Exhibit 10.3
AGREEMENT AND PLAN OF MERGER
AND REORGANIZATION
This Agreement and Plan of Merger and Reorganization, dated as of June 22,
1999 (this "Agreement"), is by and among (i) LeukoSite, Inc., a Delaware
corporation ("LeukoSite"), (ii) ProScript Acquisition Co., a Delaware
corporation that is a wholly-owned subsidiary of LeukoSite ("Merger Sub"), (iii)
ProScript, Inc., a Delaware corporation (the "Company"), and (iv) HealthCare
Ventures IV, L.P., a Delaware limited partnership, and HealthCare Ventures III,
L.P., a Delaware limited partnership (individually, a "Note Holder" and,
collectively, the "Note Holders").
WHEREAS, the parties desire that, among other things, certain debt of the
Company be cancelled and repaid in full by the issuance of shares of stock of
LeukoSite, and that Merger Sub be merged with and into the Company (the
"Merger"), subject to the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
agreements, covenants, representations and warranties hereinafter set forth, the
parties hereto agree as follows:
1. Definitions.
1.1. Certain Defined Terms. As used in this Agreement, the following
terms have the following respective meanings:
"Affiliate" means, with respect to any person, any other person (i) that
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such person or (ii) who is a
family member or relative of such person. When used in this Agreement (other
than in Sections 3 and 14 hereof) with reference to the Company, the term
"Affiliate" includes the Stockholders. When used in Section 3 of this Agreement
with reference to LeukoSite, the term "Affiliate" includes any corporation,
limited partnership or limited liability company through which LeukoSite and any
other person are engaged in a joint venture for the development and
commercialization of a Product Candidate or a Related Compound, provided that
LeukoSite owns fifty percent (50%) or more of the equity interests in such
corporation, limited partnership or limited liability company.
"Affiliated Group" has the meaning ascribed to it in Section 1504 of the
Code, and in addition includes any analogous combined, consolidated or unitary
group, as defined under any applicable state, local, or foreign income Tax law.
"Aggregate Contingent Consideration Payments" means the LeukoSite
Contingent Milestone Payments, the Contingent Partner Licensing Payments, the
HMR Payments and the Contingent Royalty Payments.
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"Bonus Recipients" means those individuals set forth in Schedule 1.1(a) of
the Company Disclosure Schedule (as such Schedule 1.1(a) may be amended or
modified immediately prior to the Closing) but only if and to the extent that
they are holders of Company Options that are outstanding immediately prior to
the Effective Time and that are cancelled at the Effective Time.
"Code" means the United States Internal Revenue Code of 1986, as amended.
"Company Common Stock" means the Company's common stock, par value $0.01
per share.
"Company Intellectual Property" shall mean that Intellectual Property
owned by, or licensed to, the Company.
"Company Patent Intellectual Property" means those United States,
international and foreign patents and patent applications (including provisional
applications), in each case that are listed in Schedule 7.10 of the Disclosure
Schedule, and all reissues, divisions, renewals, extensions, provisions,
continuations, foreign counterparts, and continuations-in-part thereof.
"Company Preferred Stock" means any or all, as the context may require or
allow, of the Company Series A Preferred Stock and the Company Series B
Preferred Stock.
"Company Series A Preferred Stock" means the Company's Series A
Convertible Preferred Stock, par value $.01 per share.
"Company Series B Preferred Stock" means the Company's Series B
Convertible Preferred Stock, par value $.01 per share.
"Company Registered Intellectual Property" means those United States,
international and foreign: (a) patents and patent applications (including
provisional applications) and all reissues, divisions, renewals, extensions,
provisions, continuations, foreign counterparts, and continuations-in-part
thereof, in each case that are listed in Schedule 7.10 of the Disclosure
Schedule; (b) registered trademarks, registered service marks, applications to
register trademarks or service marks, intent-to-use applications, or other
registrations or applications related to trademarks or service marks, in each
case that are listed in Schedule 7.10 of the Disclosure Schedule; and (c)
registered copyrights and applications for copyright registration, in each case
that are listed on Schedule 7.10 of the Disclosure Schedule.
"Company Stock" means, collectively, the Company Common Stock and the
Company Preferred Stock.
"Compound 341" means either PS-341 or any other compound from the PS-341
Compound Class.
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"Compound 519" means either PS-519 or any other compound from the PS-519
Compound Class.
"Convertible Notes" means, individually or collectively as the context may
require, (i) that certain Convertible Promissory Note, dated February 25, 1999,
in the original principal amount of $340,500, made by the Company to HealthCare
Ventures IV, L.P., and (ii) that certain Convertible Promissory Note, dated
February 25, 1999, in the original principal amount of $1,159,500, made by the
Company to HealthCare Ventures III, L.P.
"Damages" means all damages, losses, claims, demands, actions, causes of
action, suits, litigations, arbitrations, liabilities, costs, and expenses,
including court costs and the reasonable fees and expenses of legal counsel.
"Designated Preferred Stockholders" means the Stockholders whose
signatures are set forth on the signature pages to the Designated Preferred
Stockholders Agreement.
"Designated Preferred Stockholders Agreement" means the Designated
Preferred Stockholders Agreement, dated of even date herewith, among LeukoSite
and the Designated Preferred Stockholders.
"Drug Development Program" means a drug development program conducted by
LeukoSite, its Affiliates or sublicensees for pre-clinical and clinical
development, regulatory approval, and commercialization of a Product Candidate.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the SEC thereunder, as in effect as of the relevant
time of reference.
"First Commercial Sale" means, with respect to any Product Candidate, any
Related Compound or any HMR Compound, as the case may be, the first sale for end
use or consumption of such Product Candidate, Related Compound or HMR Compound,
as the case may be, in any Major Geographical Area (or in a country within such
Major Geographical Area) after required approvals have been granted by the
governing regulatory authority in such Major Geographical Area (or in a country
within such Major Geographical Area).
"FDA" means the United States Food and Drug Administration.
"Harvard License Agreements" means (i) License Agreement, dated April 14,
1995, between the President and Fellows of Harvard College and ProScript, Inc.
(formerly known as MyoGenics, Inc.), relating to patented Harvard case No.
1087-94 covering lactacystin analogs for human and veterinary health care and
(ii) License Agreement, dated July 5, 1994, between the President and Fellows of
Harvard College and ProScript, Inc. (formerly known as MyoGenics, Inc.),
relating to that certain U.S. patent application, Serial No. 08/210,381 (filed
on March 18, 1994) relating to proteasome regulation of NF-kB activity.
"HMR Compound" means any compound as to which royalties are due to the
Company pursuant to the HMR Agreement.
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"Indebtedness," as applied to any person, means (a) all indebtedness of
such person for borrowed money, whether current or funded, or secured or
unsecured, (b) all indebtedness of such person for the deferred purchase price
of property or services represented by a note or other security, (c) all
indebtedness of such person created or arising under any conditional sale or
other title retention agreement (even if the rights and remedies of the seller
or lender under such agreement in the event of default are limited to
repossession or sale of specific property), (d) all indebtedness of such person
secured by a purchase money mortgage or other Lien to secure all or part of the
purchase price of property subject to such mortgage or other Lien, (e) all
accounts payable, notes payable and accrued expenses of such person, (f) all
indebtedness or liabilities of such person that would be required to be
reflected on a balance sheet or referred to in the notes thereto in accordance
with generally accepted accounting principles, (g) all indebtedness, liabilities
or obligations of such person that are identified in Section 7.11 of the
Disclosure Schedule as "Indebtedness", (h) all other obligations of such person
under leases that have been or must be, in accordance with generally accepted
accounting principles, recorded as capital leases in respect of which such
person is liable as lessee, (i) any liability of such person in respect of
banker's acceptances or letters of credit, and (j) all indebtedness referred to
in clauses (a), (b), (c), (d), (e), (f), (g), (h) or (i) above that is directly
or indirectly guaranteed by such person or which such person has agreed
(contingently or otherwise) to purchase or otherwise acquire or in respect of
which such person has otherwise assured a creditor against loss.
