and August 3,
1999.
-- The description of the common stock contained in LeukoSite's
Registration Statement on Form 8-A filed with the SEC under the
Securities Exchange Act of 1934.
-- You may request a copy of these filings at no cost, by writing,
telephoning or e-mailing us at the following address:
LeukoSite, Inc.
215 First Street
Cambridge, MA 02142
Attn: Investor Relations
(617) 621-9350
[email protected]
This prospectus is part of a Registration Statement we filed with the SEC.
You should rely only on the information incorporated by reference or provided in
this prospectus. No one else is authorized to provide you with different
information. We are not making an offer of these securities in any state where
the offer is not permitted. You should not assume that the information in this
prospectus is accurate as of any date other than the date on the front of this
document.
FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, including statements regarding LeukoSite's drug
development programs, clinical trials, receipt of regulatory approval, capital
needs, intellectual property, expectations and intentions.
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Forward-looking statements necessarily involve risks and uncertainties, and
LeukoSite's actual results could differ materially from those anticipated in the
forward-looking statements due to a number of factors, including those set forth
below under "Risk Factors" and elsewhere in this prospectus. The factors set
forth below under "Risk Factors" and other cautionary statements made in this
prospectus should be read and understood as being applicable to all related
forward-looking statements wherever they appear in this prospectus. We undertake
no obligation to update publicly any forward-looking statements for any reason,
even if new information becomes available or other events occur in the future.
RISK FACTORS
INVESTING IN LEUKOSITE'S COMMON STOCK IS VERY RISKY. YOU SHOULD BE ABLE TO
BEAR A COMPLETE LOSS OF YOUR INVESTMENT. YOU SHOULD CAREFULLY CONSIDER THE
FOLLOWING FACTORS, IN ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS.
OUR DRUG CANDIDATES MAY NOT PROVE TO BE SAFE AND EFFECTIVE IN HUMAN
CLINICAL TRIALS.
We are currently testing three monoclonal antibody and two small molecule
products in human clinical trials. Clinical trials of drug candidates involve
the testing of potential therapeutic agents in humans to determine whether the
drug candidates are safe and effective and, if so, to what degree. Many drugs in
human clinical trials fail to demonstrate the desired safety and efficacy
characteristics. Drugs in later stages of clinical development may fail to show
the desired safety and efficacy traits despite having progressed through initial
human testing. The clinical trials of any of our drug candidates may not be
successful which may prevent us from commercializing the drug, substantially
impairing our business, financial condition and results of operations.
OUR DRUG CANDIDATES ARE SUBJECT TO GOVERNMENTAL REGULATION AND PRODUCT
APPROVALS.
Our products currently under development are subject to extensive and
rigorous regulation by the federal government, principally the FDA, and by state
and local governments. If we market these products abroad, foreign governments
may also impose export/import requirements and other restrictive regulations. We
must complete all appropriate regulatory clearance processes before
commercializing a product, which is lengthy and expensive. We cannot be sure
that we can obtain necessary regulatory approvals on a timely basis, if at all,
for any of the products we are currently developing, and all of the following
could have a material adverse effect on our business, financial condition and
results of operations
-- significant delays in obtaining or failing to obtain required
approvals
-- loss of previously obtained approvals
-- failing to comply with existing or future regulatory requirements
Complying with FDA regulatory requirements applicable to product
development and obtaining FDA approval can take a number of years, involves the
expenditure of substantial resources and is uncertain. Many products that
initially appear promising ultimately do not reach the market because they are
found to be unsafe or ineffective or cannot meet the FDA's other
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regulatory requirements. Moreover, it is possible that the current regulatory
framework could change or additional regulations could arise at any stage during
our product development, which may affect our ability to obtain approval as
anticipated, delay the submission or review of an application, or require
additional expenditures by LeukoSite.
All of LeukoSite's product candidates will require FDA and foreign
government approvals for commercialization, none of which have been obtained.
LeukoSite and ILEX Oncology are required to file a Biologics Licensing
Application (BLA) with the FDA before beginning commercialization of
CAMPATH-Registered Trademark- in the United States and must also file for
marketing approval from other jurisdictions. We are not certain when,
independently or with our collaborative partners, we will submit any marketing
applications for our other monoclonal antibodies or small molecule antagonists
under development. We cannot guarantee that any studies will demonstrate that
the products are safe and effective for their intended uses, or that the FDA
will grant required approval on a timely basis, or at all, for
CAMPATH-Registered Trademark- or other product for any studied indications.
Government regulations may cause delays in LeukoSite's marketing of
products for a considerable or indefinite time, which could impose costly
procedural requirements upon LeukoSite's activities. While we attempt to comply
with such applicable government regulations, larger companies or companies more
experienced in regulatory affairs may obtain a competitive advantage over us.
Delays in obtaining governmental regulatory approval could adversely affect our
marketing strategy as well as our ability to generate revenue from commercial
sales. Our inability to obtain marketing approval of our products on a timely
basis, or at all, would have a material adverse effect on our business,
financial condition and results of operations.
WE ARE IN THE EARLY STAGES OF PRODUCT DEVELOPMENT.
Many of LeukoSite's research and development programs are at an early
stage of development. The FDA has not approved any of our product candidates. We
have limited experience in conducting preclinical and clinical trials.
Furthermore, even if we receive initially positive preclinical trial results,
such results do not mean that similar results will be obtained in the later
stages of drug development, such as additional preclinical trials or human
clinical testing. All of our potential drug candidates are prone to the risks of
failure inherent in pharmaceutical product development, including the
possibility that none of our drug candidates will or can
-- be safe and effective
-- otherwise meet applicable regulatory standards
-- receive the necessary regulatory marketing approvals
-- develop into commercially viable drugs
-- be manufactured or produced economically and on a large scale
-- be successfully marketed
-- be reimbursed by government or private consumers
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-- achieve customer acceptance
In addition, third parties may preclude us from marketing our drugs
through enforcement of their proprietary rights. Or, third parties may succeed
in marketing equivalent or superior drug products. Our failure to develop safe,
commercially viable drugs would have a material adverse effect on our business,
financial condition and results of operations.
WE DEPEND ON OUR COLLABORATIVE PARTNERS.
A key element of LeukoSite's strategy is to accelerate certain of its drug
discovery and development programs and to fund its capital requirements, in
part, through collaboration agreements with major pharmaceutical companies. We
currently have collaboration agreements with Warner-Lambert Company, Roche
Bioscience, Kyowa Hakko Kogyo, Ltd. and Genentech, Inc. Each of our partners has
the right, but not the obligation, to conduct preclinical and clinical trials of
the compounds developed during their collaboration with us and to develop and
commercialize any drug candidates resulting from their collaboration with us.
For example, under the Genentech collaboration agreement, Genentech has the
right, but not the obligation, to conduct Phase III clinical trials of our
LDP-02 monoclonal antibody product. Thus, the collaboration agreements allow our
collaborative partners significant discretion in electing whether to pursue the
development of any potential drug candidates. As a result, we cannot control the
amount and timing of the resources dedicated by our collaborative partners to
their respective collaborations with us.
This also means that LeukoSite's right to receive revenues under the
collaboration agreements for drug development milestones or royalties,
co-promotion rights or profit-sharing on sales is dependent largely upon the
activities and the development, manufacturing and marketing resources of its
collaborative partners. As such
-- our partners may not pursue the development and commercialization of
compounds resulting from their collaboration with us
-- any development or commercialization may not be successful even if
our partners pursued such efforts
-- we may not derive any royalty or product sales revenue from our
collaborations
Moreover, certain drug candidates discovered by LeukoSite may be
competitive with our partners' drugs or drug candidates. Accordingly, it is
possible that our collaborative partners will choose not to proceed with the
development of our drug candidates or that they will pursue their existing or
alternative technologies in preference to our drug candidates. We advise you
that
-- our interests may not always coincide with those of our
collaborative partners
-- some of our collaborative partners could independently develop or
develop with third parties drugs which compete with ours
-- disagreements with our partners over rights to technology or other
proprietary interests might occur, leading to delays in research or
in the development and commercialization of certain product
candidates (such disputes could also require or result in litigation
or arbitration, which is time-consuming and expensive)
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OUR AGREEMENTS WITH OUR COLLABORATIVE PARTNERS ARE TERMINABLE.
LeukoSite relies on its collaborative partners to fund a substantial
portion of its research operations and clinical trials. Although each of the
collaboration agreements may be extended past its current term, we cannot be
sure that these contracts will be extended or renewed, or that any renewal, if
made, will be on terms favorable to us. The following table explains how some of
our major collaboration agreements can be terminated:
AGREEMENT TERMINATION RIGHTS
- --------------------------------------- --------------------------------------
Warner-Lambert Company (all agreements) By either party upon breach by other
party; at any time for any reason upon
6 months written notice
Kyowa Hakko Kogyo, Ltd. By either party upon breach by other
party; at any time upon 60 days
written notice
Genentech, Inc. By either party upon breach by other
party; at any time upon 9 months
written notice
Roche BioScience By either party upon breach by other
party and for such other reasons (by
Roche BioScience) as set forth in the
agreement
In short, we cannot guarantee that any of the collaboration agreements
will remain in effect for its expected term. If any of the collaborative
partners terminates or breaches its agreement with LeukoSite, or fails to
conduct its collaborative activities in a timely manner, then the development or
commercialization of any drug candidate or research program with such partner
could be delayed or terminated. Alternatively, we may have to devote unexpected
and unbudgeted additional resources to such development or commercialization,
all of which could have a material adverse effect on our business, financial
condition and results of operations.
WE HAVE A HISTORY OF LOSSES AND AN EXPECTATION OF FUTURE LOSSES.
LeukoSite has incurred a net operating loss every year since it was
incorporated in May 1992, and had an accumulated deficit of approximately $57.5
million through June 30, 1999. LeukoSite expects to incur significant additional
operating losses over the next several years and expects cumulative losses to
increase substantially due to expanded research and development efforts,
preclinical and clinical trials and commercialization expenses. In 1999, we
expect that our only revenues will come from milestone payments and any other
amounts received under existing and future collaboration agreements, if any. It
is possible that we may not be able to
-- successfully commercialize any of our products
-- establish any additional collaborative relationships on terms
acceptable to us
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-- maintain the current collaboration agreements in effect
-- achieve the milestones that are required for us to receive funds
from our current collaborative partners
LeukoSite's ability to generate revenue or achieve profitability is
dependent in part on its and its collaborative partners' ability to complete the
development of drug candidates successfully, to obtain regulatory approvals for
drug candidates and to manufacture and commercialize any resulting drugs. We
cannot provide assurance that we will successfully identify, develop,
commercialize, manufacture and market any products, obtain required regulatory
approvals or achieve profitability.
WE HAVE SIGNIFICANT DEVELOPMENT COSTS AND ARE UNCERTAIN AS TO THE
AVAILABILITY OF FUTURE FUNDING.
LeukoSite will require substantial additional funds in order to finance
its drug discovery and development programs, fund operating expenses, pursue
regulatory clearances, and prosecute and defend its intellectual property
rights. We depend heavily upon our collaborative partners for research and
clinical trials funding and we cannot be sure that our existing collaboration
agreements will provide the necessary funding to meet our operating expenses.
LeukoSite intends to seek additional funding through public or private
financing or collaboration or other arrangements with collaborative partners. If
we raise additional funds by issuing new equity securities, this may result in
further dilution to our existing stockholders. In addition, any future investors
may demand (and we may have to grant) rights superior to those of our existing
stockholders in order to obtain additional funds. Still, we cannot be sure that
additional financing will be available, in the first instance, from any sources
or, even if available, that such funds will be available on acceptable terms.
OUR PATENT AND PROPRIETARY RIGHTS COULD AFFECT OUR ABILITY TO COMPETE.
LeukoSite's success will depend in part on its ability to obtain United
States and foreign patent protection for its drug candidates and processes,
preserve its trade secrets, and operate without infringing the proprietary
rights of third parties. We place considerable importance on obtaining patent
protection for significant new technologies, products and processes. Legal
standards relating to the validity of patents covering pharmaceutical and
biotechnological inventions, and the scope of claims made under such patents,
are still developing. Our patent position is highly uncertain and involves
complex legal and factual questions. We cannot be certain that the named
applicants or inventors of the subject matter covered by our patent applications
or patents (whether directly owned by us or licensed to us) were the first to
invent or the first to file patent applications for such inventions. Third
parties may challenge, infringe upon, circumvent or seek to invalidate existing
or future patents owned by or licensed to us. A court or other agency with
jurisdiction may find our patents unenforceable. Even if we have valid patents,
these patents still may not provide sufficient protection against competitive
products or other commercially valuable products or processes.
If a third party claims the same or overlapping subject matter as we have
claimed in a United States patent application or patent, then we may decide or
be required to participate in interference proceedings in the United States
Patent and Trademark Office in order to determine who invented the subject
matter first. If we lost such an interference proceeding, then we would
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be deprived of the patent protection we previously sought or obtained. Indeed,
regardless of whether we win or lose in such proceedings, we would still incur
substantial costs.
In addition to patent protection, LeukoSite relies on trade secrets,
proprietary know-how, and confidentiality provisions in agreements with our
collaborative partners, employees and consultants to protect our intellectual
property. We also rely on invention assignment provisions in agreements with
employees and certain consultants. It is possible that these agreements could be
breached or that we might not have adequate remedies for any such breaches.
Third parties may learn of or independently discover our trade secrets,
proprietary know-how and intellectual property, which could have a material
adverse effect on our business, financial condition and results of operations.
LeukoSite's product candidates LDP-01, LDP-02 and CAMPATH-Registered
Trademark- are humanized monoclonal antibodies. We are aware that both the U.S.
Patent and Trademark Office and certain foreign governments have issued patents
to third parties which relate to certain humanized antibodies, products useful
for making humanized antibodies, and processes for making and using humanized
antibodies. We may choose to seek or be required to seek licenses under certain
of these patents.
We are also aware of third party applications in the United States and
abroad relating to certain humanized monoclonal antibodies, products useful for
making humanized antibodies, and processes for making and using humanized
antibodies. LeukoSite may choose to seek or be required to seek licenses under
some or all of the patents which might issue from these patent applications.
INTELLECTUAL PROPERTY LITIGATION COULD HARM OUR BUSINESS.
There is significant and widespread litigation in the pharmaceutical and
biotechnology industry regarding patents and proprietary rights. LeukoSite may
need to assert claims of infringement, enforce its patents, protect trade
secrets, know-how or other intellectual property rights, or determine the scope
or validity of proprietary rights of third parties. Conversely, we may need to
defend against claims of infringement by third parties. We cannot guarantee that
any of our patents will ultimately be held valid or that our efforts to assert
or defend any patents, trade secrets, know-how or other intellectual property
rights would be successful. Similarly, we cannot guarantee that our products or
processes will not be held to infringe the patents or other intellectual
property rights of others. Uncertainties emanating from the initiation and
continuation of any patent or related litigation could have a material adverse
effect on our business, financial condition and results of operations.
The expenses of intellectual property litigation or other similar
proceedings would be likely to be substantial, and could have a material adverse
effect on LeukoSite's business, financial condition and results of operations.
An adverse outcome in such litigation or proceeding could subject LeukoSite to
significant liabilities or require LeukoSite to cease certain activities. If any
of our present or future products or processes is alleged or determined to
infringe upon the patents or impermissibly use the intellectual property of
others, we may choose or be required to obtain licenses from third parties under
their patents or proprietary rights. We cannot guarantee that we will be able to
obtain those licenses on acceptable terms, if at all. In such event, we would be
severely restricted or prohibited from the development, manufacture and sale of
our drug candidates.
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INTENSE COMPETITION CREATES RISKS.
The biotechnology and pharmaceutical industries are intensely competitive.
LeukoSite has many competitors both in the United States and abroad, including
major, multinational pharmaceutical and chemical companies, specialized
biotechnology firms and universities and other research institutions. Many of
our competitors have greater financial and other resources, such as larger
research and development staffs and more effective marketing and manufacturing
organizations. Our competitors may succeed in developing or licensing on an
exclusive basis technologies and drugs that are more effective or less costly
than any which we are currently developing, which could render our technology
and future drug products obsolete and noncompetitive. It is possible for our
competitors to obtain FDA or other regulatory approvals for drug candidates
before we can. In general, companies that begin commercial sale of their drugs
before their competitors have a significant competitive advantage in the
marketplace, including the ability to obtain certain patent and FDA marketing
exclusivity rights that would delay our ability to market certain products. Even
if our drugs or drug products are approved for sale, we cannot assure our
ability to compete successfully with competitors' existing products or products
under development.
WE RELY ON CONTRACT MANUFACTURERS AND LACK MANUFACTURING EXPERIENCE
OURSELVES.
LeukoSite depends on third parties to manufacture its product candidates
and is aware of only a limited number of manufacturers which it believes has the
ability and capability to manufacture its drug candidates for preclinical and
clinical trials. LeukoSite and ILEX have an agreement with Boehringer Ingleheim
for the production of CAMPATH-Registered Trademark- for our clinical trials and
for any commercial sales. If we were required to transfer manufacturing
processes to other third-party manufacturers, then we could experience
significant delays in supply. If, at any time, we are unable to maintain,
develop or contract for manufacturing capabilities on acceptable terms, then our
ability to conduct preclinical and clinical trials with our drug candidates will
be adversely affected, resulting in delays in the submission of drug candidates
for regulatory approvals. We have no experience in manufacturing and we
currently lack the facilities and personnel to manufacture products in
accordance with Good Manufacturing Practices as prescribed by the FDA or to
produce an adequate supply of compounds to meet future requirements for
preclinical and clinical trials.
THERE ARE RISKS ASSOCIATED WITH THE ILEX JOINT VENTURE.
LeukoSite has entered into a joint venture with ILEX for the development
and commercialization of CAMPATH-Registered Trademark- for the treatment of
chronic lymphocytic leukemia. As part of the joint venture, we are obligated to
share fifty percent of the development costs of CAMPATH-Registered Trademark-.
If LeukoSite fails for any reason to make a required capital contribution to the
joint venture, then ILEX may gain control of the management of the joint venture
and become entitled to a greater share of the profits derived from product sales
of CAMPATH-Registered Trademark-. At the same time, if ILEX fails for any reason
to make a required capital contribution to the joint venture, then we may be
required to make additional capital contributions to the joint venture to
maintain the desired level of development activities by the joint venture. It is
possible that we may not have the resources to compensate for any failure by
ILEX to make any capital contributions in its stead and the joint venture may
not be able to continue operations with lesser funding. In addition, after the
earlier of a change in control (as defined in the joint venture agreement
between LeukoSite and ILEX) of ILEX or LeukoSite and October 2, 2000, either
company has the right to purchase the other
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company's ownership of the joint venture in the event of an unresolved deadlock.
As a result, LeukoSite may never be able to recoup its investment in the joint
venture.
RAPID TECHNOLOGICAL CHANGE COULD RENDER PRODUCTS OBSOLETE.
Biotechnology and related pharmaceutical technology have undergone and are
subject to rapid and significant change. LeukoSite expects that the technologies
associated with biotechnology research and development will continue along this
rapid path. Our success will depend in large part on our ability to maintain a
competitive position in the rapidly changing environment. Because of the rapid
changes in technology, our compounds, products or processes may become obsolete
before we can recover the expenses incurred in developing such compounds,
products or processes. We cannot assure that we can maintain our technological
competitiveness.
WE DEPEND ON KEY PERSONNEL.
We believe that our ability to successfully implement our business
strategy is highly dependent on our management and scientific team. None of our
executive officers has employment agreements with us. Losing the services of one
or more of these individuals might hinder our ability to achieve our development
objectives. We are highly dependent on our ability to hire and retain qualified
scientific and technical personnel. The competition for these employees is
intense. We cannot be sure that we can continue to hire and retain the qualified
personnel needed for our business. Loss of the services of or the failure to
recruit key scientific and technical personnel could adversely affect our
business, operating results and financial condition.
CERTAIN EXISTING STOCKHOLDERS HOLD A SUBSTANTIAL PORTION OF OUR STOCK.
LeukoSite's officers, directors and principal stockholders own or control
approximately 47.7% of the outstanding common stock. As a result, these
stockholders, acting together, will have the ability to control most matters
requiring approval by the stockholders.
WE HAVE NOT DECLARED ANY DIVIDENDS.
We have never declared or paid cash dividends. We do not intend to declare
or pay any cash dividends in the foreseeable future.
LEUKOSITE
LeukoSite is a biotechnology company developing proprietary monoclonal
antibody and small molecule drugs to treat patients with cancer and
inflammatory, autoimmune and viral diseases. The mailing address and telephone
number of our principal executive office is 215 First Street, Cambridge, MA
02142 (617) 621-9350.
On July 1, 1998 LeukoSite raised approximately $11.8 million in a private
placement of common stock. LeukoSite issued approximately 1,970,000 shares of
Common Stock.
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<PAGE>
RECENT DEVELOPMENTS
On February 11, 1999 LeukoSite acquired by merger all of the issued and
outstanding capital stock of CytoMed, Inc. through the issuance initially of
935,625 shares of LeukoSite's Series A Convertible Preferred Stock, which
automatically converted into 935,625 shares of common stock as of May 25, 1999.
On July 19, 1999 LeukoSite acquired by merger all of the issued and
outstanding capital stock of ProScript, Inc. and, in connection therewith,
issued an aggregate of 187,970 shares of common stock and paid initially
$411,719 in cash.
On July 20, 1999 LeukoSite raised approximately $14.4 million in a private
placement of its common stock with two institutional investors, HealthCare
Ventures V, L.P. and Perseus Capital, LLC, at a price per share of $9.70, for an
aggregate of 1,487,548 shares of common stock.
USE OF PROCEEDS
LeukoSite will not receive any proceeds from the sale of the shares of
common stock offered by the selling stockholders hereunder.
SELLING STOCKHOLDERS
The Selling Stockholders covered by this prospectus are persons who
received LeukoSite common stock in connection with (one or more of the
following) (1) the private placement of LeukoSite's common stock which occurred
on July 1, 1998, (2) the acquisition (by merger) by LeukoSite of CytoMed, Inc.,
(3) the acquisition (by merger) by LeukoSite of ProScript, Inc., and/or (4) the
private placement of LeukoSite's common stock which occurred on July 20, 1999 or
who were entitled to have shares registered in connection with piggyback
registration rights previously granted by LeukoSite.
1998 Private Placement. Under a Registration Rights Agreement dated July
1, 1998 among LeukoSite and certain selling stockholders, we agreed to register
the LeukoSite common stock sold to those selling stockholders in the private
placement and to use our best efforts to keep the Registration Statement
effective for two years, or until all of the shares are sold under the
Registration Statement, whichever comes first.
CytoMed Merger. Under an Agreement and Plan of Merger and Reorganization
dated January 4, 1999 among LeukoSite, LeukoSite Merger Corporation, a
wholly-owned subsidiary of LeukoSite, and CytoMed, Inc., we agreed to register
the LeukoSite common stock to be issued as consideration for the merger of
CytoMed with and into LeukoSite Merger Corporation for the accounts of the
former shareholders of CytoMed. We also agreed to use our best efforts to keep
the Registration Statement effective for two years, or until all of the shares
are sold under the Registration Statement, whichever comes first.
ProScript Merger. Under an Agreement and Plan of Merger and Reorganization
dated June 22, 1999 among LeukoSite, ProScript Acquisition Co., a wholly-owned
subsidiary of LeukoSite, ProScript, Inc., HealthCare Ventures III, L.P. and
HealthCare Ventures IV, L.P., the shares of LeukoSite common stock issued in
connection therewith were required to be registered upon written notice to
LeukoSite or as a piggyback on any other registration statement being filed by
the Company.
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<PAGE>
1999 Private Placement. Under two separate Registration Rights Agreements
each dated July 20, 1999 between LeukoSite and each of Perseus Capital LLC and
HealthCare Ventures V, L.P., we agreed to register the LeukoSite common stock
issued in connection with the private placement and to use our best efforts to
keep the Registration Statement effective for two years, or until all of the
shares are sold under the Registration Statement, whichever comes first.
Our registration of the shares of common stock hereunder does not
necessarily mean that the selling stockholders will sell all or any of the
shares. The following tables set forth certain information regarding the
beneficial ownership of the common stock as of July 28, 1999, by each of the
selling stockholders. The information provided in the tables below with respect
to each selling stockholder has been obtained from such selling stockholder
and/or estimated by the Company (in cases in which such selling stockholders did
not provide updated information) based upon, where applicable, our calculation
of such ownership under the applicable merger agreement(s). Except as otherwise
disclosed below, none of the selling stockholders has, or within the past three
years has had, any position, office or other material relationship with the
Company. Because the selling stockholders may sell all or some portion of the
shares of common stock beneficially owned by them, only an estimate (assuming
each selling stockholder sells all of its shares offered hereby) can be given as
to the number of shares of common stock that will be beneficially owned by the
selling stockholders after this offering. In addition, the selling stockholders
may have sold, transferred or otherwise disposed of, or may sell, transfer or
otherwise dispose of, at any time or from time to time since the date on which
they last provided the information regarding the shares of common stock
beneficially owned by them, all or a portion of the shares of common stock
beneficially owned by them in transactions exempt from the registration
requirements of the Securities Act of 1933. Certain selling stockholders have
not provided updated information to us regarding the shares of common stock
beneficially owned by them.
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<PAGE>
SELLING STOCKHOLDERS
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED AFTER OFFERING
SHARES BENEFICIALLY NUMBER OF SHARES ------------------------
NAME AND ADDRESS OWNED PRIOR TO BEING OFFERED (2)
OF BENEFICIAL OWNER OFFERING (1) (Not subject to Escrow) NUMBER PERCENTAGE
- ------------------------------- ------------------- ----------------------- ------ ----------
<S> <C> <C> <C> <C>
Atlas Venture Fund II, L.P. 36,009 36,009 0 *
222 Berkeley Street
Boston, MA 02116
Attn: Jean-Francois Formela
Atlas Venture Europe Fund B.V. 28,981 28,981 0 *
P. O. Box 5225
1410 AE NAARDEN
The Netherlands
Attn: Hans Bosman
Beck, Thomas R. 805 805 0 *
345 Silver Hill Road
Concord, MA 01742
Biotechnology Development 39,297 39,297 0 *
Fund, L.P.
575 High Street, Suite 201
Palo Alto, CA 94301
Attn: Virginia Leung
CIP Capital, L.P. 29,276 29,276 0 *
Bldg. 300
435 Devon Park Drive
Wayne, PA 19087
Attn: Joseph Jackson
Deutsche Vermogens- 77,156 77,156 0 *
Bildungsgesellschaft mbH
Feldbergstr. 22
60323 Frankfurt am Main
Germany
Attn: Berndt Ubach-Utermohl
Fisher, Richard A 402 402 0 *
c/o UCB Research Inc.
840 Memorial Drive
Cambridge, MA 02139
Four Partners 33,334 33,334 0 *
667 Madison Avenue
7th Floor
New York, New York 10021
Gateway Venture 12,361 12,361 0 *
Partners III L.P.
8000 Maryland Avenue, Suite 1190
St. Louis, MO 63105
Attn: C.E. Anagnostopoulos, Ph.D.
Goldman Sachs & Co. 166,667 166,667 0 *
One New York Plaza
New York, New York 10004
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED AFTER OFFERING
SHARES BENEFICIALLY NUMBER OF SHARES ------------------------
NAME AND ADDRESS OWNED PRIOR TO BEING OFFERED (2)
OF BENEFICIAL OWNER OFFERING (1) (Not subject to Escrow) NUMBER PERCENTAGE
- ------------------------------- ------------------- ----------------------- ------ ----------
<S> <C> <C> <C> <C>
HealthCare Ventures and
Affiliated Entities 3,184,779 (3) 3,175,779 9,000 *
44 Nassau Street
Princeton, NJ 08542
Hudson Trust 4,755 4,755 0 *
47 Hulfish Street
Suite 420
Princeton, NJ 08542
Attn: Scott Ciccone
Kisner, Daniel 5,444 5,444 0 *
1849 Montgomery Avenue
Cardiff, California 92007
Lombard Odier & Cie 425,325 425,325 0 *
Toedistrasse 36
CH8027
Zurich, Switzerland
New Day Investment
Partnership 111,111 111,111 0 *
6690 LaJolla Scenic South
LaJolla, California 92037
New York Life Insurance 79,695 79,695 0 *
Company
51 Madison Avenue, 2nd Floor
New York, NY 10010
Attn: Richard F. Drake, Room 207
2nd Floor South,
Home Office Building
Todd Noonan 500 500 0 *
International Creative
Management, Inc.
40 West 57th Street, 18th Floor
New York, New York 10019
Oracle Strategic Partners, L.P. 176,839 176,839 0 *
712 5th Avenue, 45th Floor
New York, NY 10019
Attn: Norman Schleifer
Peretz Family Investments 124,758 (4) 115,758 9,000 *
20 Larchwood Drive
Cambridge, MA 02138
Perseus Capital, LLC 1,447,595 1,447,595 0 *
The Army and Navy Club Building
1627 I Street NW
Suite 610
Washington, DC 20006
Rho Management Co. Inc. and
Affiliated Entities 559,565 (5) 559,565 0 *
767 Fifth Avenue
New York, NY 10153
Roche Finance Ltd 269,901 269,901 0 *
c/o Hoffman-La Roche, Ltd.
</TABLE>
-14-
<PAGE>
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED AFTER OFFERING
SHARES BENEFICIALLY NUMBER OF SHARES ------------------------
NAME AND ADDRESS OWNED PRIOR TO BEING OFFERED (2)
OF BENEFICIAL OWNER OFFERING (1) (Not subject to Escrow) NUMBER PERCENTAGE
- ------------------------------- ------------------- ----------------------- ------ ----------
<S> <C> <C> <C> <C>
124 Grensacherstrasse
CH-4002 Basel
Switzerland
Schroders PLC and
Affiliated Entities 880,093 (6) 409,559 470,534 6.7%
120 Cheapside
London EC2V 6DS
ENGLAND
Springer, Timothy 781,033 (7) 770,825 10,208 *
Center for Blood Research
200 Longwood Avenue
Boston, Massachusetts 02115
Springer Family Trust 134,067 134,067 0 *
245 Walcott Road
Chestnut Hill, Massachusetts
S.R. One Ltd 222,222 222,222 0 *
200 Barr Harbor Drive
Suite 250
Four Tower Bridge
West Conshohocken, PA 19428-2977
Stiefel Laboratories Ltd. 41,918 41,918 0 *
(Ireland)
Finisklin Industrial Estate
Sligo, Ireland
Attn: Thomas J. Crowley
Walsh, Christopher 20,309 (8) 945 19,364 *
Harvard Medical School
45 Shattuck Street
Boston, Massachusetts 02115
Warner-Lambert Company 618,466 618,466 0 *
201 Tabor Road
Morris Plains, New Jersey 07950
Weiss Peck & Greer LLC and
Affiliated Entities 71,111 (9) 71,111 0 *
One New York Plaza
New York, New York 10004
Woodrich, Richard H. 451 451 0 *
15 Edmunds Road.
Wellesley Hills, MA 02481
WPG-Farber Present 37,012 37,012 0 *
Fund, L.P.
One New York Plaza
NewYork, NY 10004-1950
Attn: Anthony Avicolli
WPG-Farber Present 2,136 2,136 0 *
Overseas, Ltd.
One New York Plaza
New York, NY 10004-1950
Attn: Anthony Avicolli
WPG-Present QP Fund, L.P. 147 147 0 *
</TABLE>
-15-
<PAGE>
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED AFTER OFFERING
SHARES BENEFICIALLY NUMBER OF SHARES ------------------------
NAME AND ADDRESS OWNED PRIOR TO BEING OFFERED (2)
OF BENEFICIAL OWNER OFFERING (1) (Not subject to Escrow) NUMBER PERCENTAGE
- ------------------------------- ------------------- ----------------------- ------ ----------
<S> <C> <C> <C> <C>
One New York Plaza
New York, NY 10004-1950
Attn: Anthony Avicolli
YK Capital, L. P. 83,000 (10) 50,000 33,000 *
509 Rochampton Road
Hillsborough, California 94010
</TABLE>
The information provided below covers the 187,125 shares that were placed
in escrow in connection with the acquisition (by merger) by LeukoSite of
CytoMed, Inc. Any shares remaining in escrow (see table below for allocation)
shall be released after December 31, 1999, if but only if on or prior to
December 31, 1999 there have not been any claims against such escrow pursuant to
the terms of the CytoMed merger agreement, OR, after February 11, 2001, if on or
prior to December 31, 1999 there has been a claim against such escrow pursuant
to the terms of such merger agreement.
ESCROW SHARES ESCROW SHARES
BENEFICIALLY OWNED BEING OFFERED
------------------ -------------
Atlas Venture Fund II, L.P. 9,002.40 9,002.40
Atlas Venture Europe Fund B.V. 7,245.48 7,245.48
Beck, Thomas R. 201.35 201.35
BioTechnology Development 9,824.44 9,824.44
CIP Capital, L.P. 7,319.02 7,319.02
Deutsche Vermogensbild-
ungsgesellschaft mbH 19,289.22 19,289.22
Fisher, Richard A. 100.67 100.67
Gateway Venture Partners III L.P. 3,090.37 3,090.37
HealthCare Ventures III, L.P. 9,971.33 9,971.33
HealthCare Ventures IV, L.P. 3,052.94 3,052.94
Hudson Trust 1,188.81 1,188.81
New York Life Insurance Company 19,923.95 19,923.95
Oracle Strategic Partners, L.P. 44,209.97 44,209.97
Rho Management Trust II 2,814.73 2,814.73
Schroder Ventures International Life
Sciences Fund LP1 18,628.86 18,628.86
Schroder Ventures International
Life Sciences Fund LP2 4,139.77 4,139.77
Schroder Ventures International
Life Sciences Fund Trust 6,557.42 6,557.42
Schroder Ventures International
Life Sciences Co-Investment Scheme 147.45 147.45
Stiefel Laboratories Ltd. 10,479.56 10,479.56
Woodrich, Richard H. 112.84 112.84
WPG-Farber Present Fund, L.P. 9,253.22 9,253.22
WPG-Farber Present QP Fund, L.P. 36.94 36.94
WPG-Farber, Present Overseas, Ltd. 534.28 534.28
Deutsche Vermogensbild-
ungsgesellschaft mgH 19,289.22 19,289.22
-16-
<PAGE>
- ----------
* Less than 1% of the outstanding shares of common stock (including the
shares being registered hereunder).
(1) The shares owned, and the shares included in the total number of shares
outstanding, have been adjusted, and the percentage owned has been
computed, in accordance with Rule 13d-3(d)(1) under the Securities
Exchange Act of 1934, as amended, and includes options, to the extent
called for by such rule, with respect to shares of Common Stock that can
be exercised within 60 days of July 28, 1999. The inclusion herein of any
shares as beneficially owned does not constitute an admission of
beneficial ownership of those shares. Except as set forth in the footnotes
below, such shares are beneficially owned with sole investment and sole
voting power.
(2) This column does not include shares of LeukoSite that are currently being
held in escrow in connection with and pursuant to the Agreement and Plan
of Merger and Reorganization with CytoMed, Inc.
(3) Includes shares held by HealthCare Ventures II, L.P., HealthCare Ventures
III, L.P., HealthCare Ventures IV, L.P. and HealthCare Ventures V, L.P.,
Dr. James Cavanaugh, a director of the Company, is a general partner of
the general partner of each of the foregoing listed HealthCare entities.
Includes shares issued in connection with the July 1998 private placement.
HealthCare Ventures III, L.P. and HealthCare Ventures IV, L.P. were also
represented on the Board of Directors of CytoMed, Inc. by Mark Leschly.
Includes the following shares issued in connection with the CytoMed
transaction: (a) 39,885 shares issued at the closing to HealthCare
Ventures III, L.P. and (b) 12,211 shares issued at the closing to
HealthCare Ventures IV, L.P. Includes 145,301 shares issued to HealthCare
Ventures III, L.P. and 42,669 shares issued to HealthCare Ventures IV,
L.P. in connection with the acquisition of ProScript, and 456,620 shares
issued to HealthCare Ventures V, L.P. in connection with the 1999 private
placement. Also includes 9,000 shares of Common Stock which HealthCare
Ventures LLC has the right to acquire within 60 days of July 28, 1999 upon
the exercise of stock options.
(4) Dr. Martin Peretz, a director of LeukoSite, is a general partner of the
Peretz Family Investments. Includes 9,000 shares of Common Stock which Dr.
Peretz has the right to acquire within 60 days of July 28, 1999 upon the
exercise of stock options.
(5) Includes 548,307 shares issued in connection with the July 1998 private
placement and, with respect to Rho Management Trust II, 11,258 shares
issued at the closing in connection with the CytoMed transaction.
(6) Includes shares held by Schroder Ventures International Life Sciences Fund
L.P. 1 ("Schroder 1"), Schroder Ventures International Life Science Fund
L.P.2 ("Schroder 2"), Schroder Ventures International Life Sciences Fund
Trust (the "Schroder Trust"), Schroders Incorporated and Schroder Ventures
International Life Sciences Co-Investment Scheme (the "Co-Investment
Scheme"). Includes the following shares issued in connection with the
CytoMed transaction: (a) 74,515 shares issued at the closing to Schroder;
(b) 16,559 shares issued at the closing to Schroder; (c) 26,229 shares
issued at the closing to the Schroder Trust; and (d) 589 shares issued at
the closing to the Co-Investment Scheme. Also includes 9,000 shares of
Common Stock which Schroders PLC has the right to acquire within 60 days
of July 28, 1999 upon the exercise of stock options. Schroders PLC was
represented on the Board of Directors of CytoMed, Inc. until
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<PAGE>
January 1, 1999 by Barbara Piette and is currently represented on the
LeukoSite Board of Directors by Kate Bingham.
(7) Includes shares held by Dr. Springer's wife and the Springer Family Trust.
Dr. Springer disclaims beneficial ownership of all shares owned by his
wife and beneficial ownership of the shares owned by the Springer Family
Trust except to the extent of his proportional interest. Includes 10,208
shares of Common Stock which Dr. Springer has the right to acquire within
60 days of July 28, 1999 upon the exercise of stock options. Dr. Springer
is a director of LeukoSite.
(8) Includes 9,000 shares of Common Stock which Dr. Walsh has the right to
acquire within 60 days of July 28, 1999 upon the exercise of stock
options. Dr. Walsh is a director of LeukoSite.
(9) Includes shares held by WPG Life Sciences Fund, L.P. and WPG Institutional
Life Sciences, L.P. See also WPG-Farber Present Fund, L.P., WPG-Farber
Present Overseas, Ltd. and WPG-Present QP Fund, L.P.
(10) Dr. Yasunori Kaneko, a director of LeukoSite, is a general partner of YK
Capital, L.P. Includes 8,000 shares of Common Stock which Dr. Kaneko has
the right to acquire within 60 days of July 28, 1999 upon the exercise of
stock options.
PLAN OF DISTRIBUTION
The shares of common stock may be sold from time to time by the selling
stockholders in one or more transactions at fixed prices, at market prices at
the time of sale, at varying prices determined at the time of sale or at
negotiated prices. The selling stockholders may offer their shares of common
stock in one or more of the following transactions:
-- on any national securities exchange or quotation service on which
the common stock may be listed or quoted at the time of sale,
including the Nasdaq National Stock Market,
-- in the over-the-counter market,
-- in private transactions,
-- through options,
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<PAGE>
-- by pledge to secure debts and other obligations, or
-- a combination of any of the above transactions.
If required, we will distribute a supplement to this prospectus to
describe material changes in the terms of the offering.
The shares of common stock described in this prospectus may be sold from
time to time directly by the selling stockholders. Alternatively, the selling
stockholders may from time to time offer shares of common stock to or through
underwriters, broker/dealers or agents. The selling stockholders and any
underwriters, broker/dealers or agents that participate in the distribution of
the shares of common stock may be deemed to be "underwriters" within the meaning
of the Securities Act of 1933. Any profits on the resale of shares of common
stock and any compensation received by any underwriter, broker/dealer or agent
may be deemed to be underwriting discounts and commissions under the Securities
Act of 1933.
Any shares covered by this prospectus which qualify for sale pursuant to
Rule 144 under the Securities Act of 1933 may be sold under Rule 144 rather than
pursuant to this prospectus. The selling stockholders may not sell all of the
shares. The selling stockholders may transfer, devise or gift such shares by
other means not described in this prospectus.
To comply with the securities laws of certain jurisdictions the common
stock must be offered or sold only through registered or licensed brokers or
dealers. In addition, in certain jurisdictions, the common stock may not be
offered or sold unless they have been registered or qualified for sale or an
exemption is available and complied with.
Under the Securities Exchange Act of 1934, any person engaged in a
distribution of the common stock may not simultaneously engage in market-making
activities with respect to the common stock for nine business days prior to the
start of the distribution. In addition, each selling stockholder and any other
person participating in a distribution will be subject to the Securities
Exchange Act of 1934 which may limit the timing of purchases and sales of common
stock by the selling stockholders or any such other person. These factors may
affect the marketability of the common stock and the ability of brokers or
dealers to engage in market-making activities.
All expenses of this registration will be paid by LeukoSite. These
expenses include the SEC's filing fees and fees under state securities or "blue
sky" laws. The selling stockholders will pay all underwriting discounts and
selling commissions, if any.
LEGAL MATTERS
Bingham Dana LLP, Boston, Massachusetts will give its opinion that the
shares offered in this prospectus have been validly issued and are fully paid
and non-assessable. Justin P. Morreale, a partner at Bingham Dana LLP, is the
Secretary of LeukoSite. Other attorneys at Bingham Dana LLP own a total of
approximately 1,600 shares of common stock.
EXPERTS
The consolidated financial statements of LeukoSite as of and for the year
ended December 31, 1997 and 1998, and for each of the three years in the period
ended December 31, 1998, incorporated by reference into this prospectus and this
Registration Statement, have been
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<PAGE>
audited by Arthur Andersen LLP, independent public accountants, as indicated in
their report with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said report.
WE HAVE NOT AUTHORIZED ANY DEALER, SALESPERSON OR OTHER PERSON TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS OR
ANY PROSPECTUS SUPPLEMENT. YOU MUST NOT RELY ON ANY UNAUTHORIZED INFORMATION.
THIS PROSPECTUS IS NOT AN OFFER OF THESE SECURITIES IN ANY STATE WHERE AN OFFER
IS NOT PERMITTED. THE INFORMATION IN THIS PROSPECTUS IS CURRENT AS OF AUGUST 17,
1999. YOU SHOULD NOT ASSUME THAT THIS PROSPECTUS IS ACCURATE AS OF ANY OTHER
DATE.
TABLE OF CONTENTS
PAGE
----
Where You Can Get More
Information.................. 2
Forward-looking Statements... 2
Risk Factors................. 3
LeukoSite.................... 10
Recent Developments.......... 11
Use of Proceeds.............. 11
Selling Stockholders......... 11
Plan of Distribution......... 18
Legal Matters................ 19
Experts...................... 19
-20-
<PAGE>
9,342,525 SHARES
LEUKOSITE, INC.
