UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Millennium Pharmaceuticals, Inc.
(Name of Issuer)
Common Stock
(Title of Class of Securities)
0005999021
(CUSIP Number)
George J. Lykos
Bayer Corporation
400 Morgan Lane
West Haven, CT 06516
203-812-2401
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
November 10, 1998
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box o.
Check the following box if a fee is being paid with the statement |X|. (A fee is
not required only if the reporting person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7).
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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SCHEDULE 13D
CUSIP No. 0005999021 Page 2 of 9 Pages
---------- -------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Bayer AG
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a)[ ]
(b)[ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS
WC.
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e)
CITIZENSHIP OR PLACE OF ORGANIZATION
Federal Republic of Germany
7 SOLE VOTING POWER
4,957,660
NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY 0
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON 4,957,660
WITH
10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,957,660
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
14.4%
14 TYPE OF REPORTING PERSON
CO
- --------------------------------------------------------------------------------
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Item 1. Security and Issuer.
This Statement relates to shares of common stock, $.001 par
value per share (the "Common Stock"), of Millennium Pharmaceuticals, Inc., a
Delaware corporation (the "Issuer"), which has its principal executive offices
at 238 Main Street, Cambridge, Massachusetts 02139-4815.
Item 2. Identity and Background.
This Statement is being filed by Bayer AG ("Bayer"), a German
corporation with its principal offices located in Leverkeusen, Germany. Bayer is
a German multinational pharmaceutical and chemical company. Information as to
the executive officers and directors of Bayer is set forth in Exhibit A hereto.
During the past five years, neither Bayer nor, to Bayer's
knowledge, any of the persons listed in Exhibit A has been convicted in a
criminal proceeding (excluding traffic violations and similar misdemeanors).
During the past five years, neither Bayer nor, to Bayer's knowledge, any of the
persons listed in Exhibit A has been a party to a civil proceeding of a judicial
or administrative body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to, federal
or state securities laws or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
The source of funds used to purchase the shares of Common
Stock was the working capital of Bayer. Bayer paid Ninety Six Million, Six
Hundred Thousand Dollars ($96,600,000.00) to acquire 4,957,660 shares of Common
Stock (the "Shares").
Item 4. Purpose of Transaction.
On November 10, 1998 Bayer acquired the Shares pursuant to an
Investment Agreement dated September 22, 1998 between Bayer and the Issuer (the
"Investment Agreement"). Also on September 22, 1998, Bayer and the Issuer
entered into an agreement (the "Colloboration Agreement") pursuant to which
Bayer will receive access to key technologies in modern genome research and a
flow of genome-based targets for drug development over a five-year period (which
period could be shortened or lengthened in accordance with the terms of the
Collaboration Agreement) (the "Program Term"). The Issuer has filed a copy of
the Collaboration Agreement with the SEC as an exhibit to its report on Form
10-Q for the quarter ended September 30, 1998.
Bayer acquired the Shares for investment purposes. Bayer's
right to sell the Shares and to acquire additional shares of Common Stock is
limited by the Investment Agreement (see Item 6 below). Subject to the
Investment Agreement, Bayer intends to review its investment in the Issuer on a
continuing basis and, depending on various factors, including the Issuer's
business affairs and financial position, other developments concerning the
Issuer, the price level of the Common Stock, conditions in the securities
markets and general economic and industry conditions, as well as other
investment opportunities available to Bayer, may in the future take such actions
with respect to its investment in the Issuer as it deems appropriate in light of
the circumstances existing from time to time. Such actions may include the
purchase of additional shares of Common Stock in the open market, in privately
negotiated transactions or otherwise, or the sale at any time of all or a
portion of the Shares or other shares of Common Stock hereafter acquired by
Bayer to one or more purchasers.
Pursuant to the Investment Agreement and subject to the
limitations described therein, Bayer has the right during the Program Term to
have a representative attend each year two regular meetings of the board of
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directors of Millennium, to receive copies of agendas and the minutes for all
board meetings, and once each quarter to receive a confidential briefing from
officers of Millennium regarding Millennium's business and strategy. In
addition, Bayer may engage in communications with one or more shareholders of
the Issuer, one or more officers of the Issuer and/or one or more members of the
board of directors of the Issuer and/or one or more representatives of the
Issuer regarding the Issuer, including but not limited to its operations. Bayer
may discuss ideas that, if effected, may result in any of the following: the
acquisition by persons of additional Common Stock of the Issuer, an
extraordinary corporate transaction involving the Issuer, and/or changes in the
board of directors or management of the Issuer.
Except as described above, Bayer does not have any current
plans or proposals that relate to or would result in any of the events set forth
in paragraphs (a) through (j) of Item 4. Bayer may, at any time and from time to
time, review or reconsider its position and/or change its purpose and/or
formulate plans or proposals without respect thereto.
Item 5. Interest in Securities of the Issuer.
(a), (b), (c) Bayer is the beneficial owner of 4,957,660
shares of Common Stock (approximately 14.4% of the outstanding shares of Common
Stock). Bayer is the beneficial owner of all of the Shares and has the sole
power to vote and dispose of all the Shares. On November 10, 1998, Bayer
acquired the Shares from the Issuer for an aggregate purchase price of
$96,600,000, or $19.485 per share, pursuant to the terms of the Investment
Agreement.
(d), (e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to the Issuer.
(i) On September 22, 1998, the Issuer and Bayer entered into
the Investment Agreement, (the "Investment Agreement") attached hereto as
Exhibit B. Pursuant to the Investment Agreement, the Issuer agreed to issue and
sell to Bayer and Bayer agreed to purchase from the Issuer 4,957,660 shares of
the Issuer's Common Stock for an aggregate purchase price of $96,600,000.
Bayer has certain subscription rights pursuant to the
Investment Agreement (as more fully described therein). So long as Bayer has not
sold more than 1,000,000 Shares (as adjusted to reflect any stock splits, stock
dividends and similar recapitalizations) (other than sales to affiliates), if
the Issuer proposes the issuance of certain new securities, then, prior to each
such issuance of such new securities, the Issuer shall offer to Bayer a pro rata
share of such new securities. These subscription rights will terminate upon the
earlier of (i) a sale of all or substantially all of the assets or business of
the Issuer, by merger, sale of assets or otherwise, or (ii) termination of the
Program Term.
Pursuant to the Investment Agreement, prior to the third
anniversary of Bayer's purchase of the Shares, except under certain
circumstances as more fully described in the Investment Agreement, Bayer and its
affiliates (i) will not acquire any direct or indirect beneficial ownership or
interest in any additional securities of the Issuer, and (ii) will not
participate in the solicitation of proxies to vote securities of the Issuer.
Prior to the second anniversary of such purchase, Bayer will not sell, transfer
or otherwise dispose of any Shares (except to any affiliate of Bayer). After the
second anniversary of the Closing and prior to the expiration of the Program
Term, Bayer will not sell, transfer or otherwise dispose of, in any one calendar
year, more than 2,500,000 Shares (as adjusted to reflect any stock splits, stock
dividends and similar recapitalizations) (except to an affiliate of Bayer).
After the second anniversary of the Closing and prior to the expiration of the
Program Term, if Bayer proposes to sell any Shares other than pursuant to a
registration statement under the Securities Act, the Issuer shall have a right
of first negotiation with respect to the acquisition of those Shares proposed to
be sold. The foregoing
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restrictions on transfer of the Shares expire under certain circumstances more
fully described in the Investment Agreement.
The description of the Investment Agreement is qualified in
its entirety by reference to such agreement, a copy of which is set forth as
Exhibit B hereto.
(ii) On November 10, 1998, the Issuer and Bayer entered into
the Registration Rights Agreement, (the "Registration Rights Agreement")
attached hereto as Exhibit C. Pursuant to the Registration Rights Agreement the
Issuer has agreed to provide Bayer certain demand and piggyback registration
rights for the shares.
Bayer has the right, subject to certain exceptions, to two
demand registrations on any registration form that the Issuer chooses and which
the Issuer is eligible to use. Bayer may not demand registration of securities
prior to the second anniversary of the closing date of the Investment Agreement.
The Issuer may postpone (or withdraw) a demand registration, under the
circumstances specified in the Registration Rights Agreement.
Also pursuant to the Registration Rights Agreement, Bayer has
certain piggyback registration rights. If the Issuer at any time proposes to
register any of its securities under the Securities Act (other than pursuant to
a demand registration or a Special Registration as defined in the Registration
Rights Agreement), whether or not for sale for its own account (a "Company
Registration"), upon the written request of Bayer, the Issuer shall use
reasonable best efforts to cause all Shares that the Issuer has been requested
by Bayer to register to be so registered under the Securities Act to the extent
necessary to permit their disposition in accordance with the intended methods of
distribution specified in the request Bayer.
The description of the Registration Rights Agreement is
qualified in its entirety by reference to such agreement, a copy of which is set
forth as Exhibit C hereto.
Item 7. Material to be Filed as Exhibits.
Exhibit A Information concerning Bayer's executive officers and directors.
Exhibit B Investment Agreement dated as of September 22, 1998 by and
between the Issuer and Bayer.
Exhibit C Registration Rights Agreement dated November 10, 1998 by and
between the Issuer and Bayer.
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Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true and correct.
Date: November 17, 1998 Bayer AG
By: /s/ Dr. Michael Strucksberg
Dr. Michael Strucksberg
Its: Deputy General Counsel
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DIRECTORS AND EXECUTIVE OFFICERS OF BAYER AG
The following table sets forth the name and present principal
occupation or employment of each member of the Supervisory Board and the Board
of Management of Bayer AG. The business address of each of them is Bayer AG,
Leverkusen, Germany. Except as otherwise indicated, all such persons are
citizens of Germany and each occupation listed refers to employment with Bayer
AG.
Exhibit A
Supervisory Board
Name: Principal Present Occupation
Hermann J. Strenger Chairman of the Supervisory Board, Former
Chairman of the Company's Board of Management
Rolf Nietzarad Chemical Laboratory Technician,
Vice Chairman of the Supervisory Board,
Leverkusen
Werner Bischoff Member of the Executive Committee of the
German Mine, Chemical and Power Workers
Union,
Adolf Busbach Electrician
Martin Kohlhaussen Chairman of the Board of Managing Directors
of Commerzbank AG
Hilman Kopper Chairman of the Supervisory Board of
Deutsche Bank AG
Dr. -Ing. Manfred Lennings Management Consultant
Dr. h.c. Andre Leysen Chairman of the Board of Administration of
(Citizen of Belgium) Gevaert N.V.
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Helmut Oswald Maucher President and Chief Executive Officer of
Nestle S.A.
Dieter Meinhardt Machine Fitter
Hans-Dieter Peppmeier Engineering Draftsman
Dr. Heinrich von Pierer Chairman of the Board of Management
of Siemens AG
Bernd Reckschwardt Chemical Worker
Waltraud Schlaefke Chemical Laboratory Technician
Hubertus Schmoldt Chairman of the German Mine, Chemical and
Power Workers Union
Dieter Schulte Chairman of the German Unions Federation (DGB)
Lodewijk C. van Wachem Chairman of the Supervisory Board of Royal
(Citizen of the Netherlands) Dutch Petroleum Company
Prof. Dr. Ernst-Ludwig Winnacker President of the German Research Association,
Dr. Hermann Wunderlich Former Vice Chairman of the Company's Board
of Management
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Board of Management
Name: Principal Present Occupation
Dr. Manfred Schneider Chairman of the Board of Management
Dr. Pol Bamelis Member of the Board of Management,
(Citizen of Belgium) Representative for Business Segment Agfa
Dr. Dieter Becher Member of the Board of Management
Hans-Jurgen Mohr Member of the Board of Management
Dr. Udo Oels Member of the Board of Management,
Representative for Business Segment Chemicals
Manfred Pfleger Member of the Board of Management
Werner Spinner Member of the Board of Management,
Representative for Business Segment Polymers
Werner Wenning Member of the Board of Management, Chief
Financial Officer
Dr. Walter Wenninger Member of the Board of Management,
Representative for Business Segment Health
Care, Agriculture
Page 9 of 9
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Exhibit B
INVESTMENT AGREEMENT
dated as of September 22, 1998
by and between
BAYER AG
a corporation of the Federal Republic of Germany
and
MILLENNIUM PHARMACEUTICALS, INC.,
a Delaware corporation
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TABLE OF CONTENTS
Page
ARTICLE I
PURCHASE AND SALE OF SHARES.................................................1
Section 1.1 Purchase and Sale...........................................1
Section 1.2 Closing Date................................................1
Section 1.3 Transactions at the Closing.................................2
ARTICLE II
REPRESENTATIONS AND WARRANTIES..............................................2
Section 2.1 Representations and Warranties of the Company...............2
Section 2.2 Representations and Warranties of Purchaser................11
ARTICLE III
EQUITY PURCHASES FROM THE COMPANY..........................................12
Section 3.1 Subscription Rights........................................12
Section 3.2 Issuance and Delivery of New Securities and Voting Stock...13
Section 3.3 Termination of Article III.................................13
ARTICLE IV
LIMITATIONS ON PURCHASES OF ADDITIONAL EQUITY SECURITIES...................13
Section 4.1 Purchases of Equity Securities.............................13
ARTICLE V
TRANSFER OF COMMON STOCK...................................................16
Section 5.1 Limitations on Transfer....................................16
ARTICLE VI
COVENANTS AND ADDITIONAL AGREEMENTS........................................18
Section 6.1 Ordinary Course............................................18
Section 6.2 Access and Information.....................................18
Section 6.3 Further Actions............................................18
Section 6.4 Further Assurances.........................................19
Section 6.5 Board Attendance Rights and Rights to Information about Board
and the Company............................................19
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ARTICLE VII
CONDITIONS PRECEDENT.......................................................19
Section 7.1 Each Party's Obligations...................................20
Section 7.2 Conditions to the Obligations of the Company...............20
Section 7.3 Conditions to the Obligations of Purchaser.................20
ARTICLE VIII
TERMINATION................................................................21
Section 8.1 Termination................................................21
Section 8.2 Effect of Termination......................................23
ARTICLE IX
INDEMNIFICATION............................................................23
Section 9.1 Indemnification of Purchaser...............................23
Section 9.2 Indemnification Procedures.................................23
Section 9.3 Survival of Representations and Warranties................24
ARTICLE X
INTERPRETATION; DEFINITIONS................................................24
Section 10.1 Interpretation.............................................24
Section 10.2 Definitions................................................25
ARTICLE XI
MISCELLANEOUS..............................................................29
Section 11.1 Severability...............................................30
Section 11.2 Specific Enforcement.......................................30
Section 11.3 Entire Agreement...........................................30
Section 11.4 Counterparts...............................................30
Section 11.5 Notices....................................................30
Section 11.6 Amendments.................................................32
Section 11.7 Cooperation................................................32
Section 11.8 Successors and Assigns.....................................32
Section 11.9 Expenses and Remedies......................................32
Section 11.10 Transfer of Shares.........................................32
Section 11.11 Governing Law..............................................33
Section 11.12 Publicity..................................................33
Section 11.13 No Third Party Beneficiaries...............................33
Section 11.14 Consent to Jurisdiction....................................33
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INVESTMENT AGREEMENT
THIS INVESTMENT AGREEMENT (the "Agreement") is made as of September 22,
1998 by and between MILLENNIUM PHARMACEUTICALS, INC., a Delaware corporation
(the "Company"), and BAYER AG, a corporation organized under the laws of the
Federal Republic of Germany ("Purchaser").
WHEREAS, the Company and Purchaser are parties to that certain
Agreement, dated as of the date hereof (the "Collaboration Agreement"), which
contains the terms and conditions on which the parties have agreed to
collaborate on a small molecule drug discovery program; and
WHEREAS, in connection with the execution of the Collaboration
Agreement, Purchaser wishes to purchase from the Company, and the Company wishes
to sell to Purchaser, shares of the Company's Common Stock, $.001 par value per
share ("Common Stock"), on the terms and subject to the conditions set forth
herein;
WHEREAS, in connection with such sale and purchase of shares of Common
Stock, the Company and Purchaser wish to enter into a registration rights
agreement (the "Registration Rights Agreement"), substantially in the form
attached hereto as Exhibit A.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants set forth herein, the Company and Purchaser agree as follows:
ARTICLE I
PURCHASE AND SALE OF SHARES
Section 1.1 Purchase and Sale. Subject to the terms and conditions of
this Agreement, the Company agrees to issue and sell to Purchaser and Purchaser
agrees to purchase from the Company 4,957,660 shares of the Company's Common
Stock (the "Shares"), at a purchase price of $19.485 per share (which purchase
price reflects the greater of (i) 115% of the average daily closing price of a
share of the Company's Common Stock over the period from March 1, 1998 to August
31, 1998 or (ii) 100% of the closing price of a share of the Company's Common
Stock on September 21, 1998) for an aggregate purchase price of Ninety Six
Million, Six Hundred Thousand Dollars ($96,600,000) (the "Purchase Price").