"Intellectual Property" shall mean any or all of the following and all
rights in, arising out of, or associated therewith: (a) all United States,
international and foreign patents and applications thereof and all reissues,
divisions, renewals, extensions, provisions, continuations and
continuations-in-part thereof; (b) all inventions (whether patentable or not),
invention disclosures, improvements, drug candidates, trade secrets, proprietary
information, know how, technology, technical data and customer lists, and all
documentation relating to any of the foregoing; (c) all copyrights, copyright
registrations and applications therefor, and all other rights corresponding
thereto throughout the world; (d) all industrial designs and any registration
and applications therefor throughout the world; (e) all trade names, logos,
common law trademarks and service marks, trademark and service ▇▇▇▇ registration
and applications therefor throughout the world; (f) all databases and data
collections and all rights therein throughout the world; and (g) any similar or
equivalent rights to any of the foregoing anywhere in the world.
"knowledge," when used to qualify a representation or warranty in this
Agreement, has the following meaning: Where a representation or warranty is made
to the best of the Company's knowledge, or with a similar qualification, the
Company will be conclusively deemed to have knowledge of any matter with respect
to which the Company's chief executive, operating, scientific and/or financial
officers and/or Vice President, Development has actual knowledge after
conducting a reasonable investigation. Where a representation or warranty is
made to the best of LeukoSite's or Merger Sub's knowledge, or with a similar
qualification, LeukoSite and Merger Sub will be conclusively deemed to have
knowledge of any matter with respect to which LeukoSite's or Merger Sub's chief
executive, scientific, and/or financial officers has actual knowledge after
conducting a reasonable investigation.
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"LeukoSite Common Stock" means the common stock, par value $0.01 per
share, of LeukoSite.
"LeukoSite Common Stock Price Per Share" means $12.28, subject to
appropriate adjustment for stock splits, stock dividends, reclassifications and
other similar events affecting the LeukoSite Common Stock after the date of this
Agreement.
"LeukoSite Preferred Stock" means the preferred stock, par value $0.01 per
share, of LeukoSite.
"LeukoSite Stock Plans" means, collectively, LeukoSite's Amended and
Restated 1993 Stock Option Plan and LeukoSite's 1997 Employee Stock Purchase
Plan.
"Liens" means any and all liens, claims, mortgages, security interests,
pledges, options, rights of first offer or refusal, charges, encumbrances,
limitations on voting rights, and restrictions on transfer of any kind, except
(i) in the case of references to securities, those arising under applicable
securities laws solely by reason of the fact that such securities were issued
pursuant to exemptions from registration under such securities laws, (ii)
mechanic's, materialmen's and similar liens, (iii) liens for Taxes not yet due
and payable and (iv) liens arising under worker's compensation, unemployment
insurance, social security, retirement and similar legislation.
"Major Geographical Area" means, individually or collectively as the
context may require, the following three areas of the world: (a) the United
States, (b) any or all countries in Europe (provided, however, that the First
Commercial Sale of a Product Candidate or a Related Compound in Europe shall not
be deemed to have occurred until the First Commercial Sale of such Product
Candidate or Related Compound in the United Kingdom, France, Italy or Germany),
and (c) Japan.
"Material Adverse Effect" means, with reference to any person, any
material adverse effect on the condition (financial or otherwise), operations,
business, assets (including intangible assets), rights, liabilities, obligations
or prospects of such person, or on such person's ability to consummate the
transactions hereby contemplated.
"Merger Consideration" means the Adjusted Initial Cash Payment, the
LeukoSite Contingent Milestone Payments, the Contingent Partner Licensing
Payments, the HMR Payments and the Contingent Royalty Payments.
"Merger Consideration Portion" means the quotient obtained by dividing (i)
one by (ii) the number of shares of Company Stock outstanding at the Effective
Time, plus the maximum number of shares of Company Stock issuable immediately
prior to the Effective Time upon the exercise of all Company Options held by the
Bonus Recipients that are outstanding immediately prior to the Effective Time,
and plus the maximum number of shares of Company Stock issuable at the Effective
Time upon the exercise of all Surviving
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Warrants that are outstanding at the Effective Time; provided, that such
quotient is subject to adjustment as follows:
(a) in the event that any Stockholder, which has duly exercised its
appraisal rights pursuant to Section 262 of the DGCL and not received any
Merger Consideration in respect of his, her or its Dissenting Shares,
receives any payment from LeukoSite in respect of his, her or its
Dissenting Shares (regardless of whether such payment represents the
appraised value of such Dissenting Shares as determined pursuant to a
judicial proceeding or represents amounts paid by LeukoSite in settlement
of such appraisal rights), such Dissenting Shares shall be subtracted from
the denominator of the fraction set forth above and the Merger
Consideration Portion shall be recalculated; and
(b) in the event that, at any time after the Effective Time, any
Surviving Warrant expires or terminates without having been exercised in
full by the holder of such Surviving Warrant, the shares of Company Stock
that would otherwise have been issuable upon exercise of such Surviving
Warrant shall be subtracted from the denominator of the fraction set forth
above and the Merger Consideration Portion shall be recalculated.
"NDA" means a New Drug Application filed with the FDA or its equivalent,
or any corresponding application for sales and marketing approval filed in any
country other than the United States with the appropriate regulatory authority
in such country (including the European Medicines Evaluation Agency).
"Net Closing Liabilities" means an amount equal to all Indebtedness and
other liabilities (accrued or contingent) of the Company at Closing, all Taxes,
all expenditures incurred by the Company during the period following the date of
this Agreement through and including the Closing which have been approved by
LeukoSite as evidenced by its written consent thereto given pursuant to Section
10.2 hereof, minus all cash and cash equivalents of the Company at Closing.
"Net Sales" means, with respect to a Product Candidate or a Related
Compound, gross revenues from the sale of such Product Candidate or Related
Compound to third parties that are not Affiliates, less discounts, refunds,
rebates, replacement or credits allowed to purchasers for return of product or
as reimbursement for damaged product, freight and other shipping charges, custom
duties, sales and use taxes and any other governmental tax or charge (except
income taxes) imposed on or at the time of the production, importation,
exportation, use, transportation, or sale of product, including any value added
taxes (VAT). If a Product Candidate or a Related Compound is sold in combination
with products or other components proprietary to LeukoSite or to a third
party(ies) for which LeukoSite pays any amounts for the right to use, then "Net
Sales" shall be based on the relative average prices charged during the
applicable quarter for such Product Candidate or Related Compound and the
products or other components when separately invoiced or priced. In the event a
Product Candidate or Related Compound and additional products or other
components were not separately invoiced or priced during the applicable
quarterly period, the Net Sales
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computation shall be based on the relative fair market price which LeukoSite
would have charged for such Product Candidate or Related Compound and additional
products or other components determined in good faith by LeukoSite.
"Other Countries" shall mean, individually or collectively as the context
may require, all of the countries in the world other than those countries
included within the Major Geographical Areas.
"Payment Shares" means shares of LeukoSite Common Stock issued by
LeukoSite to the Note Holders pursuant to the terms of this Agreement.
"person" (regardless of whether capitalized) means any natural person,
entity, or association, including without limitation any corporation,
partnership, limited liability company, government (or agency or subdivision
thereof), trust, joint venture or proprietorship.
"Product Candidate" shall mean, individually or collectively, as the
context may require, (i) Compound 519 but only if and to the extent used for the
treatment of stroke, myocardial infarction, asthma, multiple sclerosis, head
trauma or ▇▇▇▇▇, and (ii) Compound 341 but only if and to the extent used for
the treatment of cancer.
"ProScript Program" means, collectively, (i) the Company's ongoing
proprietary research and development program related to PS-341 and the PS-341
Compound Class, and (ii) the Company's ongoing proprietary research and
development program related to PS-519 and the PS-519 Compound Class.
"PS-341" means the compound (i) that is currently under development by the
Company pursuant to one of its ongoing proprietary research and development
programs, (ii) that is designated by the Company as of the date of this
Agreement as PS-341 and (iii) that has the chemical structure set forth in
Schedule 1.1(b) of the Company Disclosure Schedule.