COMMON STOCK
-------------------
PROSPECTUS
August 17, 1999
-------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses in connection with the issuance and distribution of the
securities being registered are set forth in the following table (all amounts
except the registration fee and the listing fee are estimated):
SEC Registration Fee ......................................... $ 8,909
Nasdaq National Market Listing Fees .......................... $ 22,500
Legal Fees and Expenses ...................................... $225,000
Accountants' Fees and Expenses ............................... $ 1,500
Miscellaneous Costs .......................................... $ 300
Total .................................................. $258,209
All expenses in connection with the issuance and distribution of the
securities being offered shall be borne by the Company.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law empowers a Delaware
corporation to indemnify its officers and directors and certain other persons to
the extent and under the circumstances set forth therein.
The Restated Certificate of Incorporation and the Amended and Restated
By-Laws of the Company, copies of which are filed herein as Exhibit 3.3 and 3.4,
provide for advancement of expenses and indemnification of officers and
directors of the Registrant and certain other persons against liabilities and
expenses incurred by any of them in certain stated proceedings and under certain
stated conditions to the fullest extent permissible under Delaware law.
Each of the Registration Rights Agreements, dated as of July 1, 1998 and
July 20, 1999 and the Agreement and Plan of Merger and Reorganization, dated
January 4, 1999, and the Agreement and Plan of Merger and Reorganization, dated
June 22, 1999 provides for indemnification by the Registrant of each of the
selling stockholders against certain liabilities under the Securities Act of
1933, the Securities Exchange Act of 1934, state securities laws or otherwise,
and provides for indemnification by the selling stockholders of the Registrant
and its directors, its officers and certain control persons against certain
liabilities under the Securities Act of 1933, the Securities Exchange Act of
1934, state securities laws or otherwise.
II-1
<PAGE>
ITEM 16. EXHIBITS
EXHIBITS
- --------
*3.3 Restated Certificate of Incorporation of the Registrant
*3.4 Amended and Restated By-Laws of the Registrant, as amended to date
4.1 Specimen certificate for shares of common stock issued in connection with
the ProScript Merger
4.2 Specimen certificate for shares of common stock issued in connection with
the 1999 Private Placement
5 Opinion of Bingham Dana LLP
10.1 Registration Rights Agreement dated as of July 20, 1999 between LeukoSite
and Perseus Capital LLC
10.2 Registration Rights Agreement dated as of July 20, 1999 between LeukoSite
and HealthCare Ventures V, L.P.
10.3 Agreement and Plan of Merger and Reorganization dated June 22, 1999 among
LeukoSite, ProScript Acquisition Co., ProScript, Inc., HealthCare Ventures
III, L.P. and HealthCare Ventures IV, L.P.
23.1 Consent of Bingham Dana LLP (included in Exhibit 5.1)
23.2 Consent of Arthur Andersen LLP
- --------
* Incorporated by reference from the Registrant's Registration Statement on
Form S-1 (Registration No. 333-30213).
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made pursuant to this Registration Statement, a post-effective
amendment to this Registration Statement to include any material
information with respect to the plan of distribution not previously
disclosed in this Registration Statement or any material change to
such information in this Registration Statement;
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
II-2
<PAGE>
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15 (d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial BONA FIDE offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions described in Item 15 above,
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant, LeukoSite, Inc., certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form S-3 and has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Cambridge, Commonwealth
of Massachusetts, on this 17th day of August, 1999.
LEUKOSITE, INC.
/s/ Christopher K. Mirabelli
----------------------------
Christopher K. Mirabelli
CHAIRMAN OF THE BOARD OF DIRECTORS,
PRESIDENT AND CHIEF EXECUTIVE OFFICER
POWER OF ATTORNEY
Each person whose signature appears below hereby appoint each of
Christopher K. Mirabelli and Augustine Lawlor severally, acting alone and
without the other, his/her true and lawful attorney-in-fact with the authority
II-3
<PAGE>
to execute in the name of each such person, any and all amendments (including
without limitation, post-effective amendments) to this Registration Statement on
Form S-3, to sign any and all additional registration statements relating to the
same offering of securities as this Registration Statement that are filed
pursuant to Rule 462(b) of the Securities Act, and to file such registration
statements with the Securities and Exchange Commission, together with any
exhibits thereto and other documents therewith, necessary or advisable to enable
the Registrant to comply with the Securities Act, and any rules, regulations and
requirements of the Securities and Exchange Commission in respect thereof, which
amendments may make such other changes in the Registration Statement as the
aforesaid attorney-in-fact executing the same deems appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated:
II-4
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
Chairman of the Board of Directors, President, August 17, 1999
/s/ Christopher K. Mirabelli Chief and Executive Officer (Principal
- -------------------------------- Executive Officer)
Christopher K. Mirabelli
Senior Vice President, Corporate August 17, 1999
/s/ Augustine Lawlor Development, Chief Operating and Financial
- -------------------------------- Office (Principal Financial and Accounting Officer)
Augustine Lawlor
Director August 17, 1999
/s/ Kate Bingham
- --------------------------------
Kate Bingham
Director August 17, 1999
/s/ James Cavanaugh
- --------------------------------
James Cavanaugh
Director August 17, 1999
/s/ Yasunori Kaneko
- --------------------------------
Yasunori Kaneko
Director August 17, 1999
/s/ Martin Peretz
- --------------------------------
Martin Peretz
Director August 17, 1999
/s/ Mark Skaletsky
- --------------------------------
Mark Skaletsky
Director August 17, 1999
/s/ Timothy A. Springer, Ph.D.
- --------------------------------
Timothy A. Springer, Ph. D.
Director August 17, 1999
/s/ Christopher T. Walsh, Ph. D.
- --------------------------------
Christopher T. Walsh, Ph. D.
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
EXHIBITS
*3.3 Restated Certificate of Incorporation of the Registrant
*3.4 Amended and Restated By-Laws of the Registrant, as amended to date
4.1 Specimen certificate for shares of common stock issued in connection with
the ProScript Merger
4.2 Specimen certificate for shares of common stock issued in connection with
the 1999 Private Placement
5 Opinion of Bingham Dana LLP
10.1 Registration Rights Agreement dated as of July 20, 1999 between LeukoSite
and Perseus Capital LLC
10.2 Registration Rights Agreement dated as of July 20, 1999 between LeukoSite
and HealthCare Ventures V, L.P.
10.3 Agreement and Plan of Merger and Reorganization dated June 22, 1999 among
LeukoSite, ProScript Acquisition Co., ProScript, Inc., HealthCare Ventures
III, L.P. and HealthCare Ventures IV, L.P.
23.1 Consent of Bingham Dana LLP (included in Exhibit 5.1)
23.2 Consent of Arthur Andersen LLP
- ----------
* Incorporated by reference from the Registrant's Registration Statement on
Form S-1 (Registration No. 333-30213).
II-6
<PAGE>
EXHIBIT 4.1
SEE LEGEND ENDORSED ON REVERSE SIDE
NUMBER SHARES
LeukoSite Inc.
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP 52728R 10 2
THIS CERTIFIES THAT SPECIMEN
is the owner of XXXX
FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK, $.01 PAR VALUE, OF
LeukoSite, Inc.
(hereinafter called the Corporation, transferable on the books of the
Corporation by the holder hereof, in person or by duly authorized attorney, upon
surrender of this Certificate properly endorsed or accompanied by a proper
assignment. This Certificate and the shares represented by this Certificate are
issued and shall be subject to the laws of the State of Delaware and to the
provisions of the Certificate of Incorporation and the By-Laws of the
Corporation as amended from time to time (copies of which are on file at the
principal office of the Corporation and the Transfer Agent), to all of which the
holder of this Certificate by acceptance hereof assents.
This Certificate is not valid until countersigned by the Transfer Agent and
registered by the Registrar.
IN WITNESS WHEREOF, the Corporation has caused the facsimile signatures of its
duly authorized officers and its facsimile seal to be hereunto affixed.
Dated:
LEUKOSITE, INC.
1992
DELAWARE
TREASURER PRESIDENT
<PAGE>
LeukoSite, Inc.
The Corporation is authorized to issue more than one class of stock. Upon
written request the Corporation will furnish without charge to each stockholder
a copy of the powers, designations, preferences and relative, participating,
optional or other special rights of each class of stock or series thereof and
the qualifications, limitations or restrictions of such preferences and/or
rights.
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED, SOLD, ASSIGNED,
PLEDGED, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT (I) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT, (II) PURSUANT TO AN AVAILABLE
EXEMPTION FROM REGISTRATION UNDER SAID ACT AND, IF REQUESTED, BY THE COMPANY,
UPON DELIVERY OF AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY
THAT THE PROPOSED TRANSFER IS EXEMPT FROM SAID ACT OR (III) PURSUANT TO THE
RESALE PROVISIONS OF RULE 144.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER AND/OR OTHER OBLIGATIONS SET FORTH IN THE AGREEMENT AND
PLAN OF MERGER AND REORGANIZATION, DATED AS OF JUNE 22, 1999 (THE "AGREEMENT").
A COPY OF THE AGREEMENT IS ON FILE AND MAY BE INSPECTED BY THE REGISTERED HOLDER
OF THIS CERTIFICATE AT THE PRINCIPAL EXECUTIVE OFFICE OF THE ISSUER.
The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIFY GIFT MIN ACT _____ Custodian TEN ENT - as
tenants by the entireties under Uniform Gift to Minors Act JT TEN - as joint
tenants with right of survivorship and not as tenants in common COM PROP - as
community property
Additional abbreviations may also be used though not in the above list.
For value received ________hereby sell, assign and transfer unto
Please insert social security or other identifying number of assignee
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
Shares of the common stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint _____Attorney to transfer the said stock on
the books of the within-named Corporation with full power of substitution in the
premises.
<PAGE>
Dated:
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR WITHOUT ALTERATION
OR ENLARGEMENT OR ANY CHANGE WHATEVER.
Signature(s) Guaranteed
THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GRANTOR INSTITUTION (BANKS,
STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN
AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO SEC RULE
17Ad-15.
<PAGE>
EXHIBIT 4.2
SEE LEGEND ENDORSED ON REVERSE SIDE
NUMBER SHARES
LeukoSite Inc.
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP 52728R 10 2
THIS CERTIFIES THAT SPECIMEN
is the owner of XXXX
FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK, $.01 PAR VALUE, OF
LeukoSite, Inc.
(hereinafter called the Corporation, transferable on the books of the
Corporation by the holder hereof, in person or by duly authorized attorney, upon
surrender of this Certificate properly endorsed or accompanied by a proper
assignment. This Certificate and the shares represented by this Certificate are
issued and shall be subject to the laws of the State of Delaware and to the
provisions of the Certificate of Incorporation and the By-Laws of the
Corporation as amended from time to time (copies of which are on file at the
principal office of the Corporation and the Transfer Agent), to all of which the
holder of this Certificate by acceptance hereof assents.
This Certificate is not valid until countersigned by the Transfer Agent and
registered by the Registrar.
IN WITNESS WHEREOF, the Corporation has caused the facsimile signatures of its
duly authorized officers and its facsimile seal to be hereunto affixed.
Dated:
LEUKOSITE, INC.
1992
DELAWARE
TREASURER PRESIDENT
<PAGE>
LeukoSite, Inc.
The Corporation is authorized to issue more than one class of stock. Upon
written request the Corporation will furnish without charge to each stockholder
a copy of the powers, designations, preferences and relative, participating,
optional or other special rights of each class of stock or series thereof and
the qualifications, limitations or restrictions of such preferences and/or
rights.
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED, SOLD, ASSIGNED,
PLEDGED, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT (I) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT, (II) PURSUANT TO AN AVAILABLE
EXEMPTION FROM REGISTRATION UNDER SAID ACT AND, IF REQUESTED, BY THE COMPANY,
UPON DELIVERY OF AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY
THAT THE PROPOSED TRANSFER IS EXEMPT FROM SAID ACT OR (III) PURSUANT TO THE
RESALE PROVISIONS OF RULE 144.
The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIFY GIFT MIN ACT _____ Custodian TEN ENT - as
tenants by the entireties under Uniform Gift to Minors Act JT TEN - as joint
tenants with right of survivorship and not as tenants in common COM PROP - as
community property
Additional abbreviations may also be used though not in the above list.
For value received ________hereby sell, assign and transfer unto
Please insert social security or other identifying number of assignee
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
Shares of the common stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint _____Attorney to transfer the said stock on
the books of the within-named Corporation with full power of substitution in the
premises.
Dated:
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR WITHOUT ALTERATION
OR ENLARGEMENT OR ANY CHANGE WHATEVER.
<PAGE>
Signature(s) Guaranteed
THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GRANTOR INSTITUTION (BANKS,
STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN
AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO SEC RULE
17Ad-15.
<PAGE>
Exhibit 10.1
LEUKOSITE, INC.
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made as of July
20, 1999 by and among (i) LeukoSite, Inc., a Delaware corporation (the
"Company"), (ii) Perseus Capital LLC., a Delaware limited liability company (the
"Initial Investor"), and (iii) each person who becomes an Investor pursuant to
Section 10 hereof (together with the Initial Investor, the "Investors" and each
individually, an "Investor").
WHEREAS, the Company has agreed to issue and sell to the Initial Investor,
and the Initial Investor has agreed to purchase from the Company, an aggregate
of 1,030,928 shares (the "Shares") of the Company's common stock, $0.01 par
value per share (the "Common Stock"), all upon the terms and conditions set
forth in the Stock Purchase Agreement, dated as of June 22, 1999, between the
Company and the Initial Investor (the "Stock Purchase Agreement"); and
WHEREAS, the terms of the Stock Purchase Agreements provide that it shall
be a condition precedent to the closing of the transactions thereunder, for the
Company and the Initial 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:
1. DEFINITIONS. The following terms shall have the meanings provided
therefor below or elsewhere in this Agreement as described below:
"Board" shall mean the board of directors of the Company.
"Closing Date" shall mean the date on which the transactions contemplated
by the Stock Purchase Agreements are consummated (or, if the transactions are
not consummated on the same date, the first date by which the transactions
contemplated by the Stock Purchase Agreements have been consummated).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Mandatory Registration Termination Date" shall mean the first day after
the effective date of the Mandatory S-3 Registration Statement on which the
Mandatory S-3 Registration Statement (as defined in Section 2 hereof) shall not
be in effect.
"Person" (whether or not capitalized) shall mean an individual,
partnership, limited liability company, corporation, association, trust, joint
venture, unincorporated
<PAGE>
-2-
organization, and any government, governmental department or agency or political
subdivision thereof.
"Qualifying Investor" shall have the meaning ascribed thereto in Section
11 hereof.
"Registrable Shares" shall mean, at the relevant time of reference
thereto, the Shares then held by the Investors (including any shares of capital
stock that were issued in respect thereof pursuant to a stock split, stock
dividend, recombination, reclassification or the like), provided, however, that
the term "Registrable Shares" shall not include any of the Shares that (i)
become eligible for resale without volume limitations pursuant to Rule 144, or
(ii) are sold pursuant to a registration statement that has been declared
effective under the Securities Act by the SEC.
"Rule 144" shall mean Rule 144 promulgated under the Securities Act and
any successor or substitute rule, law or provision.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended.
2. MANDATORY FORM S-3 REGISTRATION.
(a) Within twenty (20) business days after the Closing Date, the Company
will prepare and file with the SEC a registration statement on Form S-3 for the
purpose of registering under the Securities Act all of the Registrable Shares
for resale by, and for the account of, the Initial Investor as the selling
stockholder thereunder (the "Mandatory S-3 Registration Statement"). The
Mandatory S-3 Registration Statement shall permit the Initial Investor to offer
and sell, on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act, any or all of the Registrable Shares. The Company agrees to use
reasonable best efforts to cause the Mandatory S-3 Registration Statement to
become effective as soon as practicable. The Company shall only be required to
keep the Mandatory S-3 Registration Statement effective until the earlier to
occur of (i) the date when all of the Registrable Shares registered thereunder
shall have been sold and (ii) July 1, 2000; provided, that in either case such
date shall be extended by the amount of time of any Suspension Period (if any).
Thereafter, the Company shall be entitled to withdraw the Mandatory S-3
Registration Statement and the Investors shall have no further right to offer or
sell any of the Registrable Shares pursuant to the Mandatory S-3 Registration
Statement (or any prospectus relating thereto).
(b) The Mandatory S-3 Registration Statement shall not be underwritten
unless the Company shall otherwise elect in its sole and absolute discretion. In
addition, the Company shall not require that the Mandatory S-3 Registration
Statement be underwritten without the written consent of the Investors.
(c) Notwithstanding anything in this Section 2 to the contrary, if the
Company shall furnish to the Investors a certificate signed by the President or
Chief Executive Officer of the Company stating that the Board of Directors of
the Company
<PAGE>
-3-
has made the good faith determination (i) that continued use by the Investors of
the registration statement filed by the Company pursuant to this Section 2 for
purposes of effecting offers or sales of Registrable Shares pursuant hereto
would require, under the Securities Act and the rules and regulations
promulgated thereunder, premature disclosure in the registration statement (or
the prospectus relating thereto) of material, nonpublic information concerning
the Company, its business or prospects or any proposed material transaction
involving the Company, (ii) that such premature disclosure would be materially
adverse to the Company, its business or prospects or any such proposed material
transaction or would make the successful consummation by the Company of any such
material transaction significantly less likely and (iii) that it is therefore
essential to suspend the use by the Investors of such registration statement
(and the prospectus relating thereto) for purposes of effecting offers or sales
of Registrable Shares pursuant thereto, then the right of the Investors to use
such registration statement (and the prospectus relating thereto) for purposes
of effecting offers or sales of Registrable Shares pursuant thereto shall be
suspended for a period (the "Suspension Period") of not more than 90 days after
delivery by the Company of the certificate referred to above in this Section
2(c). During the Suspension Period, the Investors shall not offer or sell any
Registrable Shares pursuant to or in reliance upon such registration statement
(or the prospectus relating thereto). The Company agrees that, as promptly as
practicable after the consummation, abandonment or public disclosure of the
event or transaction that caused the Company to suspend the use of the
registration statement (and the prospectus relating thereto) pursuant to this
Section 2(c), the Company will provide the Investors with revised prospectuses,
if required, and will notify the Investors of their ability to effect offers or
sales of Registrable Shares pursuant to or in reliance upon such registration
statement.
2A. DEMAND FORM S-3 REGISTRATION.
(a) Registration Upon Request; Limitations. In the event that, at any time
or from time to time after the Mandatory Registration Termination Date, the
Company shall receive from any Investor who holds at least twenty-five percent
(25%) of the Registrable Shares a written request or requests (a "Demand
Notice") that the Company effect a registration on Form S-3 (a "Demand
Registration"), or any successor or substitute form, with respect to all or a
part of the Registrable Shares owned by such Investor, then the Company will
promptly give written notice of the proposed registration and the Investor's or
Investors' request therefor to all other Investors, and, as soon as practicable,
use reasonable best efforts to effect such registration of all or such portion
of such Investor's or Registrable Shares as are specified in such request,
together with all or such portion of the Registrable Shares of any other
Investor or Investors joining in such request as are specified in a written
request given within ten (10) business days after receipt of such written notice
from the Company; provided, however, that the Company's obligation under this
Section 2A(a) shall be temporarily suspended if the Company has previously given
a notice of the type specified in Section 3 hereof or this Section 2A(a)
("Registration Notice") from the date the Registration Notice is received until
the date the registration statement referred to in the Registration Notice is
declared effective (the "Temporary Suspension Period"), so long as (i) the
Temporary Suspension Period is no longer than sixty-five (65) days, and (ii) the
Investors are informed in writing that the Company's obligation under this
Section 2A(a) have been temporarily suspended in accordance with this provision;
and
<PAGE>
-4-
provided, further, that the obligations of the Company under this Section 2A(a)
shall be subject to the limitations set forth in Sections 2A(c), 2A(d) and 2A(e)
below. The Company may include in any registration pursuant to Section 2A(a)
hereof additional shares of Common Stock for sale for its own account or for the
account of any other person who has been granted piggy-back registration rights.
No registration under this Section 2A(a) shall be underwritten unless the
Company shall otherwise elect in its sole and absolute discretion.
If the Company receives conflicting instructions, notices or elections
from two or more persons with respect to the same Registrable Shares, then the
Company may act upon the basis of the instructions, notice or election received
from the registered owner of such Registrable Shares.
(b) Selection of Underwriters. If a registration pursuant to Section 2A(a)
hereof involves an underwritten offering, the underwriter or underwriters
thereof shall be selected by the Company, provided that the underwriter or
underwriters so selected shall be a nationally recognized investment banking
firm or firms.
(c) Limitation on Number of Registrations. The Company shall not be
required to effect (i) more than two (2) registrations pursuant to Section 2A(a)
and (ii) more than one registration pursuant to Section 2A(a) during any
consecutive nine (9) month period.
(d) Limitation on Company's Obligation. Notwithstanding anything in this
Section 2A to the contrary, but in all events subject to the provisions of
Section 2A(f) hereof, the Company shall not be obligated to effect any
registration pursuant to Sections 2A and 3:
(1) if Form S-3, or any successor or substitute form, is not then
available for the registration of such Registrable Shares proposed to be sold
and distributed by such Investor or Investors;
(2) if such Investor or Investors, together with the holders of any
other securities of the Company entitled to inclusion in such registration,
propose to sell Registrable Shares and such other securities (if any) at an
aggregate price to the public of less than $750,000; or
(3) if the Company shall furnish to the Investors a certificate
signed by the President and Chief Executive Officer of the Company stating that
the Board has made the good faith determination that a registration would
require premature disclosure of material, nonpublic information concerning the
Company, its business or prospects, that such premature disclosure would be
materially adverse to the Company and that it is therefore essential to suspend
or defer such registration, then the Company shall have the right either to
suspend the use of an effective registration statement or defer the filing of a
registration statement for a period of not more than ninety (90) days (the
"Deferral Period"); provided, however, that the Company may not utilize this
right more than once with respect to each registration request (or registration
statement filed as a result of a request) made pursuant to, and in accordance
with, Section 2A(a) hereof. If the Board makes the determination described in
the preceding sentence, the Company shall give written notice of such
determination to the holders of Registrable Shares. The
<PAGE>
-5-
Company shall notify the holders of the expiration of the Deferral Period and
shall, if such registration statement requested pursuant to Section 2A(a) hereof
has not yet been filed, cause the registration statement with respect to the
Demand Registration to be filed on the fifth (5th) business day following the
expiration of the Deferral Period (the "Withdrawal Period") (or, if registration
on such date is not practicable, as promptly as possible thereafter) unless,
prior to the expiration of the Withdrawal Period, the holders holding a majority
of Registrable Shares to be included in any such Demand Registration not yet
filed, by written notice to the Company, withdraws the request made under
Section 2(a), in which case, such request shall not count as one of the Demand
Registrations permitted hereunder and the Company shall pay all expenses in
connection with such registration theretofor incurred in accordance with Section
6 herein.
(e) Limitation on Requests. Notwithstanding anything in this Section 2A to
the contrary, (1) no Investor may request a registration pursuant to this
Section 2A within one hundred and eighty (180) days of the effective date of any
other registration statement filed by the Company with the SEC pursuant to
Sections 2A and 3; and (2) no Investor may request a registration pursuant to
Section 2A(a) at any time after the seventh (7th) anniversary of the Closing
Date.
(f) Unavailability of Form S-3. Notwithstanding anything to the contrary
expressed or implied in this Agreement, if Form S-3 or any substitute form is
not then available for the registration of such Registrable Shares that would
otherwise have been proposed to be sold and distributed by such Investor or
Investors pursuant to this Section 2A, the Company shall be obligated to prepare
and file a registration statement on Form S-1 at the written request or requests
from any Investor or Investors given in accordance with Section 2A(a) and the
provisions of this Section 2A (other than Section 2A(d)(2)) shall govern and
apply to such request or requests and such registration on Form S-1.
3. "PIGGYBACK REGISTRATION".
(a) If, at any time after the Mandatory Registration Termination
Date, the Company proposes to register any of its Common Stock under the
Securities Act, whether as a result of a primary or secondary offering of Common
Stock or pursuant to registration rights granted to holders of other securities
of the Company (but excluding in all cases any registration pursuant to Section
2A hereof or any registrations to be effected on Forms S-4 or S-8 or other
applicable successor Forms), the Company shall, each such time, give to the
Investors twenty (20) days' prior written notice of its intent to do so, and
such notice shall describe the proposed registration and offer such holders the
opportunity to register such number of Registrable Shares as each such holder
may request. Upon the written request of any Investor given within ten (10) days
after the giving of any such notice by the Company, the Company shall use its
reasonable best efforts to cause to be included in such registration the
Registrable Shares of such selling Investor, to the extent requested to be
registered, among all holders of Registrable Shares and other persons entitled
to the inclusion of their shares in such registration, pro rata on the basis of
the number of shares of Common Stock that owned or held by such selling Investor
to all of the shares of Common Stock owned or held by all holders and other
persons entitled to be included within such registration; provided
<PAGE>
-6-
that (i) the number of Registrable Shares proposed to be sold by such selling
Investor is equal to at least twenty-five percent (25%) of the total number of
Registrable Shares then held by such selling Investor, (ii) such selling
Investor agrees to sell those of its Registrable Shares to be included in such
registration in the same manner and on the same terms and conditions as the
other shares of Common Stock which the Company proposes to register, and (iii)
if the registration is to include shares of Common Stock to be sold for the
account of the Company or any party exercising demand registration rights
pursuant to any other agreement with the Company, the proposed managing
underwriter does not advise the Company that in its opinion the inclusion of
such selling Registrable Shares (without any reduction in the number of shares
to be sold for the account of the Company or such party exercising demand
registration rights) is likely to affect materially and adversely the success of
the offering or the price that would be received for any shares of Common Stock
offered, in which case the rights of such selling Investor shall be as provided
in Section 3(b) hereof.
(b) If a registration pursuant to Section 3 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 by
the Investors to be included in such registration is likely to affect materially
and adversely the success of the offering or the price that would be received
for any shares of Common Stock offered in such offering, then, notwithstanding
anything in this Section 3 to the contrary, the Company shall only be required
to 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 shares of Common Stock proposed to be included in such
registration for the account of the Company and/or any stockholders of the
Company (other than the Investors) that have exercised demand registration
rights, in accordance with the priorities, if any, then existing among the
Company and/or such stockholders of the Company with registration rights (other
than the Investors), and (ii) second, the shares of Common Stock requested to be
included in such registration by all other stockholders of the Company
(including, without limitation, the Investors), pro rata among such other
stockholders (including, without limitation, the Investors) on the basis of the
number of shares of Common Stock that each of them requested to be included in
such registration.
(c) In connection with any offering involving an underwriting of
shares, the Company shall not be required under this Section 3 or otherwise to
include the Registrable Shares of any Investor therein unless such Investor
accepts and agrees to the terms of the underwriting, which shall be reasonable
and customary, as agreed upon between the Company and the underwriters selected
by the Company.
4. OBLIGATIONS OF THE COMPANY. Whenever the Company is required under
Sections 2A or 3 hereof to use its reasonable best efforts to effect the
registration of any of the Registrable Shares of the Investors, the Company
shall, as expeditiously as practicable:
(a) Prepare and file with the SEC (not later than forty-five (45)
days after receipt of a request to file a registration statement with respect to
Registrable
<PAGE>
-7-
Shares pursuant to Section 3A hereof) a registration statement with respect to
such Registrable Shares and use its reasonable best efforts to cause such
registration statement to become and remain effective; provided, however that,
except to the extent otherwise provided in Section 2A hereof, the Company shall
in no event be obligated to cause any such registration to remain effective for
more than ninety (90) days; provided further, that before filing a registration
statement or prospectus or any amendments or supplements thereto, the Company
shall (i) use reasonable efforts to provide counsel selected by the holders of a
majority of the Registrable Shares being registered in such registration
("Holders' Counsel") with an opportunity to participate in the preparation of
such registration statement and each prospectus included therein (and each
amendment or supplement thereto) to be filed with the SEC, and (ii) notify the
Holders' Counsel of any stop order issued or threatened by the SEC and to take
all reasonable action required to prevent the entry of such stop order or to
remove it if entered;
(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) Notify the Investors and Holders' Counsel (if any) promptly and,
if requested by any Investor, confirm such advice in writing (i) when a
registration statement has become effective and when any post-effective
amendments and supplements thereto become effective, and (ii) of the issuance by
the SEC or any state securities commission of any stop order suspending the
effectiveness of a registration statement.
(d) Furnish to the selling Investors 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 4(e) below) as the selling Investors may reasonably
request in order to facilitate the disposition of such Registrable Shares;
(e) Notify the Investors and Holders' Counsel (if any), 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 each 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 Investors will not offer or sell Registrable Shares until the
Company has notified the Investors that it has prepared a supplement or
amendment to such prospectus and delivered copies of such supplement or
amendment to the Investors (it being understood and agreed by the Company that
the foregoing
<PAGE>
-8-
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 4(e) and deliver copies of same as above provided in Section 4(d)
hereof);
(f) Use its reasonable best efforts to register and qualify such
Registrable Shares under such other securities or Blue Sky laws of such
jurisdictions as each selling Investor shall be reasonably request and do any
and all other acts or things which may be reasonably necessary or advisable to
enable each selling Investor to consummate the public sale or other disposition
in such jurisdiction of Registrable Shares, provided that the Company shall not
be required in connection therewith or as a condition thereto to qualify to do
business or to file a general consent to service of process in any such states
or jurisdictions where it is not then qualified or subject to process;
(g) Use its reasonable best efforts to cause all Registrable Shares
to be listed on the Nasdaq National Stock Market; and
(h) Make available for inspection by any seller of Registrable
Shares, any managing underwriter participating in any disposition pursuant to
such registration statement, Holders' Counsel (if any) and any attorney,
accountant or other agent retained by any such seller or any managing
underwriter (each, an "Inspector" and collectively, the "Inspectors"), during
regular business hours and upon reasonable advance notice, all financial and
other records, pertinent corporate documents and properties of the Company
(collectively, the "Records") as shall be reasonably necessary to enable them to
exercise their due diligence responsibility, and cause the Company's officers,
directors and employees, and the independent public accountants of the Company,
to supply all information reasonably requested by any such Inspector in
connection with such registration statement, subject to obligations of
confidentiality.
5. FURNISH INFORMATION. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Agreement that
the selling Investors shall furnish to the Company such information regarding
them and the Shares held by them as the Company shall reasonably request and as
shall be required in order to effect any registration by the Company pursuant to
this Agreement.
6. EXPENSES OF REGISTRATION. All expenses incurred in connection with a
registration pursuant to this Agreement (excluding underwriting commissions and
discounts of the selling Investors), including without limitation all
registration and qualification fees, printing expenses, and fees and
disbursements of counsel for the Company and one counsel for the selling
Investors, shall be borne by the Company.
7. DELAY OF REGISTRATION. Subject to Section 13(d) hereof, the Investors
and the Company (other than with respect to Section 4(e)) shall not take any
action to restrain, enjoin or otherwise delay any registration as the result of
any controversy which might arise with respect to the interpretation or
implementation of this Agreement.
<PAGE>
-9-
8. INDEMNIFICATION. In the event that any Registrable Shares of the
Investors are included in a registration statement pursuant to this Agreement:
(a) To the fullest extent permitted by law, the Company will
indemnify and hold harmless each selling Investor, any underwriter (as defined
in the Securities Act) for the Company, and each officer, director, fiduciary,
employee, member, general partner and limited partner (and affiliates thereof)
of such selling Investor or such underwriter, each broker or other person acting
on behalf of such selling Investor and each person, if any, who controls such
selling 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
therein a material fact required to be stated therein, or necessary to make the
statements therein not misleading, or any violation by the Company of the
Securities Act or state securities or blue sky laws applicable to the Company
and leading to action or inaction required of the Company in connection with
such registration or qualification under such Securities Act or state securities
or blue sky laws; and, subject to the provisions of Section 8(c), the Company
will reimburse on demand such selling Investor, such underwriter, such broker or
other person acting on behalf of such selling Investor or such officer,
director, fiduciary, employee, member, general partner, limited partner,
affiliate or controlling person for any legal or other expenses reasonably
incurred by any of them in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that the indemnity
agreement contained in this Section 8(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), nor shall the Company be liable in any such case
for any such loss, 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 selling Investors, any underwriter for them or
controlling person with respect to them.
(b) To the fullest extent permitted by law, each selling 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 underwriter
for the Company (within the meaning of the Securities Act), and all other
selling Investors 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
<PAGE>
-10-
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 therein 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 selling Investor expressly for use in
connection with such registration; and, subject to the provisions of Section
8(c), such selling Investor will reimburse on demand any legal or other expenses
reasonably incurred by the Company or any such director, officer, controlling
person, underwriter or other selling Investor in connection with investigating
or defending any such loss, claim, damage, liability or action, provided,
however, that the maximum amount of liability of each selling Investor hereunder
shall be limited to the proceeds (net of underwriting discounts and commissions,
if any) actually received by such selling Investor from the sale of Registrable
Shares covered by such registration statement; and provided, further, however,
that the indemnity agreement contained in this Section 8(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 those selling Investor(s)
against which the request for indemnity is being made (which consent shall not
be unreasonably withheld).
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against any indemnifying party
under this Section 8, 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, jointly with
any other indemnifying party similarly noticed, to assume at its expense the
defense thereof with counsel mutually satisfactory to the parties; provided,
however, that, if any indemnified party shall have reasonably concluded that
there may be one or more legal defenses available to such indemnified party
which are different from or additional to those available to the indemnifying
party, or that such claim or litigation involves or could have an effect upon
matters beyond the scope of the indemnity agreement provided in this Section 8,
the indemnifying party shall not have the right to assume the defense of such
action on behalf of such indemnified party, and such indemnifying party shall
reimburse such indemnified party and any person controlling such indemnified
party for the fees and expenses of counsel retained by the indemnified party
which are reasonably related to the matters covered by the indemnity agreement
provided in this Section 8. Subject to the foregoing, an indemnified party shall
have the right to employ separate counsel in any such action and to participate
in the defense thereof but the fees and expenses of such counsel shall not be at
the expense of the Company. The failure to notify an indemnifying party promptly
of the commencement of any such action, if materially prejudicial to his ability
to defend such action, shall relieve such indemnifying party of any liability to
the indemnified party under this Section 8, but the omission so to notify the
indemnifying party will not relieve him of any liability which he may have to
any indemnified party otherwise other than under this Section 8.
<PAGE>
-11-
(d) If the indemnification provided for in this Section 8 from the
indemnifying party is applicable by its terms but unavailable to an indemnified
party hereunder in respect of any losses, claims, damages, liabilities or
expenses referred to therein, then the indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages,
liabilities or expenses in such proportion as is appropriate to reflect the
relative fault of the indemnifying party and indemnified party in connection
with the actions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
faults of such indemnifying party and indemnified party shall be determined by
reference to, among other things, whether any action in question, including any
untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact, has been made by, or relates to information
supplied by, such indemnifying party or indemnified party, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such action. The amount paid or payable by a party as a result of the
losses, claims, damages, liabilities and expenses referred to above shall be
deemed to include, subject to the limitations set forth in Sections 8(a), 8(b)
and 8(c), any legal or other fees, charges or expenses reasonably incurred by
such party in connection with any investigation or proceeding. No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person. The parties
hereto agree that it would not be just and equitable if contribution pursuant to
this Section 8(d) were determined by pro rata allocation or by any other method
of allocation which does not take account of the equitable considerations
referred to in the immediately preceding paragraph.
(e) Notwithstanding anything in this Section 8 to the contrary, if,
in connection with an underwritten public offering, the Company, the Investors
and the underwriters enter into an underwriting or purchase agreement relating
to such offering which contains provisions covering indemnification among the
parties, then the indemnification provision of this Section 8 shall be deemed
inoperative for purposes of such offering.
9. REPORTS UNDER THE EXCHANGE ACT. With a view to making available to the
Investors the use of Section 2A hereof and the benefits of Rule 144 and any
other rule or regulation of the SEC that may at any time permit the Investors to
sell the Shares to the public without registration, the Company agrees to use
reasonable best efforts to: (i) make and keep public information available, as
those terms are understood and defined in the General Instructions to Form S-3,
or any successor or substitute form, and in Rule 144, (ii) file with the SEC in
a timely manner all reports and other documents required to be filed by an
issuer of securities registered under the Securities Act or the Exchange Act,
(iii) as long as any Investor owns any Shares, to furnish in writing upon such
Investor's request a written statement by the Company that it has complied with
the reporting requirements of Rule 144 and of the Securities Act and the
Exchange Act, and to furnish to such Investor a copy of the most recent annual
or quarterly report of the Company, and such other reports and documents so
filed by the Company as may be reasonably requested in availing such Investor of
any rule or regulation of the SEC permitting the selling of any such Shares
<PAGE>
-12-
without registration and (iv) undertake any additional actions reasonably
necessary to maintain the availability of a registration statement on Form S-3,
including any successor or substitute forms, or the use of Rule 144.
10. TRANSFER OF REGISTRATION RIGHTS.
(a) In the event that, pursuant to Section 10.9(a) of the Stock Purchase
Agreement, the Initial Investor shall assign, in whole or in part, its right to
purchase Shares to any permitted assignee in accordance with the terms of the
Stock Purchase Agreement, then the Initial Investor shall have the right to
assign to such permitted assignee the Initial Investor's rights under this
Agreement, to the extent of the interest assigned to such permitted assignee by
the Initial Investor; provided, however, that no rights may be assigned to any
such permitted assignee unless such permitted assignee shall execute and deliver
to the Company such permitted assignee's written agreement to become a party to
this Agreement and to become bound and subject to all of the terms and
provisions of this Agreement to the same extent as the Initial Investor. Upon
any such assignment to any such permitted assignee in accordance with the terms
of this Section 10(a), such permitted assignee shall be deemed to be an "Initial
Investor" for purposes of this Agreement.
(b) Except to the extent otherwise provided in Section 10(a) hereof, none
of the rights of any Investor under this Agreement shall be transferred or
assigned to any person unless (i) such person is a Qualifying Investor (as
defined below), and (ii) such person agrees to become a party to, and bound by,
all of the terms and conditions of, this Agreement. For purposes of this Section
10(b), the term "Qualifying Investor" shall mean, with respect to any Investor,
(i) any partner, member or shareholder thereof, (ii) any person, corporation or
partnership controlling, controlled by, or under common control with, such
Investor or any partner thereof, or (iii) any other direct transferee from such
Investor of at least 257,000 shares of Common Stock (subject to adjustment in
the event of stock splits, stock dividends, recombinations, recapitalizations
and the like). None of the rights of any Investor under this Agreement shall be
transferred or assigned to any transferee of Shares pursuant to a "brokers
transaction" within the meaning of Rule 144 under the Securities Act or an
effective registration statement under the Securities Act. Upon transfer of
Shares and rights in accordance with this Section 10(b), such Qualified Investor
shall be deemed an "Investor" hereunder.
11. LOCKUP AGREEMENT.
(a) Each Investor which holds or owns (at the time of the written request
of the Company or managing underwriter referred to below in Section 11(b) or at
any time during the ninety (90) day period commencing on the effective date of
the registration statement relating to such underwritten public offering of the
Company's securities) of record or beneficially (within the meaning of Section
13(d) of the Exchange Act and the rules and regulations promulgated thereunder)
five percent (5%) or more of the then issued and outstanding shares of common
stock of the Company (including, for this purpose, shares held or owned by any
and all affiliates of such Investor) hereby agrees that, at the written request
of the Company or any managing underwriter of any
<PAGE>
-13-
underwritten public offering of securities of the Company, such Investor (and
its affiliates) 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 Securities during the ninety (90) day
period commencing on the effective date of the registration statement relating
to such underwritten public offering of the Company's securities. If an Investor
is unable to 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 Securities pursuant to an effective
registration statement as a result of the foregoing sentence, and such effective
registration statement was filed pursuant to a request made under Section 2A
hereof, then such request shall not count as one of the Demand Registrations
permitted under Section 2A hereof.
(b) The Company shall use reasonable best efforts to cause each officer
and director of the Company who holds or owns (at the time of the written
request of the Company or managing underwriter referred to below in this Section
11 or at any time during the ninety (90) day period commencing on the effective
date of the registration statement relating to such underwriter public offering
of the Company's securities) of record or beneficially (within the meaning of
Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder) five percent (5%) or more of the then issued and outstanding shares
of common stock of the Company, at the written request of the Company or any
managing underwriter of any underwritten public offering of securities of the
Company, not to, 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 Securities during the ninety (90) day
period commencing on the effective date of the registration statement relating
to such underwritten public offering of the Company's securities.
12. ENTIRE AGREEMENT. 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.
13. MISCELLANEOUS.
(a) This Agreement may not be amended, modified or terminated, and
no rights or provisions may be waived, except with the written consent of the
Majority Holders and the Company.
(b) This Agreement shall be governed by and construed and enforced
in accordance with the laws of the Commonwealth of Massachusetts, and shall be
binding upon the parties hereto and their respective heirs, personal
representatives, successors and permitted assigns and transferees, provided that
the terms and conditions of Section 10 hereof are satisfied. Notwithstanding
anything in this Agreement to the contrary, if at any time any Investor shall
cease to own any Shares, all of such Investor's rights under this Agreement
shall immediately terminate.
<PAGE>
-14-
(c) Any notices to be given pursuant to this Agreement shall be in
writing and shall be given by certified or registered mail, return receipt
request. Notices shall be deemed given when personally delivered or when mailed
to the addresses of the respective parties as set forth on Exhibit A hereto, or
to such changed address of which any party may notify the others pursuant
hereto, except that a notice of change of address shall be deemed given when
received.
(d) The parties acknowledge and agree that in the event of any
breach of this Agreement, remedies at law will be inadequate, and each of the
parties hereto shall be entitled to specific performance of the obligations of
the other parties hereto and to such appropriate injunctive relief as may be
granted by a court of competent jurisdiction. All remedies, either under this
Agreement or by law or otherwise afforded to any of the parties, shall be
cumulative and not alternative.
(e) This Agreement may be executed in a number of counterparts. All
such counterparts together shall constitute one Agreement, and shall be binding
on all the parties hereto notwithstanding that all such parties have not signed
the same counterpart. The parties hereto confirm that any facsimile copy of
another party's executed counterpart of this Agreement (or its signature page
thereof) will be deemed to be an executed original thereof.
(f) Except as contemplated in Section 8 hereof, this Agreement is
intended solely for the benefit of the parties hereto and is not intended to
confer any benefits upon, or create any rights in favor of, any Person
(including, without limitation, any stockholder or debt holder of the Company)
other than the parties hereto.
(g) If any provision of this Agreement is invalid, illegal or
unenforceable, such provision shall be ineffective to the extent, but only to
the extent of, such invalidity, illegality or unenforceability, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement, unless such a construction would be unreasonable.
(h) This Agreement shall be binding upon, and inure to the benefit
of, the parties hereto and their permitted successors and assigns.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date and year first above written.
LEUKOSITE, INC.