Section 1.2 Closing Date. The closing of the purchase and sale of the
Shares hereunder (the "Closing") shall be held at the offices of Hale and Dorr,
60 State Street, Boston, Massachusetts, at 10:00 a.m., Boston time, on the third
Business Day following the first date on which all the conditions to Closing set
forth in Article VII have been satisfied or waived, or at such other, place,
time and date as the Company and Purchaser shall agree. The Company shall
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give Purchaser three (3) Business Days prior notice of the date the Closing is
scheduled to occur. The date of the Closing is hereinafter referred to as the
"Closing Date."
Section 1.3 Transactions at the Closing. At the Closing, subject to the
terms and conditions of this Agreement, (a) the Company shall issue and sell to
Purchaser and Purchaser shall purchase the Shares; (b) the Company shall deliver
to Purchaser a certificate representing the Shares, registered in the name of
Purchaser against payment of the Purchase Price by wire transfer of immediately
available funds to an account or accounts previously designated by the Company
no less than five (5) Business Days prior to the Closing Date; and (c) the
Company and Purchaser shall enter into the Registration Rights Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1 Representations and Warranties of the Company. The Company
hereby represents and warrants to Purchaser as follows:
(a) Corporate Organization. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware. Each Subsidiary is duly organized and validly
existing and, if applicable, is in good standing, under the laws of the
jurisdiction of its incorporation or organization. Each of the Company
and its Subsidiaries is duly qualified or licensed and, if applicable,
is in good standing as a foreign corporation, in each jurisdiction in
which the properties owned, leased or operated, or the business
conducted, by it require such qualification or licensing, except for
any such failure so to qualify or be in good standing which,
individually or in the aggregate, would not have a Material Adverse
Effect on the Company and its Subsidiaries, taken as a whole. Each of
the Subsidiaries has the requisite power and authority to carry on its
business as it is now being conducted. The Company has heretofore made
available to Purchaser complete and correct copies of the Certificate
of Incorporation of the Company (the "Company Charter") and the By-laws
of the Company (the "Company By-Laws") and the certificate of
incorporation and by-laws, or the comparable organizational documents,
of each of its Subsidiaries, each as amended to date and currently in
full force and effect.
(b) Corporate Authority. The Company has the requisite
corporate power and authority to execute, deliver and perform this
Agreement and the Registration Rights Agreement and to consummate the
transactions contemplated hereby and thereby. The execution, delivery
and performance of this Agreement and the Registration Rights Agreement
by the Company, the issuance and sale by the Company of the Shares and
the performance by the Company of the other transactions contemplated
hereby and thereby have been duly authorized by the Company's Board of
Directors, and no other corporate
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proceedings on the part of the Company are necessary to authorize this
Agreement or the Registration Rights Agreement or for the Company to
consummate the transactions so contemplated herein and therein. This
Agreement is, and the Registration Rights Agreement, when executed or
delivered will be, valid and binding agreements of the Company,
enforceable against the Company in accordance with their respective
terms, assuming that this Agreement and the Registration Rights
Agreement are valid and binding agreements of Purchaser, subject as to
enforcement of remedies to applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting generally the
enforcement of creditors' rights and subject to a court's discretionary
authority with respect to the granting of a decree ordering specific
performance or other equitable remedies.
(c) No Violations; Consents and Approvals. (i) Neither the
execution, delivery or performance by the Company of this Agreement or
the Registration Rights Agreement or the consummation by the Company of
the transactions contemplated hereby or thereby (A) will result in a
violation or breach of the Company Charter or the Company By-Laws or
the charter or by-laws of any of the Company's Subsidiaries or (B) will
result in a violation or breach of (or give rise to any right of
termination, revocation, cancellation or acceleration under or
increased payments under), or constitute a default (with or without due
notice or lapse of time or both) under, or result in the creation of
any lien, mortgage, charge, encumbrance or security interest of any
kind (a "Lien") upon any of the properties or assets of the Company or
any of its Subsidiaries under, (1) any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, contract, agreement,
obligation, instrument, offer, commitment, understanding or other
arrangement (each a "Contract") or of any license, waiver, exemption,
order, franchise, permit or concession (each a "Permit") to which the
Company or any of its Subsidiaries is a party or by which any of their
properties or assets may be bound, or (2) subject to the governmental
filings and other matters referred to in clause (ii) below, any
judgment, order, decree, statute, law, regulation or rule applicable to
the Company or any of its Subsidiaries, except, in the case of clause
(B), for violations, breaches, defaults, rights of cancellation,
termination, revocation or acceleration or Liens that would not,
individually or in the aggregate, have a Material Adverse Effect on the
Company and its Subsidiaries, taken as a whole.
(ii) Except for filings as may be required under, and other
applicable requirements of, the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), no consent,
approval, order or authorization of, or registration, declaration or
filing with, any government or any court, administrative agency or
commission or other governmental authority or agency, federal, state,
local or foreign (a "Governmental Entity"), is required with respect to
the Company in connection with the execution, delivery or performance
by the Company of this Agreement or the consummation by the Company of
the transactions contemplated hereby (except where the failure to
obtain such consents, approvals, orders or authorizations, or to make
such
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filings would not, individually or in the aggregate, have a Material
Adverse Effect on the Company and its Subsidiaries, taken as a whole).
(d) Capital Stock. The authorized capital stock of the Company
consists of (i) 100,000,000 shares of Common Stock, of which an
aggregate 29,550,646 shares of Common Stock were issued and outstanding
as of the close of business on August 31, 1998, and (ii) 5,000,000
shares of preferred stock, $.001 par value per share, of which none
were issued and outstanding as of the close of business on August 31,
1998. As of the close of business on August 31, 1998, there were
outstanding under the Company's stock option and incentive plans
(collectively, the "Company Stock Plans"), options to acquire an
aggregate of 6,215,608 shares of Common Stock (subject to adjustment on
the terms set forth therein). All of the outstanding shares of Common
Stock have been duly authorized and validly issued, and are fully paid
and nonassessable. Except as set forth on Schedule 2.1(d), there are no
preemptive or similar rights on the part of any holders of any class of
securities of the Company or of any of its Subsidiaries. Except for the
Common Stock, the Company has outstanding no bonds, debentures, notes
or other obligations or securities the holders of which have the right
to vote (or are convertible or exchangeable into or exercisable for
securities having the right to vote) with the stockholders of the
Company on any matter. Except as set forth above or on Schedule 2.1(d),
as of the date of this Agreement, there are no securities convertible
into or exchangeable for, or options, warrants, calls, subscriptions,
rights, contracts, commitments, arrangements or understandings of any
kind to which the Company or any of its Subsidiaries is a party or by
which any of them is bound obligating the Company or any of its
Subsidiaries contingently or otherwise to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of capital
stock or other voting securities of the Company or of any of its
Subsidiaries. Except as set forth on Schedule 2.1(d), there are no
outstanding agreements of the Company or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any shares of capital stock of
the Company or any of its Subsidiaries.
(e) Subsidiaries. (i) Schedule 2.1(e) contains a complete and
correct description of the shares of stock or other equity interests
that are authorized, or issued and outstanding, of each of the
Company's Subsidiaries. The Company has no equity interests with a
value of $100,000 or more in any Person other than its Subsidiaries,
and there are no commitments on the part of the Company or any
Subsidiary to contribute additional capital in respect of any equity
interest in any Person. Each of the outstanding shares of capital stock
of each of the Subsidiaries has been duly authorized and validly
issued, and is fully paid and nonassessable. Except as set forth on
Schedule 2.1(e), all of the outstanding shares of capital stock of each
Subsidiary are owned, either directly or indirectly, by the Company
free and clear of all Liens.
(ii) Schedule 2.1(e)(ii) contains a complete and correct list
of all Subsidiaries of the Company.
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(f) SEC Filings. The Company has timely filed all reports,
schedules, forms, statements and other documents required to be filed
by it with the SEC under the Securities Act and the Exchange Act since
May 1996 (the "Company SEC Documents"). As of its filing date, each
Company SEC Document filed, as amended or supplemented, if applicable,
(i) complied in all material respects with the applicable requirements
of the Securities Act or the Exchange Act, as applicable, and the rules
and regulations thereunder and (ii) did not, at the time it was filed,
contain any untrue statement of a material fact or omit to state any
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.
(g) Absence of Certain Events and Changes. Except as disclosed
in the Company SEC Documents filed with the SEC and publicly available
prior to the date hereof, or as otherwise contemplated or permitted by
this Agreement, and except for any items referred to in Schedule
2.1(g), since June 30, 1998, the Company and its Subsidiaries have
conducted their respective businesses in the ordinary course consistent
with past practice and there has not been any event, change or
development which, individually or in the aggregate, would have a
Material Adverse Effect on the Company and its Subsidiaries, taken as a
whole.
(h) Compliance with Applicable Law. Except as disclosed in the
Company SEC Documents, each of the Company and its Subsidiaries is in
compliance with all statutes, laws, regulations, rules, judgments,
orders and decrees of all Governmental Entities applicable to it that
relate to its respective business, and neither the Company nor any of
its Subsidiaries has received any notice alleging noncompliance except,
with reference to all the foregoing, where the failure to be in
compliance would not, individually or in the aggregate, have a Material
Adverse Effect on the Company and its Subsidiaries, taken as a whole.
This Section 2.1(h) does not relate to employee benefits matters (for
which Section 2.1(l) is applicable, environmental matters, (for which
Section 2.1(m) is applicable) or tax matters (for which Section 2.1(k)
is applicable). Each of the Company and its Subsidiaries has all
Permits that are required in order to permit it to carry on its
business as it is presently conducted, except where the failure to have
such Permits or rights would not, individually or in the aggregate,
have a Material Adverse Effect on the Company and its Subsidiaries,
taken as a whole. All such Permits are in full force and effect and the
Company and its Subsidiaries are in compliance with the terms of such
Permits, except where the failure to be in full force and effect or in
compliance would not, individually or in the aggregate, have a Material
Adverse Effect on the Company and its Subsidiaries, taken as a whole.
(i) Litigation. Except as disclosed in the Company SEC
Documents filed with the SEC and publicly available prior to the date
hereof or referred to in Schedule 2.1(i), there are no civil, criminal
or administrative actions, suits, or proceedings pending
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or, to the Knowledge of the Company, threatened, against the Company or
any of its Subsidiaries that, individually or in the aggregate, are
likely to have a Material Adverse Effect on the Company and its
Subsidiaries, taken as a whole. Except as disclosed in the Company SEC
Documents filed with the SEC and publicly available prior to the date
hereof, there are no outstanding judgments, orders, decrees, or
injunctions of any Governmental Entity against the Company or any of
its Subsidiaries that, insofar as can reasonably be foreseen,
individually or in the aggregate, in the future would have a Material
Adverse Effect on the Company and its Subsidiaries, taken as a whole.
(j) Contracts. (i) The Company has filed as exhibits to the
Company SEC Documents all material agreements required to be filed
under the rules and regulations of the SEC (the "Material Contracts").
(ii) All Material Contracts are legal, valid, binding, in full
force and effect and enforceable against each party thereto, except to
the extent that any failure to be enforceable, individually or in the
aggregate, would not reasonably be expected to have or result in a
Material Adverse Effect on the Company and its Subsidiaries, taken as a
whole, provided that no representation is made as to the enforceability
of any non-competition provision in any employment agreement. There
does not exist under any Material Contract any violation, breach or
event of default, or event or condition that, after notice or lapse of
time or both, would constitute a violation, breach or event of default
thereunder, on the part of any of the Company or its Subsidiaries or,
to the Knowledge of the Company or any of its Subsidiaries, any other
Person, other than such violations, breaches or events of default as
would not, individually or in the aggregate, have a Material Adverse
Effect on the Company and its Subsidiaries, taken as a whole. The
enforceability of all Material Contracts will not be adversely affected
in any manner by the execution, delivery or performance of this
Agreement or the Registration Rights Agreement or the consummation of
the transactions contemplated hereby or thereby, and no Material
Contract contains any change in control or other terms or conditions
that will become applicable or inapplicable as a result of the
consummation of such transactions. Except as set forth on Schedule
2.1(j), neither the Company nor the Subsidiaries are a party to any
contract prohibiting or materially restricting the ability of the
Company or any of its Subsidiaries to conduct its business, to engage
in any business or operate in any geographical area or compete with any
person.
(k) Taxes. (i) Except as set forth on Schedule 2.1(k), (A) all
Tax Returns required to be filed by or on behalf of each of the Company
and its Subsidiaries have been filed except to the extent that a
failure to file, individually or in the aggregate, would not have a
Material Adverse Effect on the Company and its Subsidiaries, taken as a
whole; (B) all such filed Tax Returns are complete and accurate in all
respects, other than any incompleteness or any inaccuracy that would
not, individually or in the aggregate, have a Material Adverse Effect
on the Company and its Subsidiaries, taken as a whole, and all Taxes
shown to be due on such Tax Returns have been paid; (C) no written
claim
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(other than a claim that has been finally settled) has been made by a
taxing authority that any of the Company or its Subsidiaries is subject
to an obligation to file Tax Returns or to pay or collect Taxes imposed
by any jurisdiction in which either the Company or its Subsidiaries
does not file Tax Returns or pay or collect Taxes, other than any such
claim that would not have a Material Adverse Effect on the Company and
its Subsidiaries, taken as a whole, or for which adequate reserves have
been provided on the balance sheets contained in the Company SEC
Documents filed with the SEC and publicly available prior to the date
hereof; (D) there is no deficiency with respect to any Taxes which
would, individually or in the aggregate, have a Material Adverse Effect
on the Company and its Subsidiaries, taken as a whole, other than any
such deficiency for which adequate reserves have been provided on the
balance sheet contained in the financial statements in the SEC Company
Documents filed with the SEC and publicly available prior to the date
hereof; and (E) all material assessments for Taxes due with respect to
completed and settled examinations or concluded litigation have been
paid which, individually or in the aggregate, exceed $100,000. As used
in this Agreement, "Taxes" shall include all federal, state, local and
foreign income, franchise, property, sales, excise and other taxes,
tariffs or governmental charges of any nature whatsoever, including
interest and penalties, and additions thereto; and "Tax Returns" shall
mean all federal state, local and foreign tax returns, declarations,
statements, reports, schedules, forms and information returns relating
to Taxes.
(ii) Except as set forth on Schedule 2.1(k), each of the
Company and its Subsidiaries has duly and timely withheld all Taxes
required to be withheld in connection with its business and assets, and
such withheld Taxes have been either duly and timely paid to the proper
governmental authorities or properly set aside in accounts for such
purpose, except to the extent that any failure to do so would not have
a Material Adverse Effect on the Company and its Subsidiaries, taken as
a whole.
(iii) Except as set forth on Schedule 2.1(k), (A) all taxable
periods of each of the Company and its Subsidiaries ending before
December 31, 1993 are closed or no longer subject to audit; (B) none of
the Company or any of its Subsidiaries is currently under any audit by
any taxing authority as to which such taxing authority has asserted in
writing any claim which, if adversely determined, could have a Material
Adverse Effect on the Company and its Subsidiaries, taken as a whole;
and (C) no waiver of the statute of limitations is in effect with
respect to any taxable year of the Company or any of its Subsidiaries.
(iv) Except as set forth on Schedule 2.1(k), (A) none of the
Company or its Subsidiaries is a party to or bound by or has any
obligation under any Tax allocation, sharing, indemnification or
similar agreement or arrangement with any Person which might result in
a Material Adverse Effect to the Company or Subsidiary which entered
into such agreement or arrangement; and (B) none of the Company or its
Subsidiaries is or has been at any time a member of any group of
companies filing a consolidated,
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combined or unitary income tax return other than any such group the
common parent of which is the Company.
(l) Employee Benefit Plans and Related Matters; ERISA. (i)
Employee Benefit Plans. Each Employee Benefit Plan that provides for
equity-based compensation or that has associated costs that are
expected to be material to the Company or its Subsidiaries in the
aggregate and that is expected to provide for contributions to be made
by the Company or its Subsidiaries or their Employees after the date
hereof or to permit the accrual of additional benefits by any Employee
of the Company or its Subsidiaries after the date hereof is either
listed on Schedule 2.1(l) or has been filed with the SEC as a material
contract (collectively, the "Plans").
(ii) Qualification. Except to the extent that failure to meet
the requirements of Section 401(a) of the Code would not result in any
material liability as to which adequate reserves have not been
established, each Employee Benefit Plan intended to be qualified under
section 401(a) of the Code, and the trust (if any) forming a part
thereof, (A) has received a favorable determination letter from the IRS
as to its qualification under the Code and to the effect that each such
trust is exempt from taxation under section 501(a) of the Code, and
nothing has occurred since the date of such determination letter that
could adversely affect such qualification or tax-exempt status or (B) a
timely application for such a favorable determination letter was filed
and the Company has no reason to believe that such a favorable
determination letter will not be granted.
