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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON DC 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) JULY 19, 1999
LEUKOSITE, INC.
(Exact Name of Registrant as Specified in Charter)
DELAWARE 0-22769 04-3173859
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
215 FIRST STREET, CAMBRIDGE, MA 02142
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (617) 621-9350
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On July 19, 1999, LeukoSite, Inc. ("LeukoSite") acquired all of the
issued and outstanding capital stock of ProScript, Inc. ("ProScript") by
payment of $411,719 in cash to ProScript shareholders and, in connection with
such acquisition, through the issuance of 187,970 shares of LeukoSite's
Common Stock, par value $0.01 per share, to certain ProScript shareholders
(who were also senior debt holders of ProScript). Under the terms of the
merger agreement, ProScript shareholders may receive additional cash payments
upon the achievement of milestones and royalties related to certain ProScript
compounds. LeukoSite has acquired, among other things, ProScript's boronate
class of proteasome inhibitors for the treatment of cancer. The acquisition
was accomplished by means of a merger (the "Merger") of ProScript Acquisition
Co., a wholly-owned subsidiary of LeukoSite, with and into ProScript,
pursuant to the terms of the Agreement and Plan of Merger and Reorganization,
dated as of June 22, 1999 (the "Agreement").
The aggregate purchase price for the transactions contemplated by the
Agreement was approximately $2.8 million, which includes net liabilities
assumed of approximately $497,000. The acquisition will be accounted for as a
purchase by LeukoSite. The terms of the Agreement were determined in
arm's-length negotiations between LeukoSite and ProScript. Two significant
ProScript shareholders, HealthCare Ventures III, L.P. and HealthCare Ventures
IV, L.P. (collectively, "HealthCare Ventures"), are also significant holders
of LeukoSite Common Stock. HealthCare Ventures, which was represented on the
ProScript Board by John Littlechild, is also currently represented on the
LeukoSite Board by James Cavanaugh. HealthCare Ventures (together with its
affiliates) beneficially owned approximately 34.5% of the outstanding
ProScript stock and approximately 20.8% of the outstanding LeukoSite Common
Stock prior to the Merger and the private placement (described in Item 5
below).
A copy of the Agreement is incorporated herein by reference and a copy
is filed herewith as Exhibit 2.
ITEM 5. OTHER EVENTS.
On July 20, 1999, LeukoSite sold an aggregate of 1,487,548 unregistered
shares of its Common Stock at a price per share of $9.70 to two (2) investors
in a private placement, as follows: (a) 1,030,928 unregistered shares to
Perseus Capital LLC for a purchase price of $10,000,000; and (b) 456,620
unregistered shares to HealthCare Ventures V, L.P., which (together with its
affiliates) owned 20.8% of the outstanding LeukoSite common Stock, prior to
the private placement and the Merger (described in Item 5 above). After
taking into account the Merger and the private placement described herein,
HealthCare Ventures (together with its affiliates) beneficially owned, as of
July 28, 1999, approximately 22.2% of the outstanding LeukoSite Common Stock
and Perseus Capital LLC owned
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approximately 9.9% of the outstanding LeukoSite Common Stock. Both HealthCare
Ventures V, L.P. and Perseus Capital LLC were granted certain registration
rights for the unregistered shares purchased by each of them.
Copies of the stock purchase agreements and registration rights agreements
in connection with the private placement are incorporated herein by reference
and filed herewith as Exhibits 10.1, 10.2, 10.3 and 10.4.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(C) EXHIBITS.
Exhibit 2 Agreement and Plan of Merger and Reorganization,
dated as of June 22, 1999, by and among LeukoSite, Inc.,
LeukoSite Merger Corporation and ProScript, Inc. Does not include
Exhibits or Disclosure Schedules. LeukoSite will furnish a copy
of any such omitted exhibit or schedule to the Commission upon
request.
Exhibit 10.1 Stock Purchase Agreement, dated June 22, 1999, between LeukoSite
and Perseus Capital LLC
Exhibit 10.2 Stock Purchase Agreement, dated June 22, 1999, between
LeukoSite and HealthCare Ventures V, L.P.
Exhibit 10.3 Registration Rights Agreement, dated July 19, 1999, between
LeukoSite and Perseus Capital LLC
Exhibit 10.4 Registration Rights Agreement, dated July 19, 1999, between
LeukoSite and HealthCare Ventures V, L.P.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
LEUKOSITE, INC.
By: /s/Augustine Lawlor
---------------------------------
Augustine Lawlor,
Vice President,
Corporate Development and
Chief Financial Officer
Dated: August 3, 1999
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Exhibit 2
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.
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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.
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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.
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"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
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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
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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
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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.
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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. ]
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<TABLE>
<CAPTION>
Term Section Term Section
---- ------- ---- -------
<S> <C> <C> <C>
Adjusted Initial Cash Payment 3.7(b) LeukoSite Indemnified Parties 14.2
Agreed Amount 14.4(c) LeukoSite R&D Programs 3.8(e)
Agreement Preamble LeukoSite's SEC Reports 8.5
Approved Unbudgeted Material Contracts 7.18
Expenditures 3.7(b) May 31, 1999 Balance Sheet 7.7
Blocking Third Party Patent 3.8(g)(iii) Merger Preamble
CERCLA 7.15(b) Merger Certificate 2.1
Certificate(s) 4.1 Merger Sub Preamble
Claim Notice 14.4(b) NMS 9.7
Claimed Amount 14.4(b) Note Holder(s) Preamble
Closing 2.1 Note Holder Indemnified Parties 14A.2
Closing Date 2.1 PBGC 7.14(d)(ii)
Company Preamble Partner 3.8(b)
Company Indemnified Parties 14.1 Payment Shares 2.2(c)
Company Options 5 Piggyback Notice 6.1(b)
Company Warrants 5 Qualified Holders 6.1(c)
Complementary Technology 3.8(g)(iii) RCRA 7.15(b)
Contingent Partner Response Notice 14.4(c)
Licensing Payment(s) 3.8(b) Royalty Pass-Through
Contingent Royalty Payment(s) 3.8(f) Section 3.8(b) 341 Compound 3.8(b)
Convertible Note Amount 2.2(c) Royalty Pass-Through
DGCL 3.1 Section 3.8(b) 519 Compound 3.8(b)
Dissenting Shares 3.6(c) SARA 7.15(b)
Effective Period 6.1(a) Section 3.8(f) Compound 3.8(f)
Effective Time 2.1 Section 3.8(f) 341 Compound 3.8(f)
Employee Benefit Plan 7.14(a) Section 3.8(f) 519 Compound 3.8(f)
Environmental Laws 7.15(b) Section 14 Indemnified Parties 14.2
EPA 7.15(c) Section 14 Indemnifying Party 14.4(b)
ERISA 7.14(c) Section 14A Agreed Amount 14A.3(c)
Excess Amount 3.7(c) Section 14A Claim Notice 14A.3(b)
Excess Net Closing Liabilities 3.7(b) Section 14A Claimed Amount 14A.3(b)
Follow-on Product 3.8(f) Section 14A Indemnified Party 14A.3(c)
Hazardous Substances 7.15(c) Section 14A Indemnifying Party 14A.3(c)
HMR 3.8(c) Section 14A Response Notice 14A.3(c)
HMR Agreement 3.8(c) Setoff Amount 3.8(h)
HMR Payment(s) 3.8(c) Shortfall Amount 3.7(c)
Hold-Back Amount 3.7(e) Special Milestone Payments 3.8(c)(i)
Hold-Back Period 3.7(e) Stockholders'
Holder Inclusion Notice 6.1(b) Representatives 4.7(a)
Incidental Shares 6.1(c) Stockholder Registration
Indemnified Parties 14.3 Statement 6.1(a)(i)
Indemnifying Party 14.4(b) Surviving Corporation 3.1
Initial Cash Payment 3.7 Surviving Warrants 5
IRS 7.14(b) Suspension Period 6.2
LeukoSite Preamble Unaudited Closing Balance
LeukoSite Contingent Sheet 3.7(a)
Milestone Payment 3. 8(a)
</TABLE>
<PAGE>
-11-
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>
-12-
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>
-13-
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>
-14-
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
<PAGE>
-15-
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>
-16-
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
<PAGE>
-17-
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.
<TABLE>
<CAPTION>
COMPOUND 519/
519 CLASS OF COMPOUNDS
- -------------------------------------------------- -------------------------------------------------------
Event Cash Payment
- -------------------------------------------------- -------------------------------------------------------
<S> <C>
Earlier of (i) completion of a successful and $500,000
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 prepare and file an $3,000,000
NDA
- -------------------------------------------------- -------------------------------------------------------
Approval of an NDA $1,000,000
- -------------------------------------------------- -------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
COMPOUND 341/
341 CLASS OF COMPOUNDS
- -------------------------------------------------- -------------------------------------------------------
Event Cash Payment
- -------------------------------------------------- -------------------------------------------------------
<S> <C>
The decision by LeukoSite to prepare and file an $3,000,000
NDA
- -------------------------------------------------- -------------------------------------------------------
Approval of an NDA $1,000,000
- -------------------------------------------------- -------------------------------------------------------
</TABLE>
(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
<PAGE>
-18-
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>
-19-
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
<PAGE>
-20-
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
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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
<PAGE>
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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
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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
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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. Section 6903(5),
any hazardous substance as defined by 42 U.S.C. Section 9601(14), any
pollutant or contaminant as defined by 42 U.S.C. Section 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.
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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).
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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.
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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.
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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:
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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
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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>
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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 10.1
LEUKOSITE, INC.
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT is dated as of June 22, 1999 by and between
(i) leukosite, inc., a Delaware corporation with its principal office at 215
First Street, Cambridge, Massachusetts 02142 (the "Company"), (ii) Perseus
Capital LLC, a Delaware limited liability company, with its principal office at
1627 I N.W., Suite 610, Washington, D.C. 20006 (the "PURCHASER") and (iii) any
permitted assignee pursuant to Section 10.9(a) hereof.
WHEREAS, the Company desires to issue and sell to the Purchaser, and the
Purchaser desires to purchase from the Company, an aggregate of 1,030,928 shares
(the "SHARES") of the authorized but unissued shares of common stock, $.01 par
value per share, of the Company (the "COMMON STOCK"), at an aggregate purchase
price of $10,000,000, all upon the terms and subject to the conditions set forth
in this Agreement.
NOW THEREFORE, in consideration of the mutual agreements, representations,
warranties and covenants herein contained, the parties hereto agree as follows:
1. DEFINITIONS. As used in this Agreement, the following terms shall have
the following respective meanings:
(a) "AFFILIATE" of a party means any corporation or other business
entity controlled by, controlling or under common control with, such party. For
this purpose "CONTROL" shall include direct or indirect beneficial ownership of
more than fifty percent (50%) of the voting power or economic interest in such
corporation or other business entity.
(b) "CLOSING" shall have the meaning set forth in Section 2.2 of this
Agreement.
(c) "CLOSING DATE" means the date of the Closing.
(d) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, and all of the rules and regulations promulgated thereunder.
(e) "PERSON" (whether or not capitalized) shall mean an individual,
partnership, limited liability company, corporation, association, trust, joint
venture,
<PAGE>
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unincorporated organization, and any government, governmental department or
agency or political subdivision thereof.
(f) "REGISTRATION RIGHTS AGREEMENT" shall mean that certain
Registration Rights Agreement, dated as of the date hereof, between the Company
and the Purchaser, in the form attached hereto as EXHIBIT A.
(g) "SEC" shall mean the Securities and Exchange Commission.
(h) "SECURITIES" shall mean the Shares, any shares of Common Stock of
the Company, any securities convertible into, exercisable for or exchangeable
for shares of Common Stock or preferred stock of the Company, or any direct or
indirect beneficial ownership in any rights, warrants or options to acquire, or
in any securities convertible into or exchangeable for, any securities (voting
or non-voting) of the Company.