By: /s/ Christopher K. Mirabelli
------------------------------------
Name: Christopher K. Mirabelli
Title: President and CEO
INITIAL INVESTOR:
PERSEUS CAPITAL LLC
By: /s/ Kenneth M. Socha
------------------------------------
Name: Kenneth M. Socha
Title: Executive Vice President
<PAGE>
Exhibit A
All correspondence to the Company shall be addressed as follows:
LeukoSite, Inc.
215 First Street
Cambridge, MA 02142
Attention: Christopher K. Mirabelli,
President and Chief Executive Officer
Telecopier: (617) 278-3399
with a copy to:
Bingham Dana LLP
150 Federal Street
Boston, Massachusetts 02110
Attention: Julio E. Vega, Esq.
Telecopier: (617) 951-8736
All correspondence to the Initial Investor shall be addressed as
follows:
Perseus Capital, LLC
The Army and Navy Club Building
1627 I Street, N.W., Suite 610
Washington D.C. 20006
Telecopy: (202) 463-6215
Attention: Christopher D. Earl, Ph.D.
with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Telecopy: (212) 757-3990
Attention: Bruce A. Gutenplan, Esq.
<PAGE>
Exhibit 10.2
LEUKOSITE, INC.
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made as of July
20, 1999 by and among (i) LeukoSite, Inc., a Delaware corporation (the
"Company"), (ii) HealthCare Ventures V, L.P., a Delaware limited partnership
(the "Initial Investor"), and (iii) each person who becomes an Investor pursuant
to Section 10 hereof (together with the Initial Investor, the "Investors" and
each individually, an "Investor").
WHEREAS, the Company has agreed to issue and sell to the Initial Investor,
and the Initial Investor has agreed to purchase from the Company, an aggregate
of 456,620 shares (the "Shares") of the Company's common stock, $0.01 par value
per share (the "Common Stock"), all upon the terms and conditions set forth in
the Stock Purchase Agreements, dated of even date herewith, between the Company
and the Initial Investor (the "Stock Purchase Agreements"); and
WHEREAS, the terms of the Stock Purchase Agreements provide that it shall
be a condition precedent to the closing of the transactions thereunder, for the
Company and the Initial 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:
1. DEFINITIONS. The following terms shall have the meanings provided
therefor below or elsewhere in this Agreement as described below:
"Board" shall mean the board of directors of the Company.
"Closing Date" shall mean the date on which the transactions contemplated
by the Stock Purchase Agreements are consummated (or, if the transactions are
not consummated on the same date, the first date by which the transactions
contemplated by the Stock Purchase Agreements have been consummated).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Mandatory Registration Termination Date" shall mean the first day after
the effective date of the Mandatory S-3 Registration Statement on which the
Mandatory S-3 Registration Statement (as defined in Section 2 hereof) shall not
be in effect.
"Person" (whether or not capitalized) shall mean an individual,
partnership, limited liability company, corporation, association, trust, joint
venture, unincorporated
<PAGE>
-2-
organization, and any government, governmental department or agency or political
subdivision thereof.
"Qualifying Investor" shall have the meaning ascribed thereto in Section
11 hereof.
"Registrable Shares" shall mean, at the relevant time of reference
thereto, the Shares then held by the Investors (including any shares of capital
stock that were issued in respect thereof pursuant to a stock split, stock
dividend, recombination, reclassification or the like), provided, however, that
the term "Registrable Shares" shall not include any of the Shares that (i)
become eligible for resale without volume limitations pursuant to Rule 144, or
(ii) are sold pursuant to a registration statement that has been declared
effective under the Securities Act by the SEC.
"Rule 144" shall mean Rule 144 promulgated under the Securities Act and
any successor or substitute rule, law or provision.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended.
2. MANDATORY FORM S-3 REGISTRATION.
(a) Within twenty (20) business days after the Closing Date, the Company
will prepare and file with the SEC a registration statement on Form S-3 for the
purpose of registering under the Securities Act all of the Registrable Shares
for resale by, and for the account of, the Initial Investor as the selling
stockholder thereunder (the "Mandatory S-3 Registration Statement"). The
Mandatory S-3 Registration Statement shall permit the Initial Investor to offer
and sell, on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act, any or all of the Registrable Shares. The Company agrees to use
reasonable best efforts to cause the Mandatory S-3 Registration Statement to
become effective as soon as practicable. The Company shall only be required to
keep the Mandatory S-3 Registration Statement effective until the earlier to
occur of (i) the date when all of the Registrable Shares registered thereunder
shall have been sold and (ii) July 1, 2000. Thereafter, the Company shall be
entitled to withdraw the Mandatory S-3 Registration Statement and the Investors
shall have no further right to offer or sell any of the Registrable Shares
pursuant to the Mandatory S-3 Registration Statement (or any prospectus relating
thereto).
(b) The Mandatory S-3 Registration Statement shall not be underwritten
unless the Company shall otherwise elect in its sole and absolute discretion.
(c) Notwithstanding anything in this Section 2 to the contrary, if the
Company shall furnish to the Investors a certificate signed by the President or
Chief Executive Officer of the Company stating that the Board of Directors of
the Company has made the good faith determination (i) that continued use by the
Investors of the registration statement filed by the Company pursuant to this
Section 2 for purposes of effecting offers or sales of Registrable Shares
pursuant hereto would require, under the
<PAGE>
-3-
Securities Act and the rules and regulations promulgated thereunder, premature
disclosure in the registration statement (or the prospectus relating thereto) of
material, nonpublic information concerning the Company, its business or
prospects or any proposed material transaction involving the Company, (ii) that
such premature disclosure would be materially adverse to the Company, its
business or prospects or any such proposed material transaction or would make
the successful consummation by the Company of any such material transaction
significantly less likely and (iii) that it is therefore essential to suspend
the use by the Investors of such registration statement (and the prospectus
relating thereto) for purposes of effecting offers or sales of Registrable
Shares pursuant thereto, then the right of the Investors to use such
registration statement (and the prospectus relating thereto) for purposes of
effecting offers or sales of Registrable Shares pursuant thereto shall be
suspended for a period (the "Suspension Period") of not more than 90 days after
delivery by the Company of the certificate referred to above in this Section
2(c). During the Suspension Period, the Investors shall not offer or sell any
Registrable Shares pursuant to or in reliance upon such registration statement
(or the prospectus relating thereto). The Company agrees that, as promptly as
practicable after the consummation, abandonment or public disclosure of the
event or transaction that caused the Company to suspend the use of the
registration statement (and the prospectus relating thereto) pursuant to this
Section 2(c), the Company will provide the Investors with revised prospectuses,
if required, and will notify the Investors of their ability to effect offers or
sales of Registrable Shares pursuant to or in reliance upon such registration
statement.
2A. DEMAND FORM S-3 REGISTRATION.
(a) Registration Upon Request; Limitations. In the event that, at any time
or from time to time after the Mandatory Registration Termination Date, the
Company shall receive from any Investor who holds at least twenty-five percent
(25%) of the Registrable Shares a written request or requests (a "Demand
Notice") that the Company effect a registration on Form S-3 (a "Demand
Registration"), or any successor or substitute form, with respect to all or a
part of the Registrable Shares owned by such Investor, then the Company will
promptly give written notice of the proposed registration and the Investor's or
Investors' request therefor to all other Investors, and, as soon as practicable,
use reasonable best efforts to effect such registration of all or such portion
of such Investor's or Registrable Shares as are specified in such request,
together with all or such portion of the Registrable Shares of any other
Investor or Investors joining in such request as are specified in a written
request given within ten (10) business days after receipt of such written notice
from the Company; provided, however, that the Company's obligation under this
Section 2A(a) shall be temporarily suspended if the Company has previously given
a notice of the type specified in Section 3 hereof or this Section 2A(a)
("Registration Notice") from the date the Registration Notice is received until
the date the registration statement referred to in the Registration Notice is
declared effective (the "Temporary Suspension Period"), so long as (i) the
Temporary Suspension Period is no longer than sixty-five (65) days, and (ii) the
Investors are informed in writing that the Company's obligation under this
Section 2A(a) have been temporarily suspended in accordance with this provision;
and provided, further, that the obligations of the Company under this Section
2A(a) shall be subject to the limitations set forth in Sections 2A(c), 2A(d) and
2A(e) below. The Company may include in any registration pursuant to Section
2A(a) hereof additional shares of
<PAGE>
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Common Stock for sale for its own account or for the account of any other person
who has been granted piggy-back registration rights. No registration under this
Section 2A(a) shall be underwritten unless the Company shall otherwise elect in
its sole and absolute discretion.
If the Company receives conflicting instructions, notices or elections
from two or more persons with respect to the same Registrable Shares, then the
Company may act upon the basis of the instructions, notice or election received
from the registered owner of such Registrable Shares.
(b) Selection of Underwriters. If a registration pursuant to Section 2A(a)
hereof involves an underwritten offering, the underwriter or underwriters
thereof shall be selected by the Company, provided that the underwriter or
underwriters so selected shall be a nationally recognized investment banking
firm or firms.
(c) Limitation on Number of Registrations. The Company shall not be
required to effect (i) more than two (2) registrations pursuant to Section 2A(a)
and (ii) more than one registration pursuant to Section 2A(a) during any
consecutive nine (9) month period.
(d) Limitation on Company's Obligation. Notwithstanding anything in this
Section 2A to the contrary, but in all events subject to the provisions of
Section 2A(f) hereof, the Company shall not be obligated to effect any
registration pursuant to Sections 2A and 3:
(1) if Form S-3, or any successor or substitute form, is not then
available for the registration of such Registrable Shares proposed to be sold
and distributed by such Investor or Investors;
(2) if such Investor or Investors, together with the holders of any
other securities of the Company entitled to inclusion in such registration,
propose to sell Registrable Shares and such other securities (if any) at an
aggregate price to the public of less than $750,000; or
(3) if the Company shall furnish to the Investors a certificate
signed by the President and Chief Executive Officer of the Company stating that
the Board has made the good faith determination that a registration would
require premature disclosure of material, nonpublic information concerning the
Company, its business or prospects, that such premature disclosure would be
materially adverse to the Company and that it is therefore essential to suspend
or defer such registration, then the Company shall have the right either to
suspend the use of an effective registration statement or defer the filing of a
registration statement for a period of not more than ninety (90) days (the
"Deferral Period"); provided, however, that the Company may not utilize this
right more than once with respect to each registration request (or registration
statement filed as a result of a request) made pursuant to, and in accordance
with, Section 2A(a) hereof. If the Board makes the determination described in
the preceding sentence, the Company shall give written notice of such
determination to the holders of Registrable Shares. The Company shall notify the
holders of the expiration of the Deferral Period and shall, if such registration
statement requested pursuant to Section 2A(a) hereof has not yet been filed,
cause the registration statement with respect to the Demand Registration to
<PAGE>
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be filed on the fifth (5th) business day following the expiration of the
Deferral Period (the "Withdrawal Period") (or, if registration on such date is
not practicable, as promptly as possible thereafter) unless, prior to the
expiration of the Withdrawal Period, the holders holding a majority of
Registrable Shares to be included in any such Demand Registration not yet filed,
by written notice to the Company, withdraws the request made under Section 2(a),
in which case, such request shall not count as one of the Demand Registrations
permitted hereunder and the Company shall pay all expenses in connection with
such registration theretofor incurred in accordance with Section 6 herein.
(e) Limitation on Requests. Notwithstanding anything in this Section 2A to
the contrary, (1) no Investor may request a registration pursuant to this
Section 2A within one hundred and eighty (180) days of the effective date of any
other registration statement filed by the Company with the SEC pursuant to
Sections 2A and 3; and (2) no Investor may request a registration pursuant to
Section 2A(a) at any time after the seventh (7th) anniversary of the Closing
Date.
(f) Unavailability of Form S-3. Notwithstanding anything to the contrary
expressed or implied in this Agreement, if Form S-3 or any substitute form is
not then available for the registration of such Registrable Shares that would
otherwise have been proposed to be sold and distributed by such Investor or
Investors pursuant to this Section 2A, the Company shall be obligated to prepare
and file a registration statement on Form S-1 at the written request or requests
from any Investor or Investors given in accordance with Section 2A(a) and the
provisions of this Section 2A (other than Section 2A(d)(2)) shall govern and
apply to such request or requests and such registration on Form S-1.
3. "PIGGYBACK REGISTRATION".
(a) If, at any time after the Mandatory Registration Termination
Date, the Company proposes to register any of its Common Stock under the
Securities Act, whether as a result of a primary or secondary offering of Common
Stock or pursuant to registration rights granted to holders of other securities
of the Company (but excluding in all cases any registration pursuant to Section
2A hereof or any registrations to be effected on Forms S-4 or S-8 or other
applicable successor Forms), the Company shall, each such time, give to the
Investors twenty (20) days' prior written notice of its intent to do so, and
such notice shall describe the proposed registration and offer such holders the
opportunity to register such number of Registrable Shares as each such holder
may request. Upon the written request of any Investor given within ten (10) days
after the giving of any such notice by the Company, the Company shall use its
reasonable best efforts to cause to be included in such registration the
Registrable Shares of such selling Investor, to the extent requested to be
registered, among all holders of Registrable Shares and other persons entitled
to the inclusion of their shares in such registration, pro rata on the basis of
the number of shares of Common Stock that owned or held by such selling Investor
to all of the shares of Common Stock owned or held by all holders and other
persons entitled to be included within such registration; provided that (i) the
number of Registrable Shares proposed to be sold by such selling Investor is
equal to at least twenty-five percent (25%) of the total number of Registrable
Shares then held by such selling Investor, (ii) such selling Investor agrees to
sell those of its
<PAGE>
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Registrable Shares to be included in such registration in the same manner and on
the same terms and conditions as the other shares of Common Stock which the
Company proposes to register, and (iii) if the registration is to include shares
of Common Stock to be sold for the account of the Company or any party
exercising demand registration rights pursuant to any other agreement with the
Company, the proposed managing underwriter does not advise the Company that in
its opinion the inclusion of such selling Registrable Shares (without any
reduction in the number of shares to be sold for the account of the Company or
such party exercising demand registration rights) is likely to affect materially
and adversely the success of the offering or the price that would be received
for any shares of Common Stock offered, in which case the rights of such selling
Investor shall be as provided in Section 3(b) hereof.
(b) If a registration pursuant to Section 3 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 by
the Investors to be included in such registration is likely to affect materially
and adversely the success of the offering or the price that would be received
for any shares of Common Stock offered in such offering, then, notwithstanding
anything in this Section 3 to the contrary, the Company shall only be required
to 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 shares of Common Stock proposed to be included in such
registration for the account of the Company and/or any stockholders of the
Company (other than the Investors) that have exercised demand registration
rights, in accordance with the priorities, if any, then existing among the
Company and/or such stockholders of the Company with registration rights (other
than the Investors), and (ii) second, the shares of Common Stock requested to be
included in such registration by all other stockholders of the Company
(including, without limitation, the Investors), pro rata among such other
stockholders (including, without limitation, the Investors) on the basis of the
number of shares of Common Stock that each of them requested to be included in
such registration.
(c) In connection with any offering involving an underwriting of
shares, the Company shall not be required under this Section 3 or otherwise to
include the Registrable Shares of any Investor therein unless such Investor
accepts and agrees to the terms of the underwriting, which shall be reasonable
and customary, as agreed upon between the Company and the underwriters selected
by the Company.
4. OBLIGATIONS OF THE COMPANY. Whenever the Company is required under
Sections 2A or 3 hereof to use its reasonable best efforts to effect the
registration of any of the Registrable Shares of the Investors, the Company
shall, as expeditiously as practicable:
(a) Prepare and file with the SEC (not later than forty-five (45)
days after receipt of a request to file a registration statement with respect to
Registrable Shares pursuant to Section 3A hereof) a registration statement with
respect to such Registrable Shares and use its reasonable best efforts to cause
such registration statement to become and remain effective; provided, however
that, except to the extent
<PAGE>
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otherwise provided in Section 2A hereof, the Company shall in no event be
obligated to cause any such registration to remain effective for more than
ninety (90) days; provided further, that before filing a registration statement
or prospectus or any amendments or supplements thereto, the Company shall (i)
use reasonable efforts to provide counsel selected by the holders of a majority
of the Registrable Shares being registered in such registration ("Holders'
Counsel") with an opportunity to participate in the preparation of such
registration statement and each prospectus included therein (and each amendment
or supplement thereto) to be filed with the SEC, and (ii) notify the Holders'
Counsel of any stop order issued or threatened by the SEC and to take all
reasonable action required to prevent the entry of such stop order or to remove
it if entered;
(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) Notify the Investors and Holders' Counsel (if any) promptly and,
if requested by any Investor, confirm such advice in writing (i) when a
registration statement has become effective and when any post-effective
amendments and supplements thereto become effective, and (ii) of the issuance by
the SEC or any state securities commission of any stop order suspending the
effectiveness of a registration statement.
(d) Furnish to the selling Investors 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 4(e) below) as the selling Investors may reasonably
request in order to facilitate the disposition of such Registrable Shares;
(e) Notify the Investors and Holders' Counsel (if any), 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 each 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 Investors will not offer or sell Registrable Shares until the
Company has notified the Investors that it has prepared a supplement or
amendment to such prospectus and delivered copies of such supplement or
amendment to the Investors (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 4(e) and deliver copies of same as above provided in
Section 4(d) hereof);
<PAGE>
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(f) Use its reasonable best efforts to register and qualify such
Registrable Shares under such other securities or Blue Sky laws of such
jurisdictions as each selling Investor shall be reasonably request and do any
and all other acts or things which may be reasonably necessary or advisable to
enable each selling Investor to consummate the public sale or other disposition
in such jurisdiction of Registrable Shares, provided that the Company shall not
be required in connection therewith or as a condition thereto to qualify to do
business or to file a general consent to service of process in any such states
or jurisdictions where it is not then qualified or subject to process;
(g) Use its reasonable best efforts to cause all Registrable Shares
to be listed on the Nasdaq National Stock Market; and
(h) Make available for inspection by any seller of Registrable
Shares, any managing underwriter participating in any disposition pursuant to
such registration statement, Holders' Counsel (if any) and any attorney,
accountant or other agent retained by any such seller or any managing
underwriter (each, an "Inspector" and collectively, the "Inspectors"), during
regular business hours and upon reasonable advance notice, all financial and
other records, pertinent corporate documents and properties of the Company
(collectively, the "Records") as shall be reasonably necessary to enable them to
exercise their due diligence responsibility, and cause the Company's officers,
directors and employees, and the independent public accountants of the Company,
to supply all information reasonably requested by any such Inspector in
connection with such registration statement, subject to obligations of
confidentiality.
5. FURNISH INFORMATION. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Agreement that
the selling Investors shall furnish to the Company such information regarding
them and the Shares held by them as the Company shall reasonably request and as
shall be required in order to effect any registration by the Company pursuant to
this Agreement.
6. EXPENSES OF REGISTRATION. All expenses incurred in connection with a
registration pursuant to this Agreement (excluding underwriting commissions and
discounts of the selling Investors), including without limitation all
registration and qualification fees, printing expenses, and fees and
disbursements of counsel for the Company and one counsel for the selling
Investors, shall be borne by the Company.
7. DELAY OF REGISTRATION. Subject to Section 13(d) hereof, the Investors
and the Company (other than with respect to Section 4(e)) shall not take any
action to restrain, enjoin or otherwise delay any registration as the result of
any controversy which might arise with respect to the interpretation or
implementation of this Agreement.
8. INDEMNIFICATION. In the event that any Registrable Shares of the
Investors are included in a registration statement pursuant to this Agreement:
<PAGE>
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(a) To the fullest extent permitted by law, the Company will
indemnify and hold harmless each selling Investor, any underwriter (as defined
in the Securities Act) for the Company, and each officer, director, fiduciary,
employee, member, general partner and limited partner (and affiliates thereof)
of such selling Investor or such underwriter, each broker or other person acting
on behalf of such selling Investor and each person, if any, who controls such
selling 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
therein a material fact required to be stated therein, or necessary to make the
statements therein not misleading, or any violation by the Company of the
Securities Act or state securities or blue sky laws applicable to the Company
and leading to action or inaction required of the Company in connection with
such registration or qualification under such Securities Act or state securities
or blue sky laws; and, subject to the provisions of Section 8(c), the Company
will reimburse on demand such selling Investor, such underwriter, such broker or
other person acting on behalf of such selling Investor or such officer,
director, fiduciary, employee, member, general partner, limited partner,
affiliate or controlling person for any legal or other expenses reasonably
incurred by any of them in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that the indemnity
agreement contained in this Section 8(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), nor shall the Company be liable in any such case
for any such loss, 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 selling Investors, any underwriter for them or
controlling person with respect to them.
(b) To the fullest extent permitted by law, each selling 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 underwriter
for the Company (within the meaning of the Securities Act), and all other
selling Investors 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 therein a material fact
required to be stated therein or necessary to make the statements therein
<PAGE>
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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 selling Investor expressly for use in connection with such
registration; and, subject to the provisions of Section 8(c), such selling
Investor will reimburse on demand any legal or other expenses reasonably
incurred by the Company or any such director, officer, controlling person,
underwriter or other selling Investor in connection with investigating or
defending any such loss, claim, damage, liability or action, provided, however,
that the maximum amount of liability of each selling Investor hereunder shall be
limited to the proceeds (net of underwriting discounts and commissions, if any)
actually received by such selling Investor from the sale of Registrable Shares
covered by such registration statement; and provided, further, however, that the
indemnity agreement contained in this Section 8(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 those selling Investor(s) against
which the request for indemnity is being made (which consent shall not be
unreasonably withheld).
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against any indemnifying party
under this Section 8, 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, jointly with
any other indemnifying party similarly noticed, to assume at its expense the
defense thereof with counsel mutually satisfactory to the parties; provided,
however, that, if any indemnified party shall have reasonably concluded that
there may be one or more legal defenses available to such indemnified party
which are different from or additional to those available to the indemnifying
party, or that such claim or litigation involves or could have an effect upon
matters beyond the scope of the indemnity agreement provided in this Section 8,
the indemnifying party shall not have the right to assume the defense of such
action on behalf of such indemnified party, and such indemnifying party shall
reimburse such indemnified party and any person controlling such indemnified
party for the fees and expenses of counsel retained by the indemnified party
which are reasonably related to the matters covered by the indemnity agreement
provided in this Section 8. Subject to the foregoing, an indemnified party shall
have the right to employ separate counsel in any such action and to participate
in the defense thereof but the fees and expenses of such counsel shall not be at
the expense of the Company. The failure to notify an indemnifying party promptly
of the commencement of any such action, if materially prejudicial to his ability
to defend such action, shall relieve such indemnifying party of any liability to
the indemnified party under this Section 8, but the omission so to notify the
indemnifying party will not relieve him of any liability which he may have to
any indemnified party otherwise other than under this Section 8.
(d) If the indemnification provided for in this Section 8 from the
indemnifying party is applicable by its terms but unavailable to an indemnified
party hereunder in respect of any losses, claims, damages, liabilities or
expenses referred to therein, then the indemnifying party, in lieu of
indemnifying such indemnified party,
<PAGE>
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shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party and indemnified party in connection with the actions which resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative faults of such indemnifying
party and indemnified party shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact, has been made by, or relates to information supplied by, such indemnifying
party or indemnified party, and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such action. The amount
paid or payable by a party as a result of the losses, claims, damages,
liabilities and expenses referred to above shall be deemed to include, subject
to the limitations set forth in Sections 8(a), 8(b) and 8(c), any legal or other
fees, charges or expenses reasonably incurred by such party in connection with
any investigation or proceeding. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person. The parties hereto agree that
it would not be just and equitable if contribution pursuant to this Section 8(d)
were determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to in the
immediately preceding paragraph.
(e) Notwithstanding anything in this Section 8 to the contrary, if,
in connection with an underwritten public offering, the Company, the Investors
and the underwriters enter into an underwriting or purchase agreement relating
to such offering which contains provisions covering indemnification among the
parties, then the indemnification provision of this Section 8 shall be deemed
inoperative for purposes of such offering.
9. REPORTS UNDER THE EXCHANGE ACT. With a view to making available to the
Investors the use of Section 2A hereof and the benefits of Rule 144 and any
other rule or regulation of the SEC that may at any time permit the Investors to
sell the Shares to the public without registration, the Company agrees to use
reasonable best efforts to: (i) make and keep public information available, as
those terms are understood and defined in the General Instructions to Form S-3,
or any successor or substitute form, and in Rule 144, (ii) file with the SEC in
a timely manner all reports and other documents required to be filed by an
issuer of securities registered under the Securities Act or the Exchange Act,
(iii) as long as any Investor owns any Shares, to furnish in writing upon such
Investor's request a written statement by the Company that it has complied with
the reporting requirements of Rule 144 and of the Securities Act and the
Exchange Act, and to furnish to such Investor a copy of the most recent annual
or quarterly report of the Company, and such other reports and documents so
filed by the Company as may be reasonably requested in availing such Investor of
any rule or regulation of the SEC permitting the selling of any such Shares
without registration and (iv) undertake any additional actions reasonably
necessary to maintain the availability of a registration statement on Form S-3,
including any successor or substitute forms, or the use of Rule 144.
<PAGE>
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10. TRANSFER OF REGISTRATION RIGHTS. None of the rights of any Investor
under this Agreement shall be transferred or assigned to any person unless (i)
such person is a Qualifying Investor (as defined below), and (ii) such person
agrees to become a party to, and bound by, all of the terms and conditions of,
this Agreement. For purposes of this Section 10, the term "Qualifying Investor"
shall mean, with respect to any Investor, (i) any partner, member or shareholder
thereof, (ii) any person, corporation or partnership controlling, controlled by,
or under common control with, such Investor or any partner thereof, or (iii) any
other direct transferee from such Investor of at least 257,000 shares of Common
Stock (subject to adjustment in the event of stock splits, stock dividends,
recombinations, recapitalizations and the like). None of the rights of any
Investor under this Agreement shall be transferred or assigned to any transferee
of Shares pursuant to a "brokers transaction" within the meaning of Rule 144
under the Securities Act or an effective registration statement under the
Securities Act. Upon transfer of Shares and rights in accordance with this
Section 10, such Qualified Investor shall be deemed an "Investor" hereunder.
11. LOCKUP AGREEMENT.
(a) Each Investor which holds or owns (at the time of the written request
of the Company or managing underwriter referred to below in this Section 11(b)
or at any time during the ninety (90) day period commencing on the effective
date of the registration statement relating to such underwriter public offering
of the Company's securities) of record or beneficially (within the meaning of
Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder) five percent (5%) or more of the then issued and outstanding shares
of common stock of the Company (including, for this purpose, shares held or
owned by any and all affiliates of such Investor) hereby agrees that, at the
written request of the Company or any managing underwriter of any underwritten
public offering of securities of the Company, such Investor (and its affiliates)
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 Securities during the ninety (90) day
period commencing on the effective date of the registration statement relating
to such underwritten public offering of the Company's securities. If an Investor
is unable to 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 Securities pursuant to an effective
registration statement as a result of the foregoing sentence, and such effective
registration statement was filed pursuant to a request made under Section 2A
hereof, then such request shall not count as one of the Demand Registrations
permitted under Section 2A hereof.
(b) The Company shall use reasonable best efforts to cause each officer
and director of the Company who holds or owns (at the time of the written
request of the Company or managing underwriter referred to below in this Section
11 or at any time during the ninety (90) day period commencing on the effective
date of the registration statement relating to such underwriter public offering
of the Company's securities) of record or beneficially (within the meaning of
Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder) five percent (5%) or more of the then
<PAGE>
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issued and outstanding shares of common stock of the Company, at the written
request of the Company or any managing underwriter of any underwritten public
offering of securities of the Company, not to, 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 Securities during the
ninety (90) day period commencing on the effective date of the registration
statement relating to such underwritten public offering of the Company's
securities.
12. ENTIRE AGREEMENT. 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.
13. MISCELLANEOUS.
(a) This Agreement may not be amended, modified or terminated, and
no rights or provisions may be waived, except with the written consent of the
Majority Holders and the Company.
(b) This Agreement shall be governed by and construed and enforced
in accordance with the laws of the Commonwealth of Massachusetts, and shall be
binding upon the parties hereto and their respective heirs, personal
representatives, successors and permitted assigns and transferees, provided that
the terms and conditions of Section 10 hereof are satisfied. Notwithstanding
anything in this Agreement to the contrary, if at any time any Investor shall
cease to own any Shares, all of such Investor's rights under this Agreement
shall immediately terminate.
(c) Any notices to be given pursuant to this Agreement shall be in
writing and shall be given by certified or registered mail, return receipt
request. Notices shall be deemed given when personally delivered or when mailed
to the addresses of the respective parties as set forth on Exhibit A hereto, or
to such changed address of which any party may notify the others pursuant
hereto, except that a notice of change of address shall be deemed given when
received.
(d) The parties acknowledge and agree that in the event of any
breach of this Agreement, remedies at law will be inadequate, and each of the
parties hereto shall be entitled to specific performance of the obligations of
the other parties hereto and to such appropriate injunctive relief as may be
granted by a court of competent jurisdiction. All remedies, either under this
Agreement or by law or otherwise afforded to any of the parties, shall be
cumulative and not alternative.
(e) This Agreement may be executed in a number of counterparts. All
such counterparts together shall constitute one Agreement, and shall be binding
on all the parties hereto notwithstanding that all such parties have not signed
the same counterpart. The parties hereto confirm that any facsimile copy of
another party's executed counterpart of this Agreement (or its signature page
thereof) will be deemed to be an executed original thereof.
<PAGE>
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(f) Except as contemplated in Section 8 hereof, this Agreement is
intended solely for the benefit of the parties hereto and is not intended to
confer any benefits upon, or create any rights in favor of, any Person
(including, without limitation, any stockholder or debt holder of the Company)
other than the parties hereto.
(g) If any provision of this Agreement is invalid, illegal or
unenforceable, such provision shall be ineffective to the extent, but only to
the extent of, such invalidity, illegality or unenforceability, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement, unless such a construction would be unreasonable.
(h) This Agreement shall be binding upon, and inure to the benefit
of, the parties hereto and their permitted successors and assigns.
[ Signature Page to follow ]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date and year first above written.
LEUKOSITE, INC.
By: /s/ Christopher K. Mirabelli
----------------------------
Name: Christopher K. Mirabelli
Title: President and CEO
INITIAL INVESTOR:
HEALTHCARE VENTURES V, L.P.
By:
By: /s/ Jeffrey Steinberg
---------------------
Name: Jeffrey Steinberg
Title: Administrative Partner of
HealthCare Partners V, L.P.
The General Partner of
HealthCare Ventures V, L.P.
<PAGE>
Exhibit A
All correspondence to the Company shall be addressed as follows:
LeukoSite, Inc.
215 First Street
Cambridge, MA 02142
Attention: Christopher K. Mirabelli,
President and Chief Executive Officer
Telecopier: (617) 278-3399
with a copy to:
Bingham Dana LLP
150 Federal Street
Boston, Massachusetts 02110
Attention: Julio E. Vega, Esq.
Telecopier: (617) 951-8736
All correspondence to the Initial Investor shall be addressed as
follows:
HealthCare Ventures V, L.P.
44 Nassau Street
Princeton, NJ 08542-4511
Telecopy: (609) 430-9525
Attention: Jeffrey Steinberg
<PAGE>
Exhibit 10.3
AGREEMENT AND PLAN OF MERGER
AND REORGANIZATION
This Agreement and Plan of Merger and Reorganization, dated as of June 22,
1999 (this "Agreement"), is by and among (i) LeukoSite, Inc., a Delaware
corporation ("LeukoSite"), (ii) ProScript Acquisition Co., a Delaware
corporation that is a wholly-owned subsidiary of LeukoSite ("Merger Sub"), (iii)
ProScript, Inc., a Delaware corporation (the "Company"), and (iv) HealthCare
Ventures IV, L.P., a Delaware limited partnership, and HealthCare Ventures III,
L.P., a Delaware limited partnership (individually, a "Note Holder" and,
collectively, the "Note Holders").
WHEREAS, the parties desire that, among other things, certain debt of the
Company be cancelled and repaid in full by the issuance of shares of stock of
LeukoSite, and that Merger Sub be merged with and into the Company (the
"Merger"), subject to the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
agreements, covenants, representations and warranties hereinafter set forth, the
parties hereto agree as follows:
1. Definitions.
1.1. Certain Defined Terms. As used in this Agreement, the following
terms have the following respective meanings:
"Affiliate" means, with respect to any person, any other person (i) that
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such person or (ii) who is a
family member or relative of such person. When used in this Agreement (other
than in Sections 3 and 14 hereof) with reference to the Company, the term
"Affiliate" includes the Stockholders. When used in Section 3 of this Agreement
with reference to LeukoSite, the term "Affiliate" includes any corporation,
limited partnership or limited liability company through which LeukoSite and any
other person are engaged in a joint venture for the development and
commercialization of a Product Candidate or a Related Compound, provided that
LeukoSite owns fifty percent (50%) or more of the equity interests in such
corporation, limited partnership or limited liability company.
"Affiliated Group" has the meaning ascribed to it in Section 1504 of the
Code, and in addition includes any analogous combined, consolidated or unitary
group, as defined under any applicable state, local, or foreign income Tax law.
"Aggregate Contingent Consideration Payments" means the LeukoSite
Contingent Milestone Payments, the Contingent Partner Licensing Payments, the
HMR Payments and the Contingent Royalty Payments.
<PAGE>
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"Bonus Recipients" means those individuals set forth in Schedule 1.1(a) of
the Company Disclosure Schedule (as such Schedule 1.1(a) may be amended or
modified immediately prior to the Closing) but only if and to the extent that
they are holders of Company Options that are outstanding immediately prior to
the Effective Time and that are cancelled at the Effective Time.
"Code" means the United States Internal Revenue Code of 1986, as amended.
"Company Common Stock" means the Company's common stock, par value $0.01
per share.
"Company Intellectual Property" shall mean that Intellectual Property
owned by, or licensed to, the Company.
"Company Patent Intellectual Property" means those United States,
international and foreign patents and patent applications (including provisional
applications), in each case that are listed in Schedule 7.10 of the Disclosure
Schedule, and all reissues, divisions, renewals, extensions, provisions,
continuations, foreign counterparts, and continuations-in-part thereof.
"Company Preferred Stock" means any or all, as the context may require or
allow, of the Company Series A Preferred Stock and the Company Series B
Preferred Stock.
"Company Series A Preferred Stock" means the Company's Series A
Convertible Preferred Stock, par value $.01 per share.
"Company Series B Preferred Stock" means the Company's Series B
Convertible Preferred Stock, par value $.01 per share.
"Company Registered Intellectual Property" means those United States,
international and foreign: (a) patents and patent applications (including
provisional applications) and all reissues, divisions, renewals, extensions,
provisions, continuations, foreign counterparts, and continuations-in-part
thereof, in each case that are listed in Schedule 7.10 of the Disclosure
Schedule; (b) registered trademarks, registered service marks, applications to
register trademarks or service marks, intent-to-use applications, or other
registrations or applications related to trademarks or service marks, in each
case that are listed in Schedule 7.10 of the Disclosure Schedule; and (c)
registered copyrights and applications for copyright registration, in each case
that are listed on Schedule 7.10 of the Disclosure Schedule.
"Company Stock" means, collectively, the Company Common Stock and the
Company Preferred Stock.
"Compound 341" means either PS-341 or any other compound from the PS-341
Compound Class.
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"Compound 519" means either PS-519 or any other compound from the PS-519
Compound Class.
"Convertible Notes" means, individually or collectively as the context may
require, (i) that certain Convertible Promissory Note, dated February 25, 1999,
in the original principal amount of $340,500, made by the Company to HealthCare
Ventures IV, L.P., and (ii) that certain Convertible Promissory Note, dated
February 25, 1999, in the original principal amount of $1,159,500, made by the
Company to HealthCare Ventures III, L.P.
"Damages" means all damages, losses, claims, demands, actions, causes of
action, suits, litigations, arbitrations, liabilities, costs, and expenses,
including court costs and the reasonable fees and expenses of legal counsel.
"Designated Preferred Stockholders" means the Stockholders whose
signatures are set forth on the signature pages to the Designated Preferred
Stockholders Agreement.
"Designated Preferred Stockholders Agreement" means the Designated
Preferred Stockholders Agreement, dated of even date herewith, among LeukoSite
and the Designated Preferred Stockholders.
"Drug Development Program" means a drug development program conducted by
LeukoSite, its Affiliates or sublicensees for pre-clinical and clinical
development, regulatory approval, and commercialization of a Product Candidate.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the SEC thereunder, as in effect as of the relevant
time of reference.
"First Commercial Sale" means, with respect to any Product Candidate, any
Related Compound or any HMR Compound, as the case may be, the first sale for end
use or consumption of such Product Candidate, Related Compound or HMR Compound,
as the case may be, in any Major Geographical Area (or in a country within such
Major Geographical Area) after required approvals have been granted by the
governing regulatory authority in such Major Geographical Area (or in a country
within such Major Geographical Area).
"FDA" means the United States Food and Drug Administration.
"Harvard License Agreements" means (i) License Agreement, dated April 14,
1995, between the President and Fellows of Harvard College and ProScript, Inc.
(formerly known as MyoGenics, Inc.), relating to patented Harvard case No.
1087-94 covering lactacystin analogs for human and veterinary health care and
(ii) License Agreement, dated July 5, 1994, between the President and Fellows of
Harvard College and ProScript, Inc. (formerly known as MyoGenics, Inc.),
relating to that certain U.S. patent application, Serial No. 08/210,381 (filed
on March 18, 1994) relating to proteasome regulation of NF-kB activity.
"HMR Compound" means any compound as to which royalties are due to the
Company pursuant to the HMR Agreement.
<PAGE>
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"Indebtedness," as applied to any person, means (a) all indebtedness of
such person for borrowed money, whether current or funded, or secured or
unsecured, (b) all indebtedness of such person for the deferred purchase price
of property or services represented by a note or other security, (c) all
indebtedness of such person created or arising under any conditional sale or
other title retention agreement (even if the rights and remedies of the seller
or lender under such agreement in the event of default are limited to
repossession or sale of specific property), (d) all indebtedness of such person
secured by a purchase money mortgage or other Lien to secure all or part of the
purchase price of property subject to such mortgage or other Lien, (e) all
accounts payable, notes payable and accrued expenses of such person, (f) all
indebtedness or liabilities of such person that would be required to be
reflected on a balance sheet or referred to in the notes thereto in accordance
with generally accepted accounting principles, (g) all indebtedness, liabilities
or obligations of such person that are identified in Section 7.11 of the
Disclosure Schedule as "Indebtedness", (h) all other obligations of such person
under leases that have been or must be, in accordance with generally accepted
accounting principles, recorded as capital leases in respect of which such
person is liable as lessee, (i) any liability of such person in respect of
banker's acceptances or letters of credit, and (j) all indebtedness referred to
in clauses (a), (b), (c), (d), (e), (f), (g), (h) or (i) above that is directly
or indirectly guaranteed by such person or which such person has agreed
(contingently or otherwise) to purchase or otherwise acquire or in respect of
which such person has otherwise assured a creditor against loss.
"Intellectual Property" shall mean any or all of the following and all
rights in, arising out of, or associated therewith: (a) all United States,
international and foreign patents and applications thereof and all reissues,
divisions, renewals, extensions, provisions, continuations and
continuations-in-part thereof; (b) all inventions (whether patentable or not),
invention disclosures, improvements, drug candidates, trade secrets, proprietary
information, know how, technology, technical data and customer lists, and all
documentation relating to any of the foregoing; (c) all copyrights, copyright
registrations and applications therefor, and all other rights corresponding
thereto throughout the world; (d) all industrial designs and any registration
and applications therefor throughout the world; (e) all trade names, logos,
common law trademarks and service marks, trademark and service mark registration
and applications therefor throughout the world; (f) all databases and data
collections and all rights therein throughout the world; and (g) any similar or
equivalent rights to any of the foregoing anywhere in the world.
"knowledge," when used to qualify a representation or warranty in this
Agreement, has the following meaning: Where a representation or warranty is made
to the best of the Company's knowledge, or with a similar qualification, the
Company will be conclusively deemed to have knowledge of any matter with respect
to which the Company's chief executive, operating, scientific and/or financial
officers and/or Vice President, Development has actual knowledge after
conducting a reasonable investigation. Where a representation or warranty is
made to the best of LeukoSite's or Merger Sub's knowledge, or with a similar
qualification, LeukoSite and Merger Sub will be conclusively deemed to have
knowledge of any matter with respect to which LeukoSite's or Merger Sub's chief
executive, scientific, and/or financial officers has actual knowledge after
conducting a reasonable investigation.
<PAGE>
-5-
"LeukoSite Common Stock" means the common stock, par value $0.01 per
share, of LeukoSite.
"LeukoSite Common Stock Price Per Share" means $12.28, subject to
appropriate adjustment for stock splits, stock dividends, reclassifications and
other similar events affecting the LeukoSite Common Stock after the date of this
Agreement.
"LeukoSite Preferred Stock" means the preferred stock, par value $0.01 per
share, of LeukoSite.
"LeukoSite Stock Plans" means, collectively, LeukoSite's Amended and
Restated 1993 Stock Option Plan and LeukoSite's 1997 Employee Stock Purchase
Plan.
"Liens" means any and all liens, claims, mortgages, security interests,
pledges, options, rights of first offer or refusal, charges, encumbrances,
limitations on voting rights, and restrictions on transfer of any kind, except
(i) in the case of references to securities, those arising under applicable
securities laws solely by reason of the fact that such securities were issued
pursuant to exemptions from registration under such securities laws, (ii)
mechanic's, materialmen's and similar liens, (iii) liens for Taxes not yet due
and payable and (iv) liens arising under worker's compensation, unemployment
insurance, social security, retirement and similar legislation.
"Major Geographical Area" means, individually or collectively as the
context may require, the following three areas of the world: (a) the United
States, (b) any or all countries in Europe (provided, however, that the First
Commercial Sale of a Product Candidate or a Related Compound in Europe shall not
be deemed to have occurred until the First Commercial Sale of such Product
Candidate or Related Compound in the United Kingdom, France, Italy or Germany),
and (c) Japan.
"Material Adverse Effect" means, with reference to any person, any
material adverse effect on the condition (financial or otherwise), operations,
business, assets (including intangible assets), rights, liabilities, obligations
or prospects of such person, or on such person's ability to consummate the
transactions hereby contemplated.
"Merger Consideration" means the Adjusted Initial Cash Payment, the
LeukoSite Contingent Milestone Payments, the Contingent Partner Licensing
Payments, the HMR Payments and the Contingent Royalty Payments.