(iii) Compliance; Liability. (A) No liability has been or is
reasonably expected to be incurred under or pursuant to Title I or IV
of ERISA or the penalty, excise Tax or joint and several liability
provisions of the Code relating to employee benefit plans that is or
would be material to the Company and its Subsidiaries, taken as a
whole.
(B) Each of the Employee Benefit Plans has been
operated and administered in all respects in compliance with
its terms, all applicable laws and all applicable collective
bargaining agreements, except for any failure so to comply
that, individually and in the aggregate, could not reasonably
be expected to result in a material liability or obligation on
the part of the Company and its Subsidiaries in the aggregate.
There are no pending or threatened claims by or on behalf of
any of the Employee Benefit Plans, by any Employee or
otherwise involving any such Employee Benefit Plan or the
assets of any Employee Benefit Plan (other than routine claims
for benefits or actions seeking qualified domestic relations
orders or qualified medical child support orders, all of which
have been fully reserved for on the regularly prepared balance
sheets of the Company or its Subsidiaries, as applicable)
which would reasonably be expected to result in any material
liability to the Company and its Subsidiaries in the
aggregate.
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(C) Except to the extent that it would not give rise
to a material liability or obligation on the part of the
Company and it Subsidiaries in the aggregate, no Employee is
or will become entitled to post-employment benefits of any
kind by reason of employment with the Company or its
Subsidiaries, including, without limitation, death or medical
benefits (whether or not insured), other than (x) coverage
mandated by section 4980B of the Code or other applicable
laws, (y) retirement benefits payable under any Plan qualified
under section 401 (a) of the Code or (z) accrued deferred
compensation. The consummation of the transactions hereunder
and under the Registration Rights Agreement will not result in
an increase in the amount of compensation or benefits or the
acceleration of the vesting or timing of payment of any
compensation or benefits payable to or in respect of any
Employee by any of the Company or its Subsidiaries.
(iv) Employees, Labor Matters, etc. Neither the Company nor
any of its Subsidiaries is a party to or bound by any collective
bargaining agreement, and there are no labor unions or other
organizations representing, purporting to represent or attempting to
represent any employees employed by the Company or any of its
Subsidiaries. Since June 30, 1998, there has not occurred or been
threatened any strike, slowdown, picketing, work stoppage, concerted
refusal to work overtime or other similar labor activity with respect
to any employees of the Company or any of its Subsidiaries. Except as
set forth on Schedule 2.1(l), there are no labor disputes currently
subject to any grievance procedure, arbitration or litigation and there
is no petition pending or threatened with respect to any employee of
the Company or its Subsidiaries. The Company and each of its
Subsidiaries has complied with all applicable laws pertaining to the
employment or termination of employment of their respective employees,
including, without limitation, all such laws relating to labor
relations, equal employment opportunities, fair employment practices,
prohibited discrimination or distinction and other similar employment
activities, except for any failure so to comply that, individually and
in the aggregate, could not result in a Material Adverse Effect on the
Company and its Subsidiaries, taken as a whole.
(m) Environmental Matters. Except as disclosed in the Company
SEC Documents filed with the SEC and publicly available prior to the
date hereof and except for such matters that, individually or in the
aggregate, would not have a Material Adverse Effect on the Company and
its Subsidiaries, taken as a whole, (i) the Company and its
Subsidiaries are in compliance with all applicable Environmental Laws
(as defined below), (ii) the Company and its Subsidiaries have all
Permits required under Environmental Laws for the operation of their
respective businesses as presently conducted ("Environmental Permits"),
(iii) neither the Company nor its Subsidiaries has received notice from
any Governmental Entity asserting that either the Company or any of its
Subsidiaries may be in violation of, or liable under, any Environmental
Law, and (iv) there are no actions, proceedings or claims pending (or,
to the Knowledge of the
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Company or any of its Subsidiaries, threatened) seeking to impose any
liability on Environmental Permits or Hazardous Substances (as defined
below).
For purposes of this Agreement, "Environmental Law" means any
federal, state, local or foreign law, statute, regulation or decree
relating to (x) the protection of the environment or (y) the use,
storage, treatment, generation, transportation, processing, handling,
release or disposal of Hazardous Substances in each case as in effect
on the date hereof. "Hazardous Substance" means any waste, substance,
material, pollutant or contaminant listed, defined, designated or
classified as hazardous, toxic or radioactive, or otherwise regulated,
under any Environmental Law.
(n) Delaware Law. The Company has taken all action necessary
to ensure that the provisions of Section 203 of the Delaware General
Corporation law (the "DGCL") will not be applicable to Purchaser or its
Affiliates as a result of the transactions contemplated by this
Agreement.
(o) Status of Shares. The Shares being issued at the Closing
have been duly authorized by all necessary corporate action on the part
of the Company, and at Closing such Shares will have been validly
issued and, assuming payment therefor has been made, will be fully paid
and nonassessable, and the issuance of such Shares will not be subject
to preemptive rights of any other stockholder of the Company. The
Shares will be eligible for listing on the Nasdaq Stock Market.
(p) Intellectual Property. The Intellectual Property that is
owned by the Company or any of its Subsidiaries is owned free from any
Liens (other than Permitted Liens), except where the failure to be free
from liens would not have a Material Adverse Effect on the Company and
its Subsidiaries, taken as a whole. All material Intellectual Property
Licenses are in full force and effect in accordance with their terms,
and are free and clear of any Liens (other than Permitted Liens),
except where the failure to be free from Liens or to be in full force
and effect would not have a Material Adverse Effect on the Company and
its Subsidiaries, taken as a whole. To the Knowledge of the Company,
the conduct of the business of the Company and its Subsidiaries does
not infringe or conflict with the rights of any third party in respect
of any Intellectual Property, except where such conduct would not
materially affect the ability of the Company and its Subsidiaries to
conduct their business as presently conducted. To the Knowledge of the
Company, none of the Company Intellectual Property is being infringed
by any third party except where such infringement would not have a
Material Adverse Effect on Company and its Subsidiaries, taken as a
whole. There is no claim or demand of any Person pertaining to, or any
proceeding which is pending or, to the Knowledge of the Company,
threatened, that challenges the rights of the Company or any of its
Subsidiaries in respect of any Company Intellectual Property, or that
claims that any default exists under any Intellectual Property License,
except where such claim, demand or proceeding would not materially
affect the ability of the Company and its Subsidiaries to conduct
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their business as presently conducted. For purposes of this Agreement,
"Company Intellectual Property" means the Intellectual Property that is
owned by the Company and its Subsidiaries and the Intellectual Property
subject to written or oral licenses, agreements or arrangements
pursuant to which its use by the Company or any of its Subsidiaries is
permitted by any Person.
(q) Brokers or Finders. No agent, broker, investment banker or
other firm is or will be entitled to any broker's or finder's fee or
any other commission or similar fee in connection with any of the
transactions contemplated by this Agreement.
Section 2.2 Representations and Warranties of Purchaser.
Purchaser hereby represents and warrants to the Company as follows:
(a) Organization. Purchaser is a corporation duly organized and validly
existing and in good standing under the laws of the Federal Republic of Germany,
with all requisite power and authority to own, lease and operate its properties
and to conduct its business as now being conducted.
(b) Authority. Purchaser has the requisite corporate power and
authority to execute, deliver and perform its obligations under this Agreement
and to consummate the transactions contemplated hereby and thereby. All
necessary corporate action required to have been taken by or on behalf of
Purchaser by applicable law or otherwise to authorize the approval, execution,
delivery and performance by Purchaser of this Agreement and the Registration
Rights Agreement and the consummation by it of the transactions contemplated
hereby and thereby have been duly authorized, and no other proceedings on its
part are or will be necessary to authorize this Agreement or the Registration
Rights Agreement or for it to consummate such transactions. This Agreement is,
and the Registration Rights Agreement, when executed and delivered will be,
valid and binding agreements of Purchaser, enforceable against Purchaser in
accordance with their respective terms, assuming that this Agreement and the
Registration Rights Agreement are valid and binding agreements of the Company,
subject as to enforcement of remedies to applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting generally the enforcement
of creditors' rights and subject to a court's discretionary authority with
respect to the granting of a decree ordering specific performance or other
equitable remedies.
(c) Conflicting Agreements and Other Matters. Neither the execution and
delivery of this Agreement or the Registration Rights Agreement nor the
performance by Purchaser of its obligations hereunder or thereunder will
conflict with, result in a breach of the terms, conditions or provisions of,
constitute a default under, result in the creation of any Lien upon any of the
properties or assets of Purchaser pursuant to, or require any consent, approval
or other action by or any notice to or filing with any Government Entity
pursuant to, the organizational documents or agreements of Purchaser or any
agreement, instrument, order, judgment, decree, statute, law, rule or regulation
by which Purchaser is bound (assuming that the Company shall have made or
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obtained all consents, approvals, orders, authorizations or filings referred to
in Section 2.1(c)(ii)), except for filings after the Closing under Section 13(d)
of the Exchange Act and filings under the HSR Act.
(d) Acquisition for Investment. (i) Purchaser is acquiring the Shares
for its own account for the purpose of investment and not with a view to or for
sale in connection with any distribution thereof, and Purchaser has no present
intention to effect, or any present or contemplated plan, agreement,
undertaking, arrangement, obligation, indebtedness, or commitment providing for,
any distribution of Shares, (ii) Purchaser is an "accredited investor" as
defined in Rule 501(a) under the Securities Act, (iii) Purchaser has carefully
reviewed the representations concerning the Company contained in this Agreement
and has made detailed inquiry concerning the Company, its business and its
personnel, and (iv) Purchaser has sufficient knowledge and experience in finance
and business that it is capable of evaluating the risks and merits of its
investment in the Company and is able financially to bear the risks thereof.
(e) Brokers or Finders. Except as set forth on Schedule 2.2(e), no
agent, broker, investment banker or other firm is or will be entitled to any
broker's or finder's fee or any other commission or similar fee from Purchaser
in connection with any of the transactions contemplated by this Agreement
ARTICLE III
EQUITY PURCHASES FROM THE COMPANY
Section 3.1 Subscription Rights. So long as Purchaser has not sold more
than 1,000,000 Shares (as adjusted to reflect any stock splits, stock dividends
and similar recapitalizations) (other than sales to Affiliates), if the Company
proposes the issuance of New Securities (other than any New Securities issued
(i) to officers, employees, directors, consultants or advisors of the Company or
any of its Subsidiaries pursuant to any employee stock offering, plan or
arrangement, (ii) in connection with any acquisition of another corporation by
the Company by merger, purchase of all or substantially all of such
corporation's assets or other reorganization (iii) in connection with
Pharmaceutical Alliances, (iv) in connection with Research and Development
Funding Transactions, (v) in connection with equipment leasing or equipment
financing arrangements, to the Person who leased or financed such equipment and
(vi) to Purchaser or its Affiliates) then, prior to each such issuance of New
Securities, the Company shall offer to Purchaser a Pro Rata Share of such New
Securities. Any offer of New Securities made to Purchaser under this Section 3.1
shall be made by notice in writing (the "Subscription Notice"). The Subscription
Notice shall set forth (i) the number of New Securities proposed to be issued to
Persons other than Purchaser and the terms of such New Securities, (ii) the
consideration (or manner of determining the consideration), if any, for which
such New Securities are proposed to be issued and the terms of payment, (iii)
the number of New Securities offered to Purchaser in compliance with the
provisions of this Section 3.1 and (iv) the proposed
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date of issuance of such New Securities. Not later than 20 Business Days after
its receipt of a Subscription Notice, Purchaser shall notify the Company in
writing whether it elects to purchase all or any portion of the New Securities
offered to Purchaser pursuant to the Subscription Notice. If Purchaser shall
elect to purchase any such New Securities, the New Securities which it shall
have elected to purchase shall be issued and sold to Purchaser by the Company at
the same time and on the same terms and conditions as the New Securities are
issued and sold to any other Person. If, for any reason, the issuance of such
New Securities is not consummated, Purchaser's right to its Pro Rata Share of
such issuance shall lapse, subject to Purchaser's ongoing subscription right
with respect to issuances of New Securities at later dates or times.
Section 3.2 Issuance and Delivery of New Securities and Voting Stock.
The Company represents and covenants to Purchaser that (i) upon issuance, all
the shares of New Securities sold to Purchaser pursuant to this Article III
shall be duly authorized, validly issued, fully paid and nonassessable and shall
be approved (if outstanding securities of the Company of the same type are at
the time already approved and the New Securities are registered under the
Securities Act) for listing on the Nasdaq Stock Market or for quotation or
listing on the principal trading market for the securities of the Company at the
time of issuance, (ii) upon delivery of such shares, they shall be free and
clear of all claims and Liens of any nature and shall not be subject to any
preemptive right of any stockholder of the Company and (iii) in connection with
any such issuance, the Company shall take such actions as are specified in
Section 2.1(o) with respect to such shares. Each share issued or delivered by
the Company hereunder shall bear the legends set forth in Section 11.10.
Section 3.3 Termination of Article III. This Article III shall
terminate upon the earlier of (i) a sale of all or substantially all of the
assets or business of the Company, by merger, sale of assets or otherwise, or
(ii) termination of the Program Term.
ARTICLE IV
LIMITATIONS ON PURCHASES OF ADDITIONAL EQUITY SECURITIES
Section 4.1 Purchases of Equity Securities. (a) Prior to the third
anniversary of the Closing, except as permitted by Section 4.1(b), (c) or (d),
Purchaser and its Affiliates will not (and will not assist or encourage other
to) directly or indirectly in any manner:
(i) acquire, or agree to acquire, directly or
indirectly, alone or in concert with others, by purchase, gift or otherwise, any
direct or indirect beneficial ownership (within the meaning of Rule 13d-3 under
the Exchange Act) or interest in any securities or direct or indirect rights,
warrants or options to acquire, or securities convertible into or exchangeable
for, any securities of the Company;
(ii) make, or in any way participate in, directly
or indirectly, alone or
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in concert with others, any "solicitation" of "proxies" to vote (as such terms
are used in the proxy rules of the SEC promulgated pursuant to Section 14 of the
Exchange Act); provided, however, that the prohibition in this subparagraph (ii)
shall not apply to solicitations exempted from the proxy solicitation rules by
Rule 14a-2 under the Exchange Act as such Rule is in effect as of the date
hereof.
(iii) form, join or in any way participate in a
"group" within the meaning of Section 13(d)(3) of the Exchange Act with respect
to any voting securities of the Company; or
(iv) acquire or agree to acquire, directly or
indirectly, alone or in concert with others, by purchase, exchange or otherwise,
(i) any of the assets, tangible or intangible, of the Company or (ii) direct or
indirect rights, warrants or options to acquire any assets of the Company,
except for such assets as are then being offered for sale by the Company;
(v) enter into any arrangement or understanding
with others to do any of the actions restricted or prohibited under clauses (i),
(ii) or (iii) of this Section 4.1(a); or
(vi) otherwise act in concert with others, to
seek to offer to the Company or any of its stockholders any business
combination, restructuring, recapitalization or similar transaction to or with
the Company or otherwise seek in concert with others, to control, change or
influence the management, board of directors or policies of the Company or
nominate any person as a director of the Company who is not nominated by the
then incumbent directors, or propose any matter to be voted upon by the
stockholders of the Company; provided, however, that nothing in this
subparagraph (vi) shall prevent Purchaser or any Affiliate of Purchaser, either
acting alone or in concert with each other, from taking any action..
(b) Nothing herein shall prevent Purchaser from purchasing any
securities of the Company pursuant to the terms of this Agreement (including
through exercise of its rights under Section 3.1 hereof) and Purchaser shall not
be treated as having breached any covenant in this Agreement solely as a result
of such purchase.
(c) Nothing herein shall prevent Purchaser from purchasing
additional Equity Securities of the Company if (i) prior thereto Purchaser has
not sold any Shares (other than to an Affiliate of Purchaser) and (ii) after
such purchase Purchaser and its Affiliates would own fourteen and three-tenths
percent (14.3%) or less of the Total Voting Power of all Voting Securities of
the Company then outstanding.