"PS-341 Compound Class" means (A) PS-341 and (B) those compounds (i) that
are members of the same boronate class of proteasome inhibitors as PS-341, (ii)
that have been generated or developed by the Company pursuant to the same
proprietary research and development program of the Company by which the Company
has developed and continues to develop PS-341 and (iii) whose chemical structure
is set forth in Schedule 1.1(c) of the Company Disclosure Schedule.
"PS-519" means the compound (i) that is currently under development by the
Company pursuant to one of its ongoing proprietary research and development
programs, (ii) that is designated by the Company as of the date of this
Agreement as PS-519 and (iii) that has the chemical structure set forth in
Schedule 1.1(d) of the Company Disclosure Schedule.
"PS-519 Compound Class" means (A) PS-519 and (B) those compounds (i) that
are members of the same lactacystin class of proteasome inhibitors as PS-519,
(ii) that have been generated or developed by the Company pursuant to the same
proprietary research and
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development program of the Company by which the Company has developed and
continues to develop PS-519 and (iii) whose chemical structure is set forth in
Schedule 1.1(e) of the Company Disclosure Schedule.
"PTO" means the United States Patent and Trademark Office.
"Related Compound" means (A) any compound (i) that is a member of the same
boronate class of proteasome inhibitors as PS-341, (ii) that is covered by the
Company Patent Intellectual Property with respect to the PS-341 Compound Class
and (iii) that is developed, marketed and commercialized by LeukoSite or any of
its Affiliates or by any Partner but only if and to the extent that it is being
developed, marketed and commercialized for the treatment of cancer, or (B) any
compound (i) that is a member of the same lactacystin class of proteasome
inhibitors as PS-519, (ii) that is covered by the Company Patent Intellectual
Property with respect to the PS-519 Compound Class and (iii) that is developed,
marketed and commercialized by LeukoSite or any of its Affiliates or by any
Partner but only if and to the extent that it is being developed, marketed and
commercialized for the treatment of stroke, myocardial infarction, asthma,
multiple sclerosis, head trauma or ▇▇▇▇▇.
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC thereunder, as in effect as of the relevant
time of reference.
"Stockholders" means the holders of shares of Company Stock outstanding
immediately prior to the Effective Time and, from and after the Effective Time,
includes those holders of Surviving Warrants that have duly exercised the
Surviving Warrants held by them in accordance with their respective terms and
the provisions of Section 5 hereof.
"Subsidiary" or "Subsidiaries" means, with respect to any person, any
corporation a majority (by number of votes) of the outstanding shares of any
class or classes of which will at the time be owned by such person or by a
Subsidiary of such person, if the holders of the shares of such class or classes
(a) are ordinarily, in the absence of contingencies, entitled to vote for the
election of a majority of the directors (or persons performing similar
functions) of the issuer thereof, even though the right so to vote has been
suspended by the happening of such a contingency, or (b) are at the time
entitled, as such holders, to vote for the election of a majority of the
directors (or persons performing similar functions) of the issuer thereof,
whether or not the right so to vote exists by reason of the happening of a
contingency.
"Tax" or "Taxes" means any federal, state, local, or foreign income, gross
receipts, franchise, estimated, alternative minimum, add-on minimum, sales, use,
transfer, registration, value added, excise, natural resources, severance,
stamp, occupation, premium, windfall profit, environmental, customs, duties,
real property, personal property, capital stock, intangibles, social security,
unemployment, disability, payroll, license, employee or other tax or levy of any
kind whatsoever, including any interest, penalties, or additions to tax in
respect of the foregoing.
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"Tax Return" means any return, declaration, report, claim for refund,
information return, or other document filed or required to be filed (including
any related or supporting estimates, elections, schedules, statements, or
information filed or required to be filed) in connection with the determination,
assessment or collection of any Tax or the administration of any laws,
regulations or administrative requirements relating to any Tax.
"Undisclosed Liabilities" shall mean any Indebtedness or other liabilities
of the Company (i) which exist on the date of this Agreement or arise after the
date of this Agreement but relate to any period prior to the Closing and (ii)
which were not reflected in the Unaudited Closing Balance Sheet or disclosed in
the Disclosure Schedule.
1.2. Terms Defined Elsewhere. The following terms are defined herein
in the sections identified below:
[ Defined Terms continued on next page. ]
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Adjusted Initial Cash Payment 3.7(b)
Agreed Amount 14.4(c)
Agreement Preamble
Approved Unbudgeted
Expenditures 3.7(b)
Blocking Third Party Patent 3.8(g)(iii)
CERCLA 7.15(b)
Certificate(s) 4.1
Claim Notice 14.4(b)
Claimed Amount 14.4(b)
Closing 2.1
Closing Date 2.1
Company Preamble
Company Indemnified Parties 14.1
Company Options 5
Company Warrants 5
Complementary Technology 3.8(g)(iii)
Contingent Partner
Licensing Payment(s) 3.8(b)
Contingent Royalty Payment(s) 3.8(f)
Convertible Note Amount 2.2(c)
DGCL 3.1
Dissenting Shares 3.6(c)
Effective Period 6.1(a)
Effective Time 2.1
Employee Benefit Plan 7.14(a)
Environmental Laws 7.15(b)
EPA 7.15(c)
ERISA 7.14(c)
Excess Amount 3.7(c)
Excess Net Closing Liabilities 3.7(b)
Follow-on Product 3.8(f)
Hazardous Substances 7.15(c)
HMR 3.8(c)
HMR Agreement 3.8(c)
HMR Payment(s) 3.8(c)
Hold-Back Amount 3.7(e)
Hold-Back Period 3.7(e)
Holder Inclusion Notice 6.1(b)
Incidental Shares 6.1(c)
Indemnified Parties 14.3
Indemnifying Party 14.4(b)
Initial Cash Payment 3.7
IRS 7.14(b)
LeukoSite Preamble
LeukoSite Contingent
Milestone Payment 3. 8(a)
LeukoSite Indemnified Parties 14.2
LeukoSite R&D Programs 3.8(e)
LeukoSite's SEC Reports 8.5
Material Contracts 7.18
May 31, 1999 Balance Sheet 7.7
Merger Preamble
Merger Certificate 2.1
Merger Sub Preamble
NMS 9.7
Note Holder(s) Preamble
Note Holder Indemnified Parties 14A.2
PBGC 7.14(d)(ii)
Partner 3.8(b)
Payment Shares 2.2(c)
Piggyback Notice 6.1(b)
Qualified Holders 6.1(c)
RCRA 7.15(b)
Response Notice 14.4(c)
Royalty Pass-Through
Section 3.8(b) 341 Compound 3.8(b)
Royalty Pass-Through
Section 3.8(b) 519 Compound 3.8(b)
▇▇▇▇ 7.15(b)
Section 3.8(f) Compound 3.8(f)
Section 3.8(f) 341 Compound 3.8(f)
Section 3.8(f) 519 Compound 3.8(f)
Section 14 Indemnified Parties 14.2
Section 14 Indemnifying Party 14.4(b)
Section 14A Agreed Amount 14A.3(c)
Section 14A Claim Notice 14A.3(b)
Section 14A Claimed Amount 14A.3(b)
Section 14A Indemnified Party 14A.3(c)
Section 14A Indemnifying Party 14A.3(c)
Section 14A Response Notice 14A.3(c)
Setoff Amount 3.8(h)
Shortfall Amount 3.7(c)
Special Milestone Payments 3.8(c)(i)
Stockholders'
Representatives 4.7(a)
Stockholder Registration
Statement 6.1(a)(i)
Surviving Corporation 3.1
Surviving Warrants 5
Suspension Period 6.2
Unaudited Closing Balance
Sheet 3.7(a)
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2. Transactions at Closing.
2.1 Closing; Merger. Subject to the other provisions of this
Agreement, the closing of the transactions contemplated under this Agreement
(the "Closing") will be held at the offices of ▇▇▇▇▇▇▇ ▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, as soon as is reasonably practicable
following satisfaction or waiver of the conditions set forth in Sections 11
through 13 (the date on which the Closing actually occurs is hereinafter
referred to as the "Closing Date"). On the Closing Date, Merger Sub and the
Company will execute a Certificate of Merger, substantially in the form of the
attached Exhibit A (the "Merger Certificate"), and will file it with the
Delaware Secretary of State in order to cause the Merger to be effected in
accordance with the laws of the State of Delaware. The Merger will be effective
upon the filing of the Merger Certificate (the "Effective Time"). For all
purposes, all of the document deliveries and other actions to occur at the
Closing will be conclusively presumed to have occurred at the same time,
immediately before the Effective Time.