"Merger Consideration Portion" means the quotient obtained by dividing (i)
one by (ii) the number of shares of Company Stock outstanding at the Effective
Time, plus the maximum number of shares of Company Stock issuable immediately
prior to the Effective Time upon the exercise of all Company Options held by the
Bonus Recipients that are outstanding immediately prior to the Effective Time,
and plus the maximum number of shares of Company Stock issuable at the Effective
Time upon the exercise of all Surviving
<PAGE>
-6-
Warrants that are outstanding at the Effective Time; provided, that such
quotient is subject to adjustment as follows:
(a) in the event that any Stockholder, which has duly exercised its
appraisal rights pursuant to Section 262 of the DGCL and not received any
Merger Consideration in respect of his, her or its Dissenting Shares,
receives any payment from LeukoSite in respect of his, her or its
Dissenting Shares (regardless of whether such payment represents the
appraised value of such Dissenting Shares as determined pursuant to a
judicial proceeding or represents amounts paid by LeukoSite in settlement
of such appraisal rights), such Dissenting Shares shall be subtracted from
the denominator of the fraction set forth above and the Merger
Consideration Portion shall be recalculated; and
(b) in the event that, at any time after the Effective Time, any
Surviving Warrant expires or terminates without having been exercised in
full by the holder of such Surviving Warrant, the shares of Company Stock
that would otherwise have been issuable upon exercise of such Surviving
Warrant shall be subtracted from the denominator of the fraction set forth
above and the Merger Consideration Portion shall be recalculated.
"NDA" means a New Drug Application filed with the FDA or its equivalent,
or any corresponding application for sales and marketing approval filed in any
country other than the United States with the appropriate regulatory authority
in such country (including the European Medicines Evaluation Agency).
"Net Closing Liabilities" means an amount equal to all Indebtedness and
other liabilities (accrued or contingent) of the Company at Closing, all Taxes,
all expenditures incurred by the Company during the period following the date of
this Agreement through and including the Closing which have been approved by
LeukoSite as evidenced by its written consent thereto given pursuant to Section
10.2 hereof, minus all cash and cash equivalents of the Company at Closing.
"Net Sales" means, with respect to a Product Candidate or a Related
Compound, gross revenues from the sale of such Product Candidate or Related
Compound to third parties that are not Affiliates, less discounts, refunds,
rebates, replacement or credits allowed to purchasers for return of product or
as reimbursement for damaged product, freight and other shipping charges, custom
duties, sales and use taxes and any other governmental tax or charge (except
income taxes) imposed on or at the time of the production, importation,
exportation, use, transportation, or sale of product, including any value added
taxes (VAT). If a Product Candidate or a Related Compound is sold in combination
with products or other components proprietary to LeukoSite or to a third
party(ies) for which LeukoSite pays any amounts for the right to use, then "Net
Sales" shall be based on the relative average prices charged during the
applicable quarter for such Product Candidate or Related Compound and the
products or other components when separately invoiced or priced. In the event a
Product Candidate or Related Compound and additional products or other
components were not separately invoiced or priced during the applicable
quarterly period, the Net Sales
<PAGE>
-7-
computation shall be based on the relative fair market price which LeukoSite
would have charged for such Product Candidate or Related Compound and additional
products or other components determined in good faith by LeukoSite.
"Other Countries" shall mean, individually or collectively as the context
may require, all of the countries in the world other than those countries
included within the Major Geographical Areas.
"Payment Shares" means shares of LeukoSite Common Stock issued by
LeukoSite to the Note Holders pursuant to the terms of this Agreement.
"person" (regardless of whether capitalized) means any natural person,
entity, or association, including without limitation any corporation,
partnership, limited liability company, government (or agency or subdivision
thereof), trust, joint venture or proprietorship.
"Product Candidate" shall mean, individually or collectively, as the
context may require, (i) Compound 519 but only if and to the extent used for the
treatment of stroke, myocardial infarction, asthma, multiple sclerosis, head
trauma or burns, and (ii) Compound 341 but only if and to the extent used for
the treatment of cancer.
"ProScript Program" means, collectively, (i) the Company's ongoing
proprietary research and development program related to PS-341 and the PS-341
Compound Class, and (ii) the Company's ongoing proprietary research and
development program related to PS-519 and the PS-519 Compound Class.
"PS-341" means the compound (i) that is currently under development by the
Company pursuant to one of its ongoing proprietary research and development
programs, (ii) that is designated by the Company as of the date of this
Agreement as PS-341 and (iii) that has the chemical structure set forth in
Schedule 1.1(b) of the Company Disclosure Schedule.
"PS-341 Compound Class" means (A) PS-341 and (B) those compounds (i) that
are members of the same boronate class of proteasome inhibitors as PS-341, (ii)
that have been generated or developed by the Company pursuant to the same
proprietary research and development program of the Company by which the Company
has developed and continues to develop PS-341 and (iii) whose chemical structure
is set forth in Schedule 1.1(c) of the Company Disclosure Schedule.
"PS-519" means the compound (i) that is currently under development by the
Company pursuant to one of its ongoing proprietary research and development
programs, (ii) that is designated by the Company as of the date of this
Agreement as PS-519 and (iii) that has the chemical structure set forth in
Schedule 1.1(d) of the Company Disclosure Schedule.
"PS-519 Compound Class" means (A) PS-519 and (B) those compounds (i) that
are members of the same lactacystin class of proteasome inhibitors as PS-519,
(ii) that have been generated or developed by the Company pursuant to the same
proprietary research and
<PAGE>
-8-
development program of the Company by which the Company has developed and
continues to develop PS-519 and (iii) whose chemical structure is set forth in
Schedule 1.1(e) of the Company Disclosure Schedule.
"PTO" means the United States Patent and Trademark Office.
"Related Compound" means (A) any compound (i) that is a member of the same
boronate class of proteasome inhibitors as PS-341, (ii) that is covered by the
Company Patent Intellectual Property with respect to the PS-341 Compound Class
and (iii) that is developed, marketed and commercialized by LeukoSite or any of
its Affiliates or by any Partner but only if and to the extent that it is being
developed, marketed and commercialized for the treatment of cancer, or (B) any
compound (i) that is a member of the same lactacystin class of proteasome
inhibitors as PS-519, (ii) that is covered by the Company Patent Intellectual
Property with respect to the PS-519 Compound Class and (iii) that is developed,
marketed and commercialized by LeukoSite or any of its Affiliates or by any
Partner but only if and to the extent that it is being developed, marketed and
commercialized for the treatment of stroke, myocardial infarction, asthma,
multiple sclerosis, head trauma or burns.
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC thereunder, as in effect as of the relevant
time of reference.
"Stockholders" means the holders of shares of Company Stock outstanding
immediately prior to the Effective Time and, from and after the Effective Time,
includes those holders of Surviving Warrants that have duly exercised the
Surviving Warrants held by them in accordance with their respective terms and
the provisions of Section 5 hereof.
"Subsidiary" or "Subsidiaries" means, with respect to any person, any
corporation a majority (by number of votes) of the outstanding shares of any
class or classes of which will at the time be owned by such person or by a
Subsidiary of such person, if the holders of the shares of such class or classes
(a) are ordinarily, in the absence of contingencies, entitled to vote for the
election of a majority of the directors (or persons performing similar
functions) of the issuer thereof, even though the right so to vote has been
suspended by the happening of such a contingency, or (b) are at the time
entitled, as such holders, to vote for the election of a majority of the
directors (or persons performing similar functions) of the issuer thereof,
whether or not the right so to vote exists by reason of the happening of a
contingency.
"Tax" or "Taxes" means any federal, state, local, or foreign income, gross
receipts, franchise, estimated, alternative minimum, add-on minimum, sales, use,
transfer, registration, value added, excise, natural resources, severance,
stamp, occupation, premium, windfall profit, environmental, customs, duties,
real property, personal property, capital stock, intangibles, social security,
unemployment, disability, payroll, license, employee or other tax or levy of any
kind whatsoever, including any interest, penalties, or additions to tax in
respect of the foregoing.
<PAGE>
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"Tax Return" means any return, declaration, report, claim for refund,
information return, or other document filed or required to be filed (including
any related or supporting estimates, elections, schedules, statements, or
information filed or required to be filed) in connection with the determination,
assessment or collection of any Tax or the administration of any laws,
regulations or administrative requirements relating to any Tax.
"Undisclosed Liabilities" shall mean any Indebtedness or other liabilities
of the Company (i) which exist on the date of this Agreement or arise after the
date of this Agreement but relate to any period prior to the Closing and (ii)
which were not reflected in the Unaudited Closing Balance Sheet or disclosed in
the Disclosure Schedule.
1.2. Terms Defined Elsewhere. The following terms are defined herein
in the sections identified below:
[ Defined Terms continued on next page. ]
<PAGE>
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Term Section
- ---- -------
Adjusted Initial Cash Payment 3.7(b)
Agreed Amount 14.4(c)
Agreement Preamble
Approved Unbudgeted
Expenditures 3.7(b)
Blocking Third Party Patent 3.8(g)(iii)
CERCLA 7.15(b)
Certificate(s) 4.1
Claim Notice 14.4(b)
Claimed Amount 14.4(b)
Closing 2.1
Closing Date 2.1
Company Preamble
Company Indemnified Parties 14.1
Company Options 5
Company Warrants 5
Complementary Technology 3.8(g)(iii)
Contingent Partner
Licensing Payment(s) 3.8(b)
Contingent Royalty Payment(s) 3.8(f)
Convertible Note Amount 2.2(c)
DGCL 3.1
Dissenting Shares 3.6(c)
Effective Period 6.1(a)
Effective Time 2.1
Employee Benefit Plan 7.14(a)
Environmental Laws 7.15(b)
EPA 7.15(c)
ERISA 7.14(c)
Excess Amount 3.7(c)
Excess Net Closing Liabilities 3.7(b)
Follow-on Product 3.8(f)
Hazardous Substances 7.15(c)
HMR 3.8(c)
HMR Agreement 3.8(c)
HMR Payment(s) 3.8(c)
Hold-Back Amount 3.7(e)
Hold-Back Period 3.7(e)
Holder Inclusion Notice 6.1(b)
Incidental Shares 6.1(c)
Indemnified Parties 14.3
Indemnifying Party 14.4(b)
Initial Cash Payment 3.7
IRS 7.14(b)
LeukoSite Preamble
LeukoSite Contingent
Milestone Payment 3. 8(a)
LeukoSite Indemnified Parties 14.2
LeukoSite R&D Programs 3.8(e)
LeukoSite's SEC Reports 8.5
Material Contracts 7.18
May 31, 1999 Balance Sheet 7.7
Merger Preamble
Merger Certificate 2.1
Merger Sub Preamble
NMS 9.7
Note Holder(s) Preamble
Note Holder Indemnified Parties 14A.2
PBGC 7.14(d)(ii)
Partner 3.8(b)
Payment Shares 2.2(c)
Piggyback Notice 6.1(b)
Qualified Holders 6.1(c)
RCRA 7.15(b)
Response Notice 14.4(c)
Royalty Pass-Through
Section 3.8(b) 341 Compound 3.8(b)
Royalty Pass-Through
Section 3.8(b) 519 Compound 3.8(b)
SARA 7.15(b)
Section 3.8(f) Compound 3.8(f)
Section 3.8(f) 341 Compound 3.8(f)
Section 3.8(f) 519 Compound 3.8(f)
Section 14 Indemnified Parties 14.2
Section 14 Indemnifying Party 14.4(b)
Section 14A Agreed Amount 14A.3(c)
Section 14A Claim Notice 14A.3(b)
Section 14A Claimed Amount 14A.3(b)
Section 14A Indemnified Party 14A.3(c)
Section 14A Indemnifying Party 14A.3(c)
Section 14A Response Notice 14A.3(c)
Setoff Amount 3.8(h)
Shortfall Amount 3.7(c)
Special Milestone Payments 3.8(c)(i)
Stockholders'
Representatives 4.7(a)
Stockholder Registration
Statement 6.1(a)(i)
Surviving Corporation 3.1
Surviving Warrants 5
Suspension Period 6.2
Unaudited Closing Balance
Sheet 3.7(a)
<PAGE>
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2. Transactions at Closing.
2.1 Closing; Merger. Subject to the other provisions of this
Agreement, the closing of the transactions contemplated under this Agreement
(the "Closing") will be held at the offices of Bingham Dana LLP, 150 Federal
Street, Boston, Massachusetts 02110, as soon as is reasonably practicable
following satisfaction or waiver of the conditions set forth in Sections 11
through 13 (the date on which the Closing actually occurs is hereinafter
referred to as the "Closing Date"). On the Closing Date, Merger Sub and the
Company will execute a Certificate of Merger, substantially in the form of the
attached Exhibit A (the "Merger Certificate"), and will file it with the
Delaware Secretary of State in order to cause the Merger to be effected in
accordance with the laws of the State of Delaware. The Merger will be effective
upon the filing of the Merger Certificate (the "Effective Time"). For all
purposes, all of the document deliveries and other actions to occur at the
Closing will be conclusively presumed to have occurred at the same time,
immediately before the Effective Time.
2.2 Repayment of Convertible Notes.
(a) Each Note Holder agrees that, simultaneously with the
consummation of the Merger and at the Effective Time, the Convertible Note then
held by it shall (automatically and without further action by such Note Holder)
be cancelled and deemed to be paid-in-full and each Note Holder shall be
entitled to receive as payment therefor that number of Payment Shares to which
such Note Holder is entitled pursuant to Section 2.2(c) below.
(b) At the Closing, each Note Holder shall deliver the
original Convertible Note held by it for cancellation in accordance with this
Section 2.2. At the Effective Time and subject to and upon delivery and
cancellation of such original Convertible Note, LeukoSite shall issue to such
Note Holder that number of Payment Shares to which such Note Holder is entitled,
pursuant to Section 2.2(c) below, as payment for, and in full satisfaction of,
all amounts owed by the Company thereunder. From and after the Effective Time,
LeukoSite shall not have any liability or obligation of any kind whatsoever
under the Convertible Notes. At the Effective Time and subject to compliance by
each Note Holder with all of its obligations under this Section 2.2, LeukoSite
shall deliver, or cause to be delivered, to such Note Holder a stock certificate
representing the number of shares of LeukoSite Common Stock to which such Note
Holder is entitled pursuant to Section 2.2(c) below.
(c) Subject to the provisions of the next sentence, the number
of shares of LeukoSite Common Stock that LeukoSite shall issue at the Effective
Time to each Note Holder shall be equal to the quotient obtained by dividing (i)
an amount equal to the sum of (A) 150% of the outstanding principal amount of
the Convertible Note held by such Note Holder as of the Closing Date and (B) all
accrued and unpaid interest on the Convertible Note held by such Note Holder as
of the Closing Date (such sum being referred to, with respect to each
Convertible Note, as the "Convertible Note Amount"), by (ii) the LeukoSite
Common Stock Price Per Share. In no event shall the total number of shares of
<PAGE>
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LeukoSite Common Stock that LeukoSite shall be required to issue pursuant to
this Section 2.2(c) (the "Payment Shares") exceed 250,000 shares. If, as a
result of the limitations imposed by the foregoing sentence, any portion of the
Convertible Note Amount with respect to either or both Convertible Notes is not
paid in full, then, at the Effective Time, LeukoSite shall make a cash payment
to the applicable Note Holder or Note Holders in an amount sufficient to make
full payment of any such unpaid portion of the Convertible Note Amount with
respect to either or both Convertible Notes, as the case may be.
(d) Notwithstanding anything contained herein to the contrary,
no fractional shares of LeukoSite Common Stock shall be issued, but cash
payments shall be made in lieu of such fractional shares and shall be determined
by multiplying each relevant Note Holder's fractional interest by the LeukoSite
Common Stock Price Per Share.
(e) No dividend or other distribution payable after the
Effective Time with respect to Payment Shares will be paid to the holder of any
undelivered Convertible Note until the holder thereof delivers such original
Convertible Note to LeukoSite, at which time such Note Holder will receive all
dividends and distributions, without interest thereon, previously payable but
withheld from such holder pursuant hereto.
3. Effect of Merger. At the Effective Time, automatically and without
further action:
3.1. Surviving Corporation. Merger Sub will be merged with and into
the Company and the separate existence of Merger Sub will cease. The Company
will continue in existence as the surviving corporation in the Merger (the
"Surviving Corporation"). The effect of the Merger will be as provided in the
applicable provisions of the Delaware General Corporation Law (the "DGCL").
Without limiting the generality of the foregoing, and subject thereto, except as
otherwise provided herein, all of the property, rights, privileges, powers, and
franchises of Merger Sub and the Company, respectively, will vest in the
Surviving Corporation, and all of the debts, liabilities, and duties of Merger
Sub and the Company, respectively, will become the debts, liabilities, and
duties of the Surviving Corporation.
3.2 Certificate of Incorporation. The Certificate of Incorporation
of the Surviving Corporation shall be the same as the Certificate of
Incorporation of the Merger Sub immediately prior to the Effective Time, except
that the name of the corporation set forth therein shall be changed to the name
of the Company.
3.3 By-Laws. The by-laws of the Surviving Corporation shall be the
same as the by-laws of the Merger Sub immediately prior to the Effective Time,
except that the name of the corporation set forth therein shall be changed to
the name of the Company.
3.4. Directors and Officers. From and after the Effective Time, the
respective officers and members of the Board of Directors of the Surviving
Corporation will consist of those persons named as such in the Merger
Certificate, each such person to hold office, subject to the applicable
provisions of the Certificate of Incorporation and the by-
<PAGE>
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laws of the Surviving Corporation, until the next annual meeting of directors or
stockholders, as the case may be, of the Surviving Corporation and until his or
her successor is duly elected or appointed and qualified.
3.5. Conversion of Merger Sub's Shares. Each share of the common
stock, par value $0.01 per share, of Merger Sub that was issued and outstanding
immediately before the Effective Time will be converted into and become one
share of the common stock, par value $ 0.01 per share, of the Surviving
Corporation.
3.6. Cancellation of Company Stock; Dissenting Shares.
(a) Cancellation of Company Stock. At the Effective Time, each share
of Company Stock issued and outstanding immediately before the Effective
Time (other than any Dissenting Shares and other than any shares of
Company Stock held directly or indirectly by the Company) shall be
cancelled and shall become and be converted into the right to receive,
subject to the provisions of Sections 3.7(c) and 3.7(e) hereof, (i) a cash
payment equal to the Merger Consideration Portion of the Adjusted Initial
Cash Payment and (ii) cash payments from time to time equal to the Merger
Consideration Portion of each Aggregate Contingent Consideration Payment
paid pursuant to Sections 3.8(a), 3.8(b), 3.8(c) and 3.8(f) hereof (it
being understood that any such right to receive any portion of any
Aggregate Contingent Consideration Payments is a contingent right that is
dependent, among other things, on whether LeukoSite is required to pay any
Aggregate Contingent Consideration Payment pursuant to Sections 3.8(a),
3.8(b), 3.8(c) or 3.8(f) hereof).
(b) Cancellation of Treasury Stock, Etc. At the Effective Time, each
share of Company Stock held directly or indirectly by the Company will be
canceled and will cease to exist, and no payment will be made with respect
thereto.
(c) Dissenting Shares. Each share of Company Stock that, immediately
before the Effective Time, was held by any person who has duly exercised
the appraisal rights afforded to dissenting stockholders pursuant to
Section 262 of the DGCL (such shares, collectively, "Dissenting Shares")
will, at the Effective Time, be cancelled but shall not entitle the holder
thereof to receive the consideration referred to in Section 3.6(a) hereof.
Instead, the holders of Dissenting Shares will be entitled to receive
payment of the appraised value of such Dissenting Shares in accordance
with the provisions of such Section 262, except that all Dissenting Shares
held by Stockholders who withdraw, fail to perfect, or otherwise lose
their appraisal rights with respect to Dissenting Shares will thereupon be
deemed to entitle the holder thereof to receive the consideration referred
to in Section 3.6(a) hereof. In the event that any Stockholder exercises
his, her or its appraisal rights pursuant to Section 262 of the DGCL and
LeukoSite makes any payment to such Stockholder in respect of his, her or
its Dissenting Shares (regardless of whether such payment represents the
appraised value of such Dissenting Shares as determined pursuant to a
judicial proceeding or represents amounts paid by LeukoSite in settlement
of such appraisal rights), then LeukoSite shall be entitled to offset
against the Merger Consideration
<PAGE>
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payable thereafter by LeukoSite an amount (no less than zero) equal to (i)
the sum of any such payment made by LeukoSite to such Stockholder in
respect of his, her or its Dissenting Shares, plus (ii) the aggregate
amount of reasonable attorneys fees and expenses incurred by LeukoSite in
connection with any judicial proceeding or settlement discussions or
negotiations resulting from the exercise of appraisal rights by such
Stockholder, less (iii) the portion of any Merger Consideration that would
have been paid by LeukoSite prior to the date of such payment to such
Stockholder if such Stockholder had not exercised appraisal rights.
(d) Optionee Bonus. In consideration of services provided to the
Company and the cancellation of Company Options held by the Bonus
Recipients, the Company has granted, effective as of the Effective Time,
to each Bonus Recipient a bonus consisting of the right to receive,
subject to the provisions of Sections 3.7(c) and 3.7(e) hereof, with
respect to each share of Company Stock issuable immediately prior to the
Effective Time upon the exercise of those Company Options held by such
Bonus Recipient immediately prior to the Effective Time (regardless of
whether such Company Options are then vested or unvested), (i) a cash
payment equal to the Merger Consideration Portion of the Adjusted Initial
Cash Payment and (ii) cash payments from time to time equal to the Merger
Consideration Portion of each Aggregate Contingent Consideration Payment
paid pursuant to Sections 3.8(a), 3.8(b), 3.8(c) and 3.8(f) hereof (it
being understood that any such right to receive any portion of any
Aggregate Contingent Consideration Payments is a contingent right that is
dependent, among other things, on whether LeukoSite is required to pay any
Aggregate Contingent Consideration Payment pursuant to Sections 3.8(a),
3.8(b), 3.8(c) or 3.8(f) hereof). The Company's obligations to make such
bonus payments shall be assumed by LeukoSite in connection with the
Merger.
3.7. Initial Cash Payment; Adjustments to Cash Payment; Hold-Backs.
The initial aggregate cash consideration payable at the Effective Time by
LeukoSite in connection with the Merger (the "Initial Cash Payment") shall equal
$2,720,000 minus the aggregate Convertible Note Amount with respect to both
Convertible Notes, subject to the adjustment and hold-back provisions of
Sections 3.7(b), 3.7(c) and 3.7(e) below.
(a) Closing Balance Sheet and Net Closing Liabilities. At the
Closing, the Company shall deliver to LeukoSite (i) an unaudited balance
sheet of the Company as of the Closing Date (the "Unaudited Closing
Balance Sheet") and (ii) a certificate signed by the President and Chief
Financial Officer of the Company certifying (i) that the Unaudited Closing
Balance Sheet was prepared in accordance with generally accepted
accounting principles, consistently applied, except for the absence of
footnotes and subject to adjustments consisting of normal year-end
accruals, the effect of which, both individually and in the aggregate, is
not material, (ii) that the Unaudited Closing Balance Sheet fairly and
accurately presents the financial condition of the Company as of the
Closing Date, and (iii) as to the amount of the Net Closing Liabilities.
The Unaudited Closing Balance Sheet and the calculation of the Net Closing
Liabilities shall have been prepared in consultation and agreement with
LeukoSite and LeukoSite's representatives after LeukoSite and
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LeukoSite's representatives have had access (consistent with the
provisions reflected in Section 10.1) to financial information and
personnel relevant to the preparation of the Unaudited Closing Balance
Sheet and the calculation of the Net Closing Liabilities. No less than
three (3) business days prior to the Closing, the Company shall have
prepared and delivered to LeukoSite (x) a draft of the Unaudited Closing
Balance Sheet that the Company expects to deliver at the Closing, (y) a
draft computation of the Net Closing Liabilities and (z) a written
description of those items and amounts that the Company anticipates could
change in the Unaudited Closing Balance Sheet and the Net Closing
Liabilities computation from the drafts thereof delivered by the Company
pursuant to this Section 3.7(a). Such drafts of the Unaudited Closing
Balance Sheet and the computation of the Net Closing Liabilities shall be
prepared by the Company in good faith and shall reflect all expenses and
liabilities that the Company reasonably anticipates will be reflected in
the Unaudited Closing Balance Sheet and the computation of Net Closing
Liabilities that will be delivered by the Company at the Closing pursuant
to this Section 3.7(a).
(b) Adjustment to Initial Cash Payment. In the event that the
amount of the Net Closing Liabilities is greater than the sum of $782,000,
plus the aggregate amount of all expenditures incurred by the Company
during the period following the date of this Agreement through and
including the Closing which have been approved by LeukoSite as evidenced
by its written consent thereto given pursuant to Section 10.2 hereof and
plus the aggregate amount of all expenditures incurred by the Company
during the period following June 30, 1999 through and including the
Closing which do not require LeukoSite's approval under Section 10.2
hereof (the amount resulting from such sum being hereinafter referred to
as the "Approved Unbudgeted Expenditures"), then the Initial Cash Payment
shall be reduced at the Closing, on a dollar-for-dollar basis, by the
amount of such excess (such excess being hereinafter referred to as the
"Excess Net Closing Liabilities"). For purposes of this Agreement, the
term "Adjusted Initial Cash Payment" shall mean the Initial Cash Payment
as adjusted at the Closing pursuant to this Section 3.7(b). In no event
shall the Adjusted Initial Cash Payment be less than zero. If the Excess
Net Closing Liabilities exceed the amount of the Initial Cash Payment or
if there are no Excess Net Closing Liabilities but the Initial Cash
Payment is less than zero as a result of the payment by LeukoSite of the
aggregate Convertible Note Amount with respect to both Convertible Notes,
then the Adjusted Initial Cash Payment shall be equal to zero and
LeukoSite shall be entitled to the special set-off rights set forth in
Section 3.7(c) below.
(c) Special Set-Off Rights. In the event that the Excess Net
Closing Liabilities exceed the amount of the Initial Cash Payment (any
such excess being referred to as the "Excess Amount") or in the event that
there are no Excess Net Closing Liabilities but the Initial Cash Payment
is less than zero as a result of the payment by LeukoSite of the aggregate
Convertible Note Amount with respect to both Convertible Notes (any such
shortfall being referred to as the "Shortfall Amount"), then LeukoSite
shall have the right to set-off the Excess Amount or the
<PAGE>
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Shortfall Amount, as the case may be, against any of the Aggregate
Contingent Consideration Payments.
(d) Payment of the Adjusted Initial Cash Payment. If the
Adjusted Initial Cash Payment is greater than zero, then, at the Effective
Time, the portion, if any, of the Adjusted Initial Cash Payment that is
not held back by LeukoSite pursuant to Section 3.7(e) below shall be paid
in accordance with the provisions of Section 3.6 hereof.
(e) Hold-Back by LeukoSite; Payment of Balance. If both of the
Excess Net Closing Liabilities and the Adjusted Initial Cash Payment are
greater than zero, then LeukoSite shall be entitled to hold back an amount
(the "Hold-Back Amount") equal to the lesser of (I) the Adjusted Initial
Cash Payment and (II) $100,000 for a period commencing on the Closing Date
and ending on the last business day of sixth (6th) calendar month
following the month in which the Closing occurs (the "Hold-Back Period").
At the end of the Hold-Back Period, LeukoSite shall pay, in accordance
with the provisions of Section 3.6, an amount equal to the Hold-Back
Amount less the aggregate amount of Undisclosed Liabilities paid or
outstanding as of the end of the Hold-Back Period; provided, however, that
if the amount of Undisclosed Liabilities is greater than the Hold-Back
Amount, then no amounts shall be paid or payable pursuant to this Section
3.7(e) and LeukoSite may be entitled to indemnification pursuant to, and
in accordance with, the provisions of Section 14 hereof with respect to
such excess Undisclosed Liabilities. Prior to the end of the Hold-Back
Period, LeukoSite shall give notice to the Stockholder Representatives of
the nature and amount of any Undisclosed Liabilities. If the Stockholder
Representatives shall notify LeukoSite that they do not believe that some
or all of such Undisclosed Liabilities are bona fide liabilities of the
Company, then LeukoSite shall afford the Stockholder Representatives with
the opportunity to present the facts that support the Stockholder
Representatives' view that some or all of such Undisclosed Liabilities are
not bona fide liabilities of the Company. LeukoSite retains the right to
make the final determination as to whether some or all of such Undisclosed
Liabilities are not bona fide liabilities of the Company. In the event
that, following the expiration of the Hold-Back Period, LeukoSite shall no
longer be required to make payment of all or any portion of any
Undisclosed Liabilities that were unpaid at the time of the expiration of
the Hold-Back Period, then LeukoSite shall make payment, in accordance
with the provisions of Section 3.6, of any portion of the Hold-Back Amount
that was offset by the amount of any such unpaid Undisclosed Liabilities
that are no longer required to be paid.
3.8. Aggregate Contingent Consideration Payments.
(a) LeukoSite Contingent Milestone Payments. If a Drug Development
Program conducted by LeukoSite or its Affiliates yields a Product
Candidate which achieves the applicable drug development milestones set
forth in the applicable table below (whether such milestones are achieved
by LeukoSite or its Affiliates), then, subject to the provisions of
Section 3.8(d) and Section 3.8(g) hereof, LeukoSite shall
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make payments, in accordance with Section 3.6, of the consideration set
forth in the applicable table below (a "LeukoSite Contingent Milestone
Payment") within thirty (30) days of the occurrence of the applicable drug
development milestone below; provided, that LeukoSite shall be obligated
to pay consideration for each drug development milestone only once,
regardless of the number of Product Candidates or compounds that achieve
such drug development milestone.
Compound 519/
519 Class of Compounds
------------------------------------------------------------------------
Event Cash Payment
------------------------------------------------------------------------
Earlier of (i) completion of a successful $500,000
and acceptable Phase II study that meets
the primary endpoints established for such
study, and (ii) the decision by LeukoSite
to commence a pivotal Phase II or
Phase III study
------------------------------------------------------------------------
The decision by LeukoSite to $3,000,000
prepare and file an NDA
------------------------------------------------------------------------
Approval of an NDA $1,000,000
------------------------------------------------------------------------
Compound 341/
341 Class of Compounds
------------------------------------------------------------------------
Event Cash Payment
------------------------------------------------------------------------
The decision by LeukoSite to $3,000,000
prepare and file an NDA
------------------------------------------------------------------------
Approval of an NDA $1,000,000
------------------------------------------------------------------------
(b) Contingent Partner Licensing Payments. If at any time LeukoSite
determines, in its sole discretion, to license, transfer or grant the
right to develop, market and commercialize, or the right to market and
commercialize (but not the right to develop), a Product Candidate or a
Related Compound to a third party which is not an Affiliate of LeukoSite
(a "Partner") then, subject to the provisions set forth
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below in this Section 3.8(b) and in Section 3.8(d) and Section 3.8(g)
hereof, LeukoSite shall make payment, in accordance with Section 3.6, of
the following amounts (each amount, individually, a "Contingent Partner
Licensing Payment" and, collectively, the "Contingent Partner Licensing
Payments"):
(i) an amount equal to twenty-five percent (25%) of any
license fees and milestone payments actually received by LeukoSite from
the Partner in respect of such Product Candidate, less the amount of any
LeukoSite Contingent Milestone Payments made by LeukoSite pursuant to
Section 3.8(a) (if any) in respect of such Product Candidate;
(ii) an amount equal to twenty-five percent (25%) of any
royalty payments actually received by LeukoSite from the Partner for sales
of such Product Candidate by such Partner to third parties, provided that
(A) in the case of any such sales made in any of the Major Geographical
Areas, such sales are made by such Partner at any time during the first
five (5) years after the First Commercial Sale of such Product Candidate
in such Major Geographical Area, and (B) in the case of any such sales
made in any of the Other Countries of the world, such sales are made by
such Partner at any time during the first five (5) years after the First
Commercial Sale of such Product Candidate in any of the Major Geographical
Areas;
(iii) an amount equal to twelve and a half percent (12.5%) of
any royalty payments actually received by LeukoSite from the Partner for
sales of such Product Candidate by such Partner to third parties, provided
that (A) in the case of any such sales made in any of the Major
Geographical Areas, such sales are made by such Partner at any time during
the second five (5) years after the First Commercial Sale of such Product
Candidate in such Major Geographical Area, and (B) in the case of any such
sales made in any of the Other Countries of the world, such sales are made
by such Partner at any time during the second five (5) years after the
First Commercial Sale of such Product Candidate in any of the Major
Geographical Areas;
(iv) an amount equal to twelve and a half percent (12.5%) of
any royalty payments actually received by LeukoSite from the Partner for
sales of such Related Compound by such Partner to third parties, provided
that (A) in the case of any such sales made in any of the Major
Geographical Areas, such sales are made by such Partner at any time during
the first five (5) years after the First Commercial Sale of such Related
Compound in such Major Geographical Area, and (B) in the case of any such
sales made in any of the Other Countries of the world, such sales are made
by such Partner at any time during the first five (5) years after the
First Commercial Sale of such Related Compound in any of the Major
Geographical Areas; and/or
(v) an amount equal to six and twenty-five hundredths percent
(6.25%) of any royalty payments actually received by LeukoSite from the
Partner for sales of such Related Compound by such Partner to third
parties, provided that (A) in the case of any such sales made in any of
the Major Geographical Areas, such sales are made by such Partner at any
time during the second five (5) years after the First
<PAGE>
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Commercial Sale of such Related Compound in such Major Geographical Area,
and (B) in the case of any such sales made in any of the Other Countries
of the world, such sales are made by such Partner at any time during the
second five (5) years after the First Commercial Sale of such Related
Compound in any of the Major Geographical Areas.
Notwithstanding anything expressed or implied in this Section 3.8(b)
or elsewhere in this Agreement to the contrary, (A) LeukoSite shall be
required to make payment of Contingent Partner Licensing Payments pursuant
to clause (i) of this Section 3.8(b) only with respect to (1) the first
Product Candidate from the PS-341 Compound Class for which LeukoSite
receives payment of any license fees or milestone payments from any
Partner and (2) the first Product Candidate from the PS-519 Compound Class
for which LeukoSite receives payment of any license fees or milestone
payments from any Partner, and (B) LeukoSite shall be required to make
payment of Contingent Partner Licensing Payments pursuant to clauses (ii),
(iii), (iv) and/or (v) of this Section 3.8(b) only with respect to (1) the
first Product Candidate or Related Compound that is a member of the same
boronate class of proteasome inhibitors as PS-341 and that is to be
marketed and commercialized by any Partner (the "Royalty Pass-Through
Section 3.8(b) 341 Compound") and (2) the first Product Candidate or
Related Compound that is a member of the same lactacystin class of
proteasome inhibitors as PS-519 and that is to be marketed and
commercialized by any Partner (the "Royalty Pass-Through Section 3.8(b)
519 Compound"). It is further specifically acknowledged and agreed that
the foregoing provisions of this paragraph shall apply regardless of the
number of Product Candidates or Related Compounds that are developed,
marketed and/or commercialized by the same Partner or by multiple Partners
and that there shall be, for purposes of this Agreement, only a single
Royalty Pass-Through Section 3.8(b) 341 Compound and a single Royalty
Pass-Through Section 3.8(b) 519 Compound.
Consideration received by LeukoSite from a Partner that is not in
the form of cash shall be valued by LeukoSite's Board of Directors in good
faith as of the date of receipt of such consideration by LeukoSite.
Promptly following any such valuation of any such non-cash consideration,
LeukoSite shall provide written notice to the Stockholder Representatives
of the results of any such valuation and the basis therefor.
In the event that LeukoSite shall receive payment from a Partner in
the form of equity securities of any person and that such payment is
subject to the provisions of this Section 3.8(b), then, in lieu of making
payment in accordance with the provisions of this Section 3.8(b) of any
such equity securities, LeukoSite shall have the right to make cash
payments pursuant to this Section 3.8(b) equal in amount to the value of
such equity securities. Notwithstanding the foregoing or anything else
expressed or implied in this Section 3.8(b) to the contrary, in no event
shall LeukoSite be required, pursuant to this Section 3.8(b), to pay,
provide or otherwise share any portion of any equity interests in any
joint venture that are issued to, or
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acquired by, LeukoSite or any of its Affiliates. No Contingent Partner
Licensing Payment, or any portion thereof, shall consist of or include any
such equity interests.
Any payment that LeukoSite is required to make pursuant to this
Section 3.8(b) shall be made within thirty (30) days following LeukoSite's
receipt of consideration from the Partner.
(c) HMR Payments. With respect to that certain Amended and Restated
Collaboration and License Agreement, dated May 19, 1997 (as heretofore
amended, the "HMR Agreement"), between Hoechst Marion Roussel, Inc., a
Delaware corporation ("HMR"), and the Company, LeukoSite shall make
payment, in accordance with Section 3.6, of the following amounts
(individually, an "HMR Payment" and, collectively, the "HMR Payments"),
subject to the provisions of Section 3.8(d) and Section 3.8(g) hereof:
(i) an amount equal to fifty percent (50%) of any milestone
payments actually received by LeukoSite or the Surviving Corporation from
HMR, pursuant to Section 4.3 of the HMR Agreement, in connection with the
development by HMR of any HMR Compound, except that (i) LeukoSite shall
not be required to make any payments under this Section 3.8(c)(i) with
respect to the first $500,000 of milestone payments actually received by
LeukoSite or the Surviving Corporation at any time after the Effective
Time pursuant to the HMR Agreement (provided, however, that the foregoing
provisions of this clause (i) shall not apply in the event that LeukoSite
makes a determination that it will not deliver to HMR the third
high-throughput assay for a Collaboration Target Inhibitor that is
reflected as part of the second milestone under Section 4.3 of the HMR
Agreement) and (ii) with respect to up to $1,000,000 of milestone payments
(the "Special Milestone Payments") actually received by LeukoSite or the
Surviving Corporation pursuant to the HMR Agreement at any time after
LeukoSite or the Surviving Corporation shall have previously received,
from and after the Effective Time, an aggregate of $1,500,000 in milestone
payments under the HMR Agreement, LeukoSite shall only be required to make
payment, in accordance with Section 3.6, of an amount equal to twenty five
percent (25%) of any and all of the Special Milestone Payments;
(ii) an amount equal to twenty-five percent (25%) of any
royalty payments actually received by LeukoSite from HMR under the HMR
Agreement for sales of any HMR Compound by HMR to third parties, provided
that (A) in the case of any such sales made in any of the Major
Geographical Areas, such sales are made by HMR at any time during the
first five (5) years after the First Commercial Sale of such HMR Compound
in such Major Geographical Area, and (B) in the case of any such sales
made in any of the Other Countries of the world, such sales are made by
HMR at any time during the first five (5) years after the First Commercial
Sale of such HMR Compound in any of the Major Geographical Areas; and
(iii) an amount equal to twelve and a half percent (12.5%) of
any royalty payments actually received by LeukoSite from HMR under the HMR
<PAGE>
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Agreement for sales of any HMR Compound by HMR to third parties, provided
that (A) in the case of any such sales made in any of the Major
Geographical Areas, such sales are made by HMR at any time during the
second five (5) years after the First Commercial Sale of such HMR Compound
in such Major Geographical Area, and (B) in the case of any such sales
made in any of the Other Countries of the world, such sales are made by
HMR at any time during the second five (5) years after the First
Commercial Sale of such HMR Compound in any of the Major Geographical
Areas.
Consideration received by LeukoSite or the Surviving Corporation
from HMR that is not in the form of cash shall be valued by LeukoSite's
Board of Directors in good faith as of the date of receipt of such
consideration by LeukoSite. Promptly following any such valuation of any
such non-cash consideration, LeukoSite shall provide written notice to the
Stockholder Representatives of the results of any such valuation and the
basis therefor.
In the event that LeukoSite shall receive payment from HMR in the
form of equity securities of any person and that such payment is subject
to the provisions of this Section 3.8(c), then, in lieu of making payment
in accordance with the provisions of this Section 3.8(c) of any such
equity securities, LeukoSite shall have the right to make cash payments
pursuant to this Section 3.8(c) equal in amount to the value of such
equity securities. Notwithstanding the foregoing or anything else
expressed or implied in this Section 3.8(c) to the contrary, in no event
shall LeukoSite be required, pursuant to this Section 3.8(c), to pay,
provide or otherwise share any portion of any equity interests in any
joint venture that are issued to, or acquired by, LeukoSite or any of its
Affiliates. No HMR Payments, or any portion thereof, shall consist of or
include any such equity interests.
Any payment that LeukoSite is required to make pursuant to this
Section 3.8(c) shall be made within thirty (30) days following LeukoSite's
or the Surviving Corporation's receipt of consideration from HMR.
(d) Maximum Payment. Notwithstanding anything in this Section 3.8
expressed or implied to the contrary, in no event shall the cumulative
aggregate amount or value of consideration that LeukoSite shall be
required to provide pursuant to Sections 3.8(a), 3.8(b)(i) and 3.8(c)(i)
exceed the sum of $20,000,000. Consideration from a Partner or HMR that is
not in the form of cash shall be valued by LeukoSite's Board of Directors
in good faith as of the date of receipt of such consideration by LeukoSite
or the Surviving Corporation and shall be included for purposes of
determining whether the maximum payment set forth in the preceding
sentence has been reached.
(e) ProScript Programs. LeukoSite represents and warrants that, as
of the date of this Agreement and based upon the information available to
it as of such date, it intends to continue the development and
commercialization of Product Candidates included in the ProScript
Programs. However, it is agreed by the Company and LeukoSite that, from
and after the date hereof, the ProScript Programs
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shall be evaluated by LeukoSite in the context of the overall research and
development programs undertaken from time to time by LeukoSite (the
"LeukoSite R&D Programs"). In making determinations concerning whether,
when and/or in what manner to develop, market or commercialize any Product
Candidate or any other compound included in any ProScript Program from and
after the date hereof, LeukoSite shall use the same criteria that it
applies in making such or similar evaluations and determinations
concerning the LeukoSite R&D Programs. Specifically, and without limiting
the generality of the foregoing sentence, LeukoSite shall take into
account its available financial resources and personnel, LeukoSite's
commitments and obligations to its corporate partners, the ease of, and
the timeframe for, obtaining regulatory approval, the potential
therapeutic benefits of the drug candidate, the level of competition in
the marketplace for the drug candidate, the relative costs of pre-clinical
and clinical development of any Product Candidate or any compound in a
ProScript Program as compared with LeukoSite's other drug development
candidates, the results and data obtained in any pre-clinical or clinical
trials, and the relative potential economic returns to LeukoSite from the
development, sale, marketing or other commercialization of any Product
Candidate or any compound in a ProScript Program as compared to any of
LeukoSite's other drug development candidates. After making a thorough
evaluation utilizing the criteria described above, LeukoSite may continue,
modify, postpone or terminate any ProScript Program or the development and
commercialization of any Product Candidate. The Stockholders'
Representatives shall have the right to obtain information about the
status of the ProScript Programs pursuant to Section 9.13 hereof.