(i) "SECURITIES ACT" shall mean the Securities Act of 1933, as
amended, and all of the rules and regulations promulgated thereunder.
(j) "VOTING SECURITIES" shall mean any Securities which entitle the
holder thereof to vote (whether at a meeting of stockholders, by written consent
without a meeting or otherwise), directly or indirectly, alone or in concert
with others on any matters for which the holder of such Securities is entitled
to vote thereon.
2. PURCHASE AND SALE OF SHARES.
2.1 PURCHASE AND SALE. Subject to and upon the terms and conditions
set forth in this Agreement, the Company agrees to issue and sell to the
Purchaser, and the Purchaser hereby agrees to purchase from the Company, at the
Closing, the Shares at a purchase price of $9.70 per share. The aggregate
purchase price payable by the Purchaser to the Company for all of the Shares
shall be $10,000,000.
2.2 CLOSING. The closing of the transactions contemplated under this
Agreement (the "CLOSING") shall take place at the Boston offices of Bingham Dana
LLP, 150 Federal Street, Boston, Massachusetts 02110 on such date and at such
time as may be agreed upon between the Purchaser and the Company; PROVIDED, that
the Closing Date shall be no earlier than the date on which the Company
consummates its proposed acquisition (the "PROSCRIPT ACQUISITION") of ProScript,
Inc., a Delaware corporation ("PROSCRIPT"), and no later than the date which is
one (1) business day after the Company consummates the ProScript Acquisition. At
the Closing, the Company shall deliver to the Purchaser a single stock
certificate, registered in the name of the Purchaser, representing the number of
shares of Common Stock purchased by the Purchaser, against payment of the
purchase price therefor by wire transfer of immediately available funds to such
account or accounts as the Company shall designate in writing.
<PAGE>
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2.3 PERSEUS-SOROS MANAGEMENT, LLC FEE. At the Closing, subject to and
upon the terms and conditions set forth in this Agreement, the Company shall pay
to Perseus, LLC, a Delaware limited liability company, a fee in an aggregate
amount equal to $200,000, by wire transfer of immediately available funds to
such account or accounts as Perseus, LLC shall designate in writing.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to the Purchaser as follows:
3.1 INCORPORATION. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and is qualified to do business in each jurisdiction in which the character of
its properties or the nature of its business requires such qualification, except
where the failure to so qualify would not have a material adverse effect upon
the Company. The Company has all requisite corporate power and authority to
carry on its business as now conducted and to carry out the transactions
contemplated hereby.
3.2 CAPITALIZATION. The authorized capital stock of the Company
consists of (i) 25,000,000 shares of Common Stock, of which 12,918,306 shares
were outstanding as of June 16, 1999, and (ii) 5,000,000 shares of preferred
stock, of which no shares are outstanding on the date hereof. Except as set
forth in SCHEDULE 3.2 hereto, there are no existing options, warrants, calls,
preemptive (or similar) rights, subscriptions or other rights, agreements,
arrangements or commitments of any character obligating the Company to issue,
transfer or sell, or cause to be issued, transferred or sold, any shares of the
capital stock of the Company or other equity interests in the Company or any
securities convertible into or exchangeable for such shares of capital stock or
other equity interests, and there are no outstanding contractual obligations of
the Company to repurchase, redeem or otherwise acquire any shares of its capital
stock or other equity interests.
3.3 AUTHORIZATION. All corporate action on the part of the Company,
its officers, directors and stockholders necessary for the authorization,
execution, delivery and performance of this Agreement and the Registration
Rights Agreement and the consummation of the transactions contemplated herein
and therein has been taken. When executed and delivered by the Company, each of
this Agreement and the Registration Rights Agreement shall constitute the legal,
valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as such may be limited by bankruptcy,
insolvency, reorganization or other laws affecting creditors' rights generally
and by general equitable principles, and except as the same may be limited by
the indemnification obligations of the Company under the Registration Rights
Agreement. The Company has all requisite corporate power to enter into this
Agreement and the Registration Rights Agreement and to carry out and perform its
obligations under the terms of this Agreement and the Registration Rights
Agreement.
3.4 VALID ISSUANCE OF THE SHARES. The Shares will, upon issuance
pursuant to the terms hereof, be duly authorized and validly issued, fully paid
and
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nonassessable and not subject to any encumbrances, preemptive rights or any
other similar contractual rights of the stockholders of the Company or others.
3.5 FINANCIAL STATEMENTS. The Company has furnished to the Purchaser
its audited Statements of Income, Stockholders' Equity and Cash Flows for each
of the fiscal years ended December 31, 1997 and 1998, its audited Consolidated
Balance Sheet as of December 31, 1998, its unaudited Statements of Income,
Stockholders' Equity and Cash Flows for the period from January 1, 1999 to March
31, 1999, and its unaudited Balance Sheet as of March 31, 1999. All such
financial statements are hereinafter referred to collectively as the "FINANCIAL
STATEMENTS". The Financial Statements have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved, and fairly present, in all material respects, the
financial position of the Company and the results of its operations as of the
date and for the periods indicated thereon, except that the unaudited financial
statements referred to above may not be in accordance with generally accepted
accounting principles because of the absence of footnotes normally contained
therein and are subject to normal year-end audit adjustments which, individually
and in the aggregate, will not be material. Since March 31, 1999, there has been
no material adverse change (actual or threatened) in the assets, liabilities
(contingent or other), affairs, operations, prospects or condition (financial or
other) of the Company.
3.6 SEC DOCUMENTS. The Company has furnished to the Purchaser, a true
and complete copy of the Company's Annual Report on Form 10-K for the year ended
December 31, 1998 (the "ANNUAL REPORT"), the Company's Quarterly Report on Form
10-Q for the three months ended March 31, 1999, and any other statement, report,
registration statement (other than registration statements on Form S-8) or
definitive proxy statement filed by the Company with the SEC during the period
commencing March 31, 1999 and ending on the date hereof. The Company will,
promptly upon the filing thereof, also furnish to the Purchaser all statements,
reports (including, without limitation, Quarterly Reports on Form 10-Q and
Current Reports on Form 8-K), registration statements and definitive proxy
statements filed by the Company with the SEC during the period commencing on the
date hereof and ending on the Closing Date (all such materials required to be
furnished to the Purchaser pursuant to this sentence or pursuant to the next
preceding sentence of this Section 3.6 being called, collectively, the "SEC
DOCUMENTS"). As of their respective filing dates, the SEC Documents complied in
all material respects with the requirements of the Exchange Act or the
Securities Act, as applicable, and none of the SEC Documents contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements made therein,
in light of the circumstances under which they were made, not misleading, as of
their respective filing dates.
3.7 CONSENTS. Except for (i) the filing and effectiveness of any
registration required to be filed by the Company under the Securities Act in
connection with the exercise by the Purchaser of its rights under the
Registration Rights Agreement and (ii) any required state "blue sky" law filings
in connection
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with the transactions contemplated under such registration statement, all
consents, approvals, orders and authorizations required on the part of the
Company in connection with the execution, delivery or performance of this
Agreement and the Registration Rights Agreement and the consummation of the
transactions contemplated herein and therein have been obtained and will be
effective as of the Closing Date.
3.8 NO CONFLICT. The execution and delivery of this Agreement and the
Registration Rights Agreement by the Company and the consummation of the
transactions contemplated hereby and thereby will not conflict with or result in
any violation of or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation or to a loss of a material benefit under (i) any provision of the
Certificate of Incorporation or By-laws of the Company or (ii) any agreement or
instrument, permit, franchise, license, judgment, order, statute, law,
ordinance, rule or regulation, applicable to the Company or its properties or
assets.
3.9 BROKERS OR FINDERS. The Company has not dealt with any broker or
finder in connection with the transactions contemplated by this Agreement, and
the Company has not incurred, and shall not incur, directly or indirectly, any
liability for any brokerage or finders' fees or agents commissions or any
similar charges in connection with this Agreement or any transaction
contemplated hereby.
3.10 NASDAQ NATIONAL MARKET. The Common Stock is listed on the Nasdaq
National Market System, and there are no proceedings to revoke or suspend such
listing.
3.11 ABSENCE OF LITIGATION. There is no pending (or to the best of the
Company's knowledge, threatened) action, suit, proceeding or investigation
against the Company or any of its direct or indirect subsidiaries.
3.12 NO UNDISCLOSED LIABILITIES. Other than as disclosed on the
Financial Statements delivered to Purchaser, since March 31, 1999, the Company
has incurred no material liabilities or obligations, fixed or contingent,
matured or unmatured or otherwise, except for liabilities or obligations that,
individually or in the aggregate, do not or would not have a material adverse
effect on the financial condition or business of the Company and its
subsidiaries other than (a) liabilities and obligations arising in the ordinary
course of business and (b) other liabilities disclosed in the schedules to this
Agreement.
3.13 CONTRACTS. All contracts, agreements and instruments required to
be filed as an exhibit to the Annual Report are legal, valid, binding and in
full force and effect and, to the knowledge of the Company, are enforceable by
the Company in accordance with their respective terms, subject to (a) laws of
general application relating to bankruptcy, insolvency and the relief of
debtors, (b) rules of law governing specific performance, injunctive relief or
other equitable remedies, and (c) actions or omissions of Persons other than the
Company, PROVIDED, however,
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that the Company has no knowledge of any material actions or omissions by such
other Persons. Except as disclosed in the Annual Report and other than contracts
or agreements relating exclusively to the Company's pre-clinical and clinical
development and manufacturing activities, the Company has not granted rights to
manufacture, produce, assemble, license, market or sell its products to any
other person and is not bound by any contract or agreement that materially
restricts the Company's exclusive right to develop, manufacture, assemble,
distribute or sell its products.
3.14 SUBSIDIARIES; JOINT VENTURES. The Company has no subsidiaries
other than LeukoSite (U.K.) Limited, a company organized under the laws of
England and Wales, and CytoMed, Inc., a Delaware corporation, each of which are
wholly-owned subsidiaries of the Company, and does not otherwise own or control,
directly or indirectly, any other Person, other than L&I Partners L.P., a
Delaware limited partnership. Except as described in the Annual Report
(including the Joint Venture Agreement (as defined below) as incorporated by
reference thereto), the Company is not a participant in any joint venture,
partnership, or similar arrangement material to its business. The Company is a
party to a joint venture agreement (the "JOINT VENTURE AGREEMENT") with Ilex
Oncology, Inc ("ILEX"). In the Company's judgement, and in the context of the
Joint Venture Agreement, the Company's commercial working relationship with Ilex
is satisfactory and, to the knowledge of the Company, (i) Ilex has not within
the last twelve months threatened to cancel or otherwise terminate the Joint
Venture Agreement with the Company in accordance with its terms, (ii) Ilex has
not notified the Company of Ilex's intention to materially modify or amend the
terms of the Joint Venture Agreement, and (iii) the consummation of the
transactions contemplated by this Agreement and the Registration Rights
Agreement will not materially adversely affect the relationship of the Company
with Ilex.
3.15 TAXES. Each of the Company and any subsidiary of the Company has
filed (or has had filed on its behalf) or will timely file or will cause to be
timely filed, all material Tax Returns (as defined below) required by applicable
law to be filed by it prior to or as of the date of the Closing, and such Tax
Returns are, or will be at the time of filing, true, correct and complete in all
material respects. Each of the Company and any subsidiary of the Company has
paid (or has had paid on its behalf) or, where payment is not yet due, has
established (or has had established on its behalf and for its sole benefit and
recourse) or will establish or cause to be established in accordance with
generally accepted accounting principles on or before the date of the Closing an
adequate accrual for the payment of, all material Taxes (as defined below) due
with respect to any period ending prior to or as of the date of the Closing.