2.2 Repayment of Convertible Notes.
(a) Each Note Holder agrees that, simultaneously with the
consummation of the Merger and at the Effective Time, the Convertible Note then
held by it shall (automatically and without further action by such Note Holder)
be cancelled and deemed to be paid-in-full and each Note Holder shall be
entitled to receive as payment therefor that number of Payment Shares to which
such Note Holder is entitled pursuant to Section 2.2(c) below.
(b) At the Closing, each Note Holder shall deliver the
original Convertible Note held by it for cancellation in accordance with this
Section 2.2. At the Effective Time and subject to and upon delivery and
cancellation of such original Convertible Note, LeukoSite shall issue to such
Note Holder that number of Payment Shares to which such Note Holder is entitled,
pursuant to Section 2.2(c) below, as payment for, and in full satisfaction of,
all amounts owed by the Company thereunder. From and after the Effective Time,
LeukoSite shall not have any liability or obligation of any kind whatsoever
under the Convertible Notes. At the Effective Time and subject to compliance by
each Note Holder with all of its obligations under this Section 2.2, LeukoSite
shall deliver, or cause to be delivered, to such Note Holder a stock certificate
representing the number of shares of LeukoSite Common Stock to which such Note
Holder is entitled pursuant to Section 2.2(c) below.
(c) Subject to the provisions of the next sentence, the number
of shares of LeukoSite Common Stock that LeukoSite shall issue at the Effective
Time to each Note Holder shall be equal to the quotient obtained by dividing (i)
an amount equal to the sum of (A) 150% of the outstanding principal amount of
the Convertible Note held by such Note Holder as of the Closing Date and (B) all
accrued and unpaid interest on the Convertible Note held by such Note Holder as
of the Closing Date (such sum being referred to, with respect to each
Convertible Note, as the "Convertible Note Amount"), by (ii) the LeukoSite
Common Stock Price Per Share. In no event shall the total number of shares of
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▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Stock that LeukoSite shall be required to issue pursuant to
this Section 2.2(c) (the "Payment Shares") exceed 250,000 shares. If, as a
result of the limitations imposed by the foregoing sentence, any portion of the
Convertible Note Amount with respect to either or both Convertible Notes is not
paid in full, then, at the Effective Time, LeukoSite shall make a cash payment
to the applicable Note Holder or Note Holders in an amount sufficient to make
full payment of any such unpaid portion of the Convertible Note Amount with
respect to either or both Convertible Notes, as the case may be.
(d) Notwithstanding anything contained herein to the contrary,
no fractional shares of LeukoSite Common Stock shall be issued, but cash
payments shall be made in lieu of such fractional shares and shall be determined
by multiplying each relevant Note Holder's fractional interest by the LeukoSite
Common Stock Price Per Share.
(e) No dividend or other distribution payable after the
Effective Time with respect to Payment Shares will be paid to the holder of any
undelivered Convertible Note until the holder thereof delivers such original
Convertible Note to LeukoSite, at which time such Note Holder will receive all
dividends and distributions, without interest thereon, previously payable but
withheld from such holder pursuant hereto.
3. Effect of Merger. At the Effective Time, automatically and without
further action:
3.1. Surviving Corporation. Merger Sub will be merged with and into
the Company and the separate existence of Merger Sub will cease. The Company
will continue in existence as the surviving corporation in the Merger (the
"Surviving Corporation"). The effect of the Merger will be as provided in the
applicable provisions of the Delaware General Corporation Law (the "DGCL").
Without limiting the generality of the foregoing, and subject thereto, except as
otherwise provided herein, all of the property, rights, privileges, powers, and
franchises of Merger Sub and the Company, respectively, will vest in the
Surviving Corporation, and all of the debts, liabilities, and duties of Merger
Sub and the Company, respectively, will become the debts, liabilities, and
duties of the Surviving Corporation.
3.2 Certificate of Incorporation. The Certificate of Incorporation
of the Surviving Corporation shall be the same as the Certificate of
Incorporation of the Merger Sub immediately prior to the Effective Time, except
that the name of the corporation set forth therein shall be changed to the name
of the Company.
3.3 By-Laws. The by-laws of the Surviving Corporation shall be the
same as the by-laws of the Merger Sub immediately prior to the Effective Time,
except that the name of the corporation set forth therein shall be changed to
the name of the Company.
3.4. Directors and Officers. From and after the Effective Time, the
respective officers and members of the Board of Directors of the Surviving
Corporation will consist of those persons named as such in the Merger
Certificate, each such person to hold office, subject to the applicable
provisions of the Certificate of Incorporation and the by-
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laws of the Surviving Corporation, until the next annual meeting of directors or
stockholders, as the case may be, of the Surviving Corporation and until his or
her successor is duly elected or appointed and qualified.
3.5. Conversion of Merger Sub's Shares. Each share of the common
stock, par value $0.01 per share, of Merger Sub that was issued and outstanding
immediately before the Effective Time will be converted into and become one
share of the common stock, par value $ 0.01 per share, of the Surviving
Corporation.
3.6. Cancellation of Company Stock; Dissenting Shares.
(a) Cancellation of Company Stock. At the Effective Time, each share
of Company Stock issued and outstanding immediately before the Effective
Time (other than any Dissenting Shares and other than any shares of
Company Stock held directly or indirectly by the Company) shall be
cancelled and shall become and be converted into the right to receive,
subject to the provisions of Sections 3.7(c) and 3.7(e) hereof, (i) a cash
payment equal to the Merger Consideration Portion of the Adjusted Initial
Cash Payment and (ii) cash payments from time to time equal to the Merger
Consideration Portion of each Aggregate Contingent Consideration Payment
paid pursuant to Sections 3.8(a), 3.8(b), 3.8(c) and 3.8(f) hereof (it
being understood that any such right to receive any portion of any
Aggregate Contingent Consideration Payments is a contingent right that is
dependent, among other things, on whether LeukoSite is required to pay any
Aggregate Contingent Consideration Payment pursuant to Sections 3.8(a),
3.8(b), 3.8(c) or 3.8(f) hereof).
(b) Cancellation of Treasury Stock, Etc. At the Effective Time, each
share of Company Stock held directly or indirectly by the Company will be
canceled and will cease to exist, and no payment will be made with respect
thereto.
(c) Dissenting Shares. Each share of Company Stock that, immediately
before the Effective Time, was held by any person who has duly exercised
the appraisal rights afforded to dissenting stockholders pursuant to
Section 262 of the DGCL (such shares, collectively, "Dissenting Shares")
will, at the Effective Time, be cancelled but shall not entitle the holder
thereof to receive the consideration referred to in Section 3.6(a) hereof.
Instead, the holders of Dissenting Shares will be entitled to receive
payment of the appraised value of such Dissenting Shares in accordance
with the provisions of such Section 262, except that all Dissenting Shares
held by Stockholders who withdraw, fail to perfect, or otherwise lose
their appraisal rights with respect to Dissenting Shares will thereupon be
deemed to entitle the holder thereof to receive the consideration referred
to in Section 3.6(a) hereof. In the event that any Stockholder exercises
his, her or its appraisal rights pursuant to Section 262 of the DGCL and
LeukoSite makes any payment to such Stockholder in respect of his, her or
its Dissenting Shares (regardless of whether such payment represents the
appraised value of such Dissenting Shares as determined pursuant to a
judicial proceeding or represents amounts paid by LeukoSite in settlement
of such appraisal rights), then LeukoSite shall be entitled to offset
against the Merger Consideration
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payable thereafter by LeukoSite an amount (no less than zero) equal to (i)
the sum of any such payment made by LeukoSite to such Stockholder in
respect of his, her or its Dissenting Shares, plus (ii) the aggregate
amount of reasonable attorneys fees and expenses incurred by LeukoSite in
connection with any judicial proceeding or settlement discussions or
negotiations resulting from the exercise of appraisal rights by such
Stockholder, less (iii) the portion of any Merger Consideration that would
have been paid by LeukoSite prior to the date of such payment to such
Stockholder if such Stockholder had not exercised appraisal rights.