(f) Contingent Royalty Payments. If LeukoSite or its Affiliate
markets and sells a Product Candidate or a Related Compound to third
parties who are not Affiliates of LeukoSite, then, subject to the
provisions set forth below in this Section 3.8(f) and in Section 3.8(g)
hereof, LeukoSite shall make payment, in accordance with Section 3.6, of
the following amounts (each amount, individually, a "Contingent Royalty
Payment" and, collectively, the "Contingent Royalty Payments"):
(i) an amount equal to ten percent (10%) of the Net Sales that
are generated by LeukoSite or its Affiliates from sales of such Product
Candidate to third parties who are not Affiliates of LeukoSite, provided
that (A) in the case of any such sales made in any of the Major
Geographical Areas, such sales are made by LeukoSite or its Affiliates at
any time during the first five (5) years after the First Commercial Sale
of such Product Candidate in such Major Geographical Area, and (B) in the
case of any such sales made in any of the Other Countries of the world,
such sales are made by LeukoSite or its Affiliates at any time during the
first five (5) years after the First Commercial Sale of such Product
Candidate in any of the Major Geographical Areas;
(ii) an amount equal to five percent (5%) of the Net Sales
that are generated by LeukoSite or its Affiliates from sales of such
Product Candidate to third parties who are not Affiliates of LeukoSite,
provided that (A) in the case of any such
<PAGE>
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sales made in any of the Major Geographical Areas, such sales are made by
LeukoSite or its Affiliates at any time during the second five (5) years
after the First Commercial Sale of such Product Candidate in such Major
Geographical Area, and (B) in the case of any such sales made in any of
the Other Countries of the world, such sales are made by LeukoSite or its
Affiliates at any time during the second five (5) years after the First
Commercial Sale of such Product Candidate in any of the Major Geographical
Areas;
(iii) an amount equal to five percent (5%) of the Net Sales
that are generated by LeukoSite or its Affiliates from sales of such
Related Compound to third parties who are not Affiliates of LeukoSite,
provided that (A) in the case of any such sales made in any of the Major
Geographical Areas, such sales are made by LeukoSite or its Affiliates at
any time during the first five (5) years after the First Commercial Sale
of such Related Compound in such Major Geographical Area, and (B) in the
case of any such sales made in any of the Other Countries of the world,
such sales are made by LeukoSite or its Affiliates at any time during the
first five (5) years after the First Commercial Sale of such Related
Compound in any of the Major Geographical Areas; and/or
(iv) an amount equal to two and half percent (2.5%) of the Net
Sales that are generated by LeukoSite or its Affiliates from sales of such
Related Compound to third parties who are not Affiliates of LeukoSite,
provided that (A) in the case of any such sales made in any of the Major
Geographical Areas, such sales are made by LeukoSite or its Affiliates at
any time during the second five (5) years after the First Commercial Sale
of such Related Compound in such Major Geographical Area, and (B) in the
case of any such sales made in any of the Other Countries of the world,
such sales are made by LeukoSite or its Affiliates at any time during the
second five (5) years after the First Commercial Sale of such Related
Compound in any of the Major Geographical Areas.
The Contingent Royalty Payments shall be paid in U.S. dollars and
within thirty (30) days after the close of each calendar quarter beginning
with the first full calendar quarter after the date on which LeukoSite
actually receives payments for Net Sales with respect to any Product
Candidate or any Related Compound.
Notwithstanding anything expressed or implied in this Section 3.8(f)
(except to the extent otherwise provided in the next paragraph) or
elsewhere in this Agreement to the contrary, LeukoSite shall be required
to make payment of Contingent Royalty Payments pursuant to this Section
3.8(f) only with respect to (i) the first Product Candidate or Related
Compound that is a member of the same boronate class of proteasome
inhibitors as PS-341 and that is to be marketed and sold by LeukoSite or
any of its Affiliates (the "Section 3.8(f) 341 Compound") and (ii) the
first Product Candidate or Related Compound that is a member of the same
lactacystin class of proteasome inhibitors as PS-519 and that is to be
marketed and sold by LeukoSite or any of its Affiliates (the "Section
3.8(f) 519 Compound"). It is further specifically acknowledged and agreed
that the foregoing provisions of this
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paragraph shall apply regardless of the number of Product Candidates
and/or Related Compounds that are marketed and sold by LeukoSite or any of
its Affiliates and that there shall be, for purposes of this Agreement,
only a single Section 3.8(f) 341 Compound and a single Section 3.8(f) 519
Compound. For purposes of this Agreement, the term "Section 3.8(f)
Compound" shall mean either or both, as the context may require, of the
Section 3.8(f) 341 Compound and the Section 3.8(f) 519 Compound.
If, within two years of the First Commercial Sale of a Section
3.8(f) Compound in a Major Geographical Area or in one of the Other
Countries, LeukoSite or its Affiliates begins to market and sell a
Follow-on Product (as defined below) with respect to such Section 3.8(f)
Compound in such Major Geographical Area or in one of the Other Countries,
then, at such time as Net Sales of such Follow-on Product in such Major
Geographical Area or in the Other Countries, as the case may be, exceeds
Net Sales of such Section 3.8(f) Compound for three consecutive calendar
quarters, the Contingent Royalty Payments contemplated by this Section
3.8(f) shall become payable with respect to such Follow-on Product and
shall cease to be payable with respect to such Section 3.8(f) Compound.
For purposes of calculating the Contingent Royalty Payments that may
become due with respect to any such Follow-on Product, the First
Commercial Sale of such Follow-on Product in any Major Geographical Area
shall be deemed to have occurred at the time of the First Commercial Sale
in such Major Geographical Area of the Section 3.8(f) Compound to which
such Follow-on Product is related pursuant to the provisions of this
paragraph; provided, however, that nothing in this sentence shall be
construed as providing for the payment of Contingent Royalty Payments in
respect of a Follow-on Product for any period of time prior to the time in
which such Follow-on Product superseded the applicable Section 3.8(f)
Compound in accordance with the provisions set forth above in this
paragraph. The term "Follow-on Product" shall mean (i) with respect to the
Section 3.8(f) 341 Compound, a single other Product Candidate or Related
Compound that is a member of the same boronate class of proteasome
inhibitors as PS-341, that targets at least one of the indications
targeted by the Section 3.8(f) 341 Compound and that is marketed by
LeukoSite with the intention of cannibalizing the Section 3.8(f) 341
Compound and (ii) with respect to the Section 3.8(f) 519 Compound, a
single other Product Candidate or Related Compound that is a member of the
same lactacystin class of proteasome inhibitors as PS-519, that targets at
least one of the indications targeted by the Section 3.8(f) 519 Compound
and that is marketed by LeukoSite with the intention of cannibalizing the
Section 3.8(f) 519 Compound.
For purposes of clarification, it is hereby understood and agreed by
the parties that the transfer or grant to any third party who is not an
Affiliate of LeukoSite of the right to market or sell a Product Candidate
or a Related Compound shall not be subject to this Section 3.8(f) but
shall be subject to Section 3.8(b) hereof.
<PAGE>
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(g) Reduction of Aggregate Contingent Consideration Payments.
(i) Development Costs for Certain Product Candidates and
Related Compounds. In the event that LeukoSite is obligated, pursuant to
any of the provisions of this Section 3.8, to make an Aggregate Contingent
Consideration Payment with respect to a Product Candidate (other than
PS-519 or PS-341) or a Related Compound, then LeukoSite shall have the
right to offset against such Aggregate Contingent Consideration Payment
all or any portion of the reasonable direct and indirect costs (including,
without limitation, applicable overhead) incurred by LeukoSite or the
Surviving Corporation in connection with pre-clinical and clinical
development of such Product Candidate or Related Compound through the
earlier of (i) the approval of the Investigational New Drug Application or
its equivalent filed with respect to such Product Candidate or Related
Compound or (ii) the commencement of Phase I human clinical trials with
respect to such Product Candidate or Related Compound.
(ii) Patent Expiration and Patent Invalidity. If (a) any
patent or patent application that covers any Product Candidate or any
Related Compound in any country or countries of the world is declared by
any court of competent jurisdiction to be invalid or unenforceable or to
infringe the rights of any third party, or (b) any patent that covers any
Product Candidate or any Related Compound in any country or countries of
the world expires and competition from a generic product develops in such
country or countries, then LeukoSite shall be entitled to reduce by fifty
percent (50%) the portion of any and all Contingent Royalty Payments that
LeukoSite would otherwise be obligated, pursuant to Section 3.8(f), to pay
in respect of sales of any such Product Candidate or Related Compound in
such country or countries.
(iii) Payments in respect of Third Party Patents and
Technology. If (a) LeukoSite reasonably determines that (i) a patent
owned, held or licensed by a third party that is not an Affiliate of
LeukoSite covers the development, manufacture, use or sale of a Product
Candidate or a Related Compound or that development, manufacture, use or
sale of a Product Candidate or a Related Compound infringes an issued and
unexpired patent of a third party that is not an Affiliate of LeukoSite
(each, a "Blocking Third Party Patent") or (ii) a patented or proprietary
complementary technology owned by a third party is necessary for
LeukoSite's development, manufacture, use or sale of a Product Candidate
or a Related Compound (a "Complementary Technology"), and (b) LeukoSite
in-licenses such Blocking Third Party Patent or Complementary Technology
pursuant to terms requiring LeukoSite to make payments to such third
party, then, subject to the provisions of Section 3.8(g)(v) below, fifty
percent (50%) of the amount of any payments that LeukoSite is required to
pay in connection with such in-licensed Blocking Third Party Patent or
Complementary Technology shall be offset by LeukoSite against any and all
Aggregate Contingent Consideration Payments that LeukoSite is required to
pay pursuant to this Section 3.8 with respect to such Product Candidate or
Related Compound, provided that in no event shall the amount of any
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LeukoSite Contingent Milestone Payment, Contingent Partner Licensing
Payment or Contingent Royalty Payment that would otherwise be payable by
LeukoSite pursuant to this Section 3.8 be reduced by more than fifty
percent (50%) pursuant to this Section 3.8(g)(iii). In the event that
LeukoSite shall in-license Complementary Technology, LeukoSite shall use
commercially reasonable efforts to get the licensor of any such
Complementary Technology to agree to indemnify LeukoSite from third party
infringement claims arising from LeukoSite's use of such Complementary
Technology.
(iv) Payments under Harvard License Agreements in respect of
any HMR Compound. If, but only if, at any time after the Effective Time,
LeukoSite renegotiates the HMR Agreement such that the milestone or
royalty payments payable to LeukoSite or the Surviving Corporation under
the HMR Agreement are higher than the amount of any such payments that are
payable to the Surviving Corporation under the HMR Agreement as in effect
on the date hereof, then fifty percent (50%) of any payments made by
LeukoSite or the Surviving Corporation pursuant to either Harvard License
Agreement in connection with, or as a result of, the development,
manufacture, use or sale of any HMR Compound shall be offset by LeukoSite
against any and all HMR Payments that LeukoSite is required to pay
pursuant to Section 3.8(c) with respect to such HMR Compound.
Notwithstanding the foregoing, in no event shall the amount of any HMR
Payment with respect to any HMR Compound be less, by virtue of this
Section 3.8(g)(iv), than the amount that would have been received under
Section 3.8(c) with respect to such HMR Compound if the terms of the HMR
Agreement had not been renegotiated.
(v) Payments under Harvard License Agreements in respect of
any Product Candidates or Related Compounds. If LeukoSite, the Surviving
Corporation, any of LeukoSite's other Affiliates or any Partner makes any
royalty payment pursuant to either Harvard License Agreement in connection
with, or as a result of, the development, manufacture, use or sale of a
Product Candidate or Related Compound, and if such Product Candidate or
Related Compound is a member of the same lactacystin class of proteasome
inhibitors as PS-519, then (A) any and all Contingent Partner Licensing
Payments that LeukoSite is required to pay pursuant to clause (iii) of
Section 3.8(b) with respect to such Product Candidate shall be calculated
as if the percentage set forth in such clause (iii) were 25% instead of
12.5% and (B) any and all Contingent Partner Licensing Payments that
LeukoSite is required to pay pursuant to clause (v) of Section 3.8(b) with
respect to such Related Compound shall be calculated as if the percentage
set forth in such clause (v) were 12.5% instead of 6.25%. In addition, if
LeukoSite, the Surviving Corporation, any of LeukoSite's other Affiliates
or any Partner makes any royalty payment pursuant to either Harvard
License Agreement in connection with, or as a result of, the development,
manufacture, use or sale of a Product Candidate or Related Compound, and
if such Product Candidate or Related Compound is a member of the same
lactacystin class of proteasome inhibitors as PS-519, then fifty percent
(50%) of the amount of any such royalty payment shall be offset by
LeukoSite against any and all Contingent Partner Licensing Payments that
LeukoSite is required to pay pursuant to
<PAGE>
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clauses (ii), (iii), (iv) and/or (v) of Section 3.8(b) with respect to
such Product Candidate or Related Compound, provided that (X) in no event
shall the amount of any Contingent Partner Licensing Payment payable by
LeukoSite pursuant to clauses (ii) and (iv) of Section 3.8(b) with respect
to such Product Candidate be less, by virtue of the operation of the
provisions of this Section 3.8(g)(v) and Section 3.8(g)(iii), than an
amount equal to one percent (1%) of the Net Sales generated by a Partner
and its Affiliates from sales of such Product Candidate to third parties
who are not Affiliates of such Partner and (Y) in no event shall the
amount of any Contingent Partner Licensing Payment payable by LeukoSite
pursuant to clauses (iii) and (v) of Section 3.8(b) with respect to such
Related Compound be less, by virtue of the operation of the provisions of
this Section 3.8(g)(v) and Section 3.8(g)(iii), than an amount equal to
one-half of one percent (0.5%) of the Net Sales generated by a Partner and
its Affiliates from sales of such Related Compound to third parties who
are not Affiliates of such Partner.
(h) Application of Offset Rights to Subsequent Payments. In the
event that, pursuant to any provision of this Agreement (including,
without limitation, any provision of this Section 3.8 or any provision of
Section 14 hereof), LeukoSite shall be entitled to offset or setoff any
amount or amounts (in each instance, a "Setoff Amount") against all or any
portion of the Merger Consideration (in accordance with the terms and
limitations set forth in this Agreement), and that, after giving effect to
any such offset or setoff right (in accordance with the terms and
limitations set forth in this Agreement), a portion of such Setoff Amount
remains unsatisfied, then the parties hereby agree that LeukoSite shall be
entitled to offset or setoff any such unsatisfied Setoff Amount against
any and all subsequent payments of Merger Consideration that LeukoSite is
required to make pursuant to this Agreement until such unsatisfied Setoff
Amount shall have been fully offset. Notwithstanding the foregoing, the
parties hereby acknowledge that the provisions of Sections 3.8(g)(iii),
(iv) and (v) contemplate and permit (under certain circumstances specified
therein) set-offs and offsets of certain amounts relating to a Product
Candidate, Related Compound or HMR Compound, as the case may be, solely
against the portion of any Merger Consideration then owed or that may be
payable in the future by LeukoSite pursuant to this Agreement with respect
to such Product Candidate, Related Compound or HMR Compound, as the case
may be, and that the provisions of this Section 3.8(h) shall not be
construed so as to permit LeukoSite to set-off or offset, pursuant to
Sections 3.8(g)(iii), (iv) and (v), any amount relating to a Product
Candidate, Related Compound or HMR Compound against any portion of the
Merger Consideration attributable to a Product Candidate, Related Compound
or HMR Compound other than such Product Candidate, Related Compound or HMR
Compound, as the case may be.
(i) Infringement Action Recoveries. In the event that LeukoSite
shall be awarded damages in connection with any suit or arbitration
against a third party for infringement of intellectual property rights
that pertain to any Section 3.8(f) Compound, then any amounts actually
received by LeukoSite in payment of such damages shall be treated, for
purposes of Section 3.8(f) hereof, as if they were Net
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Sales of such Section 3.8(f) Compound arising from sales of such Section
3.8(f) Compound during the years during which the infringement was
occurring. In the event that a Partner shall be awarded damages in
connection with any suit or arbitration against a third party for
infringement of intellectual property rights that pertain to a Product
Candidate or Related Compound being marketed by such Partner and that such
Partner makes payment to LeukoSite of a portion of such awarded damages,
then the portion of such awarded damages that is actually received by
LeukoSite from such Partner shall be treated, for purposes of Section
3.8(b) hereof, as if they were royalty payments received by LeukoSite from
such Partner arising from sales of such Product Candidate or Related
Compound by such Partner during the years during which the infringement
was occurring. If any infringement covered by the provisions of this
Section 3.8(h) occurred over a period of more than one year, then, for
purposes of this Section 3.8(h), any amounts actually received by
LeukoSite in connection with such infringement shall be apportioned
equally among the years during which such infringement was occurring and,
thereafter, the amount apportioned to each year shall be treated as either
(i) Net Sales or (ii) royalty payments received by LeukoSite, from sales
of the applicable Product Candidate or Related Compound, as the case may
be, during such year.
3.9 Delivery of Reports; Audit Rights; Interest. Simultaneously with the
delivery of each Contingent Partner Licensing Payment, HMR Payment and
Contingent Royalty Payment pursuant to the relevant portions of Section 3.8
above, LeukoSite shall deliver to the Stockholder Representatives a report
indicating the appropriate calculation(s) for each payment, including with
respect to each Product Candidate or Related Compound, an accounting of the
deductions from Net Sales permitted by the definition thereof, and the total
amounts owed. LeukoSite will keep records in sufficient detail to enable the
Stockholder Representatives to verify the accuracy of any report delivered
pursuant to this Section 3.9 for a period of not less than two (2) years after
the end of the calendar quarter to which such records apply. Subject to the
execution of a standard form confidentiality and non-disclosure agreement, an
independent certified public accountant selected by the Stockholder
Representatives shall have reasonable access to the records of LeukoSite, during
reasonable business hours, upon not less than five (5) business days' notice to
LeukoSite, solely for the purpose of verifying the accuracy of any report
delivered by LeukoSite pursuant to this Section 3.9, and not more than once
during any twelve (12) consecutive month period. The accountant selected by the
Stockholder Representatives shall not disclose any information other than
information relating solely to the accuracy of the reports and payments made
under Section 3.8 of this Agreement. Any audits under this Section 3.9 shall be
at the expense of the Stockholders and/or the Stockholder Representatives,
provided, however, that if LeukoSite has underpaid a Contingent Partner
Licensing Payment, HMR Payment or Contingent Royalty Payment due under this
Agreement by more than ten percent (10%), LeukoSite shall reimburse the
Stockholders and/or the Stockholder Representatives, as the case may be, for the
cost of such audit. Any Aggregate Contingent Consideration Payments not paid
when due under this Agreement shall bear interest at an annual rate equal to the
prime rate established by the Wall Street Journal as of the date such amount is
due until the date such amount is paid in full.
<PAGE>
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4. Procedures.
4.1. Certificates. After the Effective Time, stock certificates
(each, a "Certificate," and collectively, the "Certificates") representing
shares of Company Stock that, pursuant to the provisions of Section 3.6(a)
above, entitle the holder thereof to receive therefor the Merger Consideration
pursuant to the Merger, will be conclusively deemed to represent the right to
receive such Merger Consideration.
4.2. Exchange of Certificates. As promptly as practicable after the
Effective Time, LeukoSite (or its designee) will send to each Stockholder
transmittal materials for use in exchanging their Certificates for the Merger
Consideration to which such Stockholder may be entitled as determined in
accordance with the provisions of this Agreement. Upon surrender of a
Certificate to LeukoSite (or its designee), together with a duly executed letter
of transmittal and any other documents reasonably required by LeukoSite, the
holder of such Certificate will be entitled to receive, in exchange for such
Certificate, the portion of the Merger Consideration to which such holder may be
entitled (as determined in accordance with the provisions of this Agreement),
and such Certificate will be canceled.
4.3. No Transfers. After the Effective Time, no transfers of shares
of Company Stock will be made in the stock transfer books of the Company. If,
after the Effective Time, Certificates are presented (for transfer or otherwise)
to the Surviving Corporation or its transfer agent for Company Stock, they will
be canceled and exchanged for the portion of the Merger Consideration
deliverable in respect thereof (or returned to the presenting person, if such
Certificate represents Dissenting Shares).
4.4. Termination of Rights. After the Effective Time, holders of
Company Stock will cease to be, and will have no rights as, stockholders of the
Company, other than (i) in the case of shares other than Dissenting Shares, the
rights to receive the Merger Consideration, as provided in this Agreement, and
(ii) in the case of Dissenting Shares, the rights afforded to the holders
thereof under Section 262 of the DGCL.
4.5. Abandoned Property. Neither LeukoSite nor the Company nor any
other person will be liable to any holder or former holder of shares of Company
Stock for any shares, or any dividends or other distributions with respect
thereto, properly delivered to a public official pursuant to applicable
abandoned property, escheat, or similar laws.
4.6. Lost Certificates, Etc. In the event that any Certificate has
been lost, stolen, or destroyed, then upon receipt by LeukoSite of appropriate
evidence as to such loss, theft, or destruction, and to the ownership of such
Certificate by the person claiming such Certificate to be lost, stolen, or
destroyed, and the receipt by LeukoSite (or its designee) of appropriate and
customary indemnification, then such person shall be entitled to receive the
appropriate portion of the Merger Consideration pursuant to the provisions of
Section 3.6(a) of this Agreement.
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4.7 Stockholders' Representatives.
(a) In order to efficiently administer the transactions
contemplated hereby, including (i) the waiver of any condition to the
obligations of the Stockholders to consummate the transactions contemplated
hereby, (ii) the defense and/or settlement of any claims for which the
Stockholders and the Bonus Recipients may be required to indemnify LeukoSite
and/or the Surviving Corporation pursuant to Section 14 below or for which
LeukoSite shall have the right of set-off pursuant to this Agreement, (iii) the
exercise of the rights of Stockholders and the Bonus Recipients hereunder, and
(iv) the orderly distribution of the Merger Consideration from LeukoSite to the
Stockholders and the Bonus Recipients, the Stockholders and the Bonus Recipients
hereby designate Robert Hannon, Daniel Burns and John Littlechild, acting
jointly, as their representatives (in such capacity, the "Stockholders'
Representatives"). Notwithstanding anything expressed or implied in the
foregoing provisions of this Section 4.7(a) or elsewhere in this Agreement to
the contrary, John Littlechild's authority to act as a Stockholders'
Representative shall be limited only to those matters relating to the orderly
distribution of the Merger Consideration from LeukoSite to the Stockholders and
the Bonus Recipients, and with respect to any other matters on which the
Stockholders' Representatives have the authority to act John Littlechild shall
not be a Stockholders' Representative.
(b) The Stockholders and the Bonus Recipients hereby authorize the
Stockholders' Representatives, acting jointly, (i) to take all action
necessary in connection with the waiver of any condition to the
obligations of the Stockholders to consummate the transactions
contemplated hereby, or the defense and/or settlement of any claims for
which the Stockholders and the Bonus Recipients may be required to
indemnify LeukoSite, the Merger Sub and/or the Surviving Corporation
pursuant to Section 14 below or for which LeukoSite shall have the right
of set-off pursuant to this Agreement, (ii) to determine the Stockholders
and the Bonus Recipients to whom Merger Consideration from LeukoSite shall
be distributed, the amount of consideration to be so distributed, and the
address of such Stockholders and the Bonus Recipients, and to receive such
Merger Consideration and distribute it pursuant to Section 3.6 hereof,
(iii) to give and receive all notices required to be given under this
Agreement, and (iv) to take any and all additional action as is
contemplated to be taken by or on behalf of the Stockholders and the Bonus
Recipients by the terms of this Agreement or to enforce against LeukoSite
its obligations under the terms of this Agreement. In order for any
action, consent, approval or determination taken or made by the
Stockholders' Representatives to be valid, binding and enforceable, it
must be taken or made by joint action of both Stockholders'
Representatives. Neither of the Stockholders' Representatives shall have
any power or authority to take any action individually without the other,
and, in the event that either of the Stockholders' Representatives takes
any action individually without the other, such action shall not be
binding or of any force or effect whatsoever.
(c) In the event that Robert Hannon or Daniel Burns or their
respective substitutes as one of the Stockholders' Representatives, dies,
becomes unable to
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perform his responsibilities hereunder or resigns from such position, the
Stockholders entitled to an aggregate Merger Consideration Portion of
greater than 50% at such time shall select another representative to fill
such vacancy and such substituted representative shall be deemed to a
Stockholders' Representative for all purposes of this Agreement and the
documents delivered pursuant hereto. In the event that John Littlechild or
his substitutes as one of the Stockholders' Representatives dies, becomes
unable to perform his responsibilities hereunder or resigns from such
position, the Note Holders, acting jointly, shall select another
representative to fill such vacancy and such substituted representative
shall be deemed to a Stockholders' Representative for all purposes of this
Agreement and the documents delivered pursuant hereto with respect to such
matters as John Littlechild is authorized to act as Stockholders'
Representative pursuant to this Agreement.
(d) All decisions and actions by the Stockholders' Representatives,
including without limitation any agreement between the Stockholders'
Representatives and LeukoSite relating to the defense or settlement of any
claims for which the Stockholders and the Bonus Recipients may be required
to indemnify LeukoSite, Merger Sub and/or the Surviving Corporation
pursuant to Section 14 below or for which LeukoSite shall have the right
of set-off pursuant to this Agreement, shall be binding upon all of the
Stockholders and the Bonus Recipients and no Stockholder or Bonus
Recipient shall have the right to object, dissent, protest or otherwise
contest the same.
(e) By virtue of the adoption of this Agreement and the approval of
the Merger by the stockholders at a meeting of stockholders (or by written
consent in lieu of a meeting) pursuant to, and in accordance with, the
applicable provisions of the DGCL, each Stockholder (regardless of whether
or not such Stockholder votes in favor of the adoption of this Agreement
and the approval of the Merger at such meeting or by written consent) that
is not a holder of Dissenting Shares hereby agrees that:
(i) LeukoSite shall be able to rely conclusively on the joint
instructions and decisions of the Stockholders' Representatives as
to the settlement of any claims for indemnification by LeukoSite,
Merger Sub and/or the Surviving Corporation pursuant to Section 14
below or for which LeukoSite shall have the right of set-off
pursuant to this Agreement, or as to any other actions required or
permitted to be taken by the Stockholders' Representatives
hereunder, and no party hereunder shall have any cause of action
against LeukoSite to the extent LeukoSite has relied upon the joint
instructions or decisions of the Stockholders' Representatives;
(ii) all actions, decisions and instructions of the
Stockholders' Representatives shall be conclusive and binding upon
all of the Stockholders and no Stockholder shall have any cause of
action against either of the Stockholders' Representatives for any
action taken, decision made or instruction given by the
Stockholders' Representatives, acting jointly, under
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this Agreement, except for fraud or willful breach of this Agreement
by the Stockholders' Representatives;
(iii) the provisions of this Section 4.7 are independent and
severable, are irrevocable and coupled with an interest and shall be
enforceable notwithstanding any rights or remedies that any
Stockholder may have in connection with the transactions
contemplated by this Agreement;
(iv) remedies available at law for any breach of the
provisions of this Section 4.7 are inadequate; therefore, LeukoSite,
Merger Sub and/or the Surviving Corporation shall be entitled to
seek temporary and permanent injunctive relief without the necessity
of proving damages if either LeukoSite, Merger Sub and/or the
Surviving Corporation brings an action to enforce the provisions of
this Section 4.7; and
(v) the provisions of this Section 4.7 shall be binding upon
the executors, heirs, legal representatives, personal
representatives, successor trustees, and successors of each
Stockholder and any references in this Agreement to a Stockholder or
the Stockholders shall mean and include the successors to the
Stockholder's rights hereunder, whether pursuant to testamentary
disposition, the laws of descent and distribution or otherwise.
(f) All fees and expenses incurred by the Stockholders'
Representatives shall be paid by the Stockholders (other than holders of
Dissenting Shares) in proportion to the aggregate Merger Consideration
Portion held by each of them; provided, that in no event shall any
Stockholder be liable for any such fees or expenses in excess of the
aggregate Merger Consideration paid to such Stockholder, without such
Stockholder's prior written consent.
4.8. Effect of Stockholder Approval. Subject to the provisions of
the last sentence of this Section 4.8, the adoption of this Agreement and the
approval of the Merger by the stockholders at a meeting of stockholders (or by
written consent in lieu of a meeting) pursuant to, and in accordance with, the
applicable provisions of the DGCL shall be deemed to constitute approval by each
Stockholder individually (regardless of whether or not such Stockholder votes in
favor of the adoption of this Agreement and the approval of the Merger at such
meeting or by written consent), to the same extent as if such Stockholder were a
party to this Agreement, of (i) all of the provisions of this Agreement that
pertain to the Stockholders, that impose liabilities, obligations or burdens on
the Stockholders (including, without limitation, the indemnification provisions
of Section 14 hereof) or that limit the rights of the Stockholders (including,
without limitation, with respect to the right of the Stockholders to receive all
or any portion of the Merger Consideration), (ii) the appointment of the
Stockholders' Representatives, (iii) the grant to the Stockholders'
Representatives of all of the powers, rights and privileges contemplated under
this Agreement (including, without limitation, those set forth in Section 4.7
hereof), (iv) the provisions of this Agreement concerning the replacement and
substitution of either of the Stockholders' Representatives, and (v) the
provisions of this Agreement that authorize LeukoSite to
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exercise any right of set-off. The exercise of any Surviving Warrant by any
holder thereof shall be deemed to constitute approval by such holder, to the
same extent as if such holder were a party to this Agreement, of all of the
matters set forth in the foregoing clauses (i) through (v). Each Stockholder
(other than holders of Dissenting Shares) and Bonus Recipient acknowledges and
agrees that the payment by LeukoSite of the Merger Consideration to the
Stockholder Representatives shall constitute payment in accordance with Section
3.6. Notwithstanding the foregoing, the provisions of this Section 4.8 shall not
apply to those Stockholders that duly exercise the appraisal rights afforded to
dissenting stockholders pursuant to Section 262 of the DGCL.
5. Stock Options and Warrants. Prior to the Effective Time, the Company
and its Board of Directors shall (i) take all actions necessary to effect the
exercise and/or termination of each option to purchase Company Stock ("Company
Options"), whether issued under one of the Company's option plans or otherwise,
and (ii) use reasonable efforts to cause each holder of a warrant to purchase
Company Stock outstanding at any time prior to the Effective Time (the "Company
Warrants") to exercise or agree to the termination of the warrant in full prior
to the Effective Time. LeukoSite will not assume any Company Option or Company
Warrant. Notwithstanding the foregoing, any Company Warrant not exercised or
terminated prior to the Effective Time (such Company Warrants being referred to
herein as the "Surviving Warrants") will be exercisable on the terms set forth
therein and, upon proper exercise and delivery of such original Surviving
Warrant to LeukoSite for cancellation and the payment of the exercise price of
such Surviving Warrant to LeukoSite, shall entitle the holder thereof to receive
from LeukoSite the aggregate Merger Consideration to which such holder would
have been entitled to if such Surviving Warrant, to the extent exercised, had
been so exercised immediately prior to the Effective Time. In the event that any
Surviving Warrant expires or terminates without having been exercised in full,
LeukoSite shall distribute, in accordance with the provisions of Section 3.6,
the Merger Consideration to which the holder of such Surviving Warrant would
have been entitled to prior to such expiration or termination if the unexercised
portion of such Surviving Warrant had been exercised in full immediately prior
to the Effective Time.
6. Registration and Lock-Up of LeukoSite Common Stock.
6.1 Registration of Shares.
(a) Demand Registrations on Form S-3
(i) Written Request; Inclusion of Shares. Subject to the
limitations set forth herein, in the event that LeukoSite shall receive
from any Note Holder or Note Holders a written request or requests that
LeukoSite effect a registration on Form S-3, or any successor or
substitute form (the "Stockholder Registration Statement"), with respect
to all or a portion of the Payment Shares owned by such Note Holder or
Note Holders, then LeukoSite will promptly give written notice of the
proposed registration and the Note Holder's or Note Holders' request
therefor to all other Note Holders (if any) and, as soon as practicable,
use reasonable best efforts to effect such registration of all or such
portion of such
<PAGE>
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Payment Shares as are specified in such request, together with all or such
portion of the Payment Shares of any other Note Holder or Note Holders
joining in such request as are specified in a written request given within
twenty (20) days after receipt of such written notice from LeukoSite;
provided, however, that LeukoSite shall have no obligation under this
Section 6.1(a) if LeukoSite has previously given a notice to the
Noteholders of the type specified in Section 6.1(b) hereof, or this
Section 6.1(a), for so long as LeukoSite is continuing to pursue the
registration referred to in such notice. LeukoSite may not include in any
registration pursuant to this Section 6.1(a) additional shares of
LeukoSite Common Stock for sale for its own account or for the account of
any other person. No registration under this Section 6.1(a) shall be
underwritten unless LeukoSite shall otherwise elect in its sole and
absolute discretion.
(ii) Selection of Underwriters. If a registration under this
Section 6.1(a) involves an underwritten offering, the underwriter or
underwriters thereof shall be selected by LeukoSite.
(iii) Certain Limitations. In addition to the limitations set
forth in Section 6.2 below, LeukoSite shall not be required to effect (A)
more than two (2) registrations pursuant to the provisions of this Section
6.1(a), (B) more than one registration pursuant to the provisions of this
Section 6.1(a) within any twelve month period or (C) any registration
pursuant to this Section 6.1(a) if the Note Holder or Note Holders,
together with the holders of any other securities of LeukoSite entitled to
include such securities in such registration, propose to sell Payment
Shares and such other securities (if any) at an aggregate price to the
public of less than $750,000.
(iv) Limitation on Requests. Notwithstanding anything in this
Section 6.1(a) to the contrary, (A) no Note Holder may request a
registration pursuant to this Section 6.1(a) within one hundred eighty
(180) days of the effective date of any other registration statement filed
by the Company with the SEC pursuant to this Section 6.1(a) or Section
6.1(b) hereof, and (B) no Note Holder may request a registration pursuant
to this Section 6.1(a) at any time after the second anniversary of the
Closing Date.
(v) Unavailability for Form S-3. Notwithstanding anything to
the contrary expressed or implied in this Agreement, if Form S-3 or any
substitute form is not then available for the registration of such Payment
Shares that would otherwise have been proposed to be sold and distributed
by such Note Holder or Note Holders pursuant to this Section 6.1(a), the
Company shall be obligated to prepare and file a registration statement
pursuant to this Section 6.1(a) on Form S-1 at the written request or
requests from any Note Holder or Note Holders given in accordance with
Section 6.1(a)(i) and the provisions of this Section 6.1(a) shall govern
and apply to such request or requests and such registration on Form S-1.
(b) Piggyback Registration. From and after the date hereof and prior
to the expiration of the fifth anniversary of the Closing Date, whenever
LeukoSite proposes to file a registration statement relating to an
offering in which LeukoSite proposes to sell shares of LeukoSite Common
Stock for its own account (other than
<PAGE>
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registration statements on Form S-4 or Form S-8 or any successor form for
securities to be offered in a transaction of the type contemplated by Rule
145 under the Securities Act or to employees or consultants of LeukoSite
pursuant to any employee benefit plan), it will, prior to such filing,
give at least 20 days' written notice to all Note Holders of its intention
to do so (subject to the limitations set forth in paragraph (d) below)
(the "Piggyback Notice") and, upon the written request of one or more Note
Holders given within ten (10) days after the LeukoSite Piggyback Notice is
given (which request shall state the intended method of disposition of
those Payment Shares requested to be included in such registration) (the
"Holder Inclusion Notice"), LeukoSite shall use reasonable best efforts to
cause all Payment Shares which LeukoSite has been requested by such Note
Holder or Note Holders to register to be registered under the Securities
Act to the extent necessary to permit their sale or other disposition in
accordance with the intended methods of distribution specified in the
Holder Inclusion Notice; provided, that (i) LeukoSite shall have the right
to postpone or withdraw any registration effected pursuant to this Section
6.1(b) hereof without obligation to any Note Holder, and (ii) the number
of Payment Shares proposed to be sold by any such Note Holder is at least
fifty percent (50%) of the total number of Payment Shares then held by
such Note Holder (or such lesser percentage if such Note Holder is
cut-back pursuant to the priorities for registration set forth in Section
6.1(c) below.
(c) Limits on Piggyback Registrations. In connection with any
offering under Section 6.1(b) hereof involving an underwriting, LeukoSite
shall not be required to include any Payment Shares in such underwriting
unless the holders thereof accept the terms of the underwriting as agreed
upon between LeukoSite and the underwriter(s) of such offering. If in the
written opinion of the managing underwriter(s) of such offering the
registration of all, or part of, the Payment Shares which the Note Holders
have requested to be included pursuant to Section 6.1(b) hereof (the
"Incidental Shares") and/or which other holders of shares of LeukoSite
Common Stock or other securities of LeukoSite entitled to include shares
of LeukoSite Common Stock in such registration have requested to be
included (collectively, the "Qualified Holders") would materially and
adversely affect the success of such public offering or the price that
would be received for any shares of LeukoSite Common Stock offered in the
offering, then, notwithstanding anything in this Section 6 to the
contrary, LeukoSite shall be required to include in the underwriting only
that number of such shares, if any, which the managing underwriter(s)
believe(s) may be sold without causing such adverse effect. If a
registration pursuant to this Section 6 hereof involves an underwritten
offering and the managing underwriter shall advise LeukoSite in writing
that, in its opinion, the number of shares of LeukoSite Common Stock
requested by the Qualified Holders to be included in such registration is
likely to affect materially and adversely the success of the public
offering or the price that would be received for any shares of LeukoSite
Common Stock offered in such offering, then, notwithstanding anything in
this Section 6 to the contrary, LeukoSite shall only be required to
include in such registration to the extent of the number of shares of
LeukoSite Common Stock which LeukoSite is so advised can be sold in such
offering, (i) first, the number of shares of
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LeukoSite Common Stock proposed to be included in such registration for
the account of LeukoSite and/or any stockholders of LeukoSite that have
exercised demand registration rights in accordance with the priorities, if
any, then existing among LeukoSite and/or such stockholders of LeukoSite
with demand registration rights, and (ii) second, the shares of LeukoSite
Common Stock requested to be included in such registration by all other
stockholders of LeukoSite (including, without limitation, the Note
Holders), pro rata among such other stockholders (including, without
limitation, the Note Holders) on the basis of the number of shares of
LeukoSite Common Stock that each of them requested to be included in such
registration.
(d) Further Limitations. Notwithstanding anything in this Section 6
to the contrary, LeukoSite shall not be required to provide any advance
notice to Note Holders in connection with any offering involving an
underwriting if LeukoSite has been informed in writing that in the opinion
of the managing underwriter(s) the inclusion of any Incidental Shares in
such offering would materially and adversely affect the success of the
offering or the price that would be received for any shares of LeukoSite
Common Stock offered in the offering. In such event, LeukoSite will
provide written notice to all Note Holders containing a copy of such
managing underwriter's(s') opinion, which notice need not be given prior
to the filing of the applicable registration statement.
6.2 Limitations on Registration Rights. Notwithstanding anything in
this Section 6 to the contrary, if the Company shall furnish to the Note Holder
or Note Holders a certificate signed by the President or Chief Executive Officer
of LeukoSite stating that the Board of Directors of LeukoSite has made the good
faith determination (i) either that filing a registration statement for purposes
of enabling any Note Holder to effect offers or sales of Payment Shares pursuant
thereto or that continued use by any Note Holder of any registration statement
or the prospectus relating thereto for such purposes, as the case may be, would
require, under the Securities Act and the rules and regulations promulgated
thereunder, premature disclosure in the registration statement (or the
prospectus relating thereto) of material, nonpublic information concerning
LeukoSite, its business or prospects or any proposed material transaction
involving LeukoSite, (ii) that such premature disclosure would be materially
adverse to LeukoSite, its business or prospects or any such proposed material
transaction or would make the successful consummation by LeukoSite of any such
material transaction significantly less likely and (iii) that it is therefore
essential either to defer the filing of any such registration statement or to
suspend the use of any such registration statement (and the prospectus relating
thereto) for purposes of effecting offers or sales of Payment Shares pursuant
thereto, as the case may be, then LeukoSite shall have the right either to defer
the filing of any such registration statement or to suspend the right of the
Note Holders to use any such registration statement (and the prospectus relating
thereto) for purposes of effecting offers or sales of Payment Shares pursuant
thereto, as the case may be, in either case for a period (the "Suspension
Period") of no more than 120 days after delivery by the Company of the
certificate referred to above in this Section 6.2(a). LeukoSite may not exercise
its rights under this Section 6.2 with respect to any or all registrations under
this Section 6 for more than 120 days in any twelve-month period.
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During the Suspension Period, none of the Note Holders shall offer or sell any
Payment Shares pursuant to or in reliance upon any such registration statement
(or the prospectus relating thereto). LeukoSite agrees that, as promptly as
practicable after the consummation, abandonment or public disclosure of the
event or transaction that caused LeukoSite either to defer the filing of any
such registration statement or to suspend the use of any such registration
statement (and the prospectus relating thereto), as the case may be, in either
case pursuant to this Section 6.2, LeukoSite, as applicable, either will file
any such registration statement or will provide to the Note Holders with revised
prospectuses, if required, and will notify the Note Holders of their ability to
effect offers or sales of Payment Shares pursuant to or in reliance upon any
such registration statement (and the prospectus related thereto). LeukoSite
agrees that no other holder of LeukoSite Common Stock seeking to resell shares
of LeukoSite Common Stock pursuant to a shelf registration statement on Form S-3
will be permitted to sell shares of LeukoSite Common Stock pursuant to such
shelf registration statement during a Suspension Period. LeukoSite shall not be
required to disclose to the Note Holders the reasons for requiring a suspension
of sales hereunder, and the Registering Stockholders shall not disclose to any
third party the existence of any such suspension.
6.3 Registration Procedures.
(a) With respect to any registration statement relating to any
request for registration pursuant to Section 6.1(a) hereof, LeukoSite
shall, subject to Section 6.2 hereof, prepare and file with the SEC such
registration statement and use commercially reasonable efforts to cause
such registration statement to become and remain effective; provided,
however, that LeukoSite shall in no event be obligated to cause any such
registration to remain effective for more ninety (90) days.
(b) If LeukoSite has delivered preliminary or final prospectuses to
the Note Holders and after having done so such prospectuses are amended or
supplemented to comply with the requirements of the Securities Act,
LeukoSite shall promptly notify the Note Holders and, if requested by
LeukoSite, the Note Holders shall immediately cease making offers or sales
of shares pursuant to any such prospectuses and the registration statement
to which such prospectuses relate and shall return to LeukoSite all copies
of any such prospectuses in their possession. LeukoSite shall promptly
provide the Note Holders with revised prospectuses and, following receipt
of the revised prospectuses, the Note Holders shall be free to resume
making offers and sales pursuant to any such revised prospectuses and the
registration statement to which such revised prospectuses relate. The
provisions of this Section 6.3(b) shall not limit in any way the
provisions of Section 6.2 hereof.
(c) LeukoSite shall furnish to each requesting Note Holder (i) such
number of conformed copies of any registration statement that, pursuant to
any of the provisions of this Section 6, includes any of such requesting
Note Holder's Payment Shares and of each such amendment and supplement
thereto (in each case including all exhibits thereto), (ii) such number of
copies of the prospectus included in such registration statement
(including each preliminary prospectus) and (iii) such number
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of documents, if any, incorporated by reference in any such registration
statement or prospectus, as such requesting Note Holder may reasonably
request.