"TAXES" shall mean any and all taxes, charges, fees, levies or other
assessments, including income, gross receipts, excise, real or personal
property, sales, withholding, social security, retirement, unemployment,
occupation, use, goods and services, license, value added, capital, net worth,
payroll, profits, franchise, transfer and recording taxes, fees and charges, and
any other taxes, assessment or similar charges imposed by the Internal Revenue
Service or any taxing authority (whether state, county, local or foreign) (each,
a "TAXING AUTHORITY"), including any interest, fines, penalties or additional
amounts
<PAGE>
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attributable to or imposed upon any such taxes or other assessments. "TAX
RETURN" shall mean any report, return, document, declaration or other
information or filing required to be supplied to any Taxing Authority, including
information returns, any documents with respect to accompanying payments of
estimated Taxes, or with respect to or accompanying requests for extensions of
time in which to file any such return, report, document, declaration or other
information. There are no claims or assessments pending against the Company or
any subsidiary of the Company for any material alleged deficiency in any Tax,
and neither the Company nor any subsidiary of the Company has been notified in
writing of any material proposed Tax claims or assessments against the Company
or any subsidiary of the Company. To the Company's knowledge, no Tax Return of
the Company or any subsidiary of the Company is or has been the subject of an
examination by a Taxing Authority. Each of the Company and any subsidiary of the
Company has withheld from each payment made to any of its past or present
employees, officers and directors, and any other person, the amount of all
material Taxes and other deductions required to be withheld therefrom and paid
the same to the proper Taxing Authority within the time required by law.
3.16 PRICING. The Company has not granted to, or agreed to give,
HealthCare Ventures V, L.P. (or any other entity through which it chooses to
invest in the Company) ("HEALTHCARE"), in connection with the sale of shares of
Common Stock by the Company to HealthCare pursuant to that certain Stock
Purchase Agreement, dated of even date herewith, the right to purchase such
shares of Common Stock on economic terms better than the economic terms granted
by the Company to the Purchaser hereunder.
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser
represents and warrants to the Company as follows:
4.1 AUTHORIZATION. All action on the part of the Purchaser and, if
applicable, its officers, directors, managers, members, shareholders and/or
partners necessary for the authorization, execution, delivery and performance of
this Agreement and the Registration Rights Agreement and the consummation of the
transactions contemplated herein and therein has been taken. When executed and
delivered, each of this Agreement and the Registration Rights Agreement will
constitute the legal, valid and binding obligation of the Purchaser, enforceable
against the Purchaser in accordance with its terms, except as such may be
limited by bankruptcy, insolvency, reorganization or other laws affecting
creditors' rights generally and by general equitable principles. The Purchaser
has all requisite power and authority to enter into each of this Agreement and
the Registration Rights Agreement and to carry out and perform its obligations
under the terms of this Agreement and the Registration Rights Agreement.
4.2 PURCHASE ENTIRELY FOR OWN ACCOUNT. The Purchaser is acquiring the
Shares for its own account for investment and not for resale or with a view to
distribution thereof in violation of the Securities Act.
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4.3 INVESTOR STATUS; ETC. The Purchaser certifies and represents to
the Company that it is an "Accredited Investor" as defined in Rule 501 of
Regulation D promulgated under the Securities Act and was not organized for the
purpose of acquiring any of the Shares. The Purchaser's financial condition is
such that it is able to bear the risk of holding the Shares for an indefinite
period of time and the risk of loss of its entire investment. The Purchaser has
been afforded the opportunity to ask questions of and receive answers from the
management of the Company concerning this investment and has sufficient
knowledge and experience in investing in companies similar to the Company in
terms of the Company's stage of development so as to be able to evaluate the
risks and merits of its investment in the Company.
4.4 SHARES NOT REGISTERED. The Purchaser understands that the Shares
have not been registered under the Securities Act, by reason of their issuance
by the Company in a transaction exempt from the registration requirements of the
Securities Act, and that the Shares must continue to be held by the Purchaser
unless a subsequent disposition thereof is registered under the Securities Act
or is exempt from such registration. The Purchaser understands that the
exemptions from registration afforded by Rule 144 (the provisions of which are
known to it) promulgated under the Securities Act depend on the satisfaction of
various conditions, and that, if applicable, Rule 144 may afford the basis for
sales only in limited amounts.
4.5 NO CONFLICT. The execution and delivery of this Agreement and the
Registration Rights Agreement by the Purchaser and the consummation of the
transactions contemplated hereby and thereby will not conflict with or result in
any violation of or default by the Purchaser (with or without notice or lapse of
time, or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to a loss of a material benefit under (i) any
provision of the organizational documents of the Purchaser or (ii) any agreement
or instrument, permit, franchise, license, judgment, order, statute, law,
ordinance, rule or regulations, applicable to the Purchaser or its respective
properties or assets.
4.6 BROKERS. The Purchaser has not retained, utilized or been
represented by any broker or finder in connection with the transactions
contemplated by this Agreement.
4.7 CONSENTS. All consents, approvals, orders and authorizations
required on the part of the Purchaser in connection with the execution, delivery
or performance of this Agreement and the consummation of the transactions
contemplated herein have been obtained and are effective as of the Closing Date.
4.8 INVESTMENT REPRESENTATIONS.
The Purchaser represents and warrants to the Company that: (i) it is a
Delaware limited liability company, (ii) each of its constituent members is an
"accredited investor" as such term is defined in Rule 501(a) promulgated under
the
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Securities Act, (iii) its principal office is located in Washington, DC, and
(iv) the principal office of its general partner is located in Washington, DC.
4.9 PURCHASER AND AFFILIATES. The total number of shares of Common
Stock currently owned by the Purchaser and all Affiliates of the Purchaser is,
in the aggregate, 416,667. There are no other Affiliates of the Purchaser that
own Common Stock or other securities of the Company.
5. CONDITIONS PRECEDENT.
5.1. CONDITIONS TO THE OBLIGATION OF THE PURCHASER TO CONSUMMATE THE
CLOSING. The obligation of the Purchaser to consummate the Closing and to
purchase and pay for the Shares is subject to the satisfaction of the following
conditions precedent:
(a) The representations and warranties contained herein of the Company
shall be true and correct in all material respects on and as of the Closing Date
with the same force and effect as though made on and as of the Closing Date.
(b) The Registration Rights Agreement shall have been executed and
delivered by the Company.
(c) There shall have been no material adverse change (actual or
threatened) in the assets, liabilities (contingent or other), affairs,
operations, or condition (financial or other) of the Company prior to the
Closing Date; and the Company shall have performed all obligations and
conditions herein required to be performed or observed by the Company on or
prior to the Closing Date.
(d) No proceeding challenging this Agreement or the transactions
contemplated hereby, or seeking to prohibit, alter, prevent or materially delay
the Closing, shall have been instituted before any court, arbitrator or
governmental body, agency or official and shall be pending.
(e) The purchase of and payment for the Shares by the Purchaser shall
not be prohibited by any law or governmental order or regulation. All necessary
consents, approvals, licenses, permits, orders and authorizations of, or
registrations, declarations and filings with, any governmental or administrative
agency or of any other person with respect to any of the transactions
contemplated hereby shall have been duly obtained or made and shall be in full
force and effect.
(f) All instruments and corporate proceedings of the Company in
connection with the transactions contemplated by this Agreement to be
consummated at the Closing shall be satisfactory in form and substance to the
Purchaser, and the Purchaser shall have received copies (executed or certified,
as may be appropriate) of all documents which the Purchaser may have reasonably
requested in connection with such transactions.
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(g) The Purchaser shall have received from Bingham Dana LLP, counsel
to the Company, an opinion addressed to it, dated the Closing Date and
substantially in the form of EXHIBIT B hereto.
(h) The Purchaser shall have received true, complete and correct
copies of the final material agreement(s) between the Company and ProScript
relating to the ProScript Acquisition and the ProScript Acquisition shall have
been consummated.
(i) The Purchaser shall have received a certificate from the Company,
in form and substance satisfactory to the Purchaser, dated the Closing Date and
signed by a secretary or an assistant secretary of the Company, certifying (i)
that attached copies of the Restated Certificate of Incorporation (the
"CHARTER"), the Amended and Restated By-Laws (the "BY-LAWS") and resolutions of
the Board of Directors of the Company approving this Agreement, the Registration
Rights Agreement and the transactions contemplated hereby and thereby, are all
true, complete and correct and remain in full force and effect as of the Closing
Date, and (ii) as to the incumbency and specimen signature of each officer of
the Company executing this Agreement, the Registration Rights Agreement and any
other document delivered in connection herewith on behalf of the Company.
(j) The Purchaser shall have received a certificate from the Company,
in form and substance satisfactory to the Purchaser, dated the Closing Date and
signed by the Company's chief financial officer, certifying that (i) the
representations and warranties of the Company contained in Section 3 hereof are
true and correct in all material respects on the Closing Date and (ii) the
Company has performed and complied with in all material respects all of the
agreements and conditions set forth or contemplated herein that are required to
be performed or complied with by the Company on or before the Closing Date.
5.2. CONDITIONS TO THE OBLIGATION OF THE COMPANY TO CONSUMMATE THE
CLOSING. The obligation of the Company to consummate the Closing and to issue
and sell the Shares to the Purchaser at the Closing is subject to the
satisfaction of the following conditions precedent:
(a) The representations and warranties contained herein of the
Purchaser shall be true and correct in all material respects on and as of the
Closing Date with the same force and effect as though made on and as of the
Closing Date.
(b) The Registration Rights Agreement shall have been executed and
delivered by the Purchaser.
(c) The Purchaser shall have performed all obligations and conditions
herein required to be performed or observed by the Purchaser on or prior to the
Closing Date.
(d) No proceeding challenging this Agreement or the transactions
contemplated hereby, or seeking to prohibit, alter, prevent or materially delay
the
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Closing, shall have been instituted before any court, arbitrator or governmental
body, agency or official and shall be pending.
(e) The sale of the Shares by the Company shall not be prohibited by
any law or governmental order or regulation. All necessary consents, approvals,
licenses, permits, orders and authorizations of, or registrations, declarations
and filings with, any governmental or administrative agency or of any other
person with respect to any of the transactions contemplated hereby shall have
been duly obtained or made and shall be in full force and effect.
(f) All instruments and corporate proceedings in connection with the
transactions contemplated by this Agreement to be consummated at the Closing
shall be satisfactory in form and substance to the Company, and the Company
shall have received counterpart originals, or certified or other copies of all
documents, including without limitation records of corporate or other
proceedings, which it may have reasonably requested in connection therewith.
(g) The Company shall have received a certificate from the Purchaser,
in form and substance satisfactory to the Company, dated the Closing Date and
signed by an authorized person in the name, and on behalf, of the Purchaser,
certifying that (i) the representations and warranties of the Purchaser
contained in Section 4 hereof are true and correct in all material respects on
the Closing Date and (ii) the Purchaser has performed and complied with in all
material respects all of the agreements and conditions set forth or contemplated
herein that are required to be performed or complied with by the Purchaser on or
before the Closing Date.
(h) Evidence reasonably satisfactory to the Company that any assignee
(other than the Joint Fund (as defined below)) to whom the Purchaser transfers
rights under Section 7.4 hereof (pursuant to Section 10.9(a) hereof), any such
transfer having been made, is an entity which is intended to qualify as a
"venture capital operating company" under the Department of Labor plan asset
regulation.