(d) Optionee Bonus. In consideration of services provided to the
Company and the cancellation of Company Options held by the Bonus
Recipients, the Company has granted, effective as of the Effective Time,
to each Bonus Recipient a bonus consisting of the right to receive,
subject to the provisions of Sections 3.7(c) and 3.7(e) hereof, with
respect to each share of Company Stock issuable immediately prior to the
Effective Time upon the exercise of those Company Options held by such
Bonus Recipient immediately prior to the Effective Time (regardless of
whether such Company Options are then vested or unvested), (i) a cash
payment equal to the Merger Consideration Portion of the Adjusted Initial
Cash Payment and (ii) cash payments from time to time equal to the Merger
Consideration Portion of each Aggregate Contingent Consideration Payment
paid pursuant to Sections 3.8(a), 3.8(b), 3.8(c) and 3.8(f) hereof (it
being understood that any such right to receive any portion of any
Aggregate Contingent Consideration Payments is a contingent right that is
dependent, among other things, on whether LeukoSite is required to pay any
Aggregate Contingent Consideration Payment pursuant to Sections 3.8(a),
3.8(b), 3.8(c) or 3.8(f) hereof). The Company's obligations to make such
bonus payments shall be assumed by LeukoSite in connection with the
Merger.
3.7. Initial Cash Payment; Adjustments to Cash Payment; Hold-Backs.
The initial aggregate cash consideration payable at the Effective Time by
LeukoSite in connection with the Merger (the "Initial Cash Payment") shall equal
$2,720,000 minus the aggregate Convertible Note Amount with respect to both
Convertible Notes, subject to the adjustment and hold-back provisions of
Sections 3.7(b), 3.7(c) and 3.7(e) below.
(a) Closing Balance Sheet and Net Closing Liabilities. At the
Closing, the Company shall deliver to LeukoSite (i) an unaudited balance
sheet of the Company as of the Closing Date (the "Unaudited Closing
Balance Sheet") and (ii) a certificate signed by the President and Chief
Financial Officer of the Company certifying (i) that the Unaudited Closing
Balance Sheet was prepared in accordance with generally accepted
accounting principles, consistently applied, except for the absence of
footnotes and subject to adjustments consisting of normal year-end
accruals, the effect of which, both individually and in the aggregate, is
not material, (ii) that the Unaudited Closing Balance Sheet fairly and
accurately presents the financial condition of the Company as of the
Closing Date, and (iii) as to the amount of the Net Closing Liabilities.
The Unaudited Closing Balance Sheet and the calculation of the Net Closing
Liabilities shall have been prepared in consultation and agreement with
LeukoSite and LeukoSite's representatives after LeukoSite and
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LeukoSite's representatives have had access (consistent with the
provisions reflected in Section 10.1) to financial information and
personnel relevant to the preparation of the Unaudited Closing Balance
Sheet and the calculation of the Net Closing Liabilities. No less than
three (3) business days prior to the Closing, the Company shall have
prepared and delivered to LeukoSite (x) a draft of the Unaudited Closing
Balance Sheet that the Company expects to deliver at the Closing, (y) a
draft computation of the Net Closing Liabilities and (z) a written
description of those items and amounts that the Company anticipates could
change in the Unaudited Closing Balance Sheet and the Net Closing
Liabilities computation from the drafts thereof delivered by the Company
pursuant to this Section 3.7(a). Such drafts of the Unaudited Closing
Balance Sheet and the computation of the Net Closing Liabilities shall be
prepared by the Company in good faith and shall reflect all expenses and
liabilities that the Company reasonably anticipates will be reflected in
the Unaudited Closing Balance Sheet and the computation of Net Closing
Liabilities that will be delivered by the Company at the Closing pursuant
to this Section 3.7(a).
(b) Adjustment to Initial Cash Payment. In the event that the
amount of the Net Closing Liabilities is greater than the sum of $782,000,
plus the aggregate amount of all expenditures incurred by the Company
during the period following the date of this Agreement through and
including the Closing which have been approved by LeukoSite as evidenced
by its written consent thereto given pursuant to Section 10.2 hereof and
plus the aggregate amount of all expenditures incurred by the Company
during the period following June 30, 1999 through and including the
Closing which do not require LeukoSite's approval under Section 10.2
hereof (the amount resulting from such sum being hereinafter referred to
as the "Approved Unbudgeted Expenditures"), then the Initial Cash Payment
shall be reduced at the Closing, on a dollar-for-dollar basis, by the
amount of such excess (such excess being hereinafter referred to as the
"Excess Net Closing Liabilities"). For purposes of this Agreement, the
term "Adjusted Initial Cash Payment" shall mean the Initial Cash Payment
as adjusted at the Closing pursuant to this Section 3.7(b). In no event
shall the Adjusted Initial Cash Payment be less than zero. If the Excess
Net Closing Liabilities exceed the amount of the Initial Cash Payment or
if there are no Excess Net Closing Liabilities but the Initial Cash
Payment is less than zero as a result of the payment by LeukoSite of the
aggregate Convertible Note Amount with respect to both Convertible Notes,
then the Adjusted Initial Cash Payment shall be equal to zero and
LeukoSite shall be entitled to the special set-off rights set forth in
Section 3.7(c) below.
(c) Special Set-Off Rights. In the event that the Excess Net
Closing Liabilities exceed the amount of the Initial Cash Payment (any
such excess being referred to as the "Excess Amount") or in the event that
there are no Excess Net Closing Liabilities but the Initial Cash Payment
is less than zero as a result of the payment by LeukoSite of the aggregate
Convertible Note Amount with respect to both Convertible Notes (any such
shortfall being referred to as the "Shortfall Amount"), then LeukoSite
shall have the right to set-off the Excess Amount or the
-▇▇-
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, as the case may be, against any of the Aggregate
Contingent Consideration Payments.
(d) Payment of the Adjusted Initial Cash Payment. If the
Adjusted Initial Cash Payment is greater than zero, then, at the Effective
Time, the portion, if any, of the Adjusted Initial Cash Payment that is
not held back by LeukoSite pursuant to Section 3.7(e) below shall be paid
in accordance with the provisions of Section 3.6 hereof.
(e) Hold-Back by LeukoSite; Payment of Balance. If both of the
Excess Net Closing Liabilities and the Adjusted Initial Cash Payment are
greater than zero, then LeukoSite shall be entitled to hold back an amount
(the "Hold-Back Amount") equal to the lesser of (I) the Adjusted Initial
Cash Payment and (II) $100,000 for a period commencing on the Closing Date
and ending on the last business day of sixth (6th) calendar month
following the month in which the Closing occurs (the "Hold-Back Period").
At the end of the Hold-Back Period, LeukoSite shall pay, in accordance
with the provisions of Section 3.6, an amount equal to the Hold-Back
Amount less the aggregate amount of Undisclosed Liabilities paid or
outstanding as of the end of the Hold-Back Period; provided, however, that
if the amount of Undisclosed Liabilities is greater than the Hold-Back
Amount, then no amounts shall be paid or payable pursuant to this Section
3.7(e) and LeukoSite may be entitled to indemnification pursuant to, and
in accordance with, the provisions of Section 14 hereof with respect to
such excess Undisclosed Liabilities. Prior to the end of the Hold-Back
Period, LeukoSite shall give notice to the Stockholder Representatives of
the nature and amount of any Undisclosed Liabilities. If the Stockholder
Representatives shall notify LeukoSite that they do not believe that some
or all of such Undisclosed Liabilities are bona fide liabilities of the
Company, then LeukoSite shall afford the Stockholder Representatives with
the opportunity to present the facts that support the Stockholder
Representatives' view that some or all of such Undisclosed Liabilities are
not bona fide liabilities of the Company. LeukoSite retains the right to
make the final determination as to whether some or all of such Undisclosed
Liabilities are not bona fide liabilities of the Company. In the event
that, following the expiration of the Hold-Back Period, LeukoSite shall no
longer be required to make payment of all or any portion of any
Undisclosed Liabilities that were unpaid at the time of the expiration of
the Hold-Back Period, then LeukoSite shall make payment, in accordance
with the provisions of Section 3.6, of any portion of the Hold-Back Amount
that was offset by the amount of any such unpaid Undisclosed Liabilities
that are no longer required to be paid.