(d) This Section 4.1 shall terminate and Purchaser and its
Affiliates shall have the right to acquire any securities of the Company without
regard to the limitation on share ownership set forth in Section 4.1 in the
event that:
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(i) the Company has entered into (A) a merger agreement in
which the holders of the Company's Voting Securities would cease to hold a
majority of the voting securities of the surviving corporation, (B) an agreement
to sell all or substantially all its assets, or (C) an agreement to be acquired,
business combination, consolidation or any such similar transaction, in each
case with any Person other than a wholly-owned subsidiary of the Company;
provided, however, the limitation shall continue if (i) the merger agreement is
with a majority-owned subsidiary of the Company and the Company is to be the
surviving corporation in the merger, or (ii) the merger agreement or other
agreements referred to in sections (A), (B), or (C) is subsequently terminated
or the transactions contemplated thereunder are not consummated; or
(ii) a tender or exchange offer (other than a tender or
exchange offer that the Company's Board of Directors has recommended be
rejected) is made by any Person or 13D Group (as hereinafter defined) (other
than an Affiliate of, or any Person acting in concert with, Purchaser) to
acquire Voting Securities which, if added to the Voting Securities (if any)
already owned by such Person or 13D Group, would result, if consummated in
accordance with its terms, in the Beneficial Ownership by such Person or 13D
Group of more than 30% of the Total Voting Power of all Voting Securities of the
Company then outstanding, provided that the limitation shall be reinstated if
such tender or exchange offer is withdrawn or terminated without such Person or
13D Group acquiring such 30% ownership level; or
(iii) it is publicly disclosed or Purchaser otherwise learns
that Voting Securities representing more than 35% of the Total Voting Power of
all Voting Securities of the Company then outstanding are Beneficially Owned by
any Person or 13D Group (other than an Affiliate of, or any person acting in
concert with, Purchaser); or
(iv) a proxy contest (or similar incident) is made by any
Person of 13D Group (other than an Affiliate of, or any Person acting in
concert with, Purchaser) to elect individuals who at the beginning of any
calendar year did not constitute the majority of the members of the Board of
Directors of the Company then in office and the Purchaser, upon the advice of
legal counsel and financial advisors, reasonably believes in good faith, that
such proxy contest will result in the election of individuals who will
constitute a majority of members of the Board of Directors of the Company, but
who did not, at the beginning of the calendar year, constitute the majority
of the members of the Board of Directors of the Company then in office, provided
that the limitation shall be reinstated if such proxy contest or similar
incident is terminated or withdrawn without affecting the change in the Board of
Directors referred to above.
(e) As used herein, the term "13D Group" shall mean any group of
Persons formed for the purpose of acquiring, holding, voting or disposing of
Voting Securities which would be required under Section 13(d) of the Exchange
Act and the rules and regulations thereunder (as now in effect and based on
present legal interpretations thereof) to file a statement on Schedule 13D with
the SEC as a "person" within the meaning of Section 13(d)(3) of the Exchange
Act. Ownership of Voting Securities under Section 4.1(d) above and Section
5.1(d) below shall be determined in accordance with Rule 13d-3 of the Exchange
Act as currently in effect.
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ARTICLE V
TRANSFER OF COMMON STOCK
Section 5.1 Limitations on Transfer. (a) Prior to the second
anniversary of the Closing, Purchaser will not, directly or indirectly, sell,
transfer or otherwise dispose of any Shares (except to any Affiliate of
Purchaser).
(b) After the second anniversary of the Closing and prior to the
expiration of the Program Term, Purchaser will not, directly or indirectly,
sell, transfer or otherwise dispose of, in any one calendar year, more than
2,500,000 Shares (as adjusted to reflect any stock splits, stock dividends and
similar recapitalizations) (except to an Affiliate of Purchaser).
(c) (i) After the second anniversary of the Closing and prior to the
expiration of the Program Term, if Purchaser proposes to sell any Shares other
than pursuant to a registration statement under the Securities Act, the Company
shall have a right of first negotiation with respect to the acquisition of those
Shares proposed to be sold. Said right of first negotiation must be asserted by
the Company within fifteen (15) Business Days of its receipt of written notice
from Purchaser of its intention to sell any Shares other than pursuant to a
registration statement under the Securities Act. Such notice shall specify the
general terms and conditions on which Purchaser intends to sell such Shares. If
the Company and Purchaser are unable to agree on the terms and conditions of the
Company's acquisition of such Shares within fifteen (15) Business Days of
Purchaser's notification to the Company of its intention to sell Shares,
Purchaser may sell such Shares at any time within the next 120 days on terms and
conditions no more favorable, taken as a whole, than those originally proposed
to the Company. (ii) After the second anniversary of the Closing and prior to
the expiration of the Program Term, if Purchaser proposes to sell any Shares
pursuant to a registration statement under the Securities Act, the Company shall
have a right of first negotiation with respect to the acquisition of those
Shares proposed to be sold. Said right of first negotiation must be asserted by
the Company within fifteen (15) Business Days of its receipt of written notice
from Purchaser of its intention to sell any Shares pursuant to a registration
statement under the Securities Act. Such notice shall specify the price for such
Shares, which shall be equal to the average closing price of the Common Stock
over the 30-day period ending on the date of such notice. If the Company does
not agree to purchase such Shares at such price within fifteen (15) Business
Days of Purchaser's notification to the Company of its intention to sell Shares,
Purchaser may sell such Shares at any time within the next 180 days pursuant to
a registration statement without restriction as to the price at which such
Shares may be sold.
(d) The limitation on share transfer set forth in this Section
5.1 shall terminate and Purchaser and its Affiliates shall have the right,
directly or indirectly, to sell, transfer or otherwise dispose of any Shares
without regard to any limitation on share transfer set forth in
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Section 5.1 in the event that:
(i) the Company has entered into (A) a merger agreement in
which the holders of the Voting Securities would cease to hold a majority of the
voting securities of the surviving corporation, (B) an agreement to sell all or
substantially all its assets, or (C) an agreement to be acquired, business
combination, consolidation or any such similar transaction, in each case with
any Person other than a wholly-owned subsidiary of the Company; provided,
however, the limitation shall (1) continue if (x) the merger agreement is with a
majority-owned subsidiary of the Company and the Company is to be the surviving
corporation in the merger or (y) the majority of the directors of the Company,
who have held that position for at least nine (9) months prior to the entering
into of the merger agreement continue as the directors of the surviving company
after the merger or (2) be reinstated if such merger agreement or other
agreements referred to in sections (A), (B) or (C) is subsequently terminated or
the transactions contemplated thereunder are not consummated;
(ii) a tender or exchange offer (other than a tender or
exchange offer that the Company's Board of Directors has recommended be
rejected) is made by any Person or 13D Group (other than an Affiliate of, or any
Person acting in concert with, Purchaser) to acquire Voting Securities which, if
added to the Voting Securities (if any) already owned by such Person or 13D
Group, would result, if consummated in accordance with its terms, in the
Beneficial Ownership by such Person or 13D Group of more than 50% of the Total
Voting Power of all Voting Securities of the Company then outstanding, provided
that the limitation shall be reinstated if such tender or exchange offer is
withdrawn or terminated without such Person or 13D Group acquiring such 50%
ownership level; or
(iii) a tender or exchange offer, which the Company's Board of
Directors has not approved or recommended, is made by any Person or 13D Group
(other than an Affiliate of, or any Person acting in concert with, Purchaser) to
acquire Voting Securities which, if added to the Voting Securities (if any)
already owned by such Person or 13D Group, would result, if consummated in
accordance with its terms, in the Beneficial Ownership by such Person or 13D
Group of more than 50% of the Total Voting Power of all Voting Securities of the
Company then outstanding and the Purchaser, upon the advice of legal counsel and
financial advisors, reasonably believes in good faith, taking into account the
conditions of the offer, that such tender or exchange offer will result in
Voting Securities being purchased, provided that the limitation shall be
reinstated if such tender or exchange offer is withdrawn or terminated without
such Person or 13D Group acquiring such 50% ownership level.
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ARTICLE VI
COVENANTS AND ADDITIONAL AGREEMENTS
Section 6.1 Ordinary Course. During the period from the date of this
Agreement and continuing until the Closing, the Company agrees as to itself and
its Subsidiaries that, except as set forth in Schedule 6.1, or to the extent
that Purchaser otherwise consents in writing, the Company and its Subsidiaries
shall conduct their respective businesses in the ordinary course in
substantially the same manner as presently conducted.
Section 6.2 Access and Information. So long as this Agreement remains
in effect, prior to the Closing, the Company will (and will cause each of its
Subsidiaries and each of their respective accountants, counsel, consultants,
officers, directors, employees, agents and representatives of or to any of the
Subsidiaries, to) give Purchaser and its Representatives, reasonable access
during reasonable business hours to all of their respective properties, assets,
books, contracts, reports and records relating to the Company and its
Subsidiaries, and furnish to them all such documents, records and information
with respect to the properties, assets and business of the Company and its
Subsidiaries, as Purchaser shall from time to time reasonably request. The
Company will keep Purchaser generally informed as to the business of the Company
and its Subsidiaries.
Section 6.3 Further Actions. (a) Each of the Company and Purchaser
shall use reasonable best efforts to take or cause to be taken all actions, and
to do or cause to be done all other things, necessary, proper or advisable in
order to fulfill and perform its obligations in respect of this Agreement and
the Registration Rights Agreement, or otherwise to consummate and make effective
the transactions contemplated hereby and thereby.
(b) Each of the Company and Purchaser shall, as promptly as
practicable, (i) make, or cause to be made, all filings and submissions
(including but not limited to under the HSR Act and foreign antitrust filings)
required under any law applicable to it or any of its Subsidiaries, and give
such reasonable undertakings as may be required in connection therewith, and
(ii) use all reasonable efforts to obtain or make, or cause to be obtained or
made, all Permits necessary to be obtained or made by it or any of its
Subsidiaries, in each case in connection with this Agreement and the
Registration Rights Agreement, the sale and transfer of the Shares pursuant
hereto and the consummation of the other transactions contemplated hereby or
thereby.
(c) Each of the Company and Purchaser shall coordinate and cooperate
with the other party in exchanging such information and supplying such
reasonable assistance as may be reasonably requested by such other party in
connection with the filings and other actions contemplated by this Agreement and
the Registration Rights Agreement.
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(d) At all times prior to the Closing Date, the Company and Purchaser
shall promptly notify each other in writing of any fact, condition, event or
occurrence that could reasonably be expected to result in the failure of any of
the conditions contained in Article VII to be satisfied, promptly upon becoming
aware of the same.
Section 6.4 Further Assurances. Following the Closing Date, the Company
shall, from time to time, execute and deliver such additional instruments,
documents, conveyances or assurances and take such other actions as shall be
necessary, or otherwise reasonably be requested by Purchaser, to confirm and
assure the rights and obligations provided for in this Agreement and the
Registration Rights Agreement and render effective the consummation of the
transactions contemplated hereby and thereby, or otherwise to carry out the
intent and purposes of this Agreement.
Section 6.5 Board Attendance Rights and Rights to Information about
Board and the Company. (a) The Company shall permit a Representative (which
Representative shall be designated by Purchaser) to attend two (2) regular
meetings of the Company's Board of Directors each year during the Program Term
(one such meeting to be held between January and June of each year, and the
second such meeting to be held between July and December of each year);
provided, however, that, at the request of the Board of Directors, the
Representative shall excuse himself or herself from such portions of the Board
of Directors meeting that he or she is attending if the Board of Directors and
its legal counsel believe it to be necessary so to conduct the Board's business
(i) in order to avoid conflict with the Company's obligations to third parties
(such as, but not limited to, discussions of proprietary aspects of
collaborations with third parties), (ii) discussions of disputes with Purchaser
and/or its Affiliates, and (iii) any other matters in which the Board of
Directors and such legal counsel reasonably conclude that the exercise of the
fiduciary duties of the Board of Directors requires such Representative to
excuse himself or herself.
(b) The Company shall provide to the Purchaser copies of agendas for
all Board meetings prior to such meetings and the minutes for all Board
meetings, including meetings of committees of the Board, as soon as practicable
after the conclusion of any such meeting.
(c) Once during each calendar quarter, at the request of Purchaser, a
Representative (which Representative shall be designated by Purchaser) will be
entitled to receive a confidential briefing from officers of the Company
concerning the Company's business and strategy, including a report on the status
of the Discovery Program and the Company's other collaborative programs (to the
extent not precluded by the terms and conditions under any such collaboration
program) and the Company's consolidated corporate strategic overview.
ARTICLE VII
CONDITIONS PRECEDENT
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Section 7.1 Each Party's Obligations. The obligations of the Company
and Purchaser to consummate the transactions contemplated to occur at the
Closing shall be subject to the satisfaction prior to the Closing of each of the
following conditions, each of which may be waived only if it is legally
permissible to do so:
(a) HSR and Other Approvals. Any applicable waiting period under the
HSR Act relating to the transactions contemplated hereby shall have expired or
been terminated, and all other material authorizations, consents, orders or
approvals of, or regulations, declarations or filings with, or expirations of
applicable waiting periods imposed by, any Governmental Entity (including,
without limitation, any foreign antitrust filing) necessary for the consummation
of the transactions contemplated hereby, shall have been obtained or filed or
shall have occurred.
(b) No Litigation, Injunctions, or Restraints. No statute, rule,
regulation, executive order, decree, temporary restraining order, preliminary or
permanent injunction or other order enacted, entered. promulgated, enforced or
issued by any Governmental Entity or other legal restraint or prohibition
preventing the consummation of the transactions contemplated by this Agreement
and the Registration Rights Agreement shall be in effect.
(c) Collaboration Agreement. The Collaboration Agreement shall have
become effective in accordance with the terms and conditions thereof.
(d) Nasdaq Listing. The Shares shall have been approved for listing on
the Nasdaq Stock Market, subject only to official notice of issuance.
Section 7.2 Conditions to the Obligations of the Company. The
obligations of the Company to consummate the transactions contemplated to occur
at the Closing shall be subject to the satisfaction or waiver thereof prior to
the Closing of each of the following conditions:
(a) Representations and Warranties. The representations and warranties
of Purchaser that are qualified as to materiality shall be true and correct, and
those that are not so qualified shall be true and correct in all material
respects, as of the date of this Agreement and as of the time of the Closing as
though made at and as of such time, except to the extent such representations
and warranties expressly relate to an earlier date (in which case such
representations and warranties that are qualified as to materiality shall be
true and correct, and those that are not so qualified shall be true and correct
in all material respects, on and as of such earlier date) and the Company shall
have received a certificate signed by an authorized officer of Purchaser to such
effect.
(b) Registration Rights Agreement. Purchaser shall have executed and
delivered the Registration Rights Agreement.
Section 7.3 Conditions to the Obligations of Purchaser. The
obligations of Purchaser to consummate the transactions contemplated to occur at
the Closing shall be subject to the
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satisfaction or waiver thereof prior to the Closing of each of the following
conditions:
(a) Representations and Warranties. The representations and warranties
of the Company set forth in this Agreement that are qualified as to materiality
shall be true and correct, and those that are not so qualified shall be true and
correct in all material respects, as of the date of this Agreement and as of the
time of the Closing as though made at and as of such time, except to the extent
such representations and warranties expressly relate to an earlier date (in
which case such representations and warranties that are qualified as to
materiality shall be true and correct, and those that are not so qualified shall
be true and correct in all material respects, on and as of such earlier date),
and Purchaser shall have received a certificate signed by the chief executive
officer and chief financial officer of the Company to such effect.
(b) Opinion of the Company's Counsel. Purchaser shall have received the
opinion dated as of the Closing of Hale and Dorr, counsel to the Company, in
form and substance reasonably satisfactory to Purchaser.
(c) Registration Rights Agreement. The Company shall have executed and
delivered the Registration Rights Agreement.
(d) Performance of Obligations of the Company. The Company shall have
performed or complied in all material respects with all obligations and
covenants required to be performed or complied with by the Company under this
Agreement and the Purchaser shall have received a certificate signed by the
chief executive officer and chief financial officer of the Company to such
effect.
(e) Corporate Proceedings. All corporate proceedings of the Company in
connection with the transactions contemplated by this Agreement and the
Registration Rights Agreement, and all documents and instruments incident
thereto, shall be satisfactory in form and substance to Purchaser and its
counsel, and Purchaser and its counsel shall have received all such documents
and instruments, or copies thereof, certified or requested, as may be reasonably
requested.