6. STANDSTILL OBLIGATIONS.
(a) The Purchaser hereby agrees with the Company and covenants that,
so long as it or any of its Affiliates is the record or beneficial owner of any
Securities, neither it nor its Affiliates will directly or indirectly, without
the prior written consent of the Company, in any manner:
(i) acquire, offer or propose to acquire, solicit an offer to
sell or agree to acquire, directly or indirectly, alone or in concert with
others, by purchase or otherwise, any direct or indirect "beneficial ownership"
(such term, for purposes of this Agreement, shall have the meaning provided
therefor under the rules and regulations promulgated by the SEC under Section
13(d) of the Exchange Act) in any Securities, such that the aggregate ownership
(whether direct or indirect, of record or beneficial) of the Purchaser (and all
permitted
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assignees) and the Affiliates of the Purchaser (and all Affiliates of the
permitted assignees) in the Company shall increase, after the Closing Date,
beyond an additional three percent (3%) of the total number of outstanding
shares of Common Stock on a fully diluted basis as of the Closing Date
(PROVIDED, HOWEVER, that, notwithstanding the foregoing provisions of this
clause (i), the Purchaser may acquire the Shares pursuant to, and in accordance
with, the provisions of this Agreement);
(ii) make, or in any way participate in, directly or indirectly,
alone or in concert with others, any "solicitation" of "proxies" or "consents"
(as such terms are used in the proxy rules of the SEC promulgated pursuant to
Section 14 of the Exchange Act) to vote for the election or removal of directors
of the Company;
(iii) otherwise act, directly or indirectly, alone or in concert
with others, to seek to propose to any of the Company's stockholders any merger,
business combination, restructuring, recapitalization or other transaction to or
with the Company that, in each case, would involve or result in a Change of
Control (as defined below) of the Company; or
(iv) otherwise seek, directly or indirectly, alone or in concert
with others, to nominate any person for election as a director of the Company
who is not nominated by the then incumbent directors of the Company.
(b) None of the Purchaser and any Affiliate of the Purchaser shall
form, become a member of, or otherwise participate in any way in, any "group"
(as such term is defined under the rules and regulations promulgated by the SEC
under Section 13(d) of the Exchange Act) that engages in any of the activities
that are prohibited under Section 6(a) hereof.
(c) Notwithstanding anything expressed or implied in this Section 6 to
the contrary, the Purchaser hereby agrees that it and its Affiliates will take
any and all steps reasonably requested by the Company in writing (including,
without limitation, granting proxies) to ensure that any and all of Voting
Securities beneficially owned by the Purchaser or any of the Affiliates of the
Purchaser are present or represented (whether in person or by proxy) at each
meeting of stockholders of the Company for the sole purpose of establishing a
valid quorum to transact business at such meeting.
(d) In the event that the Purchaser or any Affiliate of the Purchaser
breaches any of its obligations under this Section 6 and such breach is not
cured within ten (10) business days, then (i) the Company, in addition to any
other legal or equitable remedies which it may have, may enforce its rights
under this Section 6 by action for specific performance and (ii) to the extent
that such breach arises as a result of any vote cast or proxy given by the
Purchaser or any Affiliate of the Purchaser, in violation of the provisions of
this Section 6, such vote or proxy, as
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the case may be, shall be null and void and the Company shall refuse to
recognize and shall not give effect to such vote or proxy.
(e) For purposes of this Section 6, "Change of Control" shall mean any
event, transaction or occurrence (whether alone or as a result of a series of
related events, transactions or occurrence) which either (i) results in a change
of beneficial ownership of the Company of greater than twenty-percent (20%) or
(ii) results in the Purchaser (and any permitted assignee) and all Affiliates of
the Purchaser (and all Affiliates of any permitted assignee) owning or holding,
whether beneficially or of record, directly or indirectly, in the aggregate
twenty percent (20%) or greater of the Securities of the Company.
Notwithstanding Section 10.9(b) hereof, the obligations, covenants and
duties under this Section 6 shall not be assignable by the Purchaser.
7. CERTAIN COVENANTS AND AGREEMENTS.
7.1. TRANSFER OF SECURITIES. The Purchaser shall not sell, assign,
pledge, transfer or otherwise dispose or encumber any of the Shares, except (i)
pursuant to an effective registration statement under the Securities Act, (ii)
to an Affiliate (so long as such affiliate agrees to be bound by the terms and
provisions of this Agreement as if, and to the fullest extent as, the Purchaser)
or to the Joint Fund or the Soros Entity pursuant to Section 10.9(a) below, or
(iii) pursuant to an available exemption from registration under the Securities
Act and applicable state securities laws and, if requested by the Company, upon
delivery by the Purchaser of either an opinion of counsel of the Purchaser
reasonably satisfactory to the Company to the effect that the proposed transfer
is exempt from registration under the Securities Act and applicable state
securities laws or a representation letter of the Purchaser reasonably
satisfactory to the Company setting forth a factual basis for concluding that
such proposed transfer is exempt from registration under the Securities Act and
applicable state securities laws. Any transfer or purported transfer of the
Shares in violation of this Section 7.1 shall be void. The Company shall not
register any transfer of the Shares in violation of this Section 7.1. The
Company may, and may instruct any transfer agent for the Company, to place such
stop transfer orders as may be required on the transfer books of the Company in
order to ensure compliance with the provisions of this Section 7.1.
7.2. LEGENDS. To the extent applicable, each certificate or other
document evidencing any of the Shares shall be endorsed with the legend set
forth below, and the Purchaser covenants that, except to the extent such
restrictions are waived by the Company, it shall not transfer the shares
represented by any such certificate without complying with the restrictions on
transfer described in this Agreement and the legends endorsed on such
certificate:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED, SOLD,
ASSIGNED, PLEDGED, TRANSFERRED OR OTHERWISE
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DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER
SAID ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER SAID
ACT AND, IF REQUESTED BY THE COMPANY, UPON DELIVERY OF EITHER AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT THE PROPOSED TRANSFER
IS EXEMPT FROM SAID ACT OR OF A REPRESENTATION LETTER SETTING FORTH A
FACTUAL BASIS FOR CONCLUDING THAT THE PROPOSED TRANSFER IS EXEMPT FROM SAID
ACT."
7.3 PUBLICITY. From and after the date of this Agreement, except to
the extent required by applicable laws, rules, regulations or stock exchange
requirements, neither (i) the Company or any of its Affiliates nor (ii) the
Purchaser or any of its Affiliates shall, without the written consent of the
other, make any public announcement or issue any press release with respect to
the transactions contemplated by this Agreement. In no event will either (i) the
Company or any of its Affiliates or (ii) the Purchaser or any of its Affiliates
make any public announcement or issue any press release with respect to the
transactions contemplated by this Agreement without consulting with the other
party, to the extent feasible, as to the content of such public announcement or
press release.
7.4 MANAGEMENT RIGHTS. Subject to the limitations set forth in the
last paragraph of this Section 7.4, from and after the Closing Date, if the
Purchaser (or other permitted assignee) is not represented on the Company's
Board of Directors and so long as the Purchaser (and any permitted assignee) and
any Affiliates of the Purchaser (and all Affiliates of any permitted assignee)
own or hold, in the aggregate, not less than 257,000 shares of the Common Stock
(subject to adjustment made for any stock dividend, split-up or subdivision or
any combination or reclassification affecting the Common Stock after the Closing
Date), then the Purchaser shall have the following rights:
(a) The Company shall provide the Purchaser with a copy of any
materials to be distributed or discussed at meetings of the Board of Directors
at the same time as provided to members of the Board of Directors, EXCEPT that
the Purchaser may be excluded from access to any material or meeting or portion
thereof (i) if the Company believes, upon advice of counsel, that such exclusion
is reasonably necessary to preserve the attorney-client privilege for matters
with respect to which the loss of such privilege could be meaningful for the
Company's business, operations or prospects, or (ii) to protect highly
confidential or proprietary information, the disclosure of which conflicts with,
breaches or could cause a default under any agreement, contract, arrangement or
other legally binding obligation of the Company to a third party.
Notwithstanding the foregoing, if the Purchaser is excluded from access to any
material as a result of clause (ii) in the preceding sentence and the Purchaser
determines in any particular case that access to such material or meeting or
portion thereof may be important to its having appropriate management rights as
a "venture capital operating company" under the Department of Labor's plan asset
regulation, then the Purchaser shall have the right to request
<PAGE>
-15-
that the Company, and the Company shall be obligated to, use reasonable efforts
to obtain the consent or waiver of such third party to permit disclosure to, or
permit attendance by, the Purchaser hereunder.
(b) The Purchaser shall be entitled, from time to time, to make
proposals, recommendations and suggestions to the Company relating to the
business and affairs of the Company.
(c) The Purchaser shall be entitled, at the Purchaser's expense
and with reasonable prior notice to the Company, to discuss the Company's
business and affairs with its officers, directors and independent accountants.
(d) The Purchaser shall be entitled, at all reasonable times, in
reasonable intervals and at the Purchaser's expense, to examine such books,
records, documents and other written information in the possession of the
Company relating to its affairs as the Purchaser may reasonably request,
PROVIDED THAT access to highly confidential or proprietary information and
facilities need not be provided to the Purchaser for the same reasons set forth
in subparagraph (a)(ii) above, subject to the last sentence of subparagraph (a)
above.
(e) The Company shall permit the Purchaser, at all reasonable
times, in reasonable intervals and at the Purchaser's expense, to visit and
inspect the Company's properties, PROVIDED THAT the Company shall not be
obligated to provide access to highly confidential or proprietary information
and properties for the same reasons set forth in subparagraph (a)(ii) above,
subject to the last sentence of subparagraph (a) above, and PROVIDED, FURTHER,
that such inspection by the Purchaser does not disrupt or cause a disruption in
the Company's ordinary course of business.
Notwithstanding Section 10.9(b) hereof, the rights contained under
this Section 7.4 shall not be assignable by the Purchaser (except to a permitted
assignee pursuant to Section 10.9(a) and provided that, such transfer having
been made, each such assignee is intended to qualify as "venture capital
operating company" under the Department of Labor plan asset regulation) and
shall automatically and without further action terminate at such time as the
Purchaser (and its permitted assignees) and the Affiliates of the Purchaser (and
all Affiliates of any permitted assignees) shall cease to own or hold, in the
aggregate, at least 257,000 shares of Common Stock (subject to adjustment made
for any stock dividend, split-up or subdivision or any combination or
reclassification affecting the Common Stock after the Closing Date) or shall
attempt to transfer such rights in violation of the foregoing prohibition. The
Purchaser (and any representative of the Purchaser) shall hold in confidence and
trust, and not use or disclose, any confidential information provided to or
learned by it (or him/her) in connection with the rights granted to the
Purchaser by the Company under this Section 7.4. The Purchaser shall execute and
deliver a confidentiality and non-disclosure agreement to the Company in the
event that the Purchaser is entitled to any of the rights set forth in this
Section 7.4, which agreement shall remain in effect for so long as the
<PAGE>
-16-
Purchaser is entitled to, and for five (5) years after the Purchaser ceases to
be entitled to, any of the rights set forth in this Section 7.4.
7.5. BOARD REPRESENTATIVE. During the six (6) month period following
the Closing Date, (a) the respective chief executive officers of the Company and
the Purchaser shall, in good faith, discuss the identities of persons who shall
be potential nominees (as a representative of the Purchaser) for a seat on the
Board of Directors of the Company, (b) after such discussions in good faith the
Purchaser shall, at its sole discretion, provide to the Company a list of the
names of three to five persons who shall be such potential nominees and, (c)
after such list shall have been provided by the Purchaser to the Company, the
Company shall select one (1) person from such list and such person's name shall
be brought to the next meeting of the full Board of the Company for
consideration as a potential member of the Board; PROVIDED, that in the event
that such person brought to the full Board is not approved as a member of the
Board, then the parties agree that they shall be obligated to repeat the process
set forth herein a second time. Notwithstanding Section 10.9(b) hereof, the
rights contained under this Section 7.5 shall not be assignable by the Purchaser
(except to a permitted assignee pursuant to Section 10.9(a)).