3.8. Aggregate Contingent Consideration Payments.
(a) LeukoSite Contingent Milestone Payments. If a Drug Development
Program conducted by LeukoSite or its Affiliates yields a Product
Candidate which achieves the applicable drug development milestones set
forth in the applicable table below (whether such milestones are achieved
by LeukoSite or its Affiliates), then, subject to the provisions of
Section 3.8(d) and Section 3.8(g) hereof, LeukoSite shall
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make payments, in accordance with Section 3.6, of the consideration set
forth in the applicable table below (a "LeukoSite Contingent Milestone
Payment") within thirty (30) days of the occurrence of the applicable drug
development milestone below; provided, that LeukoSite shall be obligated
to pay consideration for each drug development milestone only once,
regardless of the number of Product Candidates or compounds that achieve
such drug development milestone.
Compound 519/
519 Class of Compounds
------------------------------------------------------------------------
Event Cash Payment
------------------------------------------------------------------------
Earlier of (i) completion of a successful $500,000
and acceptable Phase II study that meets
the primary endpoints established for such
study, and (ii) the decision by LeukoSite
to commence a pivotal Phase II or
Phase III study
------------------------------------------------------------------------
The decision by LeukoSite to $3,000,000
prepare and file an NDA
------------------------------------------------------------------------
Approval of an NDA $1,000,000
------------------------------------------------------------------------
Compound 341/
341 Class of Compounds
------------------------------------------------------------------------
Event Cash Payment
------------------------------------------------------------------------
The decision by LeukoSite to $3,000,000
prepare and file an NDA
------------------------------------------------------------------------
Approval of an NDA $1,000,000
------------------------------------------------------------------------
(b) Contingent Partner Licensing Payments. If at any time LeukoSite
determines, in its sole discretion, to license, transfer or grant the
right to develop, market and commercialize, or the right to market and
commercialize (but not the right to develop), a Product Candidate or a
Related Compound to a third party which is not an Affiliate of LeukoSite
(a "Partner") then, subject to the provisions set forth
-18-
below in this Section 3.8(b) and in Section 3.8(d) and Section 3.8(g)
hereof, LeukoSite shall make payment, in accordance with Section 3.6, of
the following amounts (each amount, individually, a "Contingent Partner
Licensing Payment" and, collectively, the "Contingent Partner Licensing
Payments"):
(i) an amount equal to twenty-five percent (25%) of any
license fees and milestone payments actually received by LeukoSite from
the Partner in respect of such Product Candidate, less the amount of any
LeukoSite Contingent Milestone Payments made by LeukoSite pursuant to
Section 3.8(a) (if any) in respect of such Product Candidate;
(ii) an amount equal to twenty-five percent (25%) of any
royalty payments actually received by LeukoSite from the Partner for sales
of such Product Candidate by such Partner to third parties, provided that
(A) in the case of any such sales made in any of the Major Geographical
Areas, such sales are made by such Partner at any time during the first
five (5) years after the First Commercial Sale of such Product Candidate
in such Major Geographical Area, and (B) in the case of any such sales
made in any of the Other Countries of the world, such sales are made by
such Partner at any time during the first five (5) years after the First
Commercial Sale of such Product Candidate in any of the Major Geographical
Areas;
(iii) an amount equal to twelve and a half percent (12.5%) of
any royalty payments actually received by LeukoSite from the Partner for
sales of such Product Candidate by such Partner to third parties, provided
that (A) in the case of any such sales made in any of the Major
Geographical Areas, such sales are made by such Partner at any time during
the second five (5) years after the First Commercial Sale of such Product
Candidate in such Major Geographical Area, and (B) in the case of any such
sales made in any of the Other Countries of the world, such sales are made
by such Partner at any time during the second five (5) years after the
First Commercial Sale of such Product Candidate in any of the Major
Geographical Areas;
(iv) an amount equal to twelve and a half percent (12.5%) of
any royalty payments actually received by LeukoSite from the Partner for
sales of such Related Compound by such Partner to third parties, provided
that (A) in the case of any such sales made in any of the Major
Geographical Areas, such sales are made by such Partner at any time during
the first five (5) years after the First Commercial Sale of such Related
Compound in such Major Geographical Area, and (B) in the case of any such
sales made in any of the Other Countries of the world, such sales are made
by such Partner at any time during the first five (5) years after the
First Commercial Sale of such Related Compound in any of the Major
Geographical Areas; and/or
(v) an amount equal to six and twenty-five hundredths percent
(6.25%) of any royalty payments actually received by LeukoSite from the
Partner for sales of such Related Compound by such Partner to third
parties, provided that (A) in the case of any such sales made in any of
the Major Geographical Areas, such sales are made by such Partner at any
time during the second five (5) years after the First
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Commercial Sale of such Related Compound in such Major Geographical Area,
and (B) in the case of any such sales made in any of the Other Countries
of the world, such sales are made by such Partner at any time during the
second five (5) years after the First Commercial Sale of such Related
Compound in any of the Major Geographical Areas.
Notwithstanding anything expressed or implied in this Section 3.8(b)
or elsewhere in this Agreement to the contrary, (A) LeukoSite shall be
required to make payment of Contingent Partner Licensing Payments pursuant
to clause (i) of this Section 3.8(b) only with respect to (1) the first
Product Candidate from the PS-341 Compound Class for which LeukoSite
receives payment of any license fees or milestone payments from any
Partner and (2) the first Product Candidate from the PS-519 Compound Class
for which LeukoSite receives payment of any license fees or milestone
payments from any Partner, and (B) LeukoSite shall be required to make
payment of Contingent Partner Licensing Payments pursuant to clauses (ii),
(iii), (iv) and/or (v) of this Section 3.8(b) only with respect to (1) the
first Product Candidate or Related Compound that is a member of the same
boronate class of proteasome inhibitors as PS-341 and that is to be
marketed and commercialized by any Partner (the "Royalty Pass-Through
Section 3.8(b) 341 Compound") and (2) the first Product Candidate or
Related Compound that is a member of the same lactacystin class of
proteasome inhibitors as PS-519 and that is to be marketed and
commercialized by any Partner (the "Royalty Pass-Through Section 3.8(b)
519 Compound"). It is further specifically acknowledged and agreed that
the foregoing provisions of this paragraph shall apply regardless of the
number of Product Candidates or Related Compounds that are developed,
marketed and/or commercialized by the same Partner or by multiple Partners
and that there shall be, for purposes of this Agreement, only a single
Royalty Pass-Through Section 3.8(b) 341 Compound and a single Royalty
Pass-Through Section 3.8(b) 519 Compound.
Consideration received by LeukoSite from a Partner that is not in
the form of cash shall be valued by LeukoSite's Board of Directors in good
faith as of the date of receipt of such consideration by LeukoSite.
Promptly following any such valuation of any such non-cash consideration,
LeukoSite shall provide written notice to the Stockholder Representatives
of the results of any such valuation and the basis therefor.
In the event that LeukoSite shall receive payment from a Partner in
the form of equity securities of any person and that such payment is
subject to the provisions of this Section 3.8(b), then, in lieu of making
payment in accordance with the provisions of this Section 3.8(b) of any
such equity securities, LeukoSite shall have the right to make cash
payments pursuant to this Section 3.8(b) equal in amount to the value of
such equity securities. Notwithstanding the foregoing or anything else
expressed or implied in this Section 3.8(b) to the contrary, in no event
shall LeukoSite be required, pursuant to this Section 3.8(b), to pay,
provide or otherwise share any portion of any equity interests in any
joint venture that are issued to, or
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acquired by, LeukoSite or any of its Affiliates. No Contingent Partner
Licensing Payment, or any portion thereof, shall consist of or include any
such equity interests.