ARTICLE VIII
TERMINATION
Section 8.1 Termination. This Agreement may be terminated at any time
prior to the Closing:
(a) by mutual written consent of Purchaser and the Company;
(b) by Purchaser or the Company;
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(i) if the Closing shall not have occurred prior to
December 31, 1998, provided, that the right to terminate this
Agreement pursuant to this clause (i) shall not be available
to any party whose failure to fulfill any obligation under
this Agreement results in the failure of the Closing to occur;
(ii) if there shall be any statute, law, regulation or
rule that makes consummating the transactions contemplated
hereby illegal or if any court or other Governmental Entity of
competent jurisdiction shall have issued a judgment, order,
decree or ruling, or shall have taken such other action
restraining, enjoining or otherwise prohibiting the
consummation of the transactions contemplated hereby and such
judgment, order, decree or ruling shall have become final and
non-appealable; or
(iii) if the Collaboration Agreement shall have
terminated;
(c) by Purchaser:
(i) if the Company shall have failed to perform in any
material respect any of its obligations hereunder or shall
have breached in any respect any representation or warranty
contained herein qualified by materiality or shall have
breached in any material respect any representation or
warranty not so qualified, and the Company has failed to
perform such obligation or cure such breach, within 30 days of
its receipt of written notice thereof from Purchaser, and such
failure to perform shall not have been waived in accordance
with the terms of this Agreement; or
(ii) if any of the conditions set forth in Section 7.1 or
7.3 shall become impossible to fulfill (other than as a result
of any breach by Purchaser of the terms of this Agreement) and
shall not have been waived in accordance with the terms of
this Agreement;
(d) by the Company:
(i) if Purchaser shall have failed to perform in any
material respect any of its obligations hereunder or shall
have breached in any respect any representation or warranty
contained herein qualified by materiality or shall have
breached any material respect any representation or warranty
not so qualified, and Purchaser has failed to perform such
obligation or cure such breach, within 30 days of its receipt
of written notice thereof from the Company, and such failure
to perform shall not have been waived in accordance with the
terms of this Agreement; or
(ii) if any of the conditions set forth in Section 7.1 or
7.2 shall become impossible to fulfill (other than as a result
of any breach by the Company of the
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terms of this Agreement) and shall not have been waived in
accordance with the terms of this Agreement;
Section 8.2 Effect of Termination. In the event of termination of this
Agreement by either the Company or Purchaser as provided in Section 8.1, this
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of Purchaser or the Company, other than the provisions
of this Section 8.2, Section 11.9 and Article IX and except to the extent that
such termination results from the willful and material breach by a party of any
of its representations, warranties, covenants or agreements set forth in this
Agreement.
ARTICLE IX
INDEMNIFICATION
Section 9.1 Indemnification of Purchaser. The Company covenants and
agrees to defend, indemnify and hold harmless each of Purchaser, its Affiliates
(other than the Company and any of its Subsidiaries), and their respective
officers, directors, partners, employees, agents, advisers and representatives
(collectively, the "Purchaser Indemnities") from and against, and pay or
reimburse the Purchaser Indemnitees for, any and all claims, demands,
liabilities, obligations, losses, costs, expenses, fines or damages (whether
absolute, accrued, conditional or otherwise and whether or not resulting from
third party claims), including interest and penalties with respect thereto and
all expenses incurred in the investigation or defense of any of the same or in
asserting, preserving or enforcing any of their respective rights hereunder
(collectively, "Losses"), resulting from or based on (or allegedly resulting
from or based on) any breach by the Company of any representation, warranty,
covenant or obligation of the Company hereunder. The Losses described in this
Section 9.1 are herein referred to as "Purchaser Indemnifiable Losses". The
Company shall reimburse the Purchaser Indemnitees for any legal or other
expenses incurred by such Purchaser Indemnitees in connection with investigating
or defending any such Purchaser Indemnifiable Losses as such expenses are
incurred.
Section 9.2 Indemnification Procedures. Promptly after receipt by a
Purchaser Indemnitee of notice of the commencement of any action or the written
assertion of any claim, such Purchaser Indemnitee shall, if a claim in respect
thereof is to be made against the Company, as the case may be (the "Indemnifying
Person"), notify the Indemnifying Person in writing of the commencement or the
written assertion thereof. Failure by a Purchaser Indemnitee to so notify the
Indemnifying Person shall relieve the Indemnifying Person from the obligation to
indemnify such Purchaser Indemnitee only to the extent that the Indemnifying
Person suffers actual and material prejudice as a result of such failure but in
no event shall such failure to notify the Indemnifying Person (i) constitute
prejudice suffered by the Indemnifying Person if it has otherwise received
notice of the actions giving rise to such obligation to indemnify or (ii)
relieve it from any liability or obligation that it may otherwise have to such
Purchaser Indemnitee. In case any such action or claim shall be brought or
asserted against any Purchaser Indemnitee and
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it shall notify the Indemnifying Person of the commencement or assertion
thereof, the Indemnifying Person shall be entitled to participate therein but
the defense of such action or claim shall be conducted by counsel to the
Purchaser Indemnitee, provided, however, that the Indemnifying Person shall not,
in connection with any one such action or proceeding or separate but
substantially similar actions or proceedings arising out of the same general
allegations, be liable for the fees and expenses of more than one separate firm
of attorneys at any time for all Purchaser Indemnitees, except to the extent
that local counsel, in addition to regular counsel, is required in order to
effectively defend against such action or proceeding and provided further that a
Purchaser Indemnitee shall not enter into any settlement of any such claim
without the prior consent of the Company, such consent not to be unreasonably
withheld or delayed. In no event shall the Company be liable under this Article
IX, and the Company's obligation to defend, indemnify and hold harmless the
Purchaser Indemnitee shall not apply to: (a) any special, incidental or
consequential damages resulting from or based upon any breach by the Company of
any representation, warranty, covenant or obligation of the Company hereunder,
(b) any Purchaser Indemnifiable Losses until the aggregate amount of such Losses
exceeds $5,000,000, and (c) any Purchaser Indemnifiable Losses in excess of
$50,000,000. The remedies set forth in this Article 9 are cumulative and shall
not be construed to restrict or otherwise affect any other remedies that may be
available to a Purchaser Indemnitee or a Party under any other agreement,
pursuant to statutory or common law or equity. Notwithstanding anything to the
contrary in this Agreement, any claim for indemnification under this Article IX
must be brought prior to the second anniversary of the Closing Date, except for
claims relating to the representations and warranties in Sections 2.1(d), 2.1(k)
and 2.1 (m) which can be brought any time prior to the expiration of the
applicable statute of limitations.
Section 9.3 Survival of Representations and Warranties. The
representations and warranties of the Company contained in this Agreement shall
expire for all purposes on the second anniversary of the Closing Date, except
for the representations and warranties contained in Sections 2.1(d), 2.1(k) and
2.1(m) which shall expire for all purposes upon expiration of the applicable
statute of limitations.
ARTICLE X
INTERPRETATION; DEFINITIONS
Section 10.1 Interpretation. As used in this Agreement, unless the
context otherwise requires:
(a) any reference to the Company and its Subsidiaries means the
Company and each of its Subsidiaries;
(b) words of any gender include all genders;
(c) words using the singular or plural number also include the plural
or singular number,
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respectively; and
(d) the terms "hereof" "herein", and "hereby" and derivative or similar
words refer to this entire Agreement.
Section 10.2 Definitions. For purposes of this Agreement, the
following terms shall have the following meanings:
"13D Group" is defined in Section 4.1(e).
"Affiliate" shall have the meaning set forth in Rule 12b-2 under the
Exchange Act (as in effect ono the date of this Agreement).
"Agreement" is defined in the recitals to this agreement.
"Beneficially Owned," "Beneficial Ownership" or any like expression
with respect to any securities means having "beneficial ownership" of such
securities (as determined pursuant to Rule 13d-3 under the Exchange Act),
including pursuant to any agreement, arrangement or understanding, whether or
not in writing.
"Business Day" means any day on which banking institutions are open in
the City of Boston.
"Closing" is defined in Section 1.2.
"Closing Date" is defined in Section 1.2.
"Code" means the Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder, as amended.
"Collaboration Agreement" is defined in the recitals to this Agreement.
"Common Stock" is defined in the recitals to this Agreement.
"Company" is defined in the recitals to this Agreement.
"Company Intellectual Property" is defined in Section 2.1(p).
"Company Stock Plans" is defined in Section 2.1(d).
"Company SEC Documents" is defined in Section 2.1(f).
"Contract" is defined in Section 2.1(c).
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"Discovery Program" shall have the meaning set forth in the
Collaboration Agreement.
"Employee" means any employee or former employee of the Company or any
of its Subsidiaries or any beneficiary or dependent of any such employee or
former employee.
"Employee Benefit Plans" means all defined contribution, defined
benefit, welfare benefit, bonus, incentive compensation, stock option, stock
purchase, stock appreciation right, stock bonus, incentive, deferred
compensation, insurance, medical, dental, vision, life, death benefit, fringe
benefit or other employee benefit plans, programs, policies or arrangements,
including without limitation, any employment, consulting, offer, secondment,
severance or other termination agreement, whether or not an employee benefit
plan within the meaning of section 3(3) of ERISA, maintained by the Company or
any of its Subsidiaries.
"Environmental Laws" is defined in Section 2.1(m).
"Environmental Permits" is defined in Section 2.1(m).
"Equity Security" means (i) any Common Stock or other Voting
Securities, (ii) any securities of the Company convertible into or exchangeable
for Common Stock or other Voting Securities or (iii) any options, rights or
warrants (or any similar securities) issued by the Company to acquire Common
Stock or other Voting Securities.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
or any successor federal statute and the rules and regulations of the SEC
promulgated thereunder, all as the same shall be in effect from time to time.
"GAAP" means United States generally accepted accounting principles.
"Governmental Entity" is defined in Section 2.1(c).
"Hazardous Substances" is defined in Section 2.1(m).
"HSR Act" is defined in Section 2.1(c).
"Indemnifying Person" is defined in Section 9.2.
"Intellectual Property" means trademarks, trade names, trade dress,
service marks, copyrights, domain names, and similar rights (including
registrations and applications to register or renew the registration of any of
the foregoing), patents and patent applications, trade secrets, ideas,
inventions, improvements, practices, processes, formulas, designs, know-how,
confidential business and technical information, computer software, firmware,
data and documentation,
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licenses of or agreements relating to any of the foregoing, rights of privacy
and publicity, moral rights, and any other similar intellectual property rights
and tangible embodiments of any of the foregoing (in any medium including
electronic media.)
"Intellectual Property License" means any license, permit,
authorization, approval, Contract or consent granted, issued by or with any
Person relating to the use of Intellectual Property.
"IRS" means the Internal Revenue Service.
"Knowledge of the Company," "Knowledge of the Company or any of its
Subsidiaries" or any like expression means to the actual knowledge of the
persons listed on Schedule 10.2.
"Lien" is defined in Section 2.1(c).
"Losses" is defined in Section 9.1.
"Material Adverse Effect" on or with respect to an entity (or group of
entities taken as a whole) means any state of facts, event, change or effect
that has had, or would reasonably be expected to have, a material adverse effect
on (a) the business, properties, results of operations or financial condition of
such entity (or, if with respect thereto, of such group of entities taken as a
whole), other than any state of facts, event, change or effect attributable to
changes in general economic or market conditions affecting the biotechnology and
pharmaceutical industries, or (b) the ability of such entity (or group of
entities) to consummate the transactions contemplated under this Agreement or
the Registration Rights Agreement.
"Material Contract" is defined in Section 2.1(j).
"New Security" means any Equity Security issued by the Company after
the Closing; provided that "New Security" shall not include (i) any securities
issuable upon conversion of any convertible Equity Security, (ii) any securities
issuable upon exercise of any option, warrant or other similar Equity Security,
or (iii) any securities issuable in connection with any stock split, stock
dividend or recapitalization of the Company where such securities are issued to
all stockholders of the Company on a pro rata basis.
"Permit" is defined in Section 2.1(c).
"Permitted Liens" means those Liens (A) securing debt that is reflected
on the balance sheets or the notes thereto contained in the Company SEC
Documents filed with the SEC and publicly available prior to the date hereof,
(B) referred to in Schedule 2.1(j), (c) for Taxes not yet due or payable or
being contested in good faith and for which adequate reserves have been
established in accordance with GAAP, (D) that constitute mechanics', carriers',
workmens' or like liens, liens arising under original purchase price conditional
sales contracts and equipment leases
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with third parties entered into in the ordinary course, (E) Liens incurred or
deposits made in the ordinary course of business consistent with past practice
in connection with workers' compensation, unemployment insurance and social
security, retirement and other legislation and (F) easements, covenants,
declarations, rights or way, encumbrances, or similar restrictions in connection
with real property owned by the Company of any of its Subsidiaries that do not
materially impair the use of such real property by the Company and any of its
Subsidiaries, and in the case of Liens described in clauses (B), (C), (D), (E)
or (F) that, individually or in the aggregate, would not have a material Adverse
Effect on the Company and its Subsidiaries, taken as a whole.
"Person" means any individual, partnership, joint venture, corporation,
limited liability company, trust, unincorporated organization, government or
department or agency of a government or other entity.
"Pharmaceutical Alliances" means a research, development,
commercialization and/or similar agreement or arrangement between the Company
and a pharmaceutical, biopharmaceutical, biotechnology or similar entity in
which Equity Securities are sold to such entity or an Affiliate of such entity.
"Plans" is defined in Section 2.1(l).
"Pro Rata Share" means the fraction of an entire issuance of New
Securities, the numerator of which shall be the number of shares of Common Stock
and other Voting Securities owned by Purchaser and its Affiliates (other than
the Company and its Subsidiaries) on a fully-diluted basis immediately prior to
such issuance of such New Securities and the denominator of which shall be the
aggregate number of shares of Common Stock and other Voting Securities
outstanding on a fully-diluted basis (giving effect to the conversion of all
then-outstanding options, warrants and other convertible securities) immediately
prior to such issuance of such New Securities.
"Program Term" shall have the meaning set forth in the Collaboration
Agreement.
"Purchase Price" is defined in Section 1.1.
"Purchaser" is defined in the recitals to this Agreement.
"Purchaser Indemnifiable Losses" is defined in Section 9.1.
"Purchaser Indemnitees" is defined in Section 9.1.
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"Registration Rights Agreement" is defined in the recitals to this
Agreement.
"Representative" means an agent or employee of Purchaser, or of an
independent public accounting firm, law firm, or other consulting company or
advisor of Purchaser.
"Research and Development Funding Transaction" means a transaction to
raise funding for the research and development of one or more specific products,
products in one or more disease areas and/or one or more specific technologies,
in each case structured as an "off balance sheet" financing. Examples of
Research and Development Funding Transactions are R&D partnerships, SWORDs and
SPARCs.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, or any
successor federal statute, and the rules and regulations of the SEC promulgated
thereunder, all as the same shall be in effect from time to time.
"Shares" is defined in Section 1.1.
"Subsidiary" means, as to any Person, any corporation at least a
majority of the shares of stock of which having general voting power under
ordinary circumstances to elect a majority of the Board of Directors of such
corporation (irrespective of whether or not at the time stock of any other class
or classes shall have or might have voting power by reason of the happening of
any contingency) is, at the time as of which the determination is being made,
owned by such Person, or one or more of its Subsidiaries or by such Person and
one or more of its Subsidiaries.
"Subscription Notice" is defined in Section 3.1.
"Taxes" is defined in Section 2.1(k).
"Tax Returns" is defined in Section 2.1(k).
"Total Voting Power" means at any time the total combined voting power
in the general election of directors of all the Voting Securities then
outstanding.
"Voting Securities" means at any time shares of any class of capital
stock of the Company which are then entitled to vote generally in the election
of directors.
ARTICLE XI
MISCELLANEOUS
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Section 11.1 Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants, and restrictions without
including any of such which may be hereafter declared invalid, void or
unenforceable.
Section 11.2 Specific Enforcement. Purchaser, on the one hand, and the
Company, on the other, acknowledge and agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of the provisions hereof in any court of the
United States or any state thereof having jurisdiction, this being in addition
to any other remedy to which they may be entitled at law or equity.
Section 11.3 Entire Agreement. This Agreement (including the documents
set forth in the Exhibits and Schedules hereto) and the Collaboration Agreement
contain the entire understanding of the parties with respect to the transactions
contemplated hereby.
Section 11.4 Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more of the counterparts have been signed
by each party and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
Section 11.5 Notices. All notices and other communications required or
permitted under this Agreement shall be effective upon receipt and shall be in
writing and may be delivered in person, by telecopy, overnight delivery service
or registered or certified United States mail, addressed to the Company or the
Purchaser, as the case may be, at their respective addresses set forth below:
If to the Company:
MILLENNIUM PHARMACEUTICALS, INC.
238 Main Street
Cambridge, Massachusetts 02139-4815
Attn: Chief Executive Officer
Telephone (617) 679-7000
Facsimile: (617) 621-0264
With copies to:
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Attention: Legal Department
and to
Hale and Dorr LLP
60 State Street
Boston, Massachusetts 01209
Attn: Steven Singer
Telephone (617) 526-6000
Facsimile: (617) 526-5000
If to Purchaser:
BAYER AG
D 51368
Leverkeusen
Federal Republic of Germany
Attn: General Counsel
Telephone: 011 49 214 30 81803
Facsimile: 011 49 214 30 50848
With copies to:
Bayer Corporation, Inc.