8. TERMINATION.
8.1 TERMINATION. Subject to Section 8.2, this Agreement may be
terminated at any time prior to the Closing as follows:
(a) by the Purchaser if there has been a material breach by the
Company of any representation, warranty, covenant or agreement of the Company
contained in this Agreement, which has not been cured by the Company within 10
days after written notice from the Purchaser;
(b) by the Company if there has been a material breach by the
Purchaser of any representation, warranty, covenant or agreement of the
Purchaser contained in this Agreement, which has not been cured by the Purchaser
within 10 days after written notice from the Company;
(c) by the Company or the Purchaser, if the Closing shall not
have occurred on or before August 6, 1999; PROVIDED, HOWEVER, that the right to
terminate this Agreement under this Section 8.1(c) shall not be available to any
party whose failure to fulfill any obligation or condition under this Agreement
has been the cause of, or resulted in, the failure of the Closing to occur on or
before such date;
(d) by the Company or the Purchaser if (i) there shall be a final
nonappealable order of a federal or state court in effect preventing
consummation of the transactions contemplated by this Agreement or (ii) there
shall be any action taken, or any statute, rule, regulation or order enacted,
promulgated or issued or deemed applicable to the transactions contemplated by
this Agreement by any governmental entity which would make consummation of the
transactions
<PAGE>
-17-
contemplated by this Agreement illegal; PROVIDED, HOWEVER, that the party
seeking to terminate this Agreement must use all reasonable efforts to remove
such judgment, injunction, order or decree; or
(e) by mutual written consent of the Company and the Purchaser.
8.2 EFFECT OF TERMINATION. If this Agreement is terminated pursuant to
Section 8.1, this Agreement shall become void and of no effect with no liability
on the part of any party hereto, EXCEPT that Sections 7.4 (Publicity), 8.2
(Effect of Termination), and 10 (Miscellaneous Provisions) shall survive the
termination hereof for a period of one year, and each party hereto shall hold in
confidence and trust, and not use or disclose to any third parties, the terms
and conditions of this Agreement and any confidential information provided to or
learned by such party in connection with the negotiation, execution and delivery
of this Agreement.
9. INDEMNIFICATION.
9.1 GENERAL.
(a) BY THE COMPANY. The Company agrees to indemnify, defend and
hold harmless the Purchaser and its Affiliates and their respective officers,
directors, agents, employees, subsidiaries, partners, members and controlling
persons (collectively, the "PURCHASER INDEMNITEES") to the fullest extent
permitted by law from and against any and all claims, losses, liabilities,
damages, deficiencies, judgements, assessments, fines, settlements, costs or
expenses (including interest, penalties and reasonable fees, disbursements and
other charges of counsel) (collectively, "LOSSES") based upon, arising out of or
otherwise in respect of any breach by the Company or its Affiliates of any
representation, warranty, covenant or agreement of the Company contained in this
Agreement.
(b) BY THE PURCHASER. The Purchaser agrees to indemnify, defend
and hold harmless the Company and its Affiliates and their respective officers,
directors, agents, employees, subsidiaries, partners, members and controlling
persons (the "COMPANY INDEMNITEES") to the fullest extent permitted by law from
and against any and all Losses based upon, arising out of or otherwise in
respect of any breach by the Purchaser or any Affiliate of the Purchaser of any
representation, warranty, covenant or agreement of the Purchaser or any
Affiliate of the Purchaser contained in this Agreement.
9.2 CLAIMS
All claims for indemnification by a Company Indemnitee or a Purchaser
Indemnitee pursuant to this Section 9 shall be made as follows:
(a) If a Company Indemnitee or a Purchaser Indemnitee has
incurred or suffered Losses for which it is entitled to indemnification under
<PAGE>
-18-
this Section 9, such Company Indemnitee or Purchaser Indemnitee, as the case may
be, shall give prompt written notice of such claim (a "CLAIM NOTICE") to the
Purchaser or the Company, as applicable. Each Claim Notice shall state the
amount of claimed Losses (the "CLAIMED AMOUNT"), if known, and the basis for
such claim.
(b) Within 20 days after delivery of a Claim Notice, the
indemnifying party under this Section 9 (the "INDEMNIFYING PARTY") shall provide
to the Company Indemnitee or the Purchaser Indemnitee, as the case may be (the
"INDEMNIFIED PARTY"), a written response (the "RESPONSE NOTICE") in which the
Indemnifying Party shall: (i) agree that all of the Claimed Amount is owed to
the Indemnified Party, (ii) agree that part, but not all, of the Claimed Amount
(the "AGREED AMOUNT") is owed to the Indemnified Party, or (iii) contest that
any of the Claimed Amount is owed to the Indemnified Party. The 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 Losses for which the Indemnified Party is entitled to
indemnification under this Section 9. If no Response Notice is delivered by the
Indemnifying Party within such 20-day period, the Indemnifying Party shall be
deemed to have agreed that all of the Claimed Amount is owed to the Indemnified
Party.
(c) If the Indemnifying Party in the Response Notice agrees (or
is deemed to have agreed) that all of the Claimed Amount is owed to the
Indemnified Party, the Indemnifying Party shall owe to the Indemnified Party an
amount equal to the Claimed Amount to be paid in the manner set forth in this
Section 9. If the Indemnifying Party in the Response Notice agrees that part,
but not all, of the Claimed Amount is owed to the Indemnified Party, the
Indemnifying Party shall owe to the 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 9.
(d) No delay on the part of the Indemnified Party in notifying
the Indemnifying Party shall relieve the Indemnifying Party of any liability or
obligation hereunder except to the extent of any actual damage, liability or
prejudice caused by or arising out of such delay.
9.3. PAYMENT OF CLAIMS. An Indemnifying Party shall make payment of
any portion of any Claimed Amount that such Indemnifying Party has agreed in a
Response Notice that it owes to an Indemnified Party or that such Indemnifying
Party is deemed to have agreed it owes to such Indemnifying Party, said payment
to be made within thirty (30) days after such Response Notice is delivered by
such Indemnifying Party or should have been delivered by such Indemnifying
Party, as the case may be.
<PAGE>
-19-
9.4. LIMITATIONS.
(a) TIME FOR CLAIMS. No Indemnifying Party will be liable for any
Losses hereunder unless a written claim for indemnification is given by the
Indemnified Party to the Indemnifying Party on or prior to (i) with respect to a
breach of a representation or warranty, the expiration of such representation or
warranty, and (ii) with respect to a breach of a covenant or agreement
(including without limitation the covenants and agreements set forth in Sections
7.4, 7.5 and 6), one year after the expiration (in accordance with its terms and
conditions) of such covenant or agreement.
(b) MAXIMUM AMOUNT. No Indemnifying Party will be liable for
any Losses hereunder in excess of $10,000,000 with respect to claims for
breaches of representations and warranties.
9.5 APPLICABILITY; EXCLUSIVITY. Notwithstanding any term to the
contrary in this Section 9, the indemnification and contribution provisions of
the Registration Rights Agreement shall govern any claim made with respect to
registration statements filed pursuant thereto or sales made thereunder. The
parties hereby acknowledge and agree that the sole and exclusive remedies of the
parties hereto in respect of any and all claims relating to any breach or
purported breach of any representation, warranty, covenant or agreement that is
contained in this Agreement will be pursuant to the indemnification provisions
of this Section 9, EXCEPT that all parties shall always retain the right to
pursue and obtain injunctive relief in addition to any other rights or remedies
hereunder.
10. MISCELLANEOUS PROVISIONS.
10.1 RIGHTS CUMULATIVE. Each and all of the various rights, powers and
remedies of the parties shall be considered to be cumulative with and in
addition to any other rights, powers and remedies which such parties may have at
law or in equity in the event of the breach of any of the terms of this
Agreement. The exercise or partial exercise of any right, power or remedy shall
neither constitute the exclusive election thereof nor the waiver of any other
right, power or remedy available to such party.
10.2 PRONOUNS. All pronouns or any variation thereof shall be deemed
to refer to the masculine, feminine or neuter, singular or plural, as the
identity of the person, persons, entity or entities may require.
10.3 NOTICES.
(a) Any notices, reports or other correspondence (hereinafter
collectively referred to as "CORRESPONDENCE") required or permitted to be given
hereunder shall be sent by postage prepaid first class mail, courier or telecopy
or delivered by hand to the party to whom such correspondence is required or
permitted to be given hereunder. The date of giving any notice shall be the date
of its actual receipt.
<PAGE>
-20-
(b) 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
(c) All correspondence to the Purchaser 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: Kenneth M. Socha, Esq.
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.
(d) Any entity may change the address to which correspondence to
it is to be addressed by notification as provided for herein.
10.4 CAPTIONS. The captions and paragraph headings of this Agreement
are solely for the convenience of reference and shall not affect its
interpretation.
<PAGE>
-21-
10.5 SEVERABILITY. Should any part or provision of this Agreement be
held unenforceable or in conflict with the applicable laws or regulations of any
jurisdiction, the invalid or unenforceable part or provisions shall be replaced
with a provision which accomplishes, to the extent possible, the original
business purpose of such part or provision in a valid and enforceable manner,
and the remainder of this Agreement shall remain binding upon the parties
hereto.
10.6 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the internal and substantive laws of the Commonwealth of
Massachusetts and without regard to any conflicts of laws concepts which would
apply the substantive law of some other jurisdiction.
10.7 WAIVER. No waiver of any term, provision or condition of this
Agreement, whether by conduct or otherwise, in any one or more instances, shall
be deemed to be, or be construed as, a further or continuing waiver of any such
term, provision or condition or as a waiver of any other term, provision or
condition of this Agreement.
10.8 EXPENSES. Each party shall pay its own expenses in connection
with the preparation, execution and delivery of this Agreement and the
Registration Rights Agreement.
10.9 ASSIGNMENT.
(a) JOINT FUND AND SOROS ENTITY. Subject to the limitations
contained below and in Sections 6, 7.4 and 7.5 hereof, the Purchaser may assign,
in whole or in part, the rights and obligations hereunder to either (i)
Perseus-Soros BioPharmaceutical Fund, LP, a Delaware limited partnership (the
"JOINT Fund"), or (ii) Soros Fund Management LLC, a Delaware limited liability
company, or a controlled investment fund or affiliate thereof (the "SOROS
ENTITY"); PROVIDED, THAT the Purchaser may assign the rights and obligations
under Section 7.5 hereunder only in whole (and not in part) and only to the
Joint Fund. As conditions precedent to the Purchaser assigning the rights and
obligations hereunder pursuant to the foregoing sentence, such assignee (whether
the Joint Fund or the Soros Entity) (a) shall agree to be bound by and become
subject to all of the rights, obligations, terms and conditions of this
Agreement applicable to, and to the same extent as the Purchaser, including
without limitation Sections 6 (Standstill), 7.4 (Management Rights) (to the
extent applicable), and 9.1 (Indemnification), (b) shall sign any and all
documents, agreements and certificates requested by the Company to effect such
agreement to be bound by the rights, obligations, terms and conditions of this
Agreement, including an assumption agreement and/or instrument of adherence
reasonable requested by the Company, and (c) shall certify that the
representations and warranties set forth in Section 4 hereof are true and
correct, as of the date of the assignment or transfer, as if made by such
assignee (except that with respect to Section 4.9, such representation and
warranty shall be modified so as to be true and correct as to such particular
assignee). In the event that the Purchaser assigns its rights and obligations
hereunder in accordance with this Section 10.9(a) in whole (and not in part) to
a permitted transferee, then the Purchaser shall continue to be
<PAGE>
-22-
bound only by the covenants, obligations and agreements of the Purchaser and its
Affiliates contained in Sections 6 (Standstill) and 9.1 (Indemnification) (it
being understood that the Purchaser shall be obligated to indemnify the Company
only with respect to breaches by itself and its Affiliates and that such
obligation shall be several and not joint with respect to permitted transferees
who shall become "Purchasers" hereunder)).
(b) GENERAL. The rights and obligations of any party hereto shall
inure to the benefit of and shall be binding upon the authorized successors and
permitted assigns of such party. Subject to paragraph (a) above and the
limitations set forth in Sections 6, 7.4 and 7.5 hereof, this Agreement and the
rights and duties of the Purchaser set forth herein may be freely assigned or
delegated, as the case may be, in whole or in part, by the Purchaser to any
person (other than the Joint Fund and the Soros Entity which shall be governed
by Section 10.1(a) above) to whom the Purchaser may transfer any of the Shares
purchased or acquired by the Purchaser; PROVIDED that the transfer complies with
the terms of Sections 7.1 and 7.2 of this Agreement and the assigning party
shall promptly notify the Company in writing of such assignment and shall remain
liable (both directly and as guarantor) with respect to all obligations so
assigned. In the event of any assignment, the assignee shall specifically assume
and be bound by the provisions of the Agreement by executing and agreeing to an
assumption agreement and/or instrument of adherence reasonably acceptable to the
Company.