Any payment that LeukoSite is required to make pursuant to this
Section 3.8(b) shall be made within thirty (30) days following LeukoSite's
receipt of consideration from the Partner.
(c) HMR Payments. With respect to that certain Amended and Restated
Collaboration and License Agreement, dated May 19, 1997 (as heretofore
amended, the "HMR Agreement"), between Hoechst ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Inc., a
Delaware corporation ("HMR"), and the Company, LeukoSite shall make
payment, in accordance with Section 3.6, of the following amounts
(individually, an "HMR Payment" and, collectively, the "HMR Payments"),
subject to the provisions of Section 3.8(d) and Section 3.8(g) hereof:
(i) an amount equal to fifty percent (50%) of any milestone
payments actually received by LeukoSite or the Surviving Corporation from
HMR, pursuant to Section 4.3 of the HMR Agreement, in connection with the
development by HMR of any HMR Compound, except that (i) LeukoSite shall
not be required to make any payments under this Section 3.8(c)(i) with
respect to the first $500,000 of milestone payments actually received by
LeukoSite or the Surviving Corporation at any time after the Effective
Time pursuant to the HMR Agreement (provided, however, that the foregoing
provisions of this clause (i) shall not apply in the event that LeukoSite
makes a determination that it will not deliver to HMR the third
high-throughput assay for a Collaboration Target Inhibitor that is
reflected as part of the second milestone under Section 4.3 of the HMR
Agreement) and (ii) with respect to up to $1,000,000 of milestone payments
(the "Special Milestone Payments") actually received by LeukoSite or the
Surviving Corporation pursuant to the HMR Agreement at any time after
LeukoSite or the Surviving Corporation shall have previously received,
from and after the Effective Time, an aggregate of $1,500,000 in milestone
payments under the HMR Agreement, LeukoSite shall only be required to make
payment, in accordance with Section 3.6, of an amount equal to twenty five
percent (25%) of any and all of the Special Milestone Payments;
(ii) an amount equal to twenty-five percent (25%) of any
royalty payments actually received by LeukoSite from HMR under the HMR
Agreement for sales of any HMR Compound by HMR to third parties, provided
that (A) in the case of any such sales made in any of the Major
Geographical Areas, such sales are made by HMR at any time during the
first five (5) years after the First Commercial Sale of such HMR Compound
in such Major Geographical Area, and (B) in the case of any such sales
made in any of the Other Countries of the world, such sales are made by
HMR at any time during the first five (5) years after the First Commercial
Sale of such HMR Compound in any of the Major Geographical Areas; and
(iii) an amount equal to twelve and a half percent (12.5%) of
any royalty payments actually received by LeukoSite from HMR under the HMR
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Agreement for sales of any HMR Compound by HMR to third parties, provided
that (A) in the case of any such sales made in any of the Major
Geographical Areas, such sales are made by HMR at any time during the
second five (5) years after the First Commercial Sale of such HMR Compound
in such Major Geographical Area, and (B) in the case of any such sales
made in any of the Other Countries of the world, such sales are made by
HMR at any time during the second five (5) years after the First
Commercial Sale of such HMR Compound in any of the Major Geographical
Areas.
Consideration received by LeukoSite or the Surviving Corporation
from HMR that is not in the form of cash shall be valued by LeukoSite's
Board of Directors in good faith as of the date of receipt of such
consideration by LeukoSite. Promptly following any such valuation of any
such non-cash consideration, LeukoSite shall provide written notice to the
Stockholder Representatives of the results of any such valuation and the
basis therefor.
In the event that LeukoSite shall receive payment from HMR in the
form of equity securities of any person and that such payment is subject
to the provisions of this Section 3.8(c), then, in lieu of making payment
in accordance with the provisions of this Section 3.8(c) of any such
equity securities, LeukoSite shall have the right to make cash payments
pursuant to this Section 3.8(c) equal in amount to the value of such
equity securities. Notwithstanding the foregoing or anything else
expressed or implied in this Section 3.8(c) to the contrary, in no event
shall LeukoSite be required, pursuant to this Section 3.8(c), to pay,
provide or otherwise share any portion of any equity interests in any
joint venture that are issued to, or acquired by, LeukoSite or any of its
Affiliates. No HMR Payments, or any portion thereof, shall consist of or
include any such equity interests.
Any payment that LeukoSite is required to make pursuant to this
Section 3.8(c) shall be made within thirty (30) days following LeukoSite's
or the Surviving Corporation's receipt of consideration from HMR.
(d) Maximum Payment. Notwithstanding anything in this Section 3.8
expressed or implied to the contrary, in no event shall the cumulative
aggregate amount or value of consideration that LeukoSite shall be
required to provide pursuant to Sections 3.8(a), 3.8(b)(i) and 3.8(c)(i)
exceed the sum of $20,000,000. Consideration from a Partner or HMR that is
not in the form of cash shall be valued by LeukoSite's Board of Directors
in good faith as of the date of receipt of such consideration by LeukoSite
or the Surviving Corporation and shall be included for purposes of
determining whether the maximum payment set forth in the preceding
sentence has been reached.
(e) ProScript Programs. LeukoSite represents and warrants that, as
of the date of this Agreement and based upon the information available to
it as of such date, it intends to continue the development and
commercialization of Product Candidates included in the ProScript
Programs. However, it is agreed by the Company and LeukoSite that, from
and after the date hereof, the ProScript Programs
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shall be evaluated by LeukoSite in the context of the overall research and
development programs undertaken from time to time by LeukoSite (the
"LeukoSite R&D Programs"). In making determinations concerning whether,
when and/or in what manner to develop, market or commercialize any Product
Candidate or any other compound included in any ProScript Program from and
after the date hereof, LeukoSite shall use the same criteria that it
applies in making such or similar evaluations and determinations
concerning the LeukoSite R&D Programs. Specifically, and without limiting
the generality of the foregoing sentence, LeukoSite shall take into
account its available financial resources and personnel, LeukoSite's
commitments and obligations to its corporate partners, the ease of, and
the timeframe for, obtaining regulatory approval, the potential
therapeutic benefits of the drug candidate, the level of competition in
the marketplace for the drug candidate, the relative costs of pre-clinical
and clinical development of any Product Candidate or any compound in a
ProScript Program as compared with LeukoSite's other drug development
candidates, the results and data obtained in any pre-clinical or clinical
trials, and the relative potential economic returns to LeukoSite from the
development, sale, marketing or other commercialization of any Product
Candidate or any compound in a ProScript Program as compared to any of
LeukoSite's other drug development candidates. After making a thorough
evaluation utilizing the criteria described above, LeukoSite may continue,
modify, postpone or terminate any ProScript Program or the development and
commercialization of any Product Candidate. The Stockholders'
Representatives shall have the right to obtain information about the
status of the ProScript Programs pursuant to Section 9.13 hereof.