(d) LeukoSite shall use reasonable best efforts to register or
qualify the Payment Shares covered by the Stockholder Registration
Statement under the securities or "blue sky" laws of such states as the
Note Holders shall reasonably request; provided, however, that LeukoSite
shall not be required in connection with this paragraph (b) to qualify as
a foreign corporation or execute a general consent to service of process
in any jurisdiction.
(e) LeukoSite shall pay the expenses incurred by it in complying
with its obligations under this Section 6, including all registration and
filing fees, exchange listing fees, fees and expenses of counsel for
LeukoSite, and fees and expenses of accountants for LeukoSite, but
excluding (i) any brokerage fees, selling commissions or underwriting
discounts incurred by the Note Holders in connection with sales under the
Stockholder Registration Statement and (ii) the fees and expenses of any
counsel retained by Note Holders.
6.4 Requirements of Company Note Holders. LeukoSite shall not be
required to include any Payment Shares in any registration statement pursuant to
the terms of this Section 6 unless:
(a) the Note Holder owning such shares furnishes to LeukoSite in
writing such information regarding such Note Holder and the proposed sale
of Payment Shares by such Note Holder as LeukoSite may reasonably request
in writing in connection with the Stockholder Registration Statement or as
shall be required in connection therewith by the SEC or any state
securities law authorities;
(b) such Note Holder shall have provided to LeukoSite its written
agreement:
(i) to indemnify LeukoSite and each of its directors and
officers under the circumstances and substantially in the form set
forth in Section 6.5(b) hereof; and
(ii) From the Closing Date to the second anniversary of the
Closing Date, each Note Holder which holds or owns (at the time of
the written request of the managing underwriter referred to below in
this Section 6.4(b) or at any time during the 90 day period
commencing on the effective date of the registration statement
relating to such underwritten public offering of LeukoSite Common
Stock) of record or beneficially (within the meaning of Section
13(d) of the Exchange Act and the rules and regulations promulgated
thereunder) Payment Shares hereby agrees that, at the written
request of any managing underwriter of any underwritten public
offering of LeukoSite Common Stock, such Note Holder shall not,
without the prior written consent of LeukoSite or such managing
underwriter, sell, make any short sale of, loan,
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grant any option for the purchase of, pledge, encumber, or otherwise
dispose of, or exercise any registration rights with respect to, any
Payment Shares during the 90 day period commencing on the effective
date of the registration statement relating to such underwritten
public offering of LeukoSite Common Stock; provided that no Note
Holder shall be obligated to enter into such lock-up agreement
described in this Section 6.4(b)(ii) unless all executive officers
and directors of LeukoSite enter into similar agreements. In order
to enforce the foregoing covenant, LeukoSite may impose stop
transfer instructions with respect to the Payment Shares of each
Note Holder (and the shares or securities of every other person
subject to the foregoing restriction) until the end of such
reasonable and customary period, and the Note Holders agree to enter
into a customary agreement with the underwriters of such offering
reflecting the lock-up agreement set forth herein.
(c) Each Note Holder hereby agrees that, without the prior written
consent of LeukoSite, such Note Holder shall not sell, make any short sale
of, loan, grant any option for the purchase of, pledge, encumber, or
otherwise dispose of any Payment Shares during the 180 day period
commencing on the Closing Date.
6.5 Indemnification. In the event that any Payment Shares of any
Note Holder are included in a registration statement pursuant to this Agreement:
(a) To the fullest extent permitted by law, LeukoSite will indemnify
and hold harmless such Note Holder, any underwriter (as defined in the
Securities Act) for LeukoSite, and each officer, director, fiduciary,
employee, member, general partner and limited partner (and affiliates
thereof) of such Note Holder or such underwriter, each broker or other
person acting on behalf of such Note Holder and each person, if any, who
controls such Note Holder 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
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, or any violation by LeukoSite of
the Securities Act or state securities or blue sky laws applicable to
LeukoSite and leading to action or inaction required of LeukoSite in
connection with such registration or qualification under such Securities
Act or state securities or blue sky laws; and will reimburse on demand
such Note Holder, such underwriter, such broker or other person acting on
behalf of such Note Holder or such officer, director, fiduciary, employee,
member, general partner, limited partner, affiliate or controlling person
for any legal or other expenses reasonably incurred by any of them in
connection with investigating or defending any such loss, claim, damage,
liability or action, subject to the provisions of Section 6.5(c);
provided, however, that the indemnity agreement contained in this Section
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6.5(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 LeukoSite (which consent shall not be unreasonably
withheld), nor shall LeukoSite be liable in any such case for any such
loss, 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 Note
Holders, any underwriter for them or controlling person with respect to
them.
(b) To the fullest extent permitted by law, such Note Holder will
severally and not jointly indemnify and hold harmless LeukoSite, each of
its directors, each of its officers who have signed such registration
statement, each person, if any, who controls LeukoSite within the meaning
of the Securities Act, any underwriter for LeukoSite (within the meaning
of the Securities Act), and all other Note Holders against any losses,
claims, damages or liabilities to which LeukoSite 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 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 therein 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 such Note Holder expressly for use in connection with such
registration; and such Note Holder will reimburse any legal or other
expenses reasonably incurred by LeukoSite or any such director, officer,
controlling person, underwriter or other Note Holder in connection with
investigating or defending any such loss, claim, damage, liability or
action, subject to the provisions of Section 6.5(c), provided, however,
that the maximum amount of liability of such Note Holder hereunder shall
be limited to the proceeds (net of underwriting discounts and commissions,
if any) actually received by such Note Holder from the sale of Payment
Shares covered by such registration statement, and provided, further,
however, that the indemnity agreement contained in this Section 6.5(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 such Note Holder against which the request for indemnity is
being made (which consent shall not be unreasonably withheld).
(c) Promptly after receipt by an indemnified party under this
Section 6.5 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against any
indemnifying party under this Section
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6.5, 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, jointly with any other
indemnifying party similarly noticed, to assume at its expense the defense
thereof with counsel mutually satisfactory to the parties; provided,
however, that, if any indemnified party shall have reasonably concluded
that there may be one or more legal defenses available to such indemnified
party which are different from or additional to those available to the
indemnifying party, or that such claim or litigation involves or could
have an effect upon matters beyond the scope of the indemnity agreement
provided in this Section 6.5, the indemnifying party shall not have the
right to assume the defense of such action on behalf of such indemnified
party, and such indemnifying party shall reimburse such indemnified party
and any person controlling such indemnified party for the fees and
expenses of counsel retained by the indemnified party which are reasonably
related to the matters covered by the indemnity agreement provided in this
Section 6.5. Subject to the foregoing, an indemnified party shall have the
right to employ separate counsel in any such action and to participate in
the defense thereof but the fees and expenses of such counsel shall not be
at the expense of the indemnifying party. The failure to notify an
indemnifying party promptly of the commencement of any such action, if
materially prejudicial to his ability to defend such action, shall relieve
such indemnifying party of any liability to the indemnified party under
this Section 6.5, but the omission so to notify the indemnifying party
will not relieve him of any liability which the indemnifying party may
have to any indemnified party otherwise other than under this Section 6.5.
(d) Notwithstanding anything in this Section 6 to the contrary, if,
in connection with an underwritten public offering, LeukoSite, such Note
Holder and the underwriters enter into an underwriting or purchase
agreement relating to such offering which contains provisions covering
indemnification among the parties, then the indemnification provision of
this Section 6.5 shall be deemed inoperative for purposes of such
offering.
6.6 Rule 144. LeukoSite shall comply with the requirements of Rule
144(c) under the Securities Act, as such Rule may be amended from time to time
(or any similar rule or regulation hereafter adopted by the SEC), regarding the
availability of current public information to the extent required to enable each
Note Holder to sell Payment Shares without registration under the Securities Act
pursuant to the resale provisions of Rule 144 (or any similar rule or
regulation). Upon the request of a Note Holder, LeukoSite will deliver to such
Note Holder a written statement as to whether it has complied with such
requirements and, upon a Note Holder's compliance with the applicable provisions
of Rule 144, will take such action as may be required (including, without
limitation, causing legal counsel to issue an appropriate opinion) to cause its
transfer agent to effectuate any transfer of Payment Shares properly requested
by such Note Holder, in accordance with the terms and conditions of Rule 144.
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6.7. Securities Laws Transfer Restrictions, Legends.
(a) No Note Holder shall sell, assign, pledge, transfer or otherwise
dispose or encumber any of those Payment Shares received by it, except (i)
pursuant to the Stockholder Registration Statement or other 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 LeukoSite, upon
delivery by such Note Holder of an opinion of counsel of such Note Holder
reasonably satisfactory to LeukoSite to the effect that the proposed
transfer is exempt from registration under the Securities Act and
applicable state securities law or (iii) pursuant to the resale provisions
of Rule 144 (or any similar rule or regulation). Any transfer or purported
transfer in violation of this Section 6.7(a) shall be voidable by
LeukoSite. LeukoSite shall not be required or obligated to register any
transfer of the Payment Shares in violation of this Section 6.7(a).
LeukoSite may, and may instruct any transfer agent for LeukoSite Common
Stock, to place such stop transfer orders as may be required on the
transfer books of LeukoSite in order to ensure compliance with the
provisions of this Section 6.7(a).
(b) To the extent applicable, each certificate or other document
evidencing any of the Payment Shares shall be endorsed with the legend set
forth below, and each Note Holder covenants that, except to the extent
such restrictions are waived by LeukoSite, 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, AND MAY NOT BE OFFERED, SOLD,
ASSIGNED, PLEDGED, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT (I)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT, (II)
PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER SAID ACT AND,
IF REQUESTED BY THE COMPANY, UPON DELIVERY OF AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY THAT THE PROPOSED TRANSFER IS
EXEMPT FROM SAID ACT OR (III) PURSUANT TO THE RESALE PROVISIONS OF RULE
144."
7. Representations and Warranties of the Company.
The Company hereby represents and warrants to LeukoSite and Merger Sub as
follows, subject in each case to such exceptions as are specifically
contemplated by this Agreement or as are set forth in the attached Disclosure
Schedule.
7.1. Incorporation; Authority. The Company is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to own or lease and
operate its properties and to carry on its business as now conducted. The
Company has delivered to LeukoSite
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complete and correct copies of its Certificate of Incorporation and by-laws, in
each case with all amendments thereto, which Certificate of Incorporation and
by-laws are in full force and effect.
7.2. Authorization and Enforceability. The Company has all requisite
corporate power to enter into the Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of the Company, subject only to
the approval of the Merger and this Agreement by the Company's stockholders. The
Board of Directors of the Company has (i) approved this Agreement and the
transactions contemplated hereby and (ii) determined that the Merger is in the
best interests of the stockholders of the Company and is on terms that are fair
to such stockholders. This Agreement has been duly executed and delivered by the
Company and constitutes the valid and binding obligation of the Company,
enforceable in accordance with its terms except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors' rights generally and (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies. The combined voting power of the shares of
Company Stock held of record by the Designated Preferred Stockholders is such
that the affirmative vote (whether at a meeting of stockholders of the Company
or by written consent in lieu of a meeting) of all shares of Company Stock held
of record by the Designated Preferred Stockholders in favor of the adoption of
this Agreement and the approval of the Merger would be sufficient to constitute
the required stockholder approval thereof pursuant to, and in accordance with,
the terms of the Company's Certificate of Incorporation, the Company's by-laws
and the DGCL.
7.3. Governmental and Other Third-Party Consents, Non-Contravention,
Etc. Except for the filing of the Merger Certificate and except as described in
Section 7.3 of the Disclosure Schedule, no consent, approval, or authorization
of or registration, designation, declaration, or filing with any governmental
authority, federal or other, or any other person, is required on the part of the
Company in connection with the execution, delivery, and performance of this
Agreement or the consummation of the Merger and the other transactions
contemplated hereby. Except as described in Schedule 7.3 of the Disclosure
Schedule, the execution, delivery, and performance of this Agreement and the
consummation of such transactions will not violate (a) any provision of the
Company's Certificate of Incorporation or by-laws, (b) any order, judgment,
injunction, award or decree of any court or state or federal governmental or
regulatory body applicable to the Company, or (c) any judgment, decree, order,
statute, rule, regulation, agreement, instrument, or other obligation to which
the Company is a party or by or to which it or any of its assets is bound or
subject, which violation will not have a Material Adverse Effect on the Company.
7.4. Capitalization. The authorized and outstanding capital stock
and other securities of the Company as of the date hereof are as set forth in
Schedule 7.4 of the Disclosure Schedule. All of such outstanding shares of
capital stock of the Company are duly authorized, validly issued, fully paid and
non-assessable, and all of such outstanding shares and other securities are
owned of record as set forth in Schedule 7.4 of the Disclosure
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Schedule, and were issued in compliance with all applicable laws, including
securities laws, and all applicable preemptive or similar rights of any person.
The Company is not aware of any person who has a valid right to rescind any
purchase of any shares of the Company's capital stock or other securities.
There are no agreements or other obligations to which the Company is a
party or by which it is bound to purchase or sell, other than as set forth in
Schedule 7.4 of the Disclosure Schedule, no convertible or exchangeable
securities, options, warrants or other rights to acquire from the Company any
shares of its capital stock or other securities. Section 7.4 of the Disclosure
Schedule sets forth the name of each person who holds any option, warrant or
other right to acquire shares of the Company's capital stock, the number and
type of shares subject to such option or right, the per-share exercise price
payable therefor and, in the case of warrants, the priority and amount of
consideration to be payable upon exercise thereof after the Merger.
7.5. Qualification. The Company is duly qualified and in good
standing as a foreign corporation in all jurisdictions in which the character of
its owned or leased properties or the nature of its activities makes such
qualification necessary, except for such failures to be so qualified or in good
standing as would not, either individually or in the aggregate, be reasonably
likely to have a Material Adverse Effect on the Company.
7.6. Subsidiaries. The Company does not have any Subsidiaries or own
any legal and/or beneficial interests in or to any other business enterprise or
other person.
7.7. Financial Statements. Included in Section 7.7 of the Disclosure
Schedule are copies of (i) the audited balance sheets of the Company as of the
last day of December in each of the years 1996 through 1997, inclusive, and the
related audited statements of income and retained earnings and cash flows,
respectively, of the Company, for the fiscal years ended on such dates,
certified by Coopers & Lybrand LLP, independent public accountants, and (ii) the
unaudited balance sheets of the Company as of December 31, 1998 and May 31,
1999, and the related unaudited statements of income and retained earnings and
cash flows, respectively, of the Company, for the 12-month and 5-month periods,
respectively, ended on such dates (such balance sheet as of May 31, 1999, the
"May 31, 1999 Balance Sheet"). Each of such financial statements have been
prepared in accordance with generally accepted accounting principles applied on
a basis consistent with prior periods; each of such balance sheets presents
fairly and accurately in all material respects the financial condition of the
Company as of its respective date; and each of such statements of income and
retained earnings and cash flows, respectively, presents fairly and accurately
in all material respects the results of operations and retained earnings, or
cash flows, as the case may be, of the Company for the period covered thereby;
in each case, subject, with respect to the unaudited financial statements
referred to in clauses (ii) and (iii) of this section to the absence of footnote
disclosure and to normal, recurring end-of-period adjustments, the effect of
which, both individually and in the aggregate, is not and will not be material.
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7.8. Absence of Certain Changes. Since May 31, 1999, except as
disclosed in Section 7.8 of the Disclosure Schedule there has not been any: (i)
change in the assets, liabilities, sales, income, or business of the Company or
in its relationships with suppliers, customers, or lessors, other than changes
that were both in the ordinary course of business and have not caused, either in
any case or in the aggregate, a Material Adverse Effect on the Company; (ii)
acquisition or disposition by the Company of any material asset or property;
(iii) damage, destruction or loss, whether or not covered by insurance,
materially and adversely affecting, either in any case or in the aggregate, the
business or any material property of the Company; (iv) declaration, setting
aside or payment of any dividend or any other distributions in respect of any
shares of capital stock of the Company; (v) issuance of any shares of the
capital stock of the Company or any direct or indirect redemption, purchase, or
other acquisition by the Company of any such capital stock; (vi) loss of the
services of any officer or key employee or consultant, or any increase in the
compensation, pension, or other benefits payable or to become payable by the
Company to any of its officers or key employees or consultants, or any bonus
payments or arrangements made to or with any of them; (vii) forgiveness or
cancellation of any debts or claims by the Company or any waivers of any rights;
(viii) entry by the Company into any transaction with any of its Affiliates;
(ix) incurrence by the Company of any obligations or liabilities, whether
absolute, accrued, contingent or otherwise (including without limitation
liabilities as guarantor or otherwise with respect to obligations of others),
other than obligations and liabilities incurred in the ordinary course of
business with persons other than Affiliates of the Company; (x) incurrence or
imposition of any Lien on any of the assets, tangible or intangible, of the
Company; or (xi) discharge or satisfaction by the Company of any Lien or payment
by the Company of any obligation or liability (fixed or contingent) other than
(A) current liabilities included in the May 31, 1999 Balance Sheet, (B) current
liabilities to persons other than Affiliates of the Company incurred since May
31, 1999 in the ordinary course of business, and (C) current liabilities
incurred in connection with the transactions contemplated hereby and disclosed
in Schedule 7.8 of the Disclosure Schedule.
7.9. Properties and Assets. The Company has good and marketable
title or leasehold title, as the case may be, to all of its assets and
properties that it purports to own or lease, including without limitation all
those reflected in the unaudited balance sheet referred to in clause (ii) of
Section 7.7 hereof (except for properties or assets sold, consumed, or otherwise
disposed of in the ordinary course of business since May 31, 1999), all free and
clear of Liens on the Company's interest therein. All such properties and assets
are in good condition and repair, reasonable wear-and-tear excepted, and are,
and as of the Closing Date will be, adequate and sufficient to carry on the
business of the Company as presently conducted. Section 7.9(a) of the Disclosure
Schedule sets forth a complete and correct list of all capital assets of the
Company.
The Company does not own any real property. The Company has not received
any notice that either the whole or any portion of any real property leased by
it is to be condemned, requisitioned, or otherwise taken by any public authority
or is to be the subject of any public improvements that may result in special
assessments against or otherwise affect such real property. Section 7.9(b) of
the Disclosure Schedule sets forth a complete and correct description of all
leases of real property to which the Company is a party.
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Complete and correct copies of all such leases have been delivered to LeukoSite.
Each such lease is valid and subsisting and no event or condition exists that
constitutes, or after notice or lapse of time or both could constitute, a
default thereunder by the Company, or to the best of its knowledge, any other
person. The leasehold interests of the Company are subject to no Lien, and the
Company is in quiet possession of the properties covered by such leases.
7.10. Intellectual Property.
(a) Section 7.10(a) of the Disclosure Schedule lists all inter
partes proceedings or actions known to the Company before any court or
tribunal (including the PTO or equivalent authority anywhere in the world)
related to any Company Intellectual Property. To the best of the Company's
knowledge, no Company Intellectual Property is the subject of any inter
partes proceeding or outstanding decree, order, judgment, agreement, or
stipulation restricting in any manner the use, transfer, or licensing
thereof by the Company or any of its Subsidiaries, or which may affect the
validity, use or enforceability of such Company Intellectual Property.
(b) With respect to each item of Company Registered Intellectual
Property, necessary registration, maintenance and renewal fees in
connection with such Company Registered Intellectual Property have been
made and all necessary documents and certificates in connection with such
Company Registered Intellectual Property have been filed with the relevant
patent authorities in the United States for the purposes of maintaining
such Company Registered Intellectual Property and no information material
to patentability under applicable law has been withheld from the examining
office that would constitute fraud or inequitable conduct.
(c) The Company owns and has good and exclusive title or the Company
exclusively licenses, in each case free and clear of any Lien, all Company
Registered Intellectual Property listed on Section 7.10(c) of the
Disclosure Schedule (for purposes of this Section 7.10(c), joint ownership
with third parties of such Company Registered Intellectual Property
constitutes "good and exclusive title").
(d) To the extent that any work, invention, or material has been
developed or created by a third party for the Company, the Company and
each of its Subsidiaries has a written agreement with such third party
with respect thereto and the Company has obtained ownership of, and is the
exclusive owner of, or has a valid license to use, all Company
Intellectual Property in such work, material or invention by operation of
law or by valid assignment or by agreement, as the case may be.
(e) Except as set forth on Schedule 7.10(e) of the Disclosure
Schedule, the Company has not transferred ownership of, or granted any
license with respect to, any Company Intellectual Property to any third
party. Section 7.10(e) of the Disclosure Schedule lists all contracts,
licenses and agreements to which the Company is a party that are currently
in effect (i) with respect to Company Intellectual Property licensed or
offered to any third party; or (ii) pursuant to which a
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third party has licensed or transferred any Company Intellectual Property
to the Company.
(f) To the best of the Company's knowledge, the contracts, licenses
and agreements listed on Section 7.10(e) of the Disclosure Schedule are in
full force and effect. The consummation of the transactions contemplated
by this Agreement will neither violate nor result in the breach,
modification, cancellation, termination, or suspension of such contracts,
licenses and agreements listed on Section 7.10(e) of the Disclosure
Schedule. The Company is in material compliance with, and has not
materially breached any term any of such contracts, licenses and
agreements listed on Section 7.10(e) of the Disclosure Schedule and, to
the knowledge of the Company, all other parties to such contracts,
licenses and agreements listed on Section 7.10(e) of the Disclosure
Schedule are in compliance with, and have not breached any term of, such
contracts, licenses and agreements. To the best of the Company's
knowledge, following the Closing Date, the Surviving Corporation will be
permitted to exercise all of the Company's rights under the contracts,
licenses and agreements listed on Section 7.10(e) of the Disclosure
Schedule to the same extent the Company would have been able to had the
transaction contemplated by this Agreement not occurred and without the
payment of any additional funds other than ongoing fees, royalties or
payments which the Company would otherwise be required to pay.
(g) To the best of the Company's knowledge, Section 7.10(g) of the
Disclosure Schedule lists all contracts, licenses and agreements between
the Company and any third party wherein or whereby the Company has agreed
to, or assumed, any obligation or duty to warrant, indemnify, hold
harmless or otherwise assume or incur any obligation or liability with
respect to the infringement or misappropriation by the Company of any
third party's Intellectual Property.
(h) The Company (including its executive officer, directors and, to
the best of the Company's knowledge, employees) has not received notice
from any third party that the operation of its business or any act,
product, drug candidate or service of the Company, infringes or
misappropriates the Intellectual Property of any third party or
constitutes unfair competition or trade practices under the laws of any
jurisdiction.
(i) To the best of the Company's knowledge, (i) no Person has nor is
infringing or misappropriating any Company Intellectual Property and (ii)
there have been, and are, no claims asserted against the Company or
against any licensee of the Company with respect to the Company
Intellectual Property.
(j) The Company maintains reasonable security measures for the
preservation of the secrecy and proprietary nature of such of the Company
Intellectual Property as constitute trade secrets or other confidential
information. To the best of the Company's knowledge, no officer, director,
employee, or consultant of the Company is obligated under or bound by any
agreement or instrument, or any judgment, decree, or order of any court of
administrative agency, that (i) conflicts or
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may conflict with his agreements and obligations to use his best efforts
to promote the interest of the Company, (ii) conflicts or may conflict
with the business or operations of the Company, or (iii) restricts or may
restrict the use or disclosure of any information that may be useful to
the Company.
7.11. Indebtedness. At the date hereof, the Company has no
Indebtedness outstanding except as set forth in Section 7.11 of the Disclosure
Schedule. The Company is not in default with respect to any outstanding
Indebtedness or any agreement, instrument, or other obligation relating thereto
and no such Indebtedness or any agreement, instrument or other obligation
relating thereto purports to limit the issuance of any securities by the
Company, or (except as set forth in Section 7.11 of the Disclosure Schedule) the
operation of its businesses. Complete and correct copies of all agreements,
instruments, and other obligations (including all amendments, supplements,
waivers, and consents) relating to any Indebtedness of the Company have been
furnished to LeukoSite.
7.12. Absence of Undisclosed Liabilities. Except to the extent (a)
reflected or reserved against in the May 31, 1999 Balance Sheet, or (b)
described in Section 7.12 of the Disclosure Schedule, the Company does not have
any liabilities or obligations of any nature, whether accrued, absolute,
contingent, or otherwise (including, without limitation, liabilities, as
guarantor or otherwise, in respect of obligations of others) that would be
required to be reflected or reserved against in a balance sheet prepared in
accordance with generally accepted accounting principles or referred to in the
notes thereto.
7.13. Taxes.
(a) Elections. All material elections with respect to Taxes
(including, without limitation, any elections under Sections 108(b)(5),
338(g), 565, 936(a) or 936(e) of the Code or Treasury Regulation Section
1.1502-20(g) or Treasury Regulation Section 1.1502-32(f)(2) as in effect
prior to August 12, 1994) affecting the Company have been provided to
LeukoSite in the Tax Returns and Financial Statements.
(b) Filing of Tax Returns and Payment of Taxes. The Company has
timely filed all Tax Returns required to be filed by it, each such Tax
Return has been prepared in compliance with all applicable laws and
regulations, and all such Tax Returns are true and accurate in all
respects. All Taxes due and payable by the Company have been paid, and the
Company will not be liable for any additional Taxes in respect of any
taxable period ending on or before the Closing Date in an amount that
exceeds the corresponding reserve for unpaid Taxes, if any, reflected in
the May 31, 1999 Balance Sheet. The Company has delivered or made
available to LeukoSite true and complete copies of all Tax Returns filed
by or with respect to it with respect to taxable periods ended on or after
December 31, 1994, and all relevant material documents and information
with respect thereto in the possession of the Company, its tax advisers
and its auditors, including without limitation examination reports and
statements of deficiencies assessed against or agreed to by the Company
with respect thereto.
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(c) Audit History. With respect to each taxable period of the
Company ended on or before December 31, 1994, either such taxable period
has been audited by the relevant taxing authority or the time for
assessing or collecting Tax with respect to each such taxable period has
closed and such taxable period is not subject to review by any relevant
taxing authority.
(d) Deficiencies. No deficiency or proposed adjustment in respect of
Taxes that has not been settled or otherwise resolved has been asserted or
assessed by any taxing authority against the Company.
(e) Liens. There are no Liens for Taxes (other than current Taxes
not yet due and payable) on the assets of the Company.
(f) Extensions to Statute of Limitations for Assessment of Taxes.
The Company does not currently have in effect any consent to extend the
time in which any Tax may be assessed or collected by any taxing
authority.
(g) Extensions of the Time for Filing Tax Returns. Except as set
forth in Section 7.13(g) of the Disclosure Schedule, the Company has not
requested or been granted an extension of the time for filing any Tax
Return to a date on or after the Closing Date.
(h) Pending Proceedings. There is no action, suit, taxing authority
proceeding, or audit with respect to any Tax now in progress, pending, or
to the best of the Company's knowledge, threatened, against or with
respect to (i) the Company, or (ii) any Affiliated Group with respect to a
taxable period during which the Company was a member of such Affiliated
Group.
(i) No Failures to File Tax Returns. No claim has ever been made by
a taxing authority in a jurisdiction where the Company does not pay Tax or
file Tax Returns that the Company is or may be subject to Taxes assessed
by such jurisdiction.
(j) Membership in Affiliated Groups, Etc. The Company has never been
a member of any Affiliated Group, or filed or been included in a combined,
consolidated, or unitary Tax Return.
(k) Adjustments under Section 481. The Company will not be required,
as a result of a change in method of accounting for any period ending on
or before the Closing Date other than as a result of the transactions
contemplated by the Agreement, to include any adjustment under Section
481(c) of the Code (or any similar or corresponding provision or
requirement under any Tax law) in taxable income for any period ending on
or after the Closing Date.
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(l) Tax Sharing, Allocation, or Indemnity Agreements. The Company is
not a party to or bound by any Tax sharing or allocation agreement or has
any current or potential contractual obligation to indemnify any other
person with respect to Taxes.
(m) Withholding Taxes. The Company has withheld and paid all Taxes
required to have been withheld and paid by it in connection with amounts
paid or owing to any employee, creditor, independent contractor, or other
person.
(n) Foreign Permanent Establishments and Branches. Except as set
forth in Section 7.13(n) of the Disclosure Schedule, the Company does not
have a permanent establishment in any foreign country, as defined in the
relevant tax treaty between the United States of America and such foreign
country, and does not otherwise operate or conduct business through any
branch in any foreign country.
(o) U.S. Real Property Holding Corporation. The Company is not and
has not been a United States real property holding corporation within the
meaning of Code Section 897(c)(2), during the applicable period specified
in Code Section 897(c)(1)(A)(ii).
(p) Safe Harbor Lease Property. None of the property owned or used
by the Company is subject to a tax benefit transfer lease executed in
accordance with Section 168(f)(8) of the Internal Revenue Code of 1954, as
amended by the Economic Recovery Tax Act of 1981.
(q) Tax-Exempt Use Property. Except as set forth in Schedule 7.13(q)
of the Disclosure Schedule, none of the property owned by the Company is
"tax-exempt use property" within the meaning of Section 168(h) of the
Code.
(r) Security for Tax-Exempt Obligations. None of the assets of the
Company directly or indirectly secures any indebtedness, the interest on
which is tax-exempt under Section 103(a) of the Code, and the Company is
not directly or indirectly an obligor or a guarantor with respect to any
such indebtedness.
(s) Section 341(f) Consent. The Company has not filed a consent
under Code Section 341(f) concerning collapsible corporations.
(t) Parachute Payments. The Company has not made any payments, is
not obligated to make any payments, and is not a party to any agreement
that under certain circumstances could obligate it to make any payments,
that will not be deductible under Code Sections 162(m) or 280G.
7.14. Employee Benefit Plans.
(a) Except as described in Section 7.14(a) of the Disclosure
Schedule, the Company does not now maintain or contribute to, and has not
in the current or
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preceding six calendar years maintained or contributed to, any pension,
profit-sharing, deferred compensation, bonus, stock option, share
appreciation right, severance, group or individual health, dental,
medical, life insurance, survivor benefit, or similar plan, policy, or
arrangement, whether formal or informal, for the benefit of any director,
officer, consultant or employee, whether active or terminated, of the
Company. Each of the arrangements set forth in Section 7.14(a) of the
Disclosure Schedule is hereinafter referred to as an "Employee Benefit
Plan," except that any such arrangement that is a multi-employer plan will
be treated as an Employee Benefit Plan only for purposes of Sections
7.14(d)(iv), (vi), and (viii) and 7.14(g) below.
(b) The Company has delivered or made available to LeukoSite true,
correct, and complete copies of each Employee Benefit Plan, and with
respect to each such Plan (i) any associated trust, custodial, insurance,
or service agreements, (ii) any annual report, actuarial report, or
disclosure materials (including specifically any summary plan
descriptions) submitted to any governmental agency or distributed to
participants or beneficiaries thereunder in the current calendar year or
any of the six preceding calendar years, and (iii) the most recently
received Internal Revenue Service ("IRS") determination letters and any
governmental advisory opinions or rulings.
(c) To the best of the Company's knowledge, each Employee Benefit
Plan is and has heretofore been maintained and operated in material
compliance with the terms of such Plan and with the requirements
prescribed (whether as a matter of substantive law or as necessary to
secure favorable tax treatment) by any and all statutes, governmental or
court orders, and governmental rules or regulations in effect from time to
time, including, but not limited to, the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), and the Code, and applicable
to such Plan. Each Employee Benefit Plan that is intended to qualify under
Section 401(a) of the Code and each trust forming part of an Employee
Benefit Plan which is intended to qualify under Section 501(c)(9) of the
Code is specifically so identified in Section 7.14(a) of the Disclosure
Schedule and has been determined by the IRS to be so qualified, and to the
best of the Company's knowledge, nothing has occurred since the date of
the last such determination as to each such Plan or trust that has
resulted or is likely to result in the revocation of such determination as
to such Plan or trust, other than such failures as may be corrected
without expenditure of more than $10,000.
(d) (i) There is no pending, or to the best of the Company's
knowledge, threatened, legal action, proceeding, or investigation, other
than routine claims for benefits, concerning any Employee Benefit Plan, or
to the best of the Company's knowledge, any fiduciary or service provider
thereof, and to the best of the Company's knowledge, there is no basis for
any such legal action, proceeding, or investigation.
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(ii) No liability (contingent or otherwise) to the Pension
Benefit Guaranty Corporation ("PBGC") or any multi-employer plan has
been incurred by the Company or any of its ERISA affiliates (other
than insurance premiums satisfied in due course).
(iii) No reportable event, or event or condition that presents
a material risk of termination by the PBGC, has occurred with
respect to any Employee Benefit Plan, or any retirement plan of an
ERISA affiliate of the Company, which is subject to Title IV of
ERISA.
(iv) To the best of the Company's knowledge, no Employee
Benefit Plan nor any party in interest with respect thereto, has
engaged in a prohibited transaction that could subject the Company
directly or indirectly to liability under Section 409 or 502(i) of
ERISA or Section 4975 of the Code.
(v) No communication, report, or disclosure has been made
that, at the time made, did not reflect accurately in all material
respects the terms and operations of any Employee Benefit Plan.
(vi) No Employee Benefit Plan provides welfare benefits
subsequent to termination of employment to employees or their
beneficiaries (except to the extent required by applicable state
insurance laws and Title I, Part 6 of ERISA), other than (A)
coverage mandated by applicable law, (B) benefits the full cost of
which is borne by the current or former employees (or their
beneficiaries), and (C) benefits that have already been satisfied in
full.
(vii) No benefits due under any Employee Benefit Plan have
been forfeited subject to the possibility of reinstatement (which
possibility would still exist at or after the Closing) except as
required by applicable law.
(viii) The Company has not undertaken to maintain any Employee
Benefit Plan for any period of time and each such Plan is terminable
at the sole discretion of the Company, subject only to such
constraints as may be imposed by applicable law.
(e) With respect to each Employee Benefit Plan for which a separate
fund of assets is or is required to be maintained, full payment has been
made of all amounts that the Company is required, under the terms of each
such Plan, to have paid as contributions to that Plan as of the end of the
most recently ended plan year of that Plan, and no accumulated funding
deficiency (as defined in Section 302 of ERISA and Section 412 of the
Code), whether or not waived, exists with respect to any such Plan. The
current value of the assets of each such Employee Benefit Plan, as of the
end of the most recently ended plan year of that Plan, exceeded the
current value of all accrued benefits under that Plan.
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(f) The execution of this Agreement and the consummation of the
transactions contemplated hereby will not result in any payment (whether
of severance pay or otherwise) becoming due from any Employee Benefit Plan
to any current or former director, officer, consultant, or employee of the
Company or result in the vesting, acceleration of payment, or increases in
the amount of any benefit payable to or in respect of any such current or
former director, officer, consultant, or employee. No representation or
warranty is made as to the foregoing with respect to actions taken by
LeukoSite after the Closing with respect to the Employee Benefit Plans.
(g) No Employee Benefit Plan is a multi-employer plan.
(h) For purposes of this Section 7.14, "multi-employer plan," "party
in interest," "current value," "accrued benefit," "reportable event," and
"benefit liability" have the same meaning assigned such terms under Sections 3,
4043(b) or 4001(a) of ERISA, and "ERISA affiliate" means any entity that under
Section 414 of the Code is treated as a single employer with the Company.
7.15. Safety and Environmental Matters. Except as set forth in
Section 7.15 of the Disclosure Schedule:
(a) None of the activities carried on by the Company at any plants,
offices, or properties in or on which the Company operates are in
violation of any zoning, health, or safety law or regulation, including
without limitation the Occupational Safety and Health Act of 1970, as
amended, excluding only such violations as will not, either individually
or in the aggregate, have a Material Adverse Effect on the Company.
(b) Neither the Company, nor to the best of the Company's knowledge,
any operator of any real property presently or formerly owned, leased, or
operated by the Company is in violation or alleged violation of any
judgment, decree, order, law, license, rule or regulation pertaining to
environmental matters, including without limitation the Resource
Conservation and Recovery Act ("RCRA"), the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended ("CERCLA"),
the Superfund Amendments and Reauthorization Act of 1986 ("SARA"), the
Federal Clean Water Act, the Federal Clean Air Act, the Toxic Substances
Control Act, and applicable federal, state, foreign, and local statutes,
regulations, ordinances, orders, and decrees relating to health, safety,
or the environment (all of the foregoing, collectively, "Environmental
Laws"), excluding only such violations as will not, either individually or
in the aggregate, have a Material Adverse Effect on the Company.
(c) The Company has not received notice from any third party,
including without limitation any federal, state, foreign, or local
governmental authority, that (i) the Company has been identified by the
United States Environmental Protection Agency (the "EPA") as a potentially
responsible party under CERCLA with respect
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to a site listed on the National Priorities List, 40 C.F.R. Part 300
Appendix B (1986); (ii) any hazardous waste as defined by 42 U.S.C.
ss.6903(5), any hazardous substance as defined by 42 U.S.C. ss. 9601(14),
any pollutant or contaminant as defined by 42 U.S.C. ss. 9601(33) or any
toxic substance, oil, or hazardous material or other chemical or substance
regulated by any Environmental Laws (collectively, "Hazardous Substances")
that the Company has generated, transported, handled, used, or disposed of
has been found at any site at which a federal, state, foreign, or local
agency or other third party has conducted or has ordered that the Company
conduct a remedial investigation, removal, or other response action
pursuant to any Environmental Law; or (iii) the Company is or will be a
named party to any claim, action, cause of action, complaint (contingent
or otherwise), or legal or administrative proceeding arising out of any
third party's incurrence of costs, expenses, losses, or damages of any
kind whatsoever in connection with the release of Hazardous Substances.
(d) (i) No portion of any real property presently or formerly owned,
leased, or operated by the Company has been used by the Company, or to the
best of the Company's knowledge, by any other person, to handle, use,
manufacture, transport, store, or dispose of Hazardous Substances except
in accordance in all material respects with applicable Environmental Laws;
and no underground tank or other underground storage receptacle for
Hazardous Substances used by the Company is located on any real property
presently owned, leased, or operated by the Company, or to the best of the
Company's knowledge, any real property formerly owned, leased, or operated
by it; (ii) in the course of the activities conducted by the Company and
to the best of the Company's knowledge, without investigation, those of
any other operators of any real property presently or formerly owned,
leased, or operated by the Company, no Hazardous Substances have been
generated, stored, or used on such properties except in accordance with
applicable Environmental Laws; (iii) to the best of the Company's
knowledge, there have been no releases (i.e. any past or present
releasing, spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, disposing, or dumping) or threatened
releases of Hazardous Substances by the Company on, upon, into, or from
any real property presently or formerly owned, leased, or operated by the
Company; (iv) to the best of the Company's knowledge, there have been no
releases on, upon, from, or into any real property in the vicinity of any
real property presently or formerly owned, leased, or operated by the
Company that, through soil or groundwater contamination, have come to be
located on, any of the real property presently or formerly owned, leased,
or operated by the Company; and (v) to the extent required by applicable
Environmental Laws, any Hazardous Substances that have been generated by
the Company, or to the Company's actual knowledge, by any other person, on
any real property presently or formerly owned, leased, or operated by the
Company, have been transported offsite only by carriers having an
identification number issued by the EPA and treated or disposed of only by
treatment or disposal facilities having, to the Company's actual
knowledge, valid permits as required under applicable Environmental Laws,
which transporters and facilities, to the Company's actual
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knowledge, have been and are operating substantially in compliance with
such permits and applicable Environmental Laws.
(e) No real property presently owned, leased, or operated by the
Company, and to the best of the Company's knowledge, no real property
formerly owned, leased, or operated by the Company, and as a result of the
present or past activities of the Company, is subject to any Environmental
Law requiring the performance of any Hazardous Substances site assessment,
the removal or remediation of any Hazardous Substances, the giving of
notice to any governmental agency or other person, or the recording and/or
delivery to any governmental agency or other person of any environmental
disclosure statement or document, by reason of, or as a condition to the
effectiveness of, the Merger and/or any other transaction contemplated
hereby.
7.16. Labor Relations. The Company is and has been in compliance in
all material respects with all federal and state laws respecting employment and
employment practices, terms and conditions of employment, wages and hours, and
nondiscrimination in employment, and is not and has not been engaged in any
unfair labor practice. There is no charge or proceeding pending, or to the best
of the Company's knowledge, threatened, against the Company alleging unlawful
discrimination in employment practices or unfair labor practice before any court
or agency, including without limitation the National Labor Relations Board.
There is no labor strike, dispute, work slow-down, or work stoppage pending, or
to the best of the Company's knowledge, threatened against or involving the
Company. No one has petitioned within the last five years or is now petitioning
for union representation of any of the employees of the Company. No grievance or
arbitration proceeding arising out of or under any collective bargaining
agreement is pending against the Company and no claim therefor has been
asserted. None of the employees of the Company is covered by any collective
bargaining agreement, and no collective bargaining agreement is currently being
negotiated by the Company. The Company has not experienced any work stoppage or
other material labor difficulty during the last five years.
7.17. Litigation. No litigation, arbitration, action, suit,
proceeding, or investigation (whether conducted by any judicial or regulatory
body, arbitrator, or other person) is pending (as evidenced by the Company's
receipt of service of process or other written notice of such pendency), or to
the best of the Company's knowledge, threatened, against the Company, nor is
there any basis therefor known to the Company.
7.18. Contracts. Section 7.18 of the Disclosure Schedule sets forth
a complete and accurate list of all "Material Contracts" to which the Company is
a party or by or to which it or any of its assets or properties is bound or
subject. As used in this Agreement, the term "Material Contract" means every
agreement or understanding of any kind, written or oral, that is legally
enforceable by or against or otherwise binding on the Company and which is
material to the Company's business, and specifically includes without
limitation: (a) agreements with any current or former officer, director,
employee, consultant, or stockholder, or any partnership, corporation, joint
venture, or any other entity in which any such person has an interest (other
than agreements terminable by the Company upon 30 days notice and which
termination does not result in any obligations or liabilities to
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the Company); (b) agreements with any labor union or association representing
any employee; (c) agreements for the provision of services by or to the Company
in excess of $25,000; (d) bonds or other security agreements provided by any
party in connection with the business of the Company; (e) agreements for the
purchase or other acquisition or the sale or other disposition of assets or
properties (other than in the ordinary course of business), or for the grant to
any person of any preferential rights to purchase any such assets or properties;
(f) joint venture agreements relating to the assets, properties, or business of
the Company or by or to which it or any of its assets or properties is bound or
subject; (g) agreements under which the Company agrees to indemnify any party,
to share tax liability of any party, or to refrain from competing with any
party; (h) agreements with regard to Indebtedness, including, without
limitation, any indenture or other agreements in connection with issuances of
bonds, debentures or other debt securities by the Company and any agreements in
connection with bank financings by the Company; (i) any agreement, contract,
commitment, transaction or series of transaction for any purpose other than in
the ordinary course of the Company's business relating to capital expenditures
or commitments or long-term obligations; (j) any purchase order or contract for
the purchase of raw materials; (k) any distribution, joint marketing or
development agreement; (l) any assignment, license or other agreement with
respect to any form of intangible property; (m) any research collaboration
agreement; (n) any agreements relating to venture capital and other equity
financings by the Company; (o) any stockholder agreements or other agreements
with any of the Stockholders pertaining to the shares of Company Stock held by
them or their rights as stockholders of the Company; and (p) to the knowledge of
the Company, any voting trust or voting agreements among the Stockholders.