10.10 SURVIVAL. The respective representations and warranties given by
the parties hereto shall survive the Closing Date and the consummation of the
transactions contemplated herein for a period of one year, without regard to any
investigation made by any party. The respective covenants and agreements agreed
to by a party hereto shall survive the Closing Date and the consummation of the
transactions contemplated herein in accordance with their respective terms and
conditions.
10.11 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties hereto respecting the subject matter hereof and
supersedes all prior agreements, negotiations, understandings, representations
and statements respecting the subject matter hereof, whether written or oral. No
modification, alteration, waiver or change in any of the terms of this Agreement
shall be valid or binding upon the parties hereto unless made in writing and
duly executed by the parties hereto.
10.12 AMENDMENTS. Any amendment, supplement or modification of or to
any provision of this Agreement, any waiver of any provisions of this Agreement
shall be effective only if made or given in writing and signed by the Company
and the Purchaser.
10.13 NO THIRD PARTY RIGHTS. Except as contemplated by Section 9
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
<PAGE>
-23-
(including, without limitation, any stockholder or debt holder of the Company)
other than the parties hereto.
10.14 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same document. 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.
[signature pages to follow]
<PAGE>
-24-
IN WITNESS WHEREOF, the parties hereto have executed this Stock Purchase
Agreement under seal as of the day and year first above written.
LEUKOSITE, INC.
By: /s/ Augustine Lawlor
-----------------------------------------
Name: Augustine Lawlor
Title: Vice President, Corporate Development
and Chief Financial Officer
PERSEUS CAPITAL LLC
By: /s/ Frank H. Pearl
-----------------------------------------
Name: Frank H. Pearl
Title: Chairman and Chief Executive Officer
<PAGE>
-25-
Exhibit A - Registration Rights Agreement
Exhibit B - Form of Company Counsel Legal Opinion
<PAGE>
Exhibit 10.2
LEUKOSITE, INC.
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT is dated as of June 22, 1999 by and between
LEUKOSITE, INC., a Delaware corporation with its principal office at 215 First
Street, Cambridge, Massachusetts 02142 (the "COMPANY"), and HealthCare Ventures
V, L.P., a Delaware limited partnership, with its principal office at 44 Nassau
Street, Princeton, New Jersey 08542-4511 (the "PURCHASER").
WHEREAS, the Company desires to issue and sell to the Purchaser, and the
Purchaser desires to purchase from the Company, an aggregate of 456,620 shares
(the "SHARES") of the authorized but unissued shares of common stock, $.01 par
value per share, of the Company (the "COMMON STOCK"), at an aggregate purchase
price of $4,429,214, all upon the terms and subject to the conditions set forth
in this Agreement.
NOW THEREFORE, in consideration of the mutual agreements, representations,
warranties and covenants herein contained, the parties hereto agree as follows:
1. DEFINITIONS. As used in this Agreement, the following terms shall have
the following respective meanings:
(a) "AFFILIATE" of a party means any corporation or other business
entity controlled by, controlling or under common control with, such party. For
this purpose "CONTROL" shall include direct or indirect beneficial ownership of
more than fifty percent (50%) of the voting power or economic interest in such
corporation or other business entity.
(b) "CLOSING" shall have the meaning set forth in Section 2.2 of this
Agreement.
(c) "CLOSING DATE" means the date of the Closing.
(d) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, and all of the rules and regulations promulgated thereunder.
(e) "PERSON" (whether or not capitalized) shall mean an individual,
partnership, limited liability company, corporation, association, trust, joint
venture, unincorporated organization, and any government, governmental
department or agency or political subdivision thereof.
<PAGE>
-2-
(f) "REGISTRATION RIGHTS AGREEMENT" shall mean that certain
Registration Rights Agreement, dated as of the date hereof, among the Company
and the Purchaser, in the form attached hereto as EXHIBIT A.
(g) "SEC" shall mean the Securities and Exchange Commission.
(h) "SECURITIES ACT" shall mean the Securities Act of 1933, as
amended, and all of the rules and regulations promulgated thereunder.
2. PURCHASE AND SALE OF SHARES.
2.1 PURCHASE AND SALE. Subject to and upon the terms and conditions
set forth in this Agreement, the Company agrees to issue and sell to the
Purchaser, and the Purchaser hereby agrees to purchase from the Company, at the
Closing, the Shares at a purchase price of $9.70 per share. The aggregate
purchase price payable by the Purchaser to the Company for all of the Shares
shall be $4,429,214.
2.2 CLOSING. The closing of the transactions contemplated under this
Agreement (the "CLOSING") shall take place at the Boston offices of Bingham Dana
LLP, 150 Federal Street, Boston, Massachusetts 02110 at 10:00 a.m. on July 22,
1999 or at such other location, date and time as may be agreed upon between the
Purchaser and the Company. At the Closing, the Company shall deliver to the
Purchaser stock certificates, registered in the name of the Purchaser,
representing the number of shares of Common Stock purchased by the Purchaser,
against payment of the purchase price therefor by wire transfer of immediately
available funds to such account or accounts as the Company shall designate in
writing.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to the Purchaser as follows:
3.1 INCORPORATION. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and is qualified to do business in each jurisdiction in which the character of
its properties or the nature of its business requires such qualification, except
where the failure to so qualify would not have a material adverse effect upon
the Company. The Company has all requisite corporate power and authority to
carry on its business as now conducted and to carry out the transactions
contemplated hereby.
3.2 CAPITALIZATION. The authorized capital stock of the Company
consists of (i) 25,000,000 shares of Common Stock, of which 12,918,306 shares
were outstanding on June 16, 1999 and (ii) 5,000,000 shares of preferred stock,
of which no shares are outstanding on the date hereof. Except as set forth in
SCHEDULE 3.2 hereto, there are no existing options, warrants, calls, preemptive
(or similar) rights, subscriptions or other rights, agreements, arrangements or
commitments of any character obligating the Company to issue, transfer or sell,
or cause to be issued, transferred or sold, any shares of the capital stock of
the Company or other equity
<PAGE>
-3-
interests in the Company or any securities convertible into or exchangeable for
such shares of capital stock or other equity interests, and there are no
outstanding contractual obligations of the Company to repurchase, redeem or
otherwise acquire any shares of its capital stock or other equity interests.
3.3 AUTHORIZATION. All corporate action on the part of the Company,
its officers, directors and stockholders necessary for the authorization,
execution, delivery and performance of this Agreement and the Registration
Rights Agreement and the consummation of the transactions contemplated herein
and therein has been taken. When executed and delivered by the Company, each of
this Agreement and the Registration Rights Agreement shall constitute the legal,
valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as such may be limited by bankruptcy,
insolvency, reorganization or other laws affecting creditors' rights generally
and by general equitable principles, and except as the same may be limited by
the indemnification obligations of the Company under the Registration Rights
Agreement. The Company has all requisite corporate power to enter into this
Agreement and the Registration Rights Agreement and to carry out and perform its
obligations under the terms of this Agreement and the Registration Rights
Agreement.
3.4 VALID ISSUANCE OF THE SHARES. The Shares will, upon issuance
pursuant to the terms hereof, be duly authorized and validly issued, fully paid
and nonassessable and not subject to any encumbrances, preemptive rights or any
other similar contractual rights of the stockholders of the Company or others.
3.5 FINANCIAL STATEMENTS. The Company has furnished to the Purchaser
its audited Statements of Income, Stockholders' Equity and Cash Flows for each
of the fiscal years ended December 31, 1997 and 1998, its audited Consolidated
Balance Sheet as of December 31, 1998, its unaudited Statements of Income,
Stockholders' Equity and Cash Flows for the period from January 1, 1999 to March
31, 1999, and its unaudited Balance Sheet as of March 31, 1999. All such
financial statements are hereinafter referred to collectively as the "FINANCIAL
STATEMENTS". The Financial Statements have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved, and fairly present, in all material respects, the
financial position of the Company and the results of its operations as of the
date and for the periods indicated thereon, except that the unaudited financial
statements referred to above may not be in accordance with generally accepted
accounting principles because of the absence of footnotes normally contained
therein and are subject to normal year-end audit adjustments which, individually
and in the aggregate, will not be material. Since March 31, 1999, there has been
no material adverse change (actual or threatened) in the assets, liabilities
(contingent or other), affairs, operations, prospects or condition (financial or
other) of the Company.
3.6 SEC DOCUMENTS. The Company has furnished to the Purchaser, a true
and complete copy of the Company's Annual Report on Form 10-K for the year ended
December 31, 1998 (the "ANNUAL REPORT"), the Company's Quarterly Report on Form
10-Q for the three months ended March 31, 1999, and any
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other statement, report, registration statement (other than registration
statements on Form S-8) or definitive proxy statement filed by the Company with
the SEC during the period commencing March 31, 1999 and ending on the date
hereof. The Company will, promptly upon the filing thereof, also furnish to the
Purchaser all statements, reports (including, without limitation, Quarterly
Reports on Form 10-Q and Current Reports on Form 8-K), registration statements
and definitive proxy statements filed by the Company with the SEC during the
period commencing on the date hereof and ending on the Closing Date (all such
materials required to be furnished to the Purchaser pursuant to this sentence or
pursuant to the next preceding sentence of this Section 3.6 being called,
collectively, the "SEC DOCUMENTS"). As of their respective filing dates, the SEC
Documents complied in all material respects with the requirements of the
Exchange Act or the Securities Act, as applicable, and none of the SEC Documents
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not
misleading, as of their respective filing dates.
3.7 CONSENTS. Except for (i) the filing and effectiveness of any
registration required to be filed by the Company under the Securities Act in
connection with the exercise by the Purchaser of its rights under the
Registration Rights Agreement and (ii) any required state "blue sky" law filings
in connection with the transactions contemplated under such registration
statement, all consents, approvals, orders and authorizations required on the
part of the Company in connection with the execution, delivery or performance of
this Agreement and the Registration Rights Agreement and the consummation of the
transactions contemplated herein and therein have been obtained and will be
effective as of the Closing Date.
3.8 NO CONFLICT. The execution and delivery of this Agreement and the
Registration Rights Agreement by the Company and the consummation of the
transactions contemplated hereby and thereby will not conflict with or result in
any violation of or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation or to a loss of a material benefit under (i) any provision of the
Certificate of Incorporation or By-laws of the Company or (ii) any agreement or
instrument, permit, franchise, license, judgment, order, statute, law,
ordinance, rule or regulation, applicable to the Company or its properties or
assets.
3.9 BROKERS OR FINDERS. The Company has not dealt with any broker or
finder in connection with the transactions contemplated by this Agreement, and
the Company has not incurred, and shall not incur, directly or indirectly, any
liability for any brokerage or finders' fees or agents commissions or any
similar charges in connection with this Agreement or any transaction
contemplated hereby.
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3.10 NASDAQ NATIONAL MARKET. The Common Stock is listed on the Nasdaq
National Market System, and there are no proceedings to revoke or suspend such
listing.
3.11 ABSENCE OF LITIGATION. There is no pending (or to the best of the
Company's knowledge, threatened) action, suit, proceeding or investigation
against the Company or any of its direct or indirect subsidiaries.
3.12 NO UNDISCLOSED LIABILITIES. Other than as disclosed on the
Financial Statements delivered to the Purchaser, since March 31, 1999, the
Company has incurred no material liabilities or obligations, fixed or
contingent, matured or unmatured or otherwise, except for liabilities or
obligations that, individually or in the aggregate, do not or would not have a
material adverse effect on the financial condition or business of the Company
and its subsidiaries other than (a) liabilities and obligations arising in the
ordinary course of business and (b) other liabilities disclosed in the schedules
to this Agreement.