400 Morgan Lane
West Haven, CT
Attn: Legal Department
Telephone: (203) 812 - 2401
Facsimile: (203) 812 - 2795
and to:
Wilmer, Cutler & Pickering
2445 M Street
Washington, D.C. 20037
Attn: Richard W. Cass
Telephone (202) 663-6503
Facsimile: (202) 663-6363
All notices and other communications shall be effective upon the earlier of
actual receipt thereof
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by the person to whom notice is directed or (a) in the case of notices and
communications sent by personal delivery or telecopy, one business day after
such notice or communication arrives at the applicable address or was
successfully sent to the applicable telecopy number, (b) in the case of notices
and communications sent by overnight delivery service, at noon (local time) on
the second business day following the day such notice or communications was
delivered to such delivery service, and (c) in the case of notices and
communications sent by United States mail, seven days after such notice or
communication shall have been deposited in the United States mail. Any notice
delivered to a party hereunder shall be sent simultaneously, by the same means,
to such party's counsel as set forth above.
Section 11.6 Amendments. This Agreement may be amended as to Purchaser
and their successors and assigns (determined as provided in Section 11.8), and
the Company may take any action herein prohibited, or omit to perform any act
required to be performed by it, if the Company shall obtain the written consent
of Purchaser. This Agreement may not be waived, changed, modified, or discharged
orally, but only by an agreement in writing signed by the party or parties
against whom enforcement of any waiver, change, modification or discharge is
sought or by parties with the right to consent to such waiver, change,
modification or discharge on behalf of such party.
Section 11.7 Cooperation. Purchaser and the Company agree to take, or
cause to be taken, all such further or other actions as shall reasonably be
necessary to make effective and consummate the transactions contemplated by this
Agreement, including, without limitation, making all required filings under the
HSR Act, if any.
Section 11.8 Successors and Assigns. All covenants and agreements
contained herein shall bind and inure to the benefit of the parties hereto and
their respective successors and assigns; provided, however, that Purchaser may
assign its rights hereunder (including its right to purchase the Shares) to an
Affiliate of Purchaser, provided that such Affiliate agrees in writing to be
bound by the terms and conditions set forth herein, and the Company may not
assign any of its rights under this Agreement without the written consent of
Purchaser, which consent shall not be unreasonably withheld.
Section 11.9 Expenses and Remedies. Whether or not the Closing takes
place, all costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be borne by the party incurring such
expense.
Section 11.10 Transfer of Shares. Purchaser understands and agrees that
the Shares have not been registered under the Securities Act or the securities
laws of any state and that they may be sold or otherwise disposed of only in one
or more transactions registered under the Securities Act and, where applicable,
such laws or as to which an exemption from the registration requirements of the
Securities Act and, where applicable, such laws is available. Purchaser
acknowledges that except as provided in the Registration Rights Agreement,
Purchaser has no right to require the Company to register the Shares and
understands and agrees that each
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certificate representing the Shares (other than, with respect to the first
legend, Shares that are no longer subject to the provisions of Article V and
other than, with respect to the second legend, Shares which have been
transferred in a transaction registered under the Securities Act or exempt from
the registration requirements of the Securities Act pursuant to Rule 144
thereunder or any similar rule or regulation) shall bear the following legends:
"THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE IS RESTRICTED BY AN AGREEMENT ON FILE AT THE
OFFICE OF THE CORPORATION."
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE
SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS
OR AN APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS OF
SUCH ACT OR SUCH LAWS."
and Purchaser agrees to transfer the Shares only in accordance with the
provisions of such legends.
Section 11.11 Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Delaware
without regard to conflicts of law principles.
Section 11.12 Publicity. The Company and Purchaser will consult and
cooperate with each other before issuing, and provide each other the opportunity
to review and comment upon, any press release or otherwise making any public
statement with respect to the transactions contemplated by this Agreement.
Section 11.13 No Third Party Beneficiaries. Nothing contained in this
Agreement is intended to confer upon any Person other than the parties hereto
and their respective successors and permitted assigns, any benefit, right or
remedies under or by reason of this Agreement; provided, however, that the
parties hereto hereby acknowledge and agree that the Purchaser Indemnities
(other than Purchaser) are third party beneficiaries of Article IX of this
Agreement.
Section 11.14 Consent to Jurisdiction. Each of the Company and
Purchaser irrevocably submits to the personal exclusive jurisdiction of the
United States District Court for the District of Delaware for the purposes of
any suit, action or other proceeding arising out of this Agreement or any
transaction contemplated hereby (and, to the extent permitted under applicable
rules of procedure, agrees not to commence any action, suit or proceeding
relating hereto except in such court). Each of the Company and Purchaser further
agrees that service of any process, summons, notice or document hand delivered
or sent by registered mail to such party's respective address
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set forth in Section 11.5 will be effective service of process for any action,
suit or proceeding in Delaware with respect to any matters to which it has
submitted to jurisdiction as set forth in the immediately preceding sentence.
Each of the Company and Purchaser irrevocably and unconditionally waives any
objection to the laying of venue of any action, suit or proceeding arising out
of this Agreement or the transactions contemplated hereby in the United States
District court for the District of Delaware, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in such court that any
such action, suit or proceeding brought in such court has been brought in an
inconvenient forum.
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IN WITNESS WHEREOF, PURCHASER and the COMPANY have caused this Agreement to be
executed as of the day and year first above written.
BAYER AG
By: /s/
Authorized Signature
By: /s/
Authorized Signature
MILLENNIUM PHARMACEUTICALS, INC.
By: /s/
Title:
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Exhibit C
MILLENNIUM PHARMACEUTICALS, INC.
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is entered into
as of November 10, 1998 by and among Millennium Pharmaceuticals, Inc., a
Delaware corporation (the "Company"), and Bayer AG, a Federal Republic of
Germany corporation ("Purchaser").
RECITALS
WHEREAS, the Company and the Purchaser have entered into an Investment
Agreement, dated as of September 22, 1998 (the "Investment Agreement"), pursuant
to which the Purchaser has agreed to purchase 4,957,660 shares (the "Shares") of
common stock, par value $.001 per share, of the Company, upon the terms and
conditions set forth therein;
WHEREAS, in order to induce the Purchaser to enter into the Investment
Agreement, the Company has agreed to provide the registration rights set forth
in this Agreement for the benefit of Purchaser and its direct and indirect
transferees upon the terms and conditions set forth herein; and
WHEREAS, the execution and delivery of this Agreement is a condition to
the Purchaser's obligations pursuant to the Investment Agreement.
NOW, THEREFORE, in consideration of the mutual premises, covenants and
conditions set forth herein, the parties hereby agree as follows:
1. Definitions. Capitalized terms used herein without definition shall
have the meanings assigned to such terms in the Investment Agreement. For the
purposes of this Agreement:
"Commission" means the U.S. Securities and Exchange Commission or any
other governmental authority from time to time administering the Securities Act.
"Common Stock" means the common stock, par value $.001 per share, of
the Company.
"DTC" means the Depository Trust Company.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
or any successor federal statute and the rules and the regulations of the
Commission promulgated thereunder, all as the same shall be in effect from time
to time.
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"Holder" means any Person owning or having the right to acquire
Registrable Securities, including an Affiliate or any successor, assignee or
transferee of Purchaser or a Holder that has received Registrable Securities in
accordance with Section 13 hereof.
"NASD" means the National Association of Securities Dealers, Inc.
"Person" means any natural person, firm, partnership, association,
corporation, company, joint venture, unincorporated association, trust, business
trust, government or department or agency of a government, limited liability
company or other entity.
"Prospectus" means the prospectus included in any Registration
Statement (including without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A), as amended or supplemented by any
prospectus supplement, with respect to the terms of the offering or any portion
of the Registrable Securities covered by such Registration Statement and all
other amendments and supplements to the prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such prospectus.
"Registrable Securities" means (a) the Shares of Common Stock received
by the Purchaser pursuant to the Investment Agreement and (b) any capital stock
or other securities of the Company issued or issuable with respect to the
Shares, (i) upon any conversion or exchange thereof, (ii) by way of stock
dividend or other distribution, stock split or reverse stock split, or (iii) in
connection with a combination of shares, recapitalization, merger,
consolidation, exchange offer or other reorganization. As to any particular
Registrable Securities, once issued such securities shall cease to be
Registrable Securities when (A) a Registration Statement with respect to the
sale of such securities shall have become effective under the Securities Act and
such securities shall have been disposed of in accordance with such Registration
Statement, (B) such securities shall have been distributed to the public in
reliance upon Rule 144 (or any successor provision) under the Securities Act,
provided that at the time such securities are proposed to be disposed of, they
may be sold under Rule 144 without any limitation on the amount of such
securities which may be sold or (C) they shall have ceased to be outstanding.
"Registration Expenses" means all fees and expenses incident to the
performance of or compliance with the provisions of this Agreement, whether or
not any Registration Statement is filed or becomes effective, including, without
limitation, all (a) registration and filing fees (including, without limitation,
(i) fees with respect to filings required to be made and other expenses
associated with the NASD and any other applicable exchange in connection with an
underwritten offering, and (ii) fees and expenses of compliance with state
securities or blue sky laws (including, without limitation, fees and
distributions of counsel for the underwriter or underwriters in connection with
blue sky qualifications of the Registrable Securities and determination of
eligibility of the Registrable Securities for investment under the laws of such
jurisdictions as are provided in Section 5(e)), (b) printing expenses
(including, without limitation, expenses of printing certificates for
Registrable Securities in a form eligible for deposit with DTC and of printing
prospectuses), (c) fees
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and disbursements of all independent certified public accountants referred to in
Section 5 (including, without limitation, the reasonable expenses of any special
audit and "cold comfort" letters required by or incident to such performance),
(d) the fees and expenses of any "qualified independent underwriter" or other
independent appraiser participating in an offering pursuant to the NASD Rules of
Conduct and the corresponding rules of any other applicable exchange, (e)
liability insurance under the Securities Act or any other securities laws, if
the Company desires such insurance, (f) fees and expenses of all attorneys,
advisers, appraisers and other persons retained by the Company or any Subsidiary
of the Company, (g) internal expenses of the Company and its Subsidiaries
(including, without limitation, all salaries and expenses of officers and
employees of the Company and its Subsidiaries, other general overhead expenses
of the Company and its Subsidiaries, and other expenses for the performance of
legal or accounting duties), (h) the expense of any annual audit and the
preparation of historical and pro forma financial statements or other data
normally prepared by the Company in the ordinary course of business, (i) the
expenses relating to printing, word processing and distributing all Registration
Statements, underwriting agreements, securities sales agreements, and any other
documents necessary in order to comply with this Agreement, (j) any fees and
disbursements of any other underwriters and broker-dealers customarily paid by
issuers or sellers of securities, and (k) the fees and disbursements of not more
than one (1) counsel (together with appropriate local counsel) chosen by the
Holders of a majority of the Registrable Securities to be included in such
Registration Statement; provided, however, that in all cases in which the
Company is required to pay Registration Expenses hereunder, Registration
Expenses shall exclude any underwriting discounts, selling commissions or any
transfer taxes payable in respect of the sale of the Registrable Securities by
the Holders thereof.
"Registration Statement" means any registration statement of the
Company that covers any of the Registrable Securities pursuant to the provisions
of this Agreement, and all amendments and supplements to any such registration
statement, including post-effective amendments, in each case including the
Prospectus, all exhibits and all material incorporated by reference or deemed to
be incorporated by reference in such registration statement.
"Rule 144" means Rule 144 (or any successor provision) under the
Securities Act.
"Securities Act" means the Securities Act of 1933, as amended, or any
successor federal statute, and the rules and regulations of the Commission
promulgated thereunder, all as the same shall be in effect from time to time.
"Special Registration" means the registration of share of equity
securities and/or options or other rights in respect thereof to be offered
solely to directors, members of management, employees, consultants or sales
agents, distributors or similar representatives of the Company or its direct or
indirect Subsidiaries, solely on Form S-8 or any successor form, a registration
on Form S-4 with respect to any merger, consolidation or acquisition, or a
registration on another form not available for registering Registrable
Securities for sale to the public.
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"underwritten registration" or "underwritten offering" means a
registration in which securities of the Company (including Registrable
Securities) are sold to an underwriter for reoffering to the public.
2. Demand Registration.
(a) Request for Registration. Subject to the provisions of
Sections 2(d) and 8, at any time or from time to time as of the date hereof,
Holders of Registrable Securities shall have the right to make a written request
that the Company effect a registration under the Securities Act of all or part
of its Registrable Securities of the Holders making such request. A request for
registration pursuant to this Section 2 (a "Demand Registration") shall specify
the approximate number of Registrable Securities requested to be registered, the
anticipated per share price range for such offering and the intended method or
disposition thereof by such Holders.
(b) Obligation to Effect Registration. Within five (5) days
after receipt by the Company of any request for Demand Registration, the Company
shall promptly give written notice of such requested registration to all
Holders. Such Holders shall have the right, by giving written notice to the
Company within twenty (20) days after the Company provides its notice, to elect
to have included in such registration such of their Registrable Securities as
such Holders may request in such notice of election. Thereupon, the Company
shall, as expeditiously as possible, use reasonable best efforts to effect the
registration under the Securities Act of all Registrable Securities that the
Company has been requested to so register; provided, that if the underwriter (if
any) managing the offering determines that, because of marketing factors, all of
the Registrable Securities requested to be registered by all Holders may not be
included in the offering, then all Holders who have requested registration shall
participate in the offering pro rata based upon the number of Registrable
Securities that they have requested to be so registered.
(c) Registration Statement Form. Registrations under this
Section 2 shall be on such appropriate form of Registration Statement of the
Commission as shall be selected by the Company and available to it under the
Securities Act. The Company agrees to include in any such Registration Statement
all information which, in the opinion of counsel to the Company, is required to
be included therein under the Securities Act.
(d) Limitations on Registration. The Company shall not be
required to effect more than two (2) Demand Registrations pursuant to this
Section 2. In addition, the Company shall not be required to effect any
registration (other than on Form S-3 or any successor form relating to secondary
offerings) during the period starting with the date sixty (60) days prior to the
Company's estimated date of filing of, and ending on the date ninety (90) days
immediately following the effective date of, any registration statement (other
than a Special Registration) pertaining to the securities of the Company,
provided that the Company is actively employing in good faith all reasonable
efforts to cause such registration statement to become effective.
Notwithstanding any other provision of this Agreement, the Company shall not be
required to effect the Demand
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Registration of any Registrable Securities prior to the second anniversary of
the closing date of the Investment Agreement.
(e) Inclusion of Other Securities. The Company shall not
register securities (other than Registrable Securities) for sale for the account
of any Person in any request for Demand Registration, unless permitted to do so
by the written consent of the Holders of at least a majority of the Registrable
Securities proposed to be sold in such Demand Registration.
(f) Effective Registration Statement. A Demand Registration
shall not be deemed to have been effected unless a Registration Statement
covering all of the Registrable Securities requested to be included in such
registration by the Holders thereof and as reduced, if necessary, in accordance
with Section 2(g) hereto has been declared effective by the Commission and
remains continually effective for the period specified in Section 5(b).
(g) Suspension. If the Board of Directors of the Company, in
its good faith judgment, determines that any registration under the Securities
Act of Registrable Securities should not be made or continued because it would
materially interfere with any material financing, acquisition, corporation
reorganization, merger, or other transaction involving the Company or any of its
subsidiaries (a "Valid Business Reason"), (i) the Company may postpone filing a
Registration Statement relating to a Demand Registration until such Valid
Business Reason no longer exists, but in no event for more than 60 days, and
(ii) in case a Registration Statement has been filed relating to a Demand
Registration, the Company may cause such Registration Statement to be withdrawn
and its effectiveness terminated or may postpone amending or supplementing such
Registration Statement until such Valid Business Reason no longer exists, but in
no event for more than 60 days (the "Postponement Period"); provided, however,
that in no event shall the Company be permitted to postpone or withdraw a
Registration Statement within 120 days after the expiration of any Postponement
Period.
(h) Allocation. If any Demand Registration involves an
underwritten offering and the managing underwriter of such offering shall advise
the Company that, in its view, the number of securities requested to be included
in such registration exceeds the largest number (the "Section 2(h) Number") that
can be sold in an orderly manner in such offering within a price range
acceptable to the Holders of Registrable Securities requesting the registration,
the Company shall include in such registration:
(i) first, all Registrable Securities requested
to be included in such Registration by the Holders of Registrable Securities
requesting such registration; provided, however, that, if the number of such
Registrable Securities exceeds the Section 2(h) Number, the number of such
Registrable Securities (not to exceed the Section 2(h) Number) shall be
allocated to the Holders of Registrable Securities requesting such registration;
provided further, however, that if the number of Registrable Securities
requested to be included by all Holders of Registrable Securities requesting
such registration exceeds the Section 2(h) Number, then the number of such
Registrable Securities included in such registration shall be allocated on a
pro rata basis among all
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Holders of Registrable Securities requesting such registration, based on the
number of Registrable Securities that each such Holder requesting registration
then owned by all such Holders requesting such registration; and
(ii) second, to the extent that consent has been
granted in accordance with
Section 2(e) and the number of Registrable Securities to be included by all
Holders of Registrable Securities requesting such registration is less than the
Section 2(h) Number, securities that the Company proposes to register.