All of the contracts listed in Section 7.18 of the Disclosure Schedule are
in full force and effect, and neither the Company, nor to the best of the
Company's knowledge, any other party thereto, is in default under or material
breach of any of the material terms thereof, nor does any event or condition
exist that after notice or lapse of time or both could constitute a default
thereunder or material breach thereof on the part of the Company, or to the best
of the Company's knowledge, any other party thereto. No approval or consent of
any person that has not already been obtained and listed in Section 7.18 of the
Disclosure Schedule is needed in order that the contracts listed in Section 7.18
of the Disclosure Schedule continue in full force and effect following the
consummation of the Merger and the other transactions contemplated hereby, and
no such contract includes any provision, the effect of which may be to terminate
(or give rise to a right of termination under) such contract, to enlarge or
accelerate any obligations of the Company thereunder, or to give additional
rights to any other person, as a result of the consummation of the Merger or the
other transactions contemplated hereby. The Company has delivered or made
available to LeukoSite true, correct, and complete copies of all such Material
Contracts, including all amendments, modifications, and supplements thereto.
7.19. Potential Conflicts of Interest. No officer, director, or, to
best of the Company's knowledge, stockholder of the Company (a) owns, directly
or indirectly, any interest (excepting not more than 5% stock holdings for
investment purposes in securities of publicly held and traded companies) in, or
is an officer, director, employee, or consultant of, any person that furnishes
or sells services, drug candidates or products that the Company
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furnishes or sells or proposes to furnish or sell or is a lessor, lessee,
customer, or supplier of the Company; (b) owns, directly or indirectly, in whole
or in part (other than solely as a result of his or its ownership of Company
Stock), any tangible or intangible property that the Company is using or the use
of which is necessary for the business of the Company; or (c) to the best of the
Company's knowledge, has any cause of action or other claim whatsoever against,
or owes any amount to, the Company, except for claims in the ordinary course of
business, such as for accrued vacation pay, accrued benefits under Employee
Benefit Plans, and similar matters and agreements.
7.20. Insurance. Section 7.20 of the Disclosure Schedule lists the
policies of products liability, theft, fire, liability, worker's compensation,
life, property and casualty, and other insurance owned or held by the Company.
Such policies of insurance are of the kinds, cover such risks, and are in such
amounts and with such deductibles and exclusions, as are consistent with prudent
business practice for companies in the Company's line of business and of a
similar size and location. All such policies are in full force and effect; are
sufficient for compliance by the Company with all requirements of law and of all
agreements to which the Company is a party; are valid, outstanding, and
enforceable policies and provide that they will remain in full force and effect
through the respective dates set forth in the Disclosure Schedule; and will not
in any way be affected by, or terminate or lapse as a result of the consummation
of, the transactions contemplated by this Agreement.
7.21. Bank Accounts, Signing Authority, Powers of Attorney. Section
7.21 of the Disclosure Schedule sets forth a complete and accurate list of all
bank, brokerage, and other accounts, and all safe-deposit boxes, of the Company
and the persons with signing or other authority to act with respect thereto.
Except as so listed, the Company does not have any account or safe deposit box
in any bank, and no person has any power, whether singly or jointly, to sign any
checks on behalf of the Company, to withdraw any money or other property from
any bank, brokerage, or other account of the Company, or to act under any agency
or power of attorney granted by the Company at any time for any purpose. Section
7.21 of the Disclosure Schedule also sets forth the names of all persons
authorized to borrow money or sign notes on behalf of the Company.
7.22. Relationships With Suppliers and Licensors. No current
supplier to the Company has notified the Company of an intention to terminate or
substantially alter its existing business relationship with the Company, nor has
any licensor under a license agreement with the Company notified the Company of
an intention to terminate or substantially alter the Company's rights under such
license, which termination or alteration would have a Material Adverse Effect on
the Company.
7.23. Employment of Officers, Employees. The name and current annual
salary and other compensation payable by the Company to each exempt non-hourly
employee whose current total annual compensation or estimated compensation from
the Company (including but not limited to wages, salary, commissions, normal
bonus, profit sharing, deferred compensation, and other extra compensation) are
as set forth in Section 7.23 of the Disclosure Schedule. Except to the extent
otherwise disclosed in Section 7.23 of the Disclosure Schedule, none of the
current or former officers, directors, employees or
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consultants of the Company is a party to, or the beneficiary of, any agreement,
plan or arrangement that provides for any payment (whether of severance pay or
otherwise) becoming due to such current or former officer, director, employee or
consultant upon termination of his or her relationship with the Company or as a
result of the Merger, or that provides for the vesting, acceleration of payment,
or increases in the amount of any benefit payable to or in respect of such
current or former director, officer, consultant, or employee upon termination of
his or her relationship with the Company or as a result of the Merger.
7.24. Minute Books. The minute books of the Company made available
to LeukoSite for inspection accurately record therein all material actions taken
by its Board of Directors, all committees thereof, and its stockholders.
7.25. Brokers. No finder, broker, agent, or other intermediary has
acted for or on behalf of the Company in connection with the negotiation,
preparation, execution, or delivery of this Agreement or the consummation of the
Merger or the other transactions contemplated hereby.
7.26. Compliance with Other Agreements, Laws, Etc. The Company has
complied with, and is in compliance with, (a) all laws, statutes, governmental
regulations and all judicial or administrative tribunal orders, judgments,
writs, injunctions, decrees or similar commands applicable to its business, (b)
all unwaived terms and provisions of all contracts, agreements and indentures to
which the Company is a party, or by which the Company or any of its properties
is subject, and (c) its Certificate of Incorporation and by-laws, respectively,
each as amended to date; in the case of the preceding clauses (a) and (b),
excepting only any such noncompliances that, both individually and in the
aggregate, have not resulted and will not result in any Material Adverse Effect
with respect to the Company. The Company has not been charged with, or to the
best of its knowledge, been under investigation with respect to, any violation
of any provision of any federal, state, or local law or administrative
regulation.
7.27. Permits, Licenses, and Programs; No Debarment.
(a) Section 7.27 of the Disclosure Schedule contains a complete and
correct copy of (i) each pending application or registration for
governmental approval and each governmental approval held by the Company
to develop, manufacture, test (including, without limitation, preclinical
tests and clinical trials), import, export, store, market and sell the
Company's products or drug candidates, (ii) the most recent report by or
on behalf of the FDA or any other governmental body involving or relating
to any facility inspection of the Company's facilities, and (iii) a
description of all ongoing proprietary internal research and development
programs included in the ProScript Programs. Except as are set forth in
Section 7.27 of the Disclosure Schedule, (i) the Company possesses such
governmental approvals from all governmental bodies including, without
limitation, all FDA approvals, necessary to permit the operation of its
business in the manner as the same is currently conducted, and to operate,
own or occupy its properties, (ii) there have been no product recalls,
field corrective activity, medical device reports, warning letters or
administrative
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actions by the FDA or any other governmental body, and (iii) to the
knowledge of the Company, (aa) there is no administrative action pending
or threatened for the revocation of any such governmental approval and
(bb) assuming the obtaining of the authorizations, consents, approvals and
other actions listed in Section 7.27 of the Disclosure Schedule, no
governmental approvals and other actions listed in Section 7.27 of the
Disclosure Schedule of the Disclosure Schedule, no governmental approval
by any governmental body having jurisdiction over the operation of the
Company's business, whether in whole or in part, will be revoked, or
become ineffective or subject to revocation, as a consequence of the
transactions contemplated by this Agreement.
(b) The Company (i) has not been debarred or received notice of
action or threat of action with respect to its debarment under the
provisions of the Generic Drug Enforcement Act of 1992, 31 U.S.C. Section
335(a) and (b), or (ii) to the best of the Company's knowledge, has used
in any capacity the services of any individual, corporation, partnership
or association which has been debarred under the provisions of the Generic
Drug Enforcement Act of 1992, 21 U.S.C. Section 335(a) and (b).
7.28. Distribution of Merger Consideration. The Merger
Consideration, when distributed in accordance with the terms of this Agreement,
will have been distributed to the holders of Company Stock in accordance with
the provisions of the Company's Certificate of Incorporation in effect
immediately prior to the Effective Time and any other document or agreement
among the Company and such holders related to the distribution of the Merger
Consideration.
7.29. Disclosure. No representation or warranty of the Company in
this Agreement (including the exhibits and schedules hereto) or in any other
agreement, instrument, certificate, or other document delivered by the Company
in connection with this Agreement, the Merger, or any of the other transactions
contemplated hereby contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact required to be stated
therein or necessary to make the statements contained therein not false or
misleading.
7A. Representations and Warranties of Note Holders.
Each Note Holder hereby represents and warrants, severally, to
LeukoSite and Merger Sub as follows, subject in each case to such exceptions as
are specifically contemplated by this Agreement or as are set forth in the
attached Disclosure Schedule.
7A.1. Incorporation; Authority. Each Note Holder is a limited
partnership duly organized, validly existing, and in good standing under the
laws of the State of Delaware.
7A.2. Authorization and Enforceability. Each Note Holder has all
requisite partnership power to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation
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of the transactions contemplated hereby have been duly authorized by all
necessary partnership action on the part of each Note Holder. This Agreement has
been duly executed and delivered by each Note Holder and constitutes the valid
and binding obligation of each Note Holder, enforceable in accordance with its
terms except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors' rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies and (iii) as limited by public policy considerations.
7A.3. Governmental and Other Third-Party Consents,
Non-Contravention, Etc. No consent, approval, or authorization of or
registration, designation, declaration, or filing with any governmental
authority, federal or other, or any other person, is required on the part of the
Note Holders in connection with the execution, delivery, and performance of this
Agreement or the consummation of the Merger and the other transactions
contemplated hereby. The execution, delivery, and performance of this Agreement
and the consummation of such transactions will not violate (a) any provision of
the Note Holders' respective partnership agreements, (b) any order, judgment,
injunction, award or decree of any court or state or federal governmental or
regulatory body applicable to the Note Holders, or (c) any judgment, decree,
order, statute, rule, regulation, agreement, instrument, or other obligation to
which any Note Holder is a party or by or to which it or any of its assets is
bound or subject, other than violations which will not have a Material Adverse
Effect on the Note Holders.
7A.4. Title to Convertible Notes. Each Note Holder is the lawful
owner of, has good and marketable title to, and is the record and beneficial
owner and holder of, each Convertible Note held by such Note Holder. Each Note
Holder has the full right to sell, convey, transfer, assign and deliver the
Convertible Note held by such Note Holder to LeukoSite as required by the terms
of this Agreement. The Convertible Notes have not been assigned or transferred
to any other person or entity and are entirely free and clear of all Liens.
7A.5. Litigation. No litigation, arbitration, action, suit,
proceeding, or investigation (whether conducted by any judicial or regulatory
body, arbitrator, or other person) is pending (as evidenced by any Note Holder's
receipt of service of process or other written notice of such pendency), or to
the best of each of the Note Holder's knowledge, threatened, against such Note
Holder, nor is there any basis therefor known to such Note Holder, the effect of
which would prohibit or interfere with the transactions contemplated by this
Agreement.
7A.6. Brokers. No finder, broker, agent, or other intermediary has
acted for or on behalf of either Note Holder in connection with the negotiation,
preparation, execution, or delivery of this Agreement or the consummation of the
Merger or the other transactions contemplated hereby.
7A.7. Investor Representations. Each Note Holder is an "accredited
investor" as defined in Rule 501(a) promulgated under the Securities Act and has
such
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knowledge and experience in financial and business matters that it is capable of
evaluating the merits and risks of the transactions contemplated under this
Agreement, including the investment in Leukosite Common Stock. Each Note Holder
represents and warrants that (a) it has total assets in excess of $5,000,000,
(b) it was not formed for the specific purpose of acquiring the Payment Shares,
(c) a substantial part of its business activities consist of investment,
purchasing, selling or trading in securities issued by others, and (iv) its
investment decisions are made by persons who have such knowledge and experience
in financial and business matters as to be capable of evaluating the merits and
risks of an investment in the Payment Shares. Each Note Holder's financial
condition is such that it is able to bear all economic risks of investment in
the Payment Shares, including a complete loss of its investment therein.
LeukoSite has provided each Note Holder with adequate access to financial and
other information concerning LeukoSite (including, without limitation,
LeukoSite's SEC Reports (as defined below) as requested and each Note Holder has
had the opportunity to ask questions of and receive answers from LeukoSite
concerning the transactions contemplated by this Agreement and to obtain
therefrom any additional information necessary to make an informed decision
regarding an investment in LeukoSite. Each Note Holder is acquiring the Payment
Shares solely for investment purposes, with no present intention of distributing
or reselling any of the Payment Shares or any interest therein. Each Note Holder
is aware that, (y) except as contemplated in Section 6 hereof, the Payment
Shares will not be registered under the Securities Act, and that neither the
Payment Shares nor any interest therein may be sold, pledged, or otherwise
transferred unless the Payment Shares are registered under the Securities Act or
qualify for an exemption under the Securities Act and (z) the certificate(s)
representing such shares will bear appropriate restrictive legends referring to
such restrictions on transfer.
8. Representations and Warranties of LeukoSite and Merger Sub to Company.
LeukoSite and Merger Sub hereby jointly and severally represent and
warrant to the Company as follows:
8.1. Incorporation; Authority. Each of LeukoSite and Merger Sub is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware and has all requisite corporate power and
authority to own or lease and operate its properties and to carry on its
business as now conducted. LeukoSite is duly qualified or licensed to conduct
its business and is in good standing as a foreign corporation in each
jurisdiction in which the failure to be so qualified would have, or would be
reasonably expected to have, a Material Adverse Effect on LeukoSite.
8.2. Authorization and Enforceability. Each of LeukoSite and Merger
Sub has all requisite corporate power and authority (including due approval of
its Board of Directors) to enter into this Agreement and to consummate the
transactions contemplated hereby and thereby. This Agreement has been duly
executed and delivered by each of LeukoSite and Merger Sub and constitutes a
legal, valid, and binding obligation of each of them, enforceable against each
of them in accordance with its terms, except as enforceability may be subject to
the effect of any applicable bankruptcy, insolvency, fraudulent
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conveyance, moratorium, reorganization, marshaling, or other similar laws or
rules of law affecting creditors' rights and remedies generally, and to general
principles of equity. LeukoSite does not require any approval from its
stockholders in connection with this Agreement, the Merger or any of the
transactions contemplated hereby or thereby (including the issuance of the
Payment Shares). None of the stockholders of LeukoSite or Merger Sub will have
any appraisal rights under Section 262 of the DGCL by reason of the consummation
of the Merger or the other transactions contemplated hereby.
8.3. Governmental and Other Third-Party Consents, Non-Contravention,
Etc. Except for (i) filing a listing application for purposes of listing the
Payment Shares in the Nasdaq Stock Market and obtaining approval of such
proposed listing, (ii) the filing of the Merger Certificate or of any
registration statement that LeukoSite is required to file pursuant to Section 6
hereof and (iii) any filings required in order to comply with federal and state
securities laws that may be applicable to the issuance of the Payment Shares, no
consent, approval, or authorization of or registration, designation,
declaration, or filing with any governmental authority, federal or other, or any
other person, is required on the part of LeukoSite or Merger Sub in connection
with this Agreement, the Merger, or any of the other transactions contemplated
hereby (including the issuance of the Payment Shares). The execution, delivery,
and performance of this Agreement and the consummation of such transactions will
not violate (a) any provision of LeukoSite's or Merger Sub's Certificate of
Incorporation or by-laws, (b) any order, judgment, injunction, award or decree
of any court or state or federal governmental or regulatory body applicable to
LeukoSite or Merger Sub, or (c) any judgment, decree, order, statute, rule,
regulation, agreement, instrument, or other obligation to which LeukoSite or
Merger Sub is a party or by or to which either of them or any of their
respective assets is bound or subject.
8.4. Merger Sub. Merger Sub has been organized for the specific
purpose of engaging in the Merger and the other transactions contemplated hereby
and has not incurred any liabilities, conducted any business, or entered into
any contracts or commitments, in each case except such as are in furtherance of
or incidental to such transactions.
8.5. LeukoSite's SEC Statements, Reports and Documents. Since August
15, 1997, LeukoSite has timely filed with the SEC all forms, reports,
registration statements, and documents required to be filed by it. LeukoSite has
delivered to the Company true and complete copies of (i) its Annual Report on
Form 10-K for its fiscal year ended December 31, 1998, (ii) its proxy statements
relating to all meetings of its stockholders (whether annual or special) held
since August 15, 1997, and (iii) all other forms, reports (including without
limitation annual reports pursuant to Exchange Act rule 14a-3), registration
statements, and documents filed or required to be filed by it with, or provided
or required to be provided by it to, the SEC since August 15, 1997
(collectively, all of the foregoing documents, "LeukoSite's SEC Reports"). As of
their respective dates, LeukoSite's SEC Reports complied in all material
respects with all applicable requirements of the Securities Act and the Exchange
Act and the rules and regulations promulgated thereunder, and did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
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light of the circumstances under which they were made, not misleading. None of
LeukoSite's SEC Reports is required to be amended or supplemented as of the date
hereof. The financial statements (including any related notes) of LeukoSite
included in LeukoSite's SEC Reports were prepared in conformity with generally
accepted accounting principles applied on a consistent basis (except as
otherwise stated in the financial statements or, in the case of audited
statements, the related report of LeukoSite's independent certified public
accountants) and present fairly in all material respects the consolidated
financial position, results of operations, changes in stockholders' equity, and
cash flows, as applicable, of LeukoSite and its consolidated Subsidiaries as of
the dates and for the periods indicated; subject, in the case of unaudited
interim consolidated financial statements, to condensation, the absence of
footnote disclosure, and normal, recurring end-of-period adjustments, the effect
of which was not and will not be material.
Except to the extent (a) reflected or reserved against in LeukoSite's
consolidated balance sheet as of March 30, 1998, included in its Quarterly
Report on Form 10-Q for its fiscal quarter ended on that date, or (b) incurred
with persons other than any Affiliate of LeukoSite in the ordinary course of
business after the date of such balance sheet, the Company does not have any
liabilities or obligations of any nature, whether accrued, absolute, contingent,
or otherwise (including without limitation liabilities, as guarantor or
otherwise, in respect of obligations of others) that would be required to be
reflected or reserved against in a balance sheet prepared in accordance with
generally accepted accounting principles or referred to in the notes thereto.
8.6. Certificate of Incorporation and By-Laws. LeukoSite's
Certificate of Incorporation and by-laws set forth as Exhibits 3.1 through 3.4,
respectively, to LeukoSite's Registration Statement on Form S-1 (Registration
No. 333-30213), as declared effective under the Securities Act on August 15,
1997, are complete and correct copies thereof, and have not been amended since
the date of such filing. LeukoSite has previously provided to the Company a
complete and correct copy of the Certificate of Incorporation and by-laws of
Merger Sub, neither of which has been amended or restated. Such Certificates of
Incorporation and by-laws of LeukoSite and Merger Sub, respectively, are in full
force and effect. Neither LeukoSite nor Merger Sub is in violation of any
provisions of its Certificate of Incorporation or by-laws.
8.7. Absence of Certain Changes. Since March 31, 1999, there has not
been any material adverse change in the assets, business, financial condition,
results of operations of LeukoSite and its Subsidiaries, taken as a whole.
8.8. Ownership of Company Stock. Neither LeukoSite nor Merger Sub
beneficially owns, directly or indirectly, or is a party to any agreement (other
than this Agreement and the Designated Preferred Stockholders Agreement),
arrangement, or understanding with respect to the acquisition, holding, voting,
or disposition of any shares of the capital stock or other securities of the
Company.
8.9. Brokers. No finder, broker, agent, or other intermediary has
acted for or on behalf of LeukoSite or Merger Sub in connection with the
negotiation, preparation,
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execution, or delivery of this Agreement or the consummation of the transactions
contemplated hereby.
8.10. Disclosure. No representation or warranty of LeukoSite in this
Agreement (including the exhibits and schedules hereto) or in any other
agreement, instrument, certificate, or other document delivered by LeukoSite in
connection with this Agreement, the Merger, or any of the other transactions
contemplated hereby contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact required to be stated
therein or necessary to make the statements contained therein not false or
misleading.
8A. Representations and Warranties of LeukoSite and Merger Sub to Note
Holders.
LeukoSite and Merger Sub hereby jointly and severally represent and
warrant to the Note Holders as follows:
8A.1. Incorporation; Authority. LeukoSite is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to own or lease and
operate its properties and to carry on its business as now conducted. LeukoSite
is duly qualified or licensed to conduct its business and is in good standing as
a foreign corporation in each jurisdiction in which the failure to be so
qualified would have, or would be reasonably expected to have, a Material
Adverse Effect on LeukoSite.
8A.2. Authorization and Enforceability. LeukoSite has all requisite
corporate power and authority (including due approval of its Board of Directors)
to enter into this Agreement and to consummate the transactions contemplated
hereby and thereby. This Agreement has been duly executed and delivered by
LeukoSite and constitutes a legal, valid, and binding obligation of LeukoSite,
enforceable against LeukoSite in accordance with its terms, except as
enforceability may be subject to the effect of any applicable bankruptcy,
insolvency, fraudulent conveyance, moratorium, reorganization, marshaling, or
other similar laws or rules of law affecting creditors' rights and remedies
generally, and to general principles of equity. LeukoSite does not require any
approval from its stockholders in connection with this Agreement, the Merger or
any of the transactions contemplated hereby or thereby (including the issuance
of the Payment Shares).
8A.3. Governmental and Other Third-Party Consents,
Non-Contravention, Etc. Except for (i) filing a listing application for purposes
of listing the Payment Shares in the Nasdaq Stock Market and obtaining approval
of such proposed listing, (ii) the filing of the Merger Certificate or of any
registration statement that LeukoSite may be required to file pursuant to
Section 6 hereof and (iii) any filings required in order to comply with federal
and state securities laws that may be applicable to the issuance of the Payment
Shares, no consent, approval, or authorization of or registration, designation,
declaration, or filing with any governmental authority, federal or other, or any
other person, is required on the part of LeukoSite in connection with this
Agreement, the
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Merger, or any of the other transactions contemplated hereby (including the
issuance of the Payment Shares). The execution, delivery, and performance of
this Agreement and the consummation of such transactions will not violate (a)
any provision of LeukoSite's Certificate of Incorporation or by-laws, (b) any
order, judgment, injunction, award or decree of any court or state or federal
governmental or regulatory body applicable to LeukoSite, or (c) any judgment,
decree, order, statute, rule, regulation, agreement, instrument, or other
obligation to which LeukoSite is a party or by or to which either of them or any
of their respective assets is bound or subject.
8A.4. Certificate of Incorporation and By-Laws. LeukoSite's
Certificate of Incorporation and by-laws set forth as Exhibits 3.1 through 3.4,
respectively, to LeukoSite's Registration Statement on Form S-1 (Registration
No. 333-30213), as declared effective under the Securities Act on August 15,
1997, are complete and correct copies thereof, and have not been amended since
the date of such filing. LeukoSite has previously provided to the Company a
complete and correct copy of the Certificate of Incorporation and by-laws of
Merger Sub, neither of which has been amended or restated. Such Certificates of
Incorporation and by-laws of LeukoSite and Merger Sub, respectively, are in full
force and effect. Neither LeukoSite nor Merger Sub is in violation of any
provisions of its Certificate of Incorporation or by-laws.
8A.5. Capitalization. The authorized capital of LeukoSite consists
of 25,000,000 shares of LeukoSite Common Stock and 5,000,000 shares of LeukoSite
Preferred Stock.
(i) As of May 7, 1999, 11,970,168 shares of LeukoSite Common Stock were
issued and outstanding, all of which were duly authorized, validly issued, fully
paid and non-assessable, and (ii) as of June 21, 1999, options granted pursuant
to the LeukoSite Stock Plans to acquire up to an aggregate of not more than
2,114,106 shares of LeukoSite Common Stock were outstanding. Since that date, no
shares of LeukoSite Common Stock have been issued except upon exercise of
options granted under the LeukoSite Stock Plans.
Except for stock options issued pursuant to the LeukoSite Stock Plans and
as set forth on Section 8A.5 of the Disclosure Schedule, there are no options,
warrants, or other rights, agreements, arrangements, or commitments of any
character to which LeukoSite is a party or by which it is bound relating to the
issued or unissued shares of the capital stock of LeukoSite or any of its
Subsidiaries (including any agreement relating to the manner in which any of
such shares will be voted at any regular or special meeting of the stockholders
of LeukoSite) or obligating LeukoSite or any of its Subsidiaries to issue or
sell any shares of capital stock of, or other equity interests in, LeukoSite or
any of its Subsidiaries.
Except as set forth on Section 8A.5 of the Disclosure Schedule, there are
no outstanding contractual obligations of LeukoSite or any of its Subsidiaries
to repurchase, redeem, or otherwise acquire, or (except pursuant to Section 6
hereof) to register any shares of any of them under the Securities Act.
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Each outstanding share of the capital stock of each of LeukoSite's
Subsidiaries is duly authorized, validly issued, fully paid, and non-assessable,
owned by LeukoSite, and free and clear of all Liens.
8A.6. LeukoSite's SEC Statements, Reports and Documents. Since
August 15, 1997, LeukoSite has timely filed with the SEC all forms, reports,
registration statements, and documents required to be filed by it. LeukoSite has
delivered to the Company true and complete copies of (i) its Annual Report on
Form 10-K for its fiscal year ended December 31 1998, (ii) its proxy statements
relating to all meetings of its stockholders (whether annual or special) held
since August 15, 1997, and (iii) all other forms, reports (including without
limitation annual reports pursuant to Exchange Act rule 14a-3), registration
statements, and documents filed or required to be filed by it with, or provided
or required to be provided by it to, the SEC since August 15, 1997
(collectively, all of the foregoing documents, "LeukoSite's SEC Reports"). As of
their respective dates, LeukoSite's SEC Reports complied in all material
respects with all applicable requirements of the Securities Act and the Exchange
Act and the rules and regulations promulgated thereunder, and did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. None of
LeukoSite's SEC Reports is required to be amended or supplemented as of the date
hereof. The financial statements (including any related notes) of LeukoSite
included in LeukoSite's SEC Reports were prepared in conformity with generally
accepted accounting principles applied on a consistent basis (except as
otherwise stated in the financial statements or, in the case of audited
statements, the related report of LeukoSite's independent certified public
accountants) and present fairly in all material respects the consolidated
financial position, results of operations, changes in stockholders' equity, and
cash flows, as applicable, of LeukoSite and its consolidated Subsidiaries as of
the dates and for the periods indicated; subject, in the case of unaudited
interim consolidated financial statements, to condensation, the absence of
footnote disclosure, and normal, recurring end-of-period adjustments, the effect
of which was not and will not be material.
Except to the extent (a) reflected or reserved against in LeukoSite's
consolidated balance sheet as of March 30, 1998, included in its Quarterly
Report on Form 10-Q for its fiscal quarter ended on that date, or (b) incurred
with persons other than any Affiliate of LeukoSite in the ordinary course of
business after the date of such balance sheet, the Company does not have any
liabilities or obligations of any nature, whether accrued, absolute, contingent,
or otherwise (including without limitation liabilities, as guarantor or
otherwise, in respect of obligations of others) that would be required to be
reflected or reserved against in a balance sheet prepared in accordance with
generally accepted accounting principles or referred to in the notes thereto.
8A.7. Legality of Payment Shares. All of the Payment Shares have
been duly authorized and, when issued and delivered in accordance with the terms
hereof, will be validly issued, fully paid and non-assessable, and free of
preemptive rights. Assuming the accuracy of the representations and warranties
set forth in Section 7A.7, the offer and sale of
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the Payment Shares to the Note Holders pursuant to, and in accordance with, the
terms of this Agreement, do not require registration under the Securities Act of
1933, as amended.
8A.8. Absence of Certain Changes. Since March 31, 1999, there has
not been any material adverse change in the assets, business, financial
condition, results of operations of LeukoSite and its Subsidiaries, taken as a
whole.
8A.9. Brokers. No finder, broker, agent, or other intermediary has
acted for or on behalf of LeukoSite or Merger Sub in connection with the
negotiation, preparation, execution, or delivery of this Agreement or the
consummation of the transactions contemplated hereby.
8A.10. Disclosure. No representation or warranty of LeukoSite in
this Agreement (including the exhibits and schedules hereto) or in any other
agreement, instrument, certificate, or other document delivered by LeukoSite in
connection with this Agreement, the Merger, or any of the other transactions
contemplated hereby contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact required to be stated
therein or necessary to make the statements contained therein not false or
misleading.
9. Mutual Covenants.
9.1. Satisfaction of Conditions. Each of the parties will use its
best reasonable efforts to cause the satisfaction as promptly as possible, but
in any event by August 22, 1999, of the conditions contained in Sections 11
through 13 of this Agreement that impose obligations on it or require action on
its part or the part of any of its stockholders or Affiliates.
9.2. Accounting Consequences. It is intended by the parties hereto
that the Merger shall be accounted for as a purchase, not a pooling of
interests.
9.3. Blue Sky Approvals. LeukoSite will file all documents required
to obtain the Blue Sky permits and approvals, if any, required to carry out the
transactions contemplated by this Agreement (to the extent required prior to the
Effective Time), will pay all expenses incident thereto and will use its best
efforts to obtain such permits and approvals; provided, however, that LeukoSite
shall not be required in connection with this Section 9.3 to qualify as a
foreign corporation or execute a general consent to service of process in any
jurisdiction.
9.4. Tax Matters. The parties understand and agree that none of them
is making any representation or warranty with respect to the tax consequences of
this Agreement, the Merger or the other transactions contemplated hereby.
9.5. Further Assurances. Subject to the terms and conditions set
forth in this Agreement, from time to time both before and after the Effective
Time, each of the parties will use his or its best reasonable efforts, as
promptly as is practicable, to take or
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cause to be taken all actions, and to do or cause to be done all other things,
as are necessary, proper, or advisable to consummate and make effective the
Merger and the other transactions contemplated hereby.
9.6. Stockholder Approval. The Company will take all steps necessary
or appropriate duly to call, give notice of, convene and hold a stockholders
meeting, and/or obtain the necessary written consents of stockholders in
accordance with the DGCL, as the case may be, as soon as reasonably practicable
for the purpose of adopting and approving this Agreement and the transactions
contemplated hereunder, and for such other purposes as may be necessary or
desirable. The Company will recommend to its stockholders the adoption and
approval of this Agreement and the transactions contemplated hereby and the
other matters to be submitted to its stockholders in connection therewith,
except to the extent that legal counsel to the Company provides legal advice to
the Board of Directors that such recommendation would cause the Board of
Directors of the Company to breach its fiduciary duties, in which case the
Company shall not be required to make such recommendation. The Company shall use
all reasonable efforts to obtain the necessary approvals by its stockholders of
this Agreement and the transactions contemplated hereby.
9.7. NASDAQ/NMS Application. LeukoSite will prepare and submit to
the National Association of Securities Dealers, Inc. a listing application
covering all of the Payment Shares, and will use its best reasonable efforts to
cause all of the Payment Shares to be approved for listing in the National
Market System (the "NMS") of the National Association of Securities Dealers,
Inc., subject to official notice of issuance.
9.8. Dissenting Shares. As promptly as practicable after any such
meeting of the Stockholders of the Company at which this Agreement and the
transactions contemplated hereunder are submitted to such Stockholders for
adoption and approval, or after sending any notices required under the DGCL
after this Agreement and the transactions contemplated hereunder have been
adopted and approved by the Stockholders of the Company by written consent in
accordance with the DGCL, the Company shall furnish to LeukoSite the names and
addresses of any dissenting stockholder and the number of Dissenting Shares.
9.9. Intellectual Property. LeukoSite and the Company each agree
that, prior to the Merger, any and all Intellectual Property, including trade
secrets, created or developed by either party shall remain the exclusive
property of the party who created or developed such property, notwithstanding
the sharing of information prior to the Merger.
9.10. Public Disclosure. Between the date hereof and the Effective
Time of the Merger, neither the Company nor LeukoSite will furnish any
communications to the public generally if the subject matter thereof relates to
the other party or to the transactions contemplated under this Agreement,
without the prior approval of the other party as to the contents thereof, which
approval shall not be unreasonably withheld or delayed; provided, however, that
the foregoing provisions of this Section 9.10 shall not apply with respect to
any communication that either party is required to release, furnish or send to
comply with such party's obligations under applicable law (in which case such
party shall use
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commercially reasonable efforts to provide a copy of such communication to the
other party for review, comment and approval within a commercially reasonable
period of time prior to the release, publication or dissemination of such
communication).
9.11. Consents. The Company shall use its best efforts to obtain the
consents, waivers and approvals under any of the Contracts as may be required in
connection with the Merger (all of such consents, waivers and approvals are set
forth in Disclosure Schedule), so as to preserve all rights of and benefits to
the Company thereunder.
9.12. Notification of Certain Matters.
(a) Between the date hereof and the Effective Time of the Merger,
each of LeukoSite and the Company shall, upon obtaining knowledge of any
of the following, promptly notify the other of:
(i) any notice or other communication from any Person alleging
that the consent of such Person is or may be required in connection
with the Merger;
(ii) any actions, suits, claims, investigations or other
judicial proceedings known to its executive officers commenced or
threatened against such party or any of its Subsidiaries which, if
pending on the date of this Agreement, would have been required to
have been disclosed pursuant to Section 7.17 or which relate to the
consummation of the Merger;
(iii) occurrence or non-occurrence of any other event known to
its executive officers which is likely to cause any representation
or warranty of such party contained in this Agreement to be
materially untrue or inaccurate at or prior to the Effective Time;
and
(iv) any failure of such party known to its executive officers
to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder.
(b) In addition to its obligations set forth in Section 9.12(a), the
Company shall promptly notify LeukoSite of any adverse determination or
recommendation in connection with any governmental proceeding to license
any of the Company's products and any report filed with the FDA regarding
an unexpected fatal or life-threatening experience with respect to any
such product.
(c) The delivery of any notice pursuant to this Section 9.12 shall
not limit or otherwise affect any remedies available to a party.
9.13. Access to Data. The Stockholders' Representatives shall have
the right from and after the Closing Date to have reasonable access, upon
request and reasonable notice and during normal business hours, to the books,
records and accounts of LeukoSite
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and its Affiliates, and to the Chief Executive Officer and the Chief Financial
Officer of LeukoSite, for the limited purpose of confirming the calculations
made pursuant to Section 3.8 hereof and obtaining an update concerning the
status of the Drug Development Programs.
9.14. Indemnification Provision in Charter. As of the Effective
Time, the Certificate of Incorporation of the Surviving Corporation shall
contain provisions no less favorable with respect to indemnification of
directors, officers or employees of the Company than are set forth in the
Certificate of Incorporation of the Company, which provisions shall not be
amended, repealed or otherwise modified for a period of six (6) years from the
Effective Time in any manner that would adversely affect the rights thereunder
of individuals who at the Effective Time were directors, officers or employees
of the Company. The Surviving Corporation or LeukoSite shall maintain in effect
for three years (or such shorter period as LeukoSite maintains similar policies
for the benefit of its directors and officers) from the Effective Time
directors' and officers' liability insurance providing to the directors and
officers of the Company as of the Effective Time with standard and customary
directors' and officers' liability insurance coverage for companies similar to
the Company. LeukoSite and the Company agree that the directors, officers and
employees of the Company covered by the provisions of this Section 9.14 are
intended to be third party beneficiaries under this Section 9.14 and shall have
the right to enforce the obligations of the Surviving Corporation. If at any
time the Surviving Corporation or LeukoSite is required to make indemnification
payments to persons who were directors, officers or employees of the Company at
or prior to the Effective Time pursuant to this Section 9.14, then LeukoSite
shall have the right to offset against any Aggregate Contingent Consideration
Payment all or any portion of such indemnification payments.
10. Conduct of the Company's Business Pending the Closing. From and after
the date of this Agreement and until the Closing, except as otherwise
specifically agreed by LeukoSite and the Company:
10.1. Full Access. The Company will afford to LeukoSite and its
authorized representatives full access, upon request and reasonable notice and
during normal business hours, to all of the properties, books, records,
contracts, and documents of the Company, and a reasonable opportunity to make
such investigations as LeukoSite desires to make, and will furnish or cause to
be furnished to LeukoSite and its authorized representatives all such
information with respect to the Company's affairs and businesses as LeukoSite
reasonably requests. No information or knowledge obtained in any investigation
pursuant to this Section 10.1 shall affect or be deemed to modify any
representation or warranty contained herein or the conditions of the parties to
consummate the Merger.
10.2. Course of Business Pending the Closing. Except with the prior
written consent of LeukoSite or except for expenditures made by the Company in
the ordinary course of business that do not exceed $10,000 for any individual
item or series of related items, the Company will not (i) make any expenditure,
accrue any expense, or incur any costs, Indebtedness or other liability,
including, without limitation, in connection with any ongoing clinical trials or
drug development programs or in connection with any ongoing
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research collaborations with third parties, (ii) initiate or agree to initiate
any clinical trials, drug development programs, or research collaborations with
third parties, (iii) make any decisions, determinations or evaluations
concerning the Company's ongoing clinical trials, drug development programs, or
research collaborations with third parties (including, without limitation, any
decision to amend, change or modify any of the Company's ongoing clinical
trials, drug development programs, or research collaborations with third
parties), (iv) in-license or out-license any intellectual property, technology
or drug candidate, (v) make or institute any new, unusual, or novel methods of
manufacture, purchase, sale, lease, management, accounting, or operation or take
or permit to occur or exist any action or circumstance referred to in Section
7.8 hereof, (vi) amend in any manner the HMR Agreement without the prior written
consent of LeukoSite, and (vii) authorize or consummate any stock split, stock
dividend, stock combination, recapitalization of shares or other similar
transaction affecting Company Stock. The Company will use its best efforts to
maintain its owned and leased properties in good operating condition and repair
and make all necessary renewals, additions, and replacements thereto.
10.3. No Dividends, Issuances, Repurchases, Etc. The Company will
not declare, set aside, or pay any dividends (whether in cash, shares of stock,
other property, or otherwise) on, or make any other distribution in respect of,
any shares of its capital stock or other securities, or issue, purchase, redeem,
or otherwise acquire for value any shares of its capital stock or other
securities. The Company will not issue any shares of its capital stock or other
securities (including without limitation any options, warrants, or other rights
to acquire Company Stock), other than shares of Company Stock issued upon the
due exercise of vested Company Stock Options or Company Warrants listed in
Section 7.4 of the Disclosure Schedule (which exercises will be disclosed by the
Company in a supplement to the Disclosure Schedule pursuant to Section 10.13
hereof).
10.4. No Compensation Changes. The Company will not increase the
compensation payable or to become payable to any of its officers, directors, key
employees, or agents, or increase any severance, bonus, insurance, pension, or
other benefit plan, payment, or arrangement made to, for, or with any such
officers, directors, key employees, or agents, nor will it effect any general or
uniform increase in the compensation payable or to become payable to its
employees or consultants, including without limitation any increase in the
benefits under any severance, bonus or pension plan or other contract or
commitment, except as described in Section 10.4 of the Disclosure Schedule. The
Company shall not pay any severance benefits to, enter into any contract,
agreement or arrangement to provide severance benefits to, or implement any
severance plan for the benefit of, any of the Company's officers, directors,
employees or consultants, except pursuant to any severance plan, contract or
arrangement described in Section 7.14 of the Disclosure Schedule.
10.5. Contracts and Commitments. The Company will not enter into any
contract or commitment, or engage in any other transaction, other than as
specifically contemplated by this Agreement or with the prior written consent of
LeukoSite.
10.6. Purchase and Sale of Capital Assets. The Company will not
purchase, lease as lessee, license as licensee, or otherwise acquire any
interest in, or sell,
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lease as lessor, license as licensor, or otherwise dispose of any interest in,
any capital asset(s).
10.7. Insurance. The Company will maintain the insurance referred to
on Section 7.20 of the Disclosure Schedule.
10.8. Preservation of Organization. The Company will use
commercially reasonable efforts to preserve its business organization intact, to
preserve for the benefit of the Surviving Corporation its present business
relationships with its suppliers and customers and others having business
relationships with it.
10.9. No Default. The Company will not take or omit to take any
action, or permit any action or omission to act, that would cause a default
under or a breach of any of its material contracts, commitments, or obligations.
10.10. Compliance with Laws. The Company will duly comply in all
material respects with all applicable laws, regulations, and orders.
10.11. Advice of Change. The Company will promptly advise LeukoSite
in writing of any event or occurrence (other than operating losses incurred by
the Company in the ordinary course of business and consistent with past
practices and the projections prepared by the Company's management and delivered
to LeukoSite prior to the date of this Agreement) which results in or is
reasonably likely to result in a Material Adverse Effect on the Company.
10.12. No Shopping. The Company will not negotiate for, solicit,
discuss, negotiate, or enter into any agreement or understanding, whether or not
binding, with respect to the issuance, sale, or transfer of any of the capital
stock or any material portion of the assets of the Company or any merger or
other business combination of the Company, to or with any person other than
LeukoSite and Merger Sub.
10.13. Disclosure Supplements. From time to time before the Closing,
and in any event immediately before the Closing, each of LeukoSite and the
Company will promptly advise the other in writing of any matter hereafter
arising or becoming known to the disclosing person that, if existing, occurring,
or known at or before the date of this Agreement, would have been required to be
set forth or described in the Disclosure Schedule, or that is necessary to
correct any information in the Disclosure Schedule that is or has become
inaccurate. No such disclosure will be taken into account in determining whether
the conditions to (i) in the case of any such supplemental disclosure by
LeukoSite, the obligations of the Company, and (ii) in the case of any such
supplemental disclosure by the Company, the respective obligations of LeukoSite
and Merger Sub, to consummate the transactions contemplated by this Agreement
have been satisfied. If the Merger is consummated, then for purposes of the
indemnification provisions of this Agreement, such supplemental disclosures
pursuant to this Section 10.13 will be deemed to have been made as of the date
hereof, and no indemnification will be payable in respect thereof by reason of
the fact that such disclosure was not made on the date hereof.
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11. Mutual Conditions to the Parties' Obligations. The parties'
obligations to consummate the Merger are subject to the satisfaction (or waiver
by each such party, in its sole discretion) of each of the conditions set forth
in this section on or before the Closing Date. If the Merger is consummated,
such conditions will conclusively be deemed to have been satisfied or waived.
11.1. Stockholder Approval. This Agreement and the Merger shall have
been approved and adopted by the stockholders of the Company by the requisite
vote under applicable law and the Company's Certificate of Incorporation.
11.2. No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction, or other order issued by any court of
competent jurisdiction, or other legal restraint or prohibition preventing the
consummation of the Merger, will be in effect, and no petition or request for
any such injunction or other order will be pending.
11.3. Securities Law Compliance. Any authorizations from all
applicable securities regulatory authorities that are required in connection
with the issuance and delivery to the Note Holders of the Payment Shares will
have been obtained.