3.13 CONTRACTS. All contracts, agreements and instruments required to
be filed as an exhibit to the Annual Report are legal, valid, binding and in
full force and effect and, to the knowledge of the Company, are enforceable by
the Company in accordance with their respective terms, subject to (a) laws of
general application relating to bankruptcy, insolvency and the relief of
debtors, (b) rules of law governing specific performance, injunctive relief or
other equitable remedies, and (c) actions or omissions of Persons other than the
Company, PROVIDED, however, that the Company has no knowledge of any material
actions or omissions by such other Persons. Except as disclosed in the Annual
Report and other than contracts or agreements relating exclusively to the
Company's pre-clinical and clinical development and manufacturing activities,
the Company has not granted rights to manufacture, produce, assemble, license,
market or sell its products to any other person and is not bound by any contract
or agreement that materially restricts the Company's exclusive right to develop,
manufacture, assemble, distribute or sell its products.
3.14 SUBSIDIARIES; JOINT VENTURES. The Company has no subsidiaries
other than LeukoSite (U.K.) Limited, a company organized under the laws of
England and Wales, and CytoMed, Inc., a Delaware corporation, each of which are
wholly-owned subsidiaries of the Company, and does not otherwise own or control,
directly or indirectly, any other Person, other than L&I Partners L.P., a
Delaware limited partnership. Except as described in the Annual Report
(including the Joint Venture Agreement (as defined below) as incorporated by
reference thereto), the Company is not a participant in any joint venture,
partnership, or similar arrangement material to its business. The Company is a
party to a joint venture agreement (the "JOINT VENTURE AGREEMENT") with Ilex
Oncology, Inc ("ILEX"). In the Company's judgement, and in the context of the
Joint Venture Agreement, the Company's commercial working relationship with Ilex
is satisfactory and, to the knowledge of the Company, (i) Ilex has not within
the last twelve months threatened to cancel or otherwise terminate the Joint
Venture Agreement with the Company in accordance with its terms, (ii) Ilex has
not notified the Company of Ilex's intention to
<PAGE>
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materially modify or amend the terms of the Joint Venture Agreement, and (iii)
the consummation of the transactions contemplated by this Agreement and the
Registration Rights Agreement will not materially adversely affect the
relationship of the Company with Ilex.
3.15 TAXES. Each of the Company and any subsidiary of the Company has
filed (or has had filed on its behalf) or will file or cause to be timely filed,
all material Tax Returns (as defined below) required by applicable law to be
filed by it prior to or as of the date of the Closing, and such Tax Returns are,
or will be at the time of filing, true, correct and complete in all material
respects. Each of the Company and any subsidiary of the Company has paid (or has
had paid on its behalf) or, where payment is not yet due, has established (or
has had established on its behalf and for its sole benefit and recourse) or will
establish or cause to be established in accordance with generally accepted
accounting principles on or before the date of the Closing an adequate accrual
for the payment of, all material Taxes (as defined below) due with respect to
any period ending prior to or as of the date of the Closing. "TAXES" shall mean
any and all taxes, charges, fees, levies or other assessments, including income,
gross receipts, excise, real or personal property, sales, withholding, social
security, retirement, unemployment, occupation, use, goods and services,
license, value added, capital, net worth, payroll, profits, franchise, transfer
and recording taxes, fees and charges, and any other taxes, assessment or
similar charges imposed by the Internal Revenue Service or any taxing authority
(whether state, county, local or foreign) (each, a "TAXING AUTHORITY"),
including any interest, fines, penalties or additional amounts attributable to
or imposed upon any such taxes or other assessments. "TAX RETURN" shall mean any
report, return, document, declaration or other information or filing required to
be supplied to any Taxing Authority, including information returns, any
documents with respect to accompanying payments of estimated Taxes, or with
respect to or accompanying requests for extensions of time in which to file any
such return, report, document, declaration or other information. There are no
claims or assessments pending against the Company or any subsidiary of the
Company for any material alleged deficiency in any Tax, and neither the Company
nor any subsidiary of the Company has been notified in writing of any material
proposed Tax claims or assessments against the Company or any subsidiary of the
Company. To the Company's knowledge, no Tax Return of the Company or any
subsidiary of the Company is or has been the subject of an examination by a
Taxing Authority. Each of the Company and any subsidiary of the Company has
withheld from each payment made to any of its past or present employees,
officers and directors, and any other person, the amount of all material Taxes
and other deductions required to be withheld therefrom and paid the same to the
proper Taxing Authority within the time required by law.
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser
represents and warrants to the Company as follows:
4.1 AUTHORIZATION. All action on the part of the Purchaser and, if
applicable, its officers, directors, managers, shareholders and/or partners
necessary for the authorization, execution, delivery and performance of this
Agreement and
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the Registration Rights Agreement and the consummation of the transactions
contemplated herein and therein has been taken. When executed and delivered,
each of this Agreement and the Registration Rights Agreement will constitute the
legal, valid and binding obligation of the Purchaser, enforceable against the
Purchaser in accordance with its terms, except as such may be limited by
bankruptcy, insolvency, reorganization or other laws affecting creditors' rights
generally and by general equitable principles. The Purchaser has all requisite
power and authority to enter into each of this Agreement and the Registration
Rights Agreement and to carry out and perform its obligations under the terms of
this Agreement and the Registration Rights Agreement.
4.2 PURCHASE ENTIRELY FOR OWN ACCOUNT. The Purchaser is acquiring the
Shares for its own account for investment and not for resale or with a view to
distribution thereof in violation of the Securities Act.
4.3 INVESTOR STATUS; ETC. The Purchaser certifies and represents to
the Company that it is an "Accredited Investor" as defined in Rule 501 of
Regulation D promulgated under the Securities Act and was not organized for the
purpose of acquiring any of the Shares. The Purchaser's financial condition is
such that it is able to bear the risk of holding the Shares for an indefinite
period of time and the risk of loss of its entire investment. The Purchaser has
been afforded the opportunity to ask questions of and receive answers from the
management of the Company concerning this investment and has sufficient
knowledge and experience in investing in companies similar to the Company in
terms of the Company's stage of development so as to be able to evaluate the
risks and merits of its investment in the Company.
4.4 SHARES NOT REGISTERED. The Purchaser understands that the Shares
have not been registered under the Securities Act, by reason of their issuance
by the Company in a transaction exempt from the registration requirements of the
Securities Act, and that the Shares must continue to be held by the Purchaser
unless a subsequent disposition thereof is registered under the Securities Act
or is exempt from such registration. The Purchaser understands that the
exemptions from registration afforded by Rule 144 (the provisions of which are
known to it) promulgated under the Securities Act depend on the satisfaction of
various conditions, and that, if applicable, Rule 144 may afford the basis for
sales only in limited amounts.
4.5 NO CONFLICT. The execution and delivery of this Agreement and the
Registration Rights Agreement by the Purchaser and the consummation of the
transactions contemplated hereby and thereby will not conflict with or result in
any violation of or default by the Purchaser (with or without notice or lapse of
time, or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to a loss of a material benefit under (i) any
provision of the organizational documents of the Purchaser or (ii) any agreement
or instrument, permit, franchise, license, judgment, order, statute, law,
ordinance, rule or regulations, applicable to the Purchaser or its properties or
assets.
<PAGE>
-8-
4.6 BROKERS. The Purchaser has not retained, utilized or been
represented by any broker or finder in connection with the transactions
contemplated by this Agreement.
4.7 CONSENTS. All consents, approvals, orders and authorizations
required on the part of the Purchaser in connection with the execution, delivery
or performance of this Agreement and the consummation of the transactions
contemplated herein have been obtained and are effective as of the Closing Date.
4.8 INVESTMENT REPRESENTATIONS. The Purchaser represents and warrants
to the Company that: (i) it is a Delaware limited partnership, (ii) each of its
constituent members is an "accredited investor" as such term is defined in Rule
501(a) promulgated under the Securities Act, (iii) its principal office is
located in Princeton, New Jersey, and (iv) the principal office of its general
partner is located in Princeton, New Jersey.
5. CONDITIONS PRECEDENT.
5.1. CONDITIONS TO THE OBLIGATION OF THE PURCHASER TO CONSUMMATE THE
CLOSING. The obligation of the Purchaser to consummate the Closing and to
purchase and pay for the Shares is subject to the satisfaction of the following
conditions precedent:
(a) The representations and warranties contained herein of the Company
shall be true and correct in all material respects on and as of the Closing Date
with the same force and effect as though made on and as of the Closing Date.
(b) The Registration Rights Agreement shall have been executed and
delivered by the Company.
(c) There shall have been no material adverse change (actual or
threatened) in the assets, liabilities (contingent or other), affairs,
operations, or condition (financial or other) of the Company prior to the
Closing Date; and the Company shall have performed all obligations and
conditions herein required to be performed or observed by the Company on or
prior to the Closing Date.
(d) No proceeding challenging this Agreement or the transactions
contemplated hereby, or seeking to prohibit, alter, prevent or materially delay
the Closing, shall have been instituted before any court, arbitrator or
governmental body, agency or official and shall be pending.
(e) The purchase of and payment for the Shares by the Purchaser shall
not be prohibited by any law or governmental order or regulation. All necessary
consents, approvals, licenses, permits, orders and authorizations of, or
registrations, declarations and filings with, any governmental or administrative
agency or of any other person with respect to any of the transactions
contemplated hereby shall have been duly obtained or made and shall be in full
force and effect.
<PAGE>
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(f) All instruments and corporate proceedings of the Company in
connection with the transactions contemplated by this Agreement to be
consummated at the Closing shall be satisfactory in form and substance to the
Purchaser, and the Purchaser shall have received copies (executed or certified,
as may be appropriate) of all documents which the Purchaser may have reasonably
requested in connection with such transactions.
(g) The Purchaser shall have received from Bingham Dana LLP, counsel
to the Company, an opinion addressed to it, dated the Closing Date and
substantially in the form of EXHIBIT B hereto.
(h) The Purchaser shall have received a certificate from the Company,
in form and substance satisfactory to the Purchaser, dated the Closing Date and
signed by a secretary or an assistant secretary of the Company, certifying (i)
that attached copies of the Restated Certificate of Incorporation (the
"CHARTER"), the Amended and Restated By-Laws (the "BY-LAWS") and resolutions of
the Board of Directors of the Company approving this Agreement, the Registration
Rights Agreement and the transactions contemplated hereby and thereby, are all
true, complete and correct and remain in full force and effect as of the Closing
Date, and (ii) as to the incumbency and specimen signature of each officer of
the Company executing this Agreement, the Registration Rights Agreement and any
other document delivered in connection herewith on behalf of the Company.
(i) The Purchaser shall have received a certificate from the Company,
in form and substance satisfactory to the Purchaser, dated the Closing Date and
signed by the Company's chief financial officer, certifying that (i) the
representations and warranties of the Company contained in Section 3 hereof are
true and correct in all material respects on the Closing Date and (ii) the
Company has performed and complied with in all material respects all of the
agreements and conditions set forth or contemplated herein that are required to
be performed or complied with by the Company on or before the Closing Date.
5.2. CONDITIONS TO THE OBLIGATION OF THE COMPANY TO CONSUMMATE THE
CLOSING. The obligation of the Company to consummate the Closing and to issue
and sell the Shares to the Purchaser at the Closing is subject to the
satisfaction of the following conditions precedent:
(a) The representations and warranties contained herein of the
Purchaser shall be true and correct in all material respects on and as of the
Closing Date with the same force and effect as though made on and as of the
Closing Date.
(b) The Registration Rights Agreement shall have been executed and
delivered by the Purchaser.
(c) The Purchaser shall have performed all obligations and conditions
herein required to be performed or observed by the Purchaser on or prior to the
Closing Date.