3. Piggyback Registration.
(a) Inclusion in Piggyback Registration. If the Company at any
time proposes to register any of its securities under the Securities Act (other
than pursuant to Section 2 or a Special Registration), whether or not for sale
for its own account, (a "Company Registration"), it shall each such time, prior
to such filing, give prompt written notice to all Holders of Registrable
Securities of its intention to do so and, upon the written request of any Holder
of Registrable Securities given to the Company within twenty (20) days after the
Company has provided such notice (which request shall state the intended method
of disposition of such Registrable Securities), the Company shall use reasonable
best efforts to cause all Registrable Securities that the Company has been
requested by the Holders thereof to register to be so registered under the
Securities Act to the extent necessary to permit their disposition in accordance
with the intended methods of distribution specified in the request of such
Holder or Holders; provided, that if at any time after giving written notice of
its intention to register any securities and prior to the effective date of the
Registration Statement filed in connection with such registration, the Company
shall determine for any reason not to register such securities, the Company may,
at its election, give written notice of such determination to each Holder that
was previously notified of such registration, and, thereupon, shall not register
any Registrable Securities in connection with such registration (but shall
nevertheless pay the Registration Expenses in connection therewith), without
prejudice, however, to the rights of any Holders to request that a registration
be effect under Section 2 and provided further, that no registration effected
under this Section 3 shall relieve the Company from its obligations to effect
Registration upon request under Section 2.
(b) Terms of Underwriting. In connection with any offering
under this Section 3 involving an underwritten offering, the Company shall not
be required to include any Registrable Securities in such offering unless the
Holder thereof accepts the terms, if any, of the underwriting as agreed upon
between the Company and the underwriters selected by it provided that such terms
must be reasonably satisfactory in substance and form to the Holder and
consistent with this Agreement, and then only in such quantity as will not, in
the opinion of the managing underwriter, jeopardize the success of the offering
by the Company.
(c) Allocation. If any Company Registration involves an
underwritten offering and the managing underwriter of such offering shall advise
the Company that, in its view, the number of securities requested to be included
in such registration exceeds the largest number (the
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"Section 3(c) Number") that can be sold in an orderly manner in such offering
within a price range acceptable to the Company, the Company shall include in
such registration:
(i) first, all securities that the Company
proposes to register for its own account (the "Company Securities"); and
(ii) second, to the extent that the number of
Company Securities is less than the Section 3(c) Number, the remaining
securities to be included in such registration shall be allocated on a pro rate
basis among (i) all Holders of Registrable Securities requesting that
Registrable Securities be included in such Registration, and (ii) all other
holders ("Other Holders") of the Company's securities who have been granted
"piggy-back" registration rights with respect to such securities (the "Other
Securities") and have requested that such Other Securities be included in such
registration, based on the number of Registrable Securities and Other
Securities that each such Holder and Other Holder requesting such registration
bears to the aggregate number of Registrable Securities and Other Securities
then owned by all such Holders and Other Holders requesting such registration.
4. Allocation of Expenses. The Company will pay all Registration
Expenses of all registrations under this Agreement.
5. Obligations of the Company. If and whenever the Company is required
to use best efforts to effect the registration under the Securities Act of any
Registrable Securities pursuant to Section 2 and 3 of this Agreement, the
Company shall:
(a) file with the Commission, as soon as practicable, a
Registration Statement with respect to such Registrable Securities, make all
required filings with the NASD and any other applicable exchange, and use best
efforts to cause such Registration Statement to become effective at the earliest
possible date and remain effective;
(b) prepare and file with the Commission such amendments and
supplements to the Registration Statement and the Prospectus used in connection
therewith and such other documents as may be necessary to keep the Registration
Statement effective until the earlier of (i) 210 days after the effective date
of such Registration Statement or (ii) the consummation of the disposition by
the Holders of all the Registrable Securities covered by such Registration
Statement and otherwise comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such Registration
Statement;
(c) furnish to counsel (if any) selected by the Holders of a
majority of the Registrable Securities covered by such Registration Statement
and to counsel for the underwriters in any underwritten offering copies of all
documents proposed to be filed with the Commission in connection with such
registration a reasonable time prior to the proposed filing thereof and give
reasonable consideration in good faith to any comments of such Holders, counsel
and underwriters.
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(d) furnish to each seller of such securities, without charge,
such number of conformed copies of such Registration Statement and of each such
amendment and supplement thereto (in each case, including all exhibits
(including all exhibits incorporated by reference), financial statements,
schedules, and all documents incorporated therein, deemed to be incorporated
therein by reference or filed therewith, except that the Company shall not be
obligated to furnish any seller of securities with more than two copies of such
exhibits and documents), such numbers of copies of the Prospectus included in
such Registration Statement (including each preliminary prospectus) in
conformity with the requirements of the Securities Act, and such other
documents, as such seller may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by such seller;
(e) use its reasonable best efforts to register or qualify and
cooperate with the Holders of Registrable Securities, the underwriters and their
respective counsels in connection with the registration or qualification (or
exemption from such registration or qualification) of the securities covered by
such Registration Statement under such other securities or blue sky laws of such
jurisdictions as each seller shall request; provided, however, that where
Registrable Securities are offered other than through an underwritten offering,
the Company agrees to cause its counsel to perform blue sky investigations and
file registrations and qualification required to be filed pursuant to this
Section 5(e); keep each such registration or qualification (or exemption
therefrom) effective during the period such Registration Statement is required
to be effective hereunder and do any and all other acts and things which may be
necessary or advisable to enable such seller to consummate the disposition in
such jurisdictions of the securities owned by such seller, except that the
Company shall not for any such purpose be required to qualify generally to do
business as a foreign corporation in any jurisdiction wherein it is not so
qualified, subject itself to taxation in any jurisdiction wherein it is not so
subject, or take any action which would subject it to general service of process
in any jurisdiction wherein it is not so subject;
(f) in connection with an underwritten public offering only,
furnish to each seller in a signed counterpart, addressed to the sellers, of
(i) an opinion of counsel for the Company
experienced in securities law matters, dated the effective
date of the Registration Statement, and
(ii) a "cold comfort" letter signed by the
independent public accountants who have issued an audit report
on the Company's financial statements included in the
Registration Statement, subject to such seller having executed
and delivered to the independent public accountants such
certificates and documents as such accountants shall
reasonably request,
covering substantially the same matters with respect to the Registration
Statement (and the Prospectus included therein) and, in the case of such
accountants' letter, with respect to events subsequent to the date of such
financial statements, as are customarily covered in opinions of issuer's
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<PAGE>
counsel and in accountants' letters delivered to the underwriters in
underwritten public offerings of securities;
(g) (i) notify each Holder of Registrable Securities subject
to such Registration Statement if such Registration Statement, at the time it or
any amendment thereto became effective, (x) contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading upon discovery by the
Company of such material misstatement or omission or (y) upon discovery by the
Company of the happening of any event as a result of which the Company believes
there would be such a material misstatement or omission, and, as promptly as
practicable, prepare and file with the Commission a post-effective amendment to
such Registration Statement and use reasonable best efforts to cause such
post-effective amendment to become effective such that such Registration
Statement, as so amended, shall not contain an untrue statement or a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading, and (ii) notify each Holder of
Registrable Securities subject to such Registration Statement, at any time when
a Prospectus related therefor is required to be delivered under the Securities
Act, if the Prospectus included in such Registration Statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading upon discovery by the Company of such material misstatement or
omission or upon the discovery by the Company of the happening of any event as a
result of which the Company believes that there would be a material misstatement
or omission, and, as promptly as is practicable, prepare and furnish to such
Holder a reasonable number of copies of a supplement to or an amendment of such
Prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such securities, such Prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(h) otherwise use its reasonable best efforts to comply with
all applicable rules and regulations of the Commission, and make available to
its security holders, as soon as reasonably practicable, an earnings statement
of the Company complying with the provisions of Section 11(a) of the Securities
Act and Rule 158 under the Securities Act (or any similar rule promulgated under
the Securities Act) no later than 45 days after the end of any 12-month period
(or 90 days after the end of any 12-month period if such period is a fiscal
year) (i) commencing at the end of any fiscal quarter in which Registrable
Securities are sold to an underwriter or to underwriters in a firm commitment or
best efforts underwritten offering, and (ii) if not sold to an underwriter or to
underwriters in such an offering, commencing on the first day of the first
fiscal quarter of the Company after the effective date of the relevant
Registration Statement, which statements shall cover said 12-month periods;
(i) promptly notify each Holder of Registrable Securities
covered by such Registration Statement, their counsel and the underwriters (i)
when such Registration Statement, or any post-effective amendment to such
Registration Statement, shall have become effective, or any
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<PAGE>
amendment of or supplement to the Prospectus used in connection therewith shall
be filed, (ii) of any request by the Commission to amend such Registration
Statement or to amend or supplement such Prospectus or for additional
information, (iii) of the issuance by the Commission of any stop order
suspending the effectiveness of such Registration Statement or of any order
preventing or suspending the use of any preliminary prospectus or the initiation
or threatening of any proceedings for any of such purposes, (iv) of the
suspension of the qualification of such securities for offering or sale in any
jurisdiction, or of the institution of any proceedings for any of such purposes
and (v) if at any time when a Prospectus is to be required by the Securities Act
to be delivered in connection with the sale of the Registrable Securities, the
representations and warranties of the Company contained in any agreement
(including the underwriting agreement contemplated in Section 6(b) below), to
the knowledge of the Company, cease to be true and correct in any material
respect;
(j) use its reasonable best efforts to prevent the issuance of
any order suspending the effectiveness of the Registration Statement or of any
order preventing or suspending the use of a Prospectus or suspending the
qualification (or exemption from qualification) of any of the Registrable
Securities covered thereby for sale in any jurisdiction, and, if any such order
is issued, to obtain the withdrawal of any such order at the earliest possible
moment;
(k) if requested by the managing underwriter, if any, (i)
promptly incorporate in a prospectus supplement or post-effective amendment such
information as the managing underwriter, if any, reasonably requests to be
included therein to comply with applicable law, and (ii) make all required
filings of such prospectus supplement or such post-effective amendment as soon
as practicable after the Company has received notification of the matters to be
incorporated in such prospectus supplement or post-effective amendment;
(l) cooperate with the Holders and the managing underwriter,
if any, to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold, which certificates shall not
bear any restrictive legends whatsoever and shall be in a form eligible for
deposit with DTC, and enable such Registrable Securities to be in such
denominations and registered in such names as the underwriters, if any, or
Holders may reasonably request at least two (2) business days prior to any sale
of Registrable Securities in a firm commitment underwritten public offering;
(m) use its reasonable best efforts to cause the Registrable
Securities covered by a Registration Statement to be registered with, and to
obtain the consent or approval of, each governmental agency or authority,
whether federal, state, local or foreign, which may be required to effect such
registration or the offering or sale in connection therewith or to enable the
sellers to offer, or to consummate the disposition of, the Registrable
Securities subject to such Registration Statement, except as may be required
solely as a consequence of the nature of such seller's business, in which case
the Company will cooperate with all reasonable respects with the filing of the
Registration Statement and the granting of such approvals;
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<PAGE>
(n) prior to the effective date of the Registration Statement,
(i) provide the registrar for the Common Stock or such other Registrable
Securities with printed certificates for such securities in a form eligible for
deposit with DTC and (ii) provide a CUSIP number for such securities.
(o) The Company agrees not to file or make any amendment to
any Registration Statement with respect to any Registrable Securities, or any
amendment of or supplement to the Prospectus used in connection therewith, which
refers to any seller of any securities covered thereby by name, or otherwise
identifies such seller as the holder of any securities of the Company, without
the consent of such seller, such consent not to be unreasonably withheld, except
that no such consent shall be required for any disclosure that is required by
law.
6. Underwritten Offerings. The provisions of this Section 6 do not
establish additional registration rights but instead set forth procedures
applicable, in addition to those set forth in Sections 2, 3 and 5, to any
registration that is an underwritten offering.
(a) Underwritten Offerings Exclusive. Whenever a request
for Demand Registration is for an underwritten offering, only securities that
are to be distributed by the underwriters may be included in the Registration.
(b) Underwriting Agreement. If requested by the underwriters
for any underwritten offering by Holders pursuant to a request for Demand
Registration, the Company shall enter into an underwriting agreement with such
underwriters for such offering, such agreement to be reasonably satisfactory in
substance and form to the Holders of a majority of the Registrable Securities to
be covered by such registration and to the underwriters and to contain such
representations and warranties by the Company and such other terms and
provisions as are customarily contained in agreements of this type, including,
but not limited to, indemnities to the effect and to the extent provided in
Section 10, provisions for the delivery of officers' certificates, opinions of
counsel and accountants' "cold comfort" letters, and hold-back arrangements. The
Holders of Registrable Securities to be distributed by such underwriters shall
be parties to such underwriting agreement and may, at their option, require that
any or all the representations and warranties by, and the agreements on the part
of, the Company to and for the benefit of such underwriters be made to and for
the benefit of such Holders and that any or all of the conditions precedent to
the obligations of such underwriters under such underwriting agreements shall
also be conditions precedent to the obligations of such Holders. No such Holders
shall be required by the Company to make any representations or warranties to,
or agreements with, the Company or the underwriters other than as set forth in
Section 6(d) and representations, warranties or agreements regarding such Holder
and such Holders's intended method of distribution.
(c) Selection of Underwriters. Whenever a request for Demand
Registration is for an underwritten offering, the Holders of a majority of the
Registrable Securities to be Registered pursuant to such offering shall have the
right to select one or more underwriters to administer the offering, subject to
the consent of the Company, which shall not be unreasonably withheld. If the
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<PAGE>
Company at any time proposes to register any of its securities under the
Securities Act for sale for its own account and such securities are to be
distributed by or through one or more underwriters, the Company shall have the
right to select one or more underwriters to administer the offering, subject to
the consent of the Holders of a majority of the Registrable Securities to be
registered pursuant to such offering, which shall not be unreasonably withheld.
In all cases in this Section 6(c), at least one of the underwriters chosen by
the Holders or the Company shall be an underwriter of nationally-recognized
standing.
(d) Hold Back Agreements. If and whenever the Company proposes
to register any of its equity securities under the Securities Act, whether or
not for its own account (other than pursuant to a Special Registration), or is
required to use its best efforts to effect the registration of any Registrable
Securities under the Securities Act pursuant to Section 2 or 3, each Holder, if
required by the managing underwriter in an underwritten offering, agrees by
acquisition of such Registrable Securities not to effect (other than pursuant to
such registration) any public sale or distribution, including, without
limitation, any sale pursuant to Rule 144, of any Registrable Securities, any
other equity securities of the Company or any securities convertible into or
exchangeable or exercisable for any equity securities of the Company during the
ten (10) days prior to, and for ninety (90) days after, the effective date of
such registration, to the extent timely notified in writing by the Company or
the managing underwriter, and the Company agrees to cause each director and
executive officer of the Company to enter into a similar agreement with the
Company. The foregoing provisions shall not apply to any Holder if such Holder
is prevented by applicable statute or regulation from entering into any such
agreement,; provided, however, that any such Holder shall undertake, in its
request to participate in any such underwritten offering, not to effect any
public sale or distribution of any applicable class of Registrable Securities
commencing on the date of sale of such applicable class of Registrable
Securities unless it has provided forty-five (45) days prior written notice of
such sale or distribution to the underwriter or underwriters. The Company
further agrees not to effect (other than pursuant to such registration or
pursuant to a Special Registration) any public sale or distribution, or to file
any Registration Statement (other than such registration or Special
Registration) covering any, of its equity securities, or any securities
convertible into or exchangeable or exercisable for such securities, during the
ten (10) days prior to, and for ninety (90) days after, the effective date of
such registration if required by the managing underwriter.
7. Preparation, Reasonable Investigation. In connection with the
preparation and filing of each Registration Statement registering Registrable
Securities under the Securities Act, the Company shall give the Holders of
Registrable Securities to be so registered and their underwriters, if any, and
their respective counsel and accountants, the opportunity to participate in the
preparation of such Registration Statement, each Prospectus included therein or
filed with the Commission, and each amendment thereof or supplement thereto, and
shall give each of them such access to all pertinent financial, corporate, and
other documents and properties of the Company and its Subsidiaries, and such
opportunities to discuss the business of the Company with its officers,
directors, employees and the independent public accountants who have issued
audit reports on its
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<PAGE>
financial statements as shall be necessary, in the opinion of such Holders' and
such underwriters' respective counsel, to conduct a reasonable investigation
within the meaning of the Securities Act.