11.4. Proceedings and Documents Satisfactory. All proceedings in
connection with the transactions contemplated by this Agreement and all
certificates and other documents delivered to such party pursuant to this
Agreement or in connection with the Closing will be reasonably satisfactory to
such party and its counsel.
12. Conditions to the Company's Obligations. The obligations of the
Company to consummate the Merger are subject to the satisfaction (or waiver by
the Company, in its sole discretion) of each of the conditions set forth in this
section on or before the Closing Date. If the Merger is consummated, such
conditions will conclusively be deemed to have been satisfied or waived.
12.1. Representations and Warranties. Each of the representations
and warranties made by LeukoSite and/or Merger Sub in or pursuant to this
Agreement or in any statement, certificate, or other document delivered to the
Company, the Stockholders or the Note Holders in connection with this Agreement,
the Merger, or any of the other transactions contemplated hereby will have been
true and correct in all material respects when made and will be true and correct
in all material respects at and as of the Closing (in each case, except that any
representation or warranty that expressly includes a materiality standard will
have been and be true and correct in all respects, giving effect to such
standard), subject only to the effect of any activities or transactions
occurring after the date hereof and either expressly contemplated by this
Agreement or consented to in writing by the Company and except for
representations and warranties made as of a specific date, which shall be true
and correct in all material respects as of such date.
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12.2. Compliance with Agreement. LeukoSite and Merger Sub will have
performed and complied in all material respects with all of their respective
obligations under this Agreement to be performed or complied with by them before
or at the Closing, including without limitation the execution and delivery of
all documents to be executed and delivered by any of them in connection with
this Agreement and/or the consummation of the Merger and the other transactions
contemplated hereby.
12.3. Material Adverse Development. There shall not have occurred
any event or occurrence which results in or would reasonably be likely to have a
Material Adverse Effect on LeukoSite.
12.4. Closing Certificate. LeukoSite and Merger Sub will have
executed and delivered to the Company, at and as of the Closing, a certificate
(without qualification as to knowledge or materiality) certifying that the
conditions referred to in Sections 12.1, 12.2 and 12.3 have been satisfied.
12.5. Opinion of Counsel. Bingham Dana LLP, counsel to LeukoSite and
Merger Sub, will have delivered to the Company a written legal opinion addressed
to the Company, dated on and as of the Closing Date, and in substantially the
form attached hereto as Exhibit B.
13. Conditions to LeukoSite's and Merger Sub's Obligations. The
obligations of each of LeukoSite and Merger Sub, respectively, to consummate the
Merger are subject to the satisfaction (or waiver by LeukoSite, in its sole
discretion) of each of the conditions set forth in this section on or before the
Closing Date. If the Merger is consummated, such conditions will conclusively be
deemed to have been satisfied or waived.
13.1. Representations and Warranties. Each of the representations
and warranties made by the Company and the Note Holders in or pursuant to this
Agreement or in any statement, certificate, or other document delivered to
LeukoSite or Merger Sub in connection with this Agreement, the Merger, or any of
the other transactions contemplated hereby will have been true and correct in
all material respects when made and will be true and correct in all material
respects at and as of the Closing (in each case, except that any representation
or warranty that expressly includes a materiality standard will have been and be
true and correct in all respects, giving effect to such standard), subject only
to the effect of any activities or transactions occurring after the date hereof
and either expressly contemplated by this Agreement or consented to in writing
by LeukoSite and except for representations and warranties made as of a specific
date, which shall be true and correct in all material respects as of such date.
13.2. Compliance with Agreement. The Company and each Note Holder
will have performed and complied in all material respects with all of its
respective obligations under this Agreement to be performed or complied with by
it before or at the Closing, including without limitation the execution and
delivery of all documents to be executed and delivered by the Company (or the
Stockholders or Note Holders) in connection
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with this Agreement and/or the consummation of the Merger and the other
transactions contemplated hereby.
13.3. Material Adverse Development. There shall not have occurred
any event or occurrence (other than operating losses incurred by the Company in
the ordinary course of business and consistent with past practices and the
projections prepared by the Company's management and delivered to LeukoSite
prior to the date of this Agreement) which results in or would reasonably be
likely to have a Material Adverse Effect on the Company.
13.4. Closing Certificates. The Company will have executed and
delivered to LeukoSite, at and as of the Closing, a certificate (without
qualification as to knowledge or materiality) certifying that the conditions
referred to in Sections 13.1, 13.2, 13.3, 13.9, 13.10, 13.11, 13.12 and 13.13
have been satisfied (it being understood that such certification will not, in
the case of Sections 13.1 and 13.2, include or cover any matter therein to the
extent it pertains to the Note Holders). Each Note Holder will have executed and
delivered to LeukoSite, at and as of the Closing, a certificate (without
qualification as to knowledge or materiality) certifying with respect to itself
that the conditions referred to in Sections 13.1 and 13.2 have been satisfied.
13.5. Opinion of Counsel. Hale and Dorr LLP, counsel to the Company,
will have delivered to LeukoSite a written legal opinion addressed to LeukoSite,
dated on and as of the Closing Date, and substantially in the form attached
hereto as Exhibit C.
13.6. Third Party Consents. LeukoSite shall have been furnished with
evidence satisfactory to it that the Company has obtained the consents,
approvals and waivers set forth in Sections 7.3 and 7.18 of the Disclosure
Schedule and any other consents, approvals and waivers that are necessary or
required as a result of the Merger to preserve all of the Company's rights and
benefits in its business, assets, properties, leases and contracts following the
Merger.
13.7. Company Options. All of the Company Options shall have been
exercised or terminated immediately prior to the Closing.
13.8. Resignation of Directors and Officers. The directors and
officers of the Company in office immediately prior to the Effective Time shall
have resigned as directors and officers of the Surviving Corporation effective
immediately following the Effective Time.
13.9. Dissenters' Rights. Any applicable period during which
Stockholders have the right to exercise appraisal, dissenters' or other similar
rights under Section 262 of the DGCL or other applicable law shall have expired
and Stockholders holding in the aggregate more than five per cent (5%) of the
outstanding shares of the Company Stock shall not have exercised appraisal,
dissenters' or similar rights under applicable law with respect to their shares
of the Company Stock by virtue of the Merger.
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13.10. Designated Preferred Stockholders Agreement. The Designated
Preferred Stockholders Agreement shall remain in full force and effect, and no
Designated Preferred Stockholder shall have taken any action to terminate or
rescind the Designated Preferred Stockholders Agreement.
13.11. Waiver of Redemption and Special Liquidation. The holders of
Company Series A Preferred Stock and the holders of Company Series B Preferred
Stock shall have waived (a) the obligation of the Company to redeem all of the
outstanding shares of Company Preferred Stock under Section A.4(f) of the
Company's Certificate of Incorporation, and (b) the right of such holders of
Company Preferred Stock to receive the Special Liquidation (as defined in and
pursuant to Section A.4(f) of the Company's Certificate of Incorporation).
13.12. Written Consent of Stockholders. The written consent of the
Designated Preferred Stockholders, dated as of the date of this Agreement,
approving all of the transactions contemplated by this Agreement, including the
Merger, shall remain in full force and effect and no Designated Preferred
Stockholder shall have withdrawn, rescinded or modified such written consent.
13.13. Excess Net Closing Liabilities. The Excess Net Closing
Liabilities shall not be greater than $250,000 as of the Closing Date.
14. Indemnification Between LeukoSite and Stockholders and Company.
14.1. Indemnification by LeukoSite and Merger Sub. Subject to the
limitations set forth in Section 14.6 hereof, LeukoSite and Merger Sub, jointly
and severally, will indemnify, defend, and hold harmless the Stockholders (but
only if the Merger is consummated) and, if the Merger is not consummated, the
Company, and each of their respective directors, officers, employees, agents,
representatives and other Affiliates, in each case to the same extent as
LeukoSite and Merger Sub have agreed to indemnify the Stockholders or the
Company, as the case may be (all persons entitled to indemnification under this
Section 14.1 being hereinafter referred to as the "Company Indemnified
Parties"), from and against any and all Damages related to or arising, directly
or indirectly, out of or in connection with any breach by LeukoSite and/or
Merger Sub of any representation, warranty, covenant, agreement, obligation, or
undertaking made by LeukoSite and/or Merger Sub in this Agreement (including any
schedule or exhibit hereto), or any other agreement, instrument, certificate, or
other document delivered by or on behalf of LeukoSite and/or Merger Sub in
connection with this Agreement, the Merger, or any of the other transactions
contemplated hereby.
14.2. Indemnification by the Company. Subject to the limitations set
forth in Section 14.6 hereof, if the Merger is not consummated the Company will
indemnify, defend, and hold harmless LeukoSite, Merger Sub and each of their
respective directors, officers, employees, agents, representatives and other
Affiliates (all persons entitled to indemnification under this Section 14.2,
Section 14.3 and Section 14A.1 hereof being hereinafter referred to as the
"LeukoSite Indemnified Parties", and, together with the
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Company Indemnified Parties, the "Section 14 Indemnified Parties"), from and
against any and all Damages related to or arising, directly or indirectly, out
of or in connection with any breach by the Company of any representation,
warranty, covenant, agreement, obligation, or undertaking made by the Company in
this Agreement (including any schedule or exhibit hereto), or any other
agreement, instrument, certificate, or other document delivered by or on behalf
of the Company in connection with this Agreement, the Merger, or any of the
other transactions contemplated hereby.
14.3. Indemnification by the Stockholders. Subject to the
limitations set forth in Section 14.6 hereof, if the Merger is consummated the
Stockholders and the Bonus Recipients, jointly and severally, will indemnify,
defend, and hold harmless the LeukoSite Indemnified Parties from and against any
and all Damages related to or arising, directly or indirectly, out of or in
connection with:
(i) any breach by the Company of any representation, warranty,
covenant, agreement, obligation, or undertaking made by the Company
in this Agreement (including any schedule or exhibit hereto), or any
other agreement, instrument, certificate, or other document
delivered by or on behalf of the Company in connection with this
Agreement, the Merger, or any of the other transactions contemplated
hereby; or
(ii) any claim for infringement of patent or other
intellectual property rights by a third party with respect to any
Product Candidate or Related Compound.
14.4. Claims.
(a) All claims for indemnification by a Section 14 Indemnified Party
pursuant to this Section 14 shall be made in accordance with the
provisions of this Section 14.
(b) If a Section 14 Indemnified Party has incurred or suffered
Damages for which it is entitled to indemnification under this Section 14,
such Section 14 Indemnified Party shall, prior to the expiration of the
representation, warranty, covenant or agreement to which such claim
relates, give prompt written notice of such claim (a "Claim Notice") to
the Stockholders' Representatives, in the case of a claim by a LeukoSite
Indemnified Party, or to LeukoSite, in the case of a claim by a Company
Indemnified Party (the Stockholders or LeukoSite, as the case may be,
being referred to, for purposes of this Section 14, as the "Section 14
Indemnifying Party"). Each Claim Notice shall state the amount of claimed
Damages (the "Claimed Amount"), if known, and the basis for such claim.
(c) Within 20 days after delivery of a Claim Notice, the Section 14
Indemnifying Party (who for purposes of this Section 14 shall be
represented by the Stockholders' Representatives in the case of a claim by
a LeukoSite Indemnified Party) shall provide to the Section 14 Indemnified
Party a written response
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(the "Response Notice") in which the Section 14 Indemnifying Party shall:
(i) agree that all of the Claimed Amount is owed to the Section 14
Indemnified Party, (ii) agree that part, but not all, of the Claimed
Amount (the "Agreed Amount") is owed to the Section 14 Indemnified Party,
or (iii) contest that any of the Claimed Amount is owed to the Section 14
Indemnified Party. The Section 14 Indemnifying Party may contest the
payment of all or a portion of the Claimed Amount only based upon a good
faith belief that all or such portion of the Claimed Amount does not
constitute Damages for which the Section 14 Indemnified Party is entitled
to indemnification under this Section 14. If no Response Notice is
delivered by the Section 14 Indemnifying Party within such 20-day period,
the Section 14 Indemnifying Party shall be deemed to have agreed that all
of the Claimed Amount is owed to the Section 14 Indemnified Party.
(d) If the Section 14 Indemnifying Party in the Response Notice
agrees (or is deemed to have agreed) that all of the Claimed Amount is
owed to the Section 14 Indemnified Party, the Section 14 Indemnifying
Party shall owe to the Section 14 Indemnified Party an amount equal to the
Claimed Amount to be paid in the manner set forth in this Section 14. If
the Section 14 Indemnifying Party in the Response Notice agrees that part,
but not all, of the Claimed Amount is owed to the Section 14 Indemnified
Party, the Section 14 Indemnifying Party shall owe to the Section 14
Indemnified Party an amount equal to the Agreed Amount set forth in such
Response Notice to be paid in the manner set forth in this Section 14.
(e) The Section 14 Indemnified Party shall give prompt written
notification to the Section 14 Indemnifying Party of the commencement of
any action, suit or proceeding relating to a third party claim for which
indemnification pursuant to this Section may be sought; provided, however,
that no delay on the part of the Section 14 Indemnified Party in notifying
the Section 14 Indemnifying Party shall relieve the Section 14
Indemnifying Party of any liability or obligation hereunder except to the
extent of any damage or liability caused by or arising out of such delay.
Within 20 days after delivery of such notification, the Section 14
Indemnifying Party may (except to the extent otherwise provided below in
this Section 14.4(e)), upon written notice thereof to the Section 14
Indemnified Party, assume control of the defense of such action, suit or
proceeding with counsel reasonably satisfactory to the Section 14
Indemnified Party, provided (i) the Section 14 Indemnifying Party
acknowledges in writing to the Section 14 Indemnified Party, on behalf of
the Section 14 Indemnifying Party, that any damages, fines, costs or other
liabilities that may be assessed against the Section 14 Indemnified Party
in connection with such action, suit or proceeding constitute Damages for
which the Section 14 Indemnified Party shall be entitled to
indemnification pursuant to this Section 14, and (ii) the third party
seeks monetary damages only. If the Section 14 Indemnifying Party does not
so assume control of such defense, the Section 14 Indemnified Party shall
control such defense. The party not controlling such defense may
participate therein at its own expense; provided that if the Section 14
Indemnifying Party assumes control of such defense and the Section 14
Indemnified Party reasonably concludes that the Section 14 Indemnifying
Parties and the Section
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14 Indemnified Party have conflicting interests or different defenses
available with respect to such action, suit or proceeding, the reasonable
fees and expenses of counsel to the Section 14 Indemnified Party shall be
considered "Damages" for purposes of this Agreement. The party controlling
such defense shall keep the other party advised of the status of such
action, suit or proceeding and the defense thereof and shall consider in
good faith recommendations made by the other party with respect thereto.
The Section 14 Indemnified Party shall not agree to any settlement of such
action, suit or proceeding without the prior written consent of the
Section 14 Indemnifying Party, which shall not be unreasonably withheld or
delayed. The Section 14 Indemnifying Party shall not agree to any
settlement of or the entry of a judgment in any action, suit or proceeding
without the prior written consent of the Section 14 Indemnified Party,
which shall not be unreasonably withheld (it being understood that it is
reasonable to withhold such consent if, among other things, the settlement
or the entry of a judgment (A) lacks a complete release of the Section 14
Indemnified Party for all liability with respect thereto or (B) imposes
any liability or obligation on the Section 14 Indemnified Party).
Notwithstanding anything in this Section 14.4(e) to the contrary, the
provisions of this Section 14.4(e) shall not apply to any claim for
indemnification pursuant to Section 14.3(ii) (it being understood that in
no event shall any Section 14 Indemnifying Party have the right to assume
the defense of any claim for which any Section 14 Indemnified Party shall
be entitled to make a claim for indemnification pursuant to Section
14.3(ii) hereof but that the Section 14 Indemnifying Party shall be
entitled to notice of such claim).
14.5 Payment of Claims.
(a) A Section 14 Indemnifying Party shall make payment of any
portion of any Claimed Amount that such Section 14 Indemnifying Party has
agreed in a Response Notice that it owes to a Section 14 Indemnified Party
or that such Section 14 Indemnifying Party is deemed to have agreed it
owes to such Section 14 Indemnifying Party pursuant to the provisions of
Section 14.4(c) hereof, said payment to be made within thirty (30) days
after such Response Notice is delivered by such Section 14 Indemnifying
Party or should have been delivered by such Section 14 Indemnifying Party,
as the case may be.
(b) Anything in this Agreement to the contrary notwithstanding,
subject to the provisions of Section 14.6 (other than Section 14.6(e)
hereof), LeukoSite may withhold and set-off against any Aggregate
Contingent Consideration Payment otherwise required to be paid or
delivered by LeukoSite pursuant to this Agreement any amount as to which
the Stockholders and the Bonus Recipients are obligated to indemnify
LeukoSite pursuant to any provision of this Agreement; provided, however,
that in no event shall the amount of any LeukoSite Contingent Milestone
Payment, Contingent Partner Licensing Payment or Contingent Royalty
Payment that would otherwise be payable by LeukoSite pursuant to Section
3.8 hereof be reduced by more than fifty percent (50%) in order to satisfy
any indemnification claim pursuant to Section 14.3(ii) hereof. LeukoSite's
set-off rights under this Section 14.5(b) shall be in addition to, and not
in lieu of, any other rights that LeukoSite may
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have elsewhere in this Agreement to set-off, off-set or reduce all or any
portion of the Merger Consideration.
14.6. Limitations of Liability.
(a) Limited Recourse; Maximum Liability. Notwithstanding any other
provision in this Agreement, all claims for indemnification by a LeukoSite
Indemnified Party under this Section 14 shall be satisfied solely by the
right of set-off set forth in Section 14.5(b) above, and no Stockholder or
Bonus Recipient shall otherwise have any direct or indirect liability to
any LeukoSite Indemnified Party.
(b) Time Limit. No Section 14 Indemnifying Party will be liable for
any Damages hereunder unless a written claim for indemnification is given
by the Section 14 Indemnified Party to the Section 14 Indemnifying Party
on or prior to the second anniversary of the Closing Date; provided,
however, that the foregoing provisions of this Section 14.6(b) shall not
apply to any claim by LeukoSite for indemnification pursuant to clause
(ii) of Section 14.3 hereof.
(c) Tax and Insurance Benefits. The amount of any Damages otherwise
payable to any Section 14 Indemnified Party hereunder will be reduced (i)
to the extent that such Section 14 Indemnified Party actually realizes, by
reason of such Damages, any tax benefit that is not offset by any
corresponding adjustment of the tax attributes of such Section 14
Indemnified Party or any of his or its assets (e.g., any tax deduction
available to such Section 14 Indemnified Party in respect of such Damages
will not be deemed to result in a tax benefit to such Section 14
Indemnified Party to the extent that such deduction results in a decrease
in such Section 14 Indemnified Party's tax basis in any securities or
other assets), and (ii) by any insurance proceeds actually received by
such Section 14 Indemnified Party in respect thereof, to the extent that
such reduction is permitted without reduction of the amount of such
proceeds payable under the applicable insurance policy.
(d) Insurance Collection. Each Section 14 Indemnified Party will use
reasonable efforts to collect any Damages from any available insurer
before attempting to collect from the Section 14 Indemnifying Party at any
time. If any Section 14 Indemnified Party recovers any amount from any
insurer after payment to such Section 14 Indemnified Party by one or more
Section 14 Indemnifying Parties of all Damages suffered or incurred by
such Section 14 Indemnified Party in respect of the matters to which such
insurance payment relates, then such Section 14 Indemnified Party will
promptly pay over to such Section 14 Indemnifying Parties the amount so
recovered, to the extent not in excess of the amount previously paid by
such Section 14 Indemnifying Party to such Section 14 Indemnified Party in
respect of such matter.
(e) Damages Limit. With respect to claims for indemnification
pursuant to clause (ii) of Section 14.3, the Stockholders shall be liable
for fifty percent (50%) of all such Damages of the LeukoSite Indemnified
Parties.
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14.7. Subrogation. A Section 14 Indemnifying Party who indemnifies a
Section 14 Indemnified Party pursuant to this Section 14 will, upon indefeasible
payment in full of the amount owed with respect to such matter pursuant to this
Section 14, be subrogated to the extent of such payment to the rights of such
Section 14 Indemnified Party against all other persons in respect of the matter
for which such indemnification payment was made, to the extent permitted by
applicable insurance policies of such Section 14 Indemnified Party, and upon
such subrogation may assert such rights against such other persons.
14.8. Exclusive Remedies. The parties hereby acknowledge and agree
that the sole and exclusive remedies of any and all Section 14 Indemnified
Parties in respect of any and all claims relating to any breach or purported
breach of any representation, warranty, covenant, agreement, obligation, or
undertaking of any Section 14 Indemnifying Party that is contained in this
Agreement will be pursuant to the indemnification provisions of this Section 14.
No breach of any such representation, warranty, covenant, agreement, obligation,
or undertaking will give rise to any right of any party hereto to rescind this
Agreement or any of the transactions contemplated hereby.
14A. Indemnification Between LeukoSite and Note Holders.
14A.1. Indemnification by the Note Holders. Subject to the
limitations set forth in Section 14A.6 hereof, whether or not the Merger is
consummated, each Note Holder, severally and not jointly, will indemnify,
defend, and hold harmless the LeukoSite Indemnified Parties, from and against
any and all Damages related to or arising, directly or indirectly, out of or in
connection with (i) any breach by such Note Holders of any representation or
warranty made by such Note Holder in Section 7A.4 and Section 7A.7 hereof and
(ii) any breach by such Note Holder of any agreement, obligation or undertaking
made by such Note Holder in Section 2.2 of this Agreement.
14A.2. Indemnification by LeukoSite. Subject to the limitations set
forth in Section 14A.6 hereof, whether or not the Merger is consummated,
LeukoSite will indemnify, defend, and hold harmless the Note Holders and each of
their respective partners, directors, officers, employees, agents,
representatives and other Affiliates (all persons entitled to indemnification
under this Section 14A.2 being hereinafter referred to as the "Note Holder
Indemnified Parties"), from and against any and all Damages related to or
arising, directly or indirectly, out of or in connection with any breach by
LeukoSite of any representation, warranty, covenant, agreement, obligation, or
undertaking made by LeukoSite to the Note Holders in this Agreement (including
any schedule or exhibit hereto), or in any other agreement, instrument,
certificate, or other document delivered by or on behalf of LeukoSite to the
Note Holders in connection with this Agreement, the Merger, or any of the other
transactions contemplated hereby.
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14A.3. Claims.
(a) All claims for indemnification by a LeukoSite Indemnified Party
or a Note Holder Indemnified Party pursuant to this Section 14A shall be
made in accordance with the provisions of this Section 14A.
(b) If a LeukoSite Indemnified Party or a Note Holder Indemnified
Party has incurred or suffered Damages for which it is entitled to
indemnification under this Section 14A, such LeukoSite Indemnified Party
or Note Holder Indemnified Party, as the case may be, shall, prior to the
expiration of the representation, warranty, covenant or agreement to which
such claim relates, give prompt written notice of such claim (a "Section
14A Claim Notice") to the Note Holders or to LeukoSite, as applicable.
Each Section 14A Claim Notice shall state the amount of claimed Damages
(the "Section 14A Claimed Amount"), if known, and the basis for such
claim.
(c) Within 20 days after delivery of a Section 14A Claim Notice, the
indemnifying party under this Section 14A (the "Section 14A Indemnifying
Party") shall provide to the LeukoSite Indemnified Party or the Note
Holder Indemnified Party, as the case may be (the "Section 14A Indemnified
Party"), a written response (the "Section 14A Response Notice") in which
the Section 14A Indemnifying Party shall: (i) agree that all of the
Section 14A Claimed Amount is owed to the Section 14A Indemnified Party,
(ii) agree that part, but not all, of the Section 14A Claimed Amount (the
"Section 14A Agreed Amount") is owed to the Section 14A Indemnified Party,
or (iii) contest that any of the Section 14A Claimed Amount is owed to the
Section 14A Indemnified Party. The Section 14A Indemnifying Party may
contest the payment of all or a portion of the Section 14A Claimed Amount
only based upon a good faith belief that all or such portion of the
Section 14A Claimed Amount does not constitute Damages for which the
Section 14A Indemnified Party is entitled to indemnification under this
Section 14A. If no Section 14A Response Notice is delivered by the Section
14A Indemnifying Party within such 20-day period, the Section 14A
Indemnifying Party shall be deemed to have agreed that all of the Section
14A Claimed Amount is owed to the Section 14A Indemnified Party.
(d) If the Section 14A Indemnifying Party in the Section 14A
Response Notice agrees (or is deemed to have agreed) that all of the
Section 14A Claimed Amount is owed to the Section 14A Indemnified Party,
the Section 14A Indemnifying Party shall owe to the Section 14A
Indemnified Party an amount equal to the Section 14A Claimed Amount to be
paid in the manner set forth in this Section 14A. If the Section 14A
Indemnifying Party in the Section 14A Response Notice agrees that part,
but not all, of the Section 14A Claimed Amount is owed to the Section 14A
Indemnified Party, the Section 14A Indemnifying Party shall owe to the
Section 14A Indemnified Party an amount equal to the agreed amount set
forth in such Section 14A Response Notice to be paid in the manner set
forth in this Section 14A.
<PAGE>
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(e) The Section 14A Indemnified Party shall give prompt written
notification to the Section 14A Indemnifying Party of the commencement of
any action, suit or proceeding relating to a third party claim for which
indemnification pursuant to this Section 14A may be sought; provided,
however, that no delay on the part of the Section 14A Indemnified Party in
notifying the Section 14A Indemnifying Party shall relieve the Section 14A
Indemnifying Party of any liability or obligation hereunder except to the
extent of any damage or liability caused by or arising out of such delay.
Within 20 days after delivery of such notification, the Section 14A
Indemnifying Party may, upon written notice thereof to the Section 14A
Indemnified Party, assume control of the defense of such action, suit or
proceeding with counsel reasonably satisfactory to the Section 14A
Indemnified Party, provided (i) the Section 14A Indemnifying Party
acknowledges in writing to the Section 14A Indemnified Party, on behalf of
the Section 14A Indemnifying Party, that any damages, fines, costs or
other liabilities that may be assessed against the Section 14A Indemnified
Party in connection with such action, suit or proceeding constitute
Damages for which the Section 14A Indemnified Party shall be entitled to
indemnification pursuant to this Section 14A, and (ii) the third party
seeks monetary damages only. If the Section 14A Indemnifying Party does
not so assume control of such defense, the Section 14A Indemnified Party
shall control such defense. The party not controlling such defense may
participate therein at its own expense; provided that if the Section 14A
Indemnifying Party assumes control of such defense and the Section 14A
Indemnified Party reasonably concludes that the Section 14A Indemnifying
Parties and the Section 14A Indemnified Party have conflicting interests
or different defenses available with respect to such action, suit or
proceeding, the reasonable fees and expenses of counsel to the Section 14A
Indemnified Party shall be considered "Damages" for purposes of this
Agreement. The party controlling such defense shall keep the other party
advised of the status of such action, suit or proceeding and the defense
thereof and shall consider in good faith recommendations made by the other
party with respect thereto. The Section 14A Indemnified Party shall not
agree to any settlement of such action, suit or proceeding without the
prior written consent of the Section 14A Indemnifying Party, which shall
not be unreasonably withheld or delayed. The Section 14A Indemnifying
Party shall not agree to any settlement of or the entry of a judgment in
any action, suit or proceeding without the prior written consent of the
Section 14A Indemnified Party, which shall not be unreasonably withheld
(it being understood that it is reasonable to withhold such consent if,
among other things, the settlement or the entry of a judgment (A) lacks a
complete release of the Section 14A Indemnified Party for all liability
with respect thereto or (B) imposes any liability or obligation on the
Section 14A Indemnified Party).
<PAGE>
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14A.5 Payment of Claims. A Section 14A Indemnifying Party shall make
payment of any portion of any Section 14A Claimed Amount that such Section
14A Indemnifying Party has agreed in a Section 14A Response Notice that it
owes to a Section 14A Indemnified Party or that such Section 14A
Indemnifying Party is deemed to have agreed it owes to such Section 14A
Indemnifying Party pursuant to the provisions of Section 14A.4(c) hereof,
said payment to be made within thirty (30) days after such Section 14A
Response Notice is delivered by such Section 14A Indemnifying Party or
should have been delivered by such Section 14A Indemnifying Party, as the
case may be.
14A.6. Limitations of Liability.
(a) Maximum Liability. No Note Holder shall be liable for any
Damages hereunder in excess of the Convertible Note Amount with respect to
such Note Holder's Convertible Note.
(b) Time Limit. No Section 14A Indemnifying Party will be liable for
any Damages hereunder unless a written claim for indemnification is given
by the Section 14A Indemnified Party to the Section 14A Indemnifying Party
on or prior to the second anniversary of the Closing Date.
(c) Tax and Insurance Benefits. The amount of any Damages otherwise
payable to any Section 14A Indemnified Party hereunder will be reduced (i)
to the extent that such Section 14A Indemnified Party actually realizes,
by reason of such Damages, any tax benefit that is not offset by any
corresponding adjustment of the tax attributes of such Section 14A
Indemnified Party or any of his or its assets (e.g., any tax deduction
available to such Section 14A Indemnified Party in respect of such Damages
will not be deemed to result in a tax benefit to such Section 14A
Indemnified Party to the extent that such deduction results in a decrease
in such Section 14A Indemnified Party's tax basis in any securities or
other assets), and (ii) by any insurance proceeds actually received by
such Section 14A Indemnified Party in respect thereof, to the extent that
such reduction is permitted without reduction of the amount of such
proceeds payable under the applicable insurance policy.
(d) Insurance Collection. Each Section 14A Indemnified Party will
use reasonable efforts to collect any Damages from any available insurer
before attempting to collect from the Section 14A Indemnifying Party at
any time. If any Section 14A Indemnified Party recovers any amount from
any insurer after payment to such Section 14A Indemnified Party by one or
more Section 14A Indemnifying Parties of all Damages suffered or incurred
by such Section 14A Indemnified Party in respect of the matters to which
such insurance payment relates, then such Section 14A Indemnified Party
will promptly pay over to such Section 14A Indemnifying Parties the amount
so recovered, to the extent not in excess of the amount previously paid by
such Section 14A Indemnifying Party to such Section 14A Indemnified Party
in respect of such matter.
<PAGE>
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14A.7. Subrogation. A Section 14A Indemnifying Party who indemnifies
a Section 14A Indemnified Party pursuant to this Section 14A will, upon
indefeasible payment in full of the amount owed with respect to such matter
pursuant to this Section 14A, be subrogated to the extent of such payment to the
rights of such Section 14A Indemnified Party against all other persons in
respect of the matter for which such indemnification payment was made, to the
extent permitted by applicable insurance policies of such Section 14A
Indemnified Party, and upon such subrogation may assert such rights against such
other persons.
14A.8. Applicability. The provisions of this Section 14A will not
apply to claims for indemnification or contribution arising under or in
connection with Section 6 hereof and/or any of the transactions contemplated by
Section 6 hereof.
14A.9. Exclusive Remedies. The parties hereby acknowledge and agree
that the sole and exclusive remedies of any and all Section 14A Indemnified
Parties in respect of any and all claims relating to any breach or purported
breach of any representation, warranty, covenant, agreement, obligation, or
undertaking of any Section 14A Indemnifying Party that is contained in this
Agreement will be pursuant to the indemnification provisions of this Section
14A. No breach of any such representation, warranty, covenant, agreement,
obligation, or undertaking will give rise to any right of any party hereto to
rescind this Agreement or any of the transactions contemplated hereby..
15. Releases. If the Merger is consummated, then, effective as of the
Effective Time, each of the Stockholders and the Note Holders, for himself or
itself and his or its heirs, legatees, successors, and assigns, hereby fully and
irrevocably releases, remises, and discharges the Surviving Corporation and its
officers, directors, employees, agents, representatives, successors, and assigns
from any and all Damages, regardless of whether known, unknown, or unknowable,
and regardless of whether absolute, contingent, or otherwise, and regardless of
whether at law, in equity, or otherwise, without limitation, whether now
existing or arising in the future, in each case to the extent based on actions,
omissions, and/or events occurring at or before the Effective Time, including
without limitation all rights to indemnification and/or contribution, but
excluding Damages and rights of indemnification arising expressly under this
Agreement and claims for accrued but unpaid salaries and reimbursable expenses
(the aggregate amount of which salaries and expenses does not exceed $50,000).
Furthermore, each of such releasing persons hereby irrevocably agrees not to
sue, or to commence, maintain, or aid in the prosecution of any litigation,
arbitration, or other action or proceeding against or adverse to any of such
released persons, or otherwise to seek any recourse against any of such released
persons, in respect of any matter hereby released or purported or attempted to
be released.
16. Termination.
(a) This Agreement may be terminated at any time before the
Effective Time by agreement of LeukoSite and the Company, notwithstanding
the approval of this Agreement and/or of the Merger by the Stockholders.
<PAGE>
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(b) If (i) any temporary restraining order, preliminary or permanent
injunction, or other order issued by any court of competent jurisdiction,
or other binding legal restraint or prohibition preventing the
consummation of the Merger or the other transactions contemplated hereby
is at any time in effect for a period of more than 20 consecutive days, or
(ii) the Closing does not occur on or before August 22, 1999, then either
LeukoSite or the Company may terminate this Agreement by delivering
written notice to the other at any time after the close of business on
date such termination right arises hereunder, provided that such failure
to close is not the result of a breach of this Agreement by the
terminating party (including, in the case of any such termination by
LeukoSite, any breach by Merger Sub, or in the case of any such
termination by the Company, any breach by any of the Stockholders or Note
Holders).
(c) Any termination of this Agreement will not affect the rights or
obligations of any party arising, or based on actions or omissions
occurring, before such termination. The provisions of Section 1
("Definitions"), Section 14 ("Indemnification"), this Section 16
("Termination") and Section 17 ("General") will survive any
termination of this Agreement.
17. General.
17.1. Cooperation. Each of the parties will cooperate with the
others and use its best reasonable efforts to prepare all necessary
documentation, to effect all necessary filings, and to obtain all necessary
permits, consents, approvals, and authorizations of all governmental bodies and
other third parties necessary to consummate the transactions contemplated by
this Agreement.
17.2. Survival of Provisions. The provisions of this Agreement,
including without limitation the representations and warranties of the parties,
and the provisions of the other documents executed and delivered in connection
with this Agreement, the Merger, and the other transactions contemplated hereby
will be deemed material, and, notwithstanding any investigation by or on behalf
of any other party, will be deemed to have been relied on by each other party,
and will survive the Closing and the consummation of the Merger and the other
transactions contemplated hereby until terminated or no longer in effect in
accordance with their respective terms, except that (i) the representations and
warranties made by the parties pursuant to this Agreement shall survive the
Closing and the consummation of the Merger and the other transactions
contemplated hereby until the second anniversary of the Closing Date and (ii)
the covenants set forth in Section 9.13 shall survive the Closing and the
consummation of the Merger and the other transactions contemplated hereby until
such date as the payments set forth in Section 3.8 have been made.
17.3. Expenses. LeukoSite, on the one hand, and the Company, on the
other hand, will be responsible for and will pay all of their own respective
expenses in connection with the negotiation and preparation of this Agreement
and the consummation of the Merger and the other transactions contemplated
hereby.
<PAGE>
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17.4. Benefits of Agreement; No Assignments; No Third-Party
Beneficiaries.
(a) This Agreement will bind and inure to the benefit of the parties
hereto and their respective heirs, successors, and permitted assigns.
(b) No party will assign any rights or delegate any obligations
hereunder without the consent of the other parties, other than in the case
of LeukoSite, in connection with (i) a merger or consolidation of
LeukoSite or (ii) a sale of the assets to which this transaction relates
(provided that, in the event of such sale of assets, the buyer agrees in
writing with the Stockholders' Representatives to be bound by the
obligations of LeukoSite under this Agreement), and any attempt to do so
will be void.
(c) Nothing in this Agreement is intended to or will confer any
rights or remedies on any person other than the parties hereto and their
respective heirs, successors, and permitted assigns, except as expressly
provided in Section 13 hereof; provided however, that the provisions in
Section 3 concerning the payment of the Merger Consideration for the
Company Stock, the representations of LeukoSite and the Merger Sub set
forth in Section 8, and the indemnification provisions in Section 14 are
for the benefit of the Stockholders.
17.5. Notices. All notices, requests, payments, instructions, or
other documents to be given hereunder will be in writing or by written
telecommunication, and will be deemed to have been duly given if (i) delivered
personally (effective upon delivery), (ii) mailed by registered or certified
mail, return receipt requested, postage prepaid (effective five business days
after dispatch), (iii) sent by a reputable, established courier service that
guarantees next business day delivery (effective the next business day), or (iv)
sent by telecopier followed within 24 hours by confirmation by one of the
foregoing methods (effective upon receipt of the telecopy in complete, readable
form), addressed as follows (or to such other address as the recipient party may
have furnished to the sending party for the purpose pursuant to this section):
(a) If to LeukoSite, Merger Sub, and/or (after the Effective Time),
the Surviving Corporation to:
LeukoSite Inc.
215 First Street
Cambridge, MA 02142
Attention: Christopher K. Mirabelli, Ph.D.
Telecopier No. (617) 621-9349
with a copy sent at the same time and by the same means to:
Justin P. Morreale, Esq.
<PAGE>
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Julio E. Vega, Esq.
Bingham Dana LLP
150 Federal Street
Boston, Massachusetts 02110
Telecopier No. (617) 951-8736
(b) If to the Company (before the Effective Time) to:
ProScript, Inc.
38 Sidney Street
Cambridge, MA 02139
Attention: Daniel Burns
Telecopier No. (617) 374-1477
If to the Company (after the Effective Time) or to the Stockholders'
Representatives to:
Mr. Robert Hannon
Ticonderoga Capital Group
20 Williams Street
Suite G40
Wellesley, MA 02481
Telecopier No. (781) 416-9868
Mr. Daniel Burns
63 Colfax Road
Skillman, NJ 08558
Telecopier No. (609) 333-0094
Mr. John Littlechild
HealthCare Ventures LLC
One Kendall Square
Building 300, 2nd Floor
Cambridge, MA 02139
Telecopier No. (617) 252-4342
with a copy sent at the same time and by the same means to:
Steven D. Singer, Esq.
Hale and Dorr LLP
60 State Street
Boston, MA 02109
Telecopier No. (617) 526-5000
(c) If to the Note Holders to:
<PAGE>
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HealthCare Ventures III, LP
HealthCare Ventures IV, LP
One Kendall Square
Building 300, 2nd Floor
Cambridge, MA 02139
Telecopier No. (617) 252-4342
with a copy sent at the same time and by the same means to:
Jeff Libson, Esq.
Pepper, Hamilton & Sheetz
1235 Westlake Drive
Suite 400
Berwyn, PA 19312-2401
Telecopier No. (610) 640-7835
17.6. Counterparts. This Agreement may be executed by the parties in
separate counterparts, each of which when so executed and delivered will be an
original, but all of which together will constitute one and the same agreement.
In pleading or proving this Agreement, it will not be necessary to produce or
account for more than one such counterpart.
17.7. Captions. The captions of sections or subsections of this
Agreement are for reference only and will not affect the interpretation or
construction of this Agreement.
17.8. Equitable Relief. Each of the parties hereby acknowledges that
any breach by him or it of his or its obligations under this Agreement would
cause substantial and irreparable damage to the parties, and that money damages
would be an inadequate remedy therefor, and accordingly, acknowledges and agrees
that each other party will be entitled to an injunction, specific performance,
and/or other equitable relief to prevent the breach of such obligations.
17.9. Construction. The language used in this Agreement is the
language chosen by the parties to express their mutual intent, and no rule of
strict construction will be applied against any party.
17.10. Waivers. No waiver of any breach or default hereunder will be
valid unless in a writing signed by the waiving party. No failure or other delay
by any party exercising any right, power, or privilege hereunder will be or
operate as a waiver thereof, nor will any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power, or privilege.
17.11. Entire Agreement. This Agreement, together with the exhibits
and schedules hereto and the other agreements, instruments, certificates, and
other documents referred to herein as having been or to be executed and
delivered in connection with the
<PAGE>
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transactions contemplated hereby, contains the entire understanding and
agreement among the parties, and supersedes any prior understandings or
agreements among them, or between or among any of them, with respect to the
subject matter hereof. Notwithstanding the foregoing, the provisions of the
Confidentiality Agreement by and between the Company and LeukoSite, will survive
the execution and delivery of this Agreement and the consummation of the Merger.
17.12. Governing Law. This Agreement will be governed by and
interpreted and construed in accordance with the internal laws of Commonwealth
of Massachusetts, as applied to contracts under seal made, and entirely to be
performed, within Massachusetts, and without reference to principles of
conflicts or choice of laws.
17.13. Amendment. This Agreement may not be amended, modified, or
supplemented except by a writing duly executed by LeukoSite, Merger Sub and the
Company; provided however, that any amendment effected subsequent to the time
the Stockholders approve this Agreement shall be subject to the provisions of
the DGCL and approval by the Stockholders Representatives; and provided,
further, that any amendments that affect the rights or obligations of the Note
Holders hereunder shall be approved by the Note Holders.
[ Signature Page to Follow ]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement and Plan of Merger and Reorganization under seal as of the date first
above written.
LEUKOSITE: LEUKOSITE, INC.
By: /s/ Augustine Lawlor
-------------------------------------
Name: Augustine Lawlor
Title: Vice President, Corporate
Development and Chief Financial
Officer
MERGER SUB: PROSCRIPT ACQUISITION CO.
By: /s/ Augustine Lawlor
-------------------------------------
Name: Augustine Lawlor
Title: Treasurer and Secretary
COMPANY: PROSCRIPT, INC.
By: /s/ Daniel R. Burns
-------------------------------------
Name: Daniel R. Burns
Title: President and CEO
NOTE HOLDERS: HEALTHCARE VENTURES IV, L.P.
By:
By: /s/ Jeffrey Steinberg
-------------------------------------
Name: Jeffrey Steinberg
Title: Administrative Partner of
HealthCare Partners IV, L.P. The
General Partner of HealthCare
Ventures, IV, L.P.
HEALTHCARE VENTURES III, L.P.
By:
By: /s/ Jeffrey Steinberg
-------------------------------------
Name: Jeffrey Steinberg
Title: Administrative Partner of
HealthCare Partners III, L.P.
The General Partner of
HealthCare Ventures III, L.P.
<PAGE>
-2-
EXHIBITS AND SCHEDULES
Exhibits
- --------
A Merger Certificate
B Form of Legal Opinion of Buyer's Counsel
C Form of Legal Opinion of Sellers' Counsel
Schedules
- ---------
Disclosure Schedules of the Company
Disclosure Schedule of LeukoSite
<PAGE>
Exhibit 23.2
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated January 29, 1999
included in LeuokoSite, Inc.'s Form 10-K/A for the year ended December 31,
1998 and to all references to our Firm included in this registration
statement.
Arthur Andersen LLP
/s/ Arthur Andersen LLP
Boston, Massachusetts
August 17, 1999