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(d) No proceeding challenging this Agreement or the transactions
contemplated hereby, or seeking to prohibit, alter, prevent or materially delay
the Closing, shall have been instituted before any court, arbitrator or
governmental body, agency or official and shall be pending.
(e) The sale of the Shares by the Company shall not be prohibited by
any law or governmental order or regulation. All necessary consents, approvals,
licenses, permits, orders and authorizations of, or registrations, declarations
and filings with, any governmental or administrative agency or of any other
person with respect to any of the transactions contemplated hereby shall have
been duly obtained or made and shall be in full force and effect.
(f) All instruments and corporate proceedings in connection with the
transactions contemplated by this Agreement to be consummated at the Closing
shall be satisfactory in form and substance to the Company, and the Company
shall have received counterpart originals, or certified or other copies of all
documents, including without limitation records of corporate or other
proceedings, which it may have reasonably requested in connection therewith.
(g) The Company shall have received a certificate from the Purchaser,
in form and substance satisfactory to the Company, dated the Closing Date and
signed by an authorized person in the name, and on behalf, of the Purchaser,
certifying that (i) the representations and warranties of the Purchaser
contained in Section 4 hereof are true and correct in all material respects on
the Closing Date and (ii) the Purchaser has performed and complied with in all
material respects all of the agreements and conditions set forth or contemplated
herein that are required to be performed or complied with by the Purchaser on or
before the Closing Date.
6. CERTAIN COVENANTS AND AGREEMENTS.
6.1. TRANSFER OF SECURITIES. The Purchaser shall not sell, assign,
pledge, transfer or otherwise dispose or encumber any of the Shares, except (i)
pursuant to an effective registration statement under the Securities Act, (ii)
to an Affiliate (so long as such affiliate agrees to be bound by the terms and
provisions of this Agreement as if, and to the fullest extent as, the
Purchaser), or (iii) pursuant to an available exemption from registration under
the Securities Act and applicable state securities laws and, if requested by the
Company, upon delivery by the Purchaser of either an opinion of counsel of the
Purchaser reasonably satisfactory to the Company to the effect that the proposed
transfer is exempt from registration under the Securities Act and applicable
state securities laws or a representation letter of the Purchaser reasonably
satisfactory to the Company setting forth a factual basis for concluding that
such proposed transfer is exempt from registration under the Securities Act and
applicable state securities laws. Any transfer or purported transfer of the
Shares in violation of this Section 6.1 shall be void. The Company shall not
register any transfer of the Shares in violation of this Section 6.1. The
Company may, and may instruct any transfer agent for the Company, to place
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such stop transfer orders as may be required on the transfer books of the
Company in order to ensure compliance with the provisions of this Section 6.1.
6.2. LEGENDS. To the extent applicable, each certificate or other
document evidencing any of the Shares shall be endorsed with the legend set
forth below, and the Purchaser covenants that, except to the extent such
restrictions are waived by the Company, it shall not transfer the shares
represented by any such certificate without complying with the restrictions on
transfer described in this Agreement and the legends endorsed on such
certificate:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED, SOLD,
ASSIGNED, PLEDGED, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM REGISTRATION UNDER SAID ACT AND, IF REQUESTED BY
THE COMPANY, UPON DELIVERY OF EITHER AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY THAT THE PROPOSED TRANSFER IS EXEMPT FROM SAID
ACT OR OF A REPRESENTATION LETTER SETTING FORTH A FACTUAL BASIS FOR
CONCLUDING THAT THE PROPOSED TRANSFER IS EXEMPT FROM SAID ACT."
6.3 PUBLICITY. From and after the date of this Agreement, except to
the extent required by applicable laws, rules, regulations or stock exchange
requirements, neither (i) the Company or any of its Affiliates nor (ii) the
Purchaser or any of its Affiliates shall, without the written consent of the
other, make any public announcement or issue any press release with respect to
the transactions contemplated by this Agreement. In no event will either (i) the
Company or any of its Affiliates or (ii) the Purchaser or any of its Affiliates
make any public announcement or issue any press release with respect to the
transactions contemplated by this Agreement without consulting with the other
party, to the extent feasible, as to the content of such public announcement or
press release.
7. TERMINATION.
7.1 TERMINATION. Subject to Section 7.2, this Agreement may be
terminated at any time prior to the Closing as follows:
(a) by the Purchaser if there has been a material breach by the
Company of any representation, warranty, covenant or agreement of the Company
contained in this Agreement, which has not been cured by the Company within 10
days after written notice from the Purchaser;
(b) by the Company if there has been a material breach by the
Purchaser of any representation, warranty, covenant or agreement of the
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Purchaser contained in this Agreement, which has not been cured by the Purchaser
within 10 days after written notice from the Company;
(c) by the Company or the Purchaser if (i) there shall be a final
nonappealable order of a federal or state court in effect preventing
consummation of the transactions contemplated by this Agreement or (ii) there
shall be any action taken, or any statute, rule, regulation or order enacted,
promulgated or issued or deemed applicable to the transactions contemplated by
this Agreement by any governmental entity which would make consummation of the
transactions contemplated by this Agreement illegal; PROVIDED, HOWEVER, that the
party seeking to terminate this Agreement must use all reasonable efforts to
remove such judgment, injunction, order or decree; or
(d) by mutual written consent of the Company and the Purchaser.
7.2 EFFECT OF TERMINATION. If this Agreement is terminated pursuant to
Section 7.1, this Agreement shall become void and of no effect with no liability
on the part of any party hereto, EXCEPT that Section 6.3 (Publicity), this
Section 7.2 (Effect of Termination) and Section 8 (Miscellaneous Provisions)
shall survive the termination hereof for a period of one (1) year, and each
party hereto shall hold in confidence and trust, and not use or disclose to any
third parties, the terms and conditions of this Agreement and any confidential
information provided to or learned by such party in connection with the
negotiation, execution and delivery of this Agreement.
8. MISCELLANEOUS PROVISIONS.
8.1 RIGHTS CUMULATIVE. Each and all of the various rights, powers and
remedies of the parties shall be considered to be cumulative with and in
addition to any other rights, powers and remedies which such parties may have at
law or in equity in the event of the breach of any of the terms of this
Agreement. The exercise or partial exercise of any right, power or remedy shall
neither constitute the exclusive election thereof nor the waiver of any other
right, power or remedy available to such party.
8.2 PRONOUNS. All pronouns or any variation thereof shall be deemed to
refer to the masculine, feminine or neuter, singular or plural, as the identity
of the person, persons, entity or entities may require.
8.3 NOTICES.
(a) Any notices, reports or other correspondence (hereinafter
collectively referred to as "CORRESPONDENCE") required or permitted to be given
hereunder shall be sent by postage prepaid first class mail, courier or telecopy
or delivered by hand to the party to whom such correspondence is required or
permitted to be given hereunder. The date of giving any notice shall be the date
of its actual receipt.
<PAGE>
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(b) 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
(c) All correspondence to the Purchaser shall be addressed as follows:
HealthCare Ventures V, L.P.
c/o HealthCare Ventures LLC
44 Nassau Street
Princeton, NJ 08542-4511
Telecopy: (609) 430-9525
Attention: Jeffrey Stienberg
with a copy to:
Pepper, Hamilton & Sheetz
1235 Westlake Drive
Suite 400
Berwyn, PA 19312-2401
Telecopy: (610) 640-7835
Attention: Jeff Libson, Esq.
(d) Any entity may change the address to which correspondence to it is
to be addressed by notification as provided for herein.
8.4 CAPTIONS. The captions and paragraph headings of this Agreement
are solely for the convenience of reference and shall not affect its
interpretation.
<PAGE>
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8.5 SEVERABILITY. Should any part or provision of this Agreement be
held unenforceable or in conflict with the applicable laws or regulations of any
jurisdiction, the invalid or unenforceable part or provisions shall be replaced
with a provision which accomplishes, to the extent possible, the original
business purpose of such part or provision in a valid and enforceable manner,
and the remainder of this Agreement shall remain binding upon the parties
hereto.
8.6 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the internal and substantive laws of the Commonwealth of
Massachusetts and without regard to any conflicts of laws concepts which would
apply the substantive law of some other jurisdiction.
8.7 WAIVER. No waiver of any term, provision or condition of this
Agreement, whether by conduct or otherwise, in any one or more instances, shall
be deemed to be, or be construed as, a further or continuing waiver of any such
term, provision or condition or as a waiver of any other term, provision or
condition of this Agreement.
8.8 EXPENSES. Each party shall pay its own expenses in connection with
the preparation, execution and delivery of this Agreement and the Registration
Rights Agreement.
8.9 ASSIGNMENT. The rights and obligations of any party hereto shall
inure to the benefit of and shall be binding upon the authorized successors and
permitted assigns of such party. Subject to the limitation set forth in Section
6.6 hereof, this Agreement and the rights and duties of the Purchaser set forth
herein may be freely assigned or delegated, as the case may be, in whole or in
part, by the Purchaser to any person to whom the Purchaser may transfer any of
the Shares purchased or acquired by the Purchaser; PROVIDED that the transfer
complies with the terms of Sections 6.1 and 6.2 of this Agreement and the
assigning party shall promptly notify the Company in writing of such assignment
and shall remain liable (both directly and as guarantor) with respect to all
obligations so assigned. In the event of any assignment, the assignee shall
specifically assume and be bound by the provisions of the Agreement by executing
and agreeing to an assumption agreement and/or instrument of adherence
reasonably acceptable to the Company.
8.10 SURVIVAL. The respective representations and warranties given by
the parties hereto, and the other covenants and agreements contained herein,
shall survive the Closing Date and the consummation of the transactions
contemplated herein for a period of one year, without regard to any
investigation made by any party.
8.11 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto respecting the subject matter hereof and supersedes
all prior agreements, negotiations, understandings, representations and
statements respecting the subject matter hereof, whether written or oral. No
modification, alteration, waiver or change in any of the terms of this Agreement
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shall be valid or binding upon the parties hereto unless made in writing and
duly executed by the parties hereto.
8.12 AMENDMENTS. Any amendment, supplement or modification of or to
any provision of this Agreement, any waiver of any provisions of this Agreement
shall be effective only if made or given in writing and signed by the Company
and the Purchaser.
8.13 NO THIRD PARTY RIGHTS. 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.
8.14 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same document. 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.
[signature pages to follow]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Stock Purchase
Agreement under seal as of the day and year first above written.
LEUKOSITE, INC.
By: /s/ Augustine Lawlor
-----------------------------------------
Name: Augustine Lawlor
Title: Vice President Corporate Development
and Chief Financial Officer
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 - Registration Rights Agreement
Exhibit B - Form of Company Counsel Legal Opinion
<PAGE>
Exhibit 10.3
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 has made the good faith determination (i) that continued use by the
Investors of the
<PAGE>
-3-
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 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
<PAGE>
-4-
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 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>
-5-
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 Registrable Shares to be included in such registration in the
same manner and on the
<PAGE>
-6-
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 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;
<PAGE>
-7-
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);
(f) Use its reasonable best efforts to register and qualify such
Registrable Shares under such other securities or Blue Sky laws of such
jurisdictions
<PAGE>
-8-
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:
(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
<PAGE>
-9-
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 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
<PAGE>
-10-
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, 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
<PAGE>
-11-
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.
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
<PAGE>
-12-
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 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
<PAGE>
-13-
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.
(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
<PAGE>
-14-
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 10.4
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 Securities Act and the rules and
regulations promulgated thereunder, premature
<PAGE>
-3-
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 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
<PAGE>
-4-
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 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
<PAGE>
-5-
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 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
<PAGE>
-6-
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 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
<PAGE>
-7-
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);
(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
<PAGE>
-8-
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:
(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
<PAGE>
-9-
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 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
<PAGE>
-10-
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, 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
<PAGE>
-11-
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.
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
<PAGE>
-12-
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 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
<PAGE>
-13-
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.
(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.
<PAGE>
-14-
(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 Partner V, L.P., The
General Partner of HealthCare
Vartives 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