8. Other Registrations. If and whenever the Company is required to use
its best efforts to effect the registration under the Securities Act of any
Registrable Securities pursuant to Section 2 or 3, and if such registration
shall not have been withdrawn or abandoned, the Company shall not be obligated
to and shall not file any Registration Statement with respect to any of its
securities (including Registrable Securities) under the Securities Act (other
than a Special Registration), whether of its own accord or at the request or
demand of any holder or holders of such securities, until a period of 180 days
shall have elapsed from the effective date of such previous registration,
provided that the Company shall not be excused from filing a Registration
Statement by virtue of this Section 8 more than once in a 360 day period.
9. Certain Obligations of Holders.
(a) The Company may require each Holder of any Registrable
Securities as to which any registration is being effected to furnish to the
Company such information regarding such Holder and the intended method of
disposition of such securities as the Company may from time to time reasonably
request in writing and as shall be required to effect the registration of such
Holder's Registrable Securities. Each such Holder agrees to furnish promptly to
the Company all information required to be disclosed in order to make the
information previously furnished to the Company by such Holder not materially
misleading.
(b) Each Holder of Registrable Securities covered by a
Registration Statement agrees that, upon receipt of any notice from the Company
pursuant to Section 5(g), such Holder will promptly discontinue the disposition
of Registrable Securities pursuant to such Registration Statement until such
Holder shall have received, in the case of clause (i) of Section 5(g), notice
from the Company that such Registration Statement has been amended, as
contemplated by Section 5(g), and, in the case of clause (ii) of Section 5(g),
copies of the supplemented or amended Prospectus contemplated by Section 5(g).
If so directed by the Company, each Holder will deliver to the Company (at the
Company's expense) all copies, other than permanent file copies, in such
Holder's possession of the Prospectus covering such Registrable Securities at
the time of receipt of such notice. In the event that the Company shall give any
such notice, the period mentioned in Section 5(b) shall be extended by the
number of days during the period from and including the date of the giving of
such notice to and including the date when each seller of any Registrable
Securities covered by such Registration Statement shall have received copies of
the supplemented or amended Prospectus covering such Registrable Securities
contemplated by Section 5(g).
10. Indemnification and Contribution.
(a) In the event of any registration of any of the Registrable
Securities under the Securities Act pursuant to this Agreement, the Company will
indemnify and hold harmless the seller of such securities, its directors,
officers, and employees, each other Person who participates as an
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<PAGE>
underwriter, broker or dealer in the offering or sale of such securities, and
each other person, if any, who controls such seller, underwriter, broker, dealer
or any such participating Person within the meaning of the Securities Act or the
Exchange Act, against any losses, claims, damages, or liabilities, joint or
several, to which such seller or any such director, officer, employee,
underwriter, broker, dealer, participating Person, or controlling Person may
become subject under the Securities Act, the Exchange Act, state securities or
blue sky laws, or otherwise, insofar as such losses, claims, damages, or
liabilities (or actions or proceedings in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material fact
contained in any Registration Statement under which such Registrable Securities
were registered under the Securities Act, any preliminary prospectus, or
Prospectus contained in the Registration Statement, or any amendment or
supplement to such Registration Statement, or arise out of or are based upon the
omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; and the
Company shall reimburse such seller and each such director, officer, employee,
underwriter, broker, dealer, participating Person, and controlling Person in
connection with investigating or defending any such loss, claim, damage,
liability, action or proceeding as such expenses are incurred; provided,
however, that the Company will not be liable in any such case to the extent that
any such loss, claim, damage, liability or expense arises out of or is based
upon any untrue statement or omission made in such Registration Statement,
preliminary prospectus, or Prospectus, or any such amendment or supplement, in
reliance upon and in conformity with information furnished to the Company, in
writing, by or on behalf of such seller, underwriter, participating Person or
controlling Person specifically for use in the preparation thereof.
(b) In the event of any registration of any of the Registrable
Securities under the Securities Act pursuant to this Agreement, each seller of
such securities, severally and not jointly, will indemnify and hold harmless the
Company, each of its directors and officers and each underwriter (if any) and
each person, if any, who controls the Company or any such underwriter within the
meaning of the Securities Act or the Exchange Act, against any losses, claims,
damages, or liabilities, joint or several, to which the Company, such directors
and officers, underwriters, or controlling Persons may become subject under the
Securities Act, Exchange Act, state securities or blue sky laws, or otherwise,
insofar as such losses, claims, damages, or liabilities (or actions or
proceedings in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement under which such securities were registered under the
Securities Act, any preliminary prospectus or Prospectus contained in the
Registration Statement, or any amendment or supplement to the Registration
Statement, or arise out of or are based upon any omission or alleged omission to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, if the statement or omission was made in
reliance upon and in conformity with information relating to such seller
furnished in writing to the Company by or on behalf of such seller expressly for
use in connection with the preparation of such Registration Statement,
preliminary prospectus, Prospectus, amendment, or supplement; provided, however,
that the liability of each such seller hereunder shall be in proportion to and
limited to the net amount received by such seller (after deducting any
underwriting discount and expenses) from the sale of Registrable Securities sold
in connection with such registration.
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<PAGE>
(c) Each party entitled to indemnification under this Section
10 (the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom; provided, that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not be unreasonably
withheld); and, provided, further, that the failure of any Indemnified Party to
give notice as provided herein shall not relieve the Indemnifying Party of its
obligations under this Section 10, except to the extent that the Indemnifying
Party is adversely affected by such failure. The Indemnified Party may
participate in such defense at such party's expense; provided, however, that the
Indemnifying Party shall pay such expense if representation of such Indemnified
Party by the counsel retained by the Indemnifying Party would be inappropriate
due to actual or potential differing interests or conflicts between the
Indemnified Party and any other party represented by such counsel in such
proceeding. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement that does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect of such claim or
litigations, and no Indemnified Party shall consent to entry of any judgment or
settle such claim or litigation without the prior written consent of the
Indemnifying Party, which consent shall not be unreasonably withheld.
(d) If for any reason the foregoing indemnity is unavailable,
or is insufficient to hold harmless an Indemnified Party, other than by reason
of the exceptions provided in this Section 10, then the Indemnifying Party
shall, in lieu of indemnifying such Indemnified Party, contribute to the amount
paid or payable by the Indemnifying 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 on the one hand and the Indemnified
Party on the other in connection with the statements or omissions which resulted
in such losses, claims, damages, or liabilities, as well as any other relevant
equitable considerations. The relative fault shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or the Holders of Registrable
Securities covered by the Registration Statement in question and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
(e) The Company and the Holders agree that it would not be
just and equitable if contribution pursuant to this Section 10 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 Section 10(d). The amount
paid or payable by an Indemnified Party as a result of the losses, claims,
damages and liabilities referred to in Section 10(d) shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such Indemnified Party in connection with investigating
or defending any such claim or litigation. Notwithstanding anything to the
contrary in this Section 10, (A) no such Holder will be required to contribute
any
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<PAGE>
amount in excess of the proceeds it received from the sale of its Registrable
Securities pursuant to such Registration Statement, (B) 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 who was not
guilty of such fraudulent misrepresentation and (C) no party shall be liable for
contribution under this Section 10 except to the extent and under such
circumstances as such party would have been liable to indemnify under this
Section 10 if such indemnification were enforceable under applicable law. Any
party entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect to
which a claim for contribution may be made against another party or parties
under this Section, notify such party or parties from whom contribution may be
sought, but the omission so to notify such party or parties from whom
contribution may be sought shall not relieve such party from any other
obligation it or they may have thereunder or otherwise under this Section. No
party shall be liable for contribution with respect to any action, suit,
proceeding or claim settled without its prior written consent, which consent
shall not be unreasonably withheld.
11. Indemnification with Respect to Underwritten Offering. In the event
that Registrable Securities are sold pursuant to a Registration Statement in an
underwritten offering, the Company agrees to enter into an underwriting
agreement containing customary representations and warranties with respect to
the business and operations of an issuer of the securities being registered and
customary covenants and agreements to be performed by such issuer, including
without limitation customary provisions with respect to indemnification by the
Company of the underwriters of such offering.
12. Reports Under Securities Exchange Act of 1934. With a view to
making available to the Holders the benefits of Rule 144 promulgated under the
Securities Act and any other rule or regulation of the Commission that may at
any time permit a Holder to sell Registrable Securities of the Company to the
public without Registration, the Company agrees to:
(a) Make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act;
(b) file with the Commission in a timely manner all reports
and other documents required of the Company under the Securities Act and the
Exchange Act; and
(c) furnish to any Holder, so long as such Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company that it has complied with the reporting requirements of Rule 144 under
the Securities Act, any other such applicable reporting requirements under the
Securities Act and all applicable reporting requirements under the Exchange Act,
(ii) a copy of the most recent annual or quarterly report of the Company and
such other reports and documents so filed by the Company, and (iii) such other
information as may be reasonably requested in availing any Holder of any rule or
regulation of the Commission which permits the selling of any such securities
without Registration or pursuant to such form.
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<PAGE>
13. Successors, Assigns and Transferees. This Agreement shall be
binding upon and shall inure to the benefit of each party hereto, and their
respective successors, assigns and transferees. The Purchaser or any other
Holder under this Agreement may assign its rights under this Agreement to any
Affiliate or to other successors, assigns and transferees of the Purchaser or
any such Holder; provided, however, that the Company is given written notice
from the Purchaser or any such Holder at the time of such transfer stating the
name and address of the transferee or assign and identifying the securities with
respect to which the rights hereunder are being transferred. As a condition to
the effectiveness of any transfer permitted hereunder (i) the transferee or
assign shall agree, in writing, upon request of the Company, to be bound by the
provisions of this Agreement, and (ii) the Company shall be given written notice
at the time of or within a reasonable time after said transfer or assignment,
stating the name and address of said transferee or assign and identifying the
securities with respect to which such registration rights are being assigned.
Provided that the Purchaser or any Holder and any transferee or assignee has
complied with the foregoing conditions, this Agreement shall survive any
transfer of Registrable Securities to and shall inure to the benefit of an
Affiliate or such other successors, assigns and transferees of the Purchase or
any such Holder. In addition, and whether or not any express transfer or
assignment shall have been made, the provisions of this Agreement which are for
the benefits of the parties hereto other than the Company shall also be for the
benefit of and enforceable by any subsequent Holder or Registrable Securities.
14. Miscellaneous.
(a) No Inconsistent Agreements. The Company will not hereafter
enter into any agreement with respect to its securities which is inconsistent
with or violates the rights granted to the Holders in this Agreement.
(b) Adjustments Affecting Registrable Securities. The Company
will not take any action, or permit any change to occur, with respect to its
securities that would adversely affect the ability of the Holders to include
such Registrable Securities in a registration undertaken pursuant to this
Agreement or which would adversely affect the marketability of such Registrable
Securities in any such registration (including, without limitation, effecting a
stock split or a combination of shares).
(c) Specific Performance; Other Rights. The parties recognize
that various of the rights of the Purchaser and any other Holder under this
Agreement are unique and agree that irreparable damage would occur in the event
that any of the provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached. Accordingly, the parties
agree that each of the Purchaser and any such Holder shall, in addition to such
other remedies as may be available to it at law or in equity, have the right to
enforce its rights hereunder by actions for injunctive relief and specific
performance in any court of the United States or any state thereof having
jurisdiction, to the extent permitted by law. The Company hereby waives any
requirement for security or the posting of any bond in connection with any
temporary or permanent award of injunctive, mandatory or other equitable relief.
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<PAGE>
(d) Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants, and restrictions without
including any of such which may be hereafter declared invalid, void or
unenforceable.
(e) Notices. All notices and other communications required or
permitted under this Agreement shall be effective upon receipt and shall be in
writing and may be delivered in person, by telecopy, overnight delivery service
or registered or certified United States mail, addressed to the Company or the
Purchaser (or to any other Holder not a party hereto on the date hereof, to the
address of such Holder in the stock record books of the Company), as the case
may be, at their respective addresses set forth below:
(i) If to the Purchaser to:
MILLENNIUM PHARMACEUTICALS, INC.
238 Main Street
Cambridge, Massachusetts 02139-4815
Attn: Chief Executive Officer
Telephone: (617) 679-7000
Facsimile: (617) 621-0264
with a required copy to:
Attention: Legal Department
and to:
Hale and Dorr LLP
60 State Street
Boston, Massachusetts 01209
Attn: Steven Singer
Telephone: (617) 526-6000
Facsimile: (617) 526-5000
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<PAGE>
(ii) If to Purchaser to:
BAYER AG
D 51368
Leverkeusen
Federal Republic of Germany
Attn: General Counsel
Telephone: 011 49 214 30 81803
Facsimile: 011 49 214 30 50848
With copies to:
Bayer Corporation, Inc.
400 Morgan Lane
West Haven, CT
Attn: Legal Department
Telephone: (203) 812 - 2401
Facsimile: (203) 812 - 2795
and to:
Wilmer, Cutler & Pickering
2445 M Street
Washington, DC 20037
Attn: Richard W. Cass
Telephone: (202) 663-6503
Facsimile: (202) 663-6363
All notices and other communications shall be effective upon the earlier of
actual receipt thereof by the person to whom notice is directed or (a) in the
case of notices and communications sent by personal delivery or telecopy, one
business day after such notice or communication arrives at the applicable
address or was successfully sent to the applicable telecopy number, (b) in the
case of notices and communications sent by overnight delivery service, at noon
(local time) on the second business day following the day such notice or
communications was delivered to such delivery service, and (c) in the case of
notices and communications sent by United States mail, seven days after such
notice or communication shall have been deposited in the United States mail. Any
notice delivered to a party hereunder shall be sent simultaneously, by the same
means, to such party's counsel as set forth above.
(f) Entire Agreement. This Agreement contain the entire
understanding of the parties with respect to the matters covered hereby.
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<PAGE>
(g) Amendments and Waivers. This Agreement may be amended as
to the Holders and their successors and assigns (determined as provided in
Section 13), and the Company may take any action herein prohibited, or omit to
perform any act required to be performed by it, only if the Company shall obtain
the written consent of the Holders of 75% of the Registrable Securities. This
Agreement may not be waived, changed, modified, or discharged orally, but only
by an agreement in writing signed by the party or parties against whom
enforcement of any waiver, change, modification or discharge is sought or by
parties with the right to consent to such waiver, change, modification or
discharge on behalf of such party; provided, however, that any consent required
by the Holders shall require the consent in writing of no less than the Holders
of 75% of the Registrable Securities.
(h) Headings; Counterparts. Headings in this Agreement are for
purposes of reference only and shall not limit or otherwise affect the meaning
hereof. This Agreement may be executed in any number of counterparts, each of
which shall be an original, but all of which together shall constitute one and
the same instrument, and shall become effective when one or more of the
counterparts have been signed by each party and delivered to the other parties,
it being understood that all parties need not sign the same counterpart.
(i) Gender. Whenever used herein the singular number shall
include the plural, the plural shall include the singular, and the use of any
gender shall include all genders.
(j) Further Assurances. Each of the parties hereto agrees to
execute and deliver those writings and documents reasonably required to more
fully carry out the purposes of this Agreement and the transactions contemplated
hereby.
(k) GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF DELAWARE
WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES.
(l) No Third Party Beneficiaries. Except as provided by
Sections 10 and 13, nothing contained in this Agreement is intended to confer
upon any Person other than the parties hereto and their respective successors
and permitted assigns and transferees, any benefit, right or remedies under or
by reason of this Agreement.
(m) Consent to Jurisdiction. Each of the parties hereto
irrevocably submits to the personal exclusive jurisdiction of the United States
District Court for the District of Delaware for the purposes of any suit, action
or other proceeding arising out of this Agreement or any transaction
contemplated hereby (and, to the extent permitted under applicable rules of
procedure, agrees not to commence any action, suit or proceeding relating hereto
except in such court). Each of the parties hereto further agrees that service of
any process, summons, notice or document hand delivered or sent by registered
mail to such party's respective address set forth in Section 14(e) will be
effective service of process for any action, suit or proceeding in Delaware with
respect to any matters to which it has submitted to jurisdiction as set forth in
the immediately preceding sentence. Each of the
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<PAGE>
parties hereto irrevocably and unconditionally waives any objection to the
laying of venue of any action, suit or proceeding arising out of this Agreement
or the transactions contemplated hereby in the United States District court for
the District of Delaware, and hereby further irrevocably and unconditionally
waives and agrees not to plead or claim in such court that any such action, suit
or proceeding brought in such court has been brought in an inconvenient forum.
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<PAGE>
IN WITNESS WHEREOF, each of the parties has executed this Agreement or
caused this Agreement to be executed on its behalf as of the day and year first
above written.
MILLENNIUM PHARMACEUTICALS, INC. BAYER AG
By: /s/ By: /s/
Title: Title:
By: /s/
Title:
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