(f) Contingent Royalty Payments. If LeukoSite or its Affiliate
markets and sells a Product Candidate or a Related Compound to third
parties who are not Affiliates of LeukoSite, then, subject to the
provisions set forth below in this Section 3.8(f) and in Section 3.8(g)
hereof, LeukoSite shall make payment, in accordance with Section 3.6, of
the following amounts (each amount, individually, a "Contingent Royalty
Payment" and, collectively, the "Contingent Royalty Payments"):
(i) an amount equal to ten percent (10%) of the Net Sales that
are generated by LeukoSite or its Affiliates from sales of such Product
Candidate to third parties who are not Affiliates of LeukoSite, provided
that (A) in the case of any such sales made in any of the Major
Geographical Areas, such sales are made by LeukoSite or its Affiliates at
any time during the first five (5) years after the First Commercial Sale
of such Product Candidate in such Major Geographical Area, and (B) in the
case of any such sales made in any of the Other Countries of the world,
such sales are made by LeukoSite or its Affiliates at any time during the
first five (5) years after the First Commercial Sale of such Product
Candidate in any of the Major Geographical Areas;
(ii) an amount equal to five percent (5%) of the Net Sales
that are generated by LeukoSite or its Affiliates from sales of such
Product Candidate to third parties who are not Affiliates of LeukoSite,
provided that (A) in the case of any such
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sales made in any of the Major Geographical Areas, such sales are made by
LeukoSite or its Affiliates at any time during the second five (5) years
after the First Commercial Sale of such Product Candidate in such Major
Geographical Area, and (B) in the case of any such sales made in any of
the Other Countries of the world, such sales are made by LeukoSite or its
Affiliates at any time during the second five (5) years after the First
Commercial Sale of such Product Candidate in any of the Major Geographical
Areas;
(iii) an amount equal to five percent (5%) of the Net Sales
that are generated by LeukoSite or its Affiliates from sales of such
Related Compound to third parties who are not Affiliates of LeukoSite,
provided that (A) in the case of any such sales made in any of the Major
Geographical Areas, such sales are made by LeukoSite or its Affiliates at
any time during the first five (5) years after the First Commercial Sale
of such Related Compound in such Major Geographical Area, and (B) in the
case of any such sales made in any of the Other Countries of the world,
such sales are made by LeukoSite or its Affiliates at any time during the
first five (5) years after the First Commercial Sale of such Related
Compound in any of the Major Geographical Areas; and/or
(iv) an amount equal to two and half percent (2.5%) of the Net
Sales that are generated by LeukoSite or its Affiliates from sales of such
Related Compound to third parties who are not Affiliates of LeukoSite,
provided that (A) in the case of any such sales made in any of the Major
Geographical Areas, such sales are made by LeukoSite or its Affiliates at
any time during the second five (5) years after the First Commercial Sale
of such Related Compound in such Major Geographical Area, and (B) in the
case of any such sales made in any of the Other Countries of the world,
such sales are made by LeukoSite or its Affiliates at any time during the
second five (5) years after the First Commercial Sale of such Related
Compound in any of the Major Geographical Areas.
The Contingent Royalty Payments shall be paid in U.S. dollars and
within thirty (30) days after the close of each calendar quarter beginning
with the first full calendar quarter after the date on which LeukoSite
actually receives payments for Net Sales with respect to any Product
Candidate or any Related Compound.
Notwithstanding anything expressed or implied in this Section 3.8(f)
(except to the extent otherwise provided in the next paragraph) or
elsewhere in this Agreement to the contrary, LeukoSite shall be required
to make payment of Contingent Royalty Payments pursuant to this Section
3.8(f) only with respect to (i) the first Product Candidate or Related
Compound that is a member of the same boronate class of proteasome
inhibitors as PS-341 and that is to be marketed and sold by LeukoSite or
any of its Affiliates (the "Section 3.8(f) 341 Compound") and (ii) the
first Product Candidate or Related Compound that is a member of the same
lactacystin class of proteasome inhibitors as PS-519 and that is to be
marketed and sold by LeukoSite or any of its Affiliates (the "Section
3.8(f) 519 Compound"). It is further specifically acknowledged and agreed
that the foregoing provisions of this
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paragraph shall apply regardless of the number of Product Candidates
and/or Related Compounds that are marketed and sold by LeukoSite or any of
its Affiliates and that there shall be, for purposes of this Agreement,
only a single Section 3.8(f) 341 Compound and a single Section 3.8(f) 519
Compound. For purposes of this Agreement, the term "Section 3.8(f)
Compound" shall mean either or both, as the context may require, of the
Section 3.8(f) 341 Compound and the Section 3.8(f) 519 Compound.
If, within two years of the First Commercial Sale of a Section
3.8(f) Compound in a Major Geographical Area or in one of the Other
Countries, LeukoSite or its Affiliates begins to market and sell a
Follow-on Product (as defined below) with respect to such Section 3.8(f)
Compound in such Major Geographical Area or in one of the Other Countries,
then, at such time as Net Sales of such Follow-on Product in such Major
Geographical Area or in the Other Countries, as the case may be, exceeds
Net Sales of such Section 3.8(f) Compound for three consecutive calendar
quarters, the Contingent Royalty Payments contemplated by this Section
3.8(f) shall become payable with respect to such Follow-on Product and
shall cease to be payable with respect to such Section 3.8(f) Compound.
For purposes of calculating the Contingent Royalty Payments that may
become due with respect to any such Follow-on Product, the First
Commercial Sale of such Follow-on Product in any Major Geographical Area
shall be deemed to have occurred at the time of the First Commercial Sale
in such Major Geographical Area of the Section 3.8(f) Compound to which
such Follow-on Product is related pursuant to the provisions of this
paragraph; provided, however, that nothing in this sentence shall be
construed as providing for the payment of Contingent Royalty Payments in
respect of a Follow-on Product for any period of time prior to the time in
which such Follow-on Product superseded the applicable Section 3.8(f)
Compound in accordance with the provisions set forth above in this
paragraph. The term "Follow-on Product" shall mean (i) with respect to the
Section 3.8(f) 341 Compound, a single other Product Candidate or Related
Compound that is a member of the same boronate class of proteasome
inhibitors as PS-341, that targets at least one of the indications
targeted by the Section 3.8(f) 341 Compound and that is marketed by
LeukoSite with the intention of cannibalizing the Section 3.8(f) 341
Compound and (ii) with respect to the Section 3.8(f) 519 Compound, a
single other Product Candidate or Related Compound that is a member of the
same lactacystin class of proteasome inhibitors as PS-519, that targets at
least one of the indications targeted by the Section 3.8(f) 519 Compound
and that is marketed by LeukoSite with the intention of cannibalizing the
Section 3.8(f) 519 Compound.
For purposes of clarification, it is hereby understood and agreed by
the parties that the transfer or grant to any third party who is not an
Affiliate of LeukoSite of the right to market or sell a Product Candidate
or a Related Compound shall not be subject to this Section 3.8(f) but
shall be subject to Section 3.8(b) hereof.
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(g) Reduction of Aggregate Contingent Consideration Payments.
(i) Development Costs for Certain Product Candidates and
Related Compounds. In the event that LeukoSite is obligated, pursuant to
any of the provisions of this Section 3.8, to make an Aggregate Contingent
Consideration Payment with respect to a Product Candidate (other than
PS-519 or PS-341) or a Related Compound, then LeukoSite shall have the
right to offset against such Aggregate Contingent Consideration Payment
all or any portion of the reasonable direct and indirect costs (including,
without limitation, applicable overhead) incurred by LeukoSite or the
Surviving Corporation in connection with pre-clinical and clinical
development of such Product Candidate or Related Compound through the
earlier of (i) the approval of the Investigational New Drug Application or
its equivalent filed with respect to such Product Candidate or Related
Compound or (ii) the commencement of Phase I human clinical trials with
respect to such Product Candidate or Related Compound.
(ii) Patent Expiration and Patent Invalidity. If (a) any
patent or patent application that covers any Product Candidate or any
Related Compound in any country or countries of the world is declared by
any court of competent jurisdiction to be invalid or unenforceable or to
infringe the rights of any third party, or (b) any patent that covers any
Product Candidate or any Related Compound in any country or countries of
the world expires and competition from a generic product develops in such
country or countries, then LeukoSite shall be entitled to reduce by fifty
percent (50%) the portion of any and all Contingent Royalty Payments that
LeukoSite would otherwise be obligated, pursuant to Section 3.8(f), to pay
in respect of sales of any such Product Candidate or Related Compound in
such country or countries.
(iii) Payments in respect of Third Party Patents and
Technology. If (a) LeukoSite reasonably determines that (i) a patent
owned, held or licensed by a third party that is not an Affiliate of
LeukoSite covers the development, manufacture, use or sale of a Product
Candidate or a Related Compound or that development, manufacture, use or
sale of a Product Candidate or a Related Compound infringes an issued and
unexpired patent of a third party that is not an Affiliate of LeukoSite
(each, a "Blocking Third Party Patent") or (ii) a patented or proprietary
complementary technology owned by a third party is necessary for
LeukoSite's development, manufacture, use or sale of a Product Candidate
or a Related Compound (a "Complementary Technology"), and (b) LeukoSite
in-licenses such Blocking Third Party Patent or Complementary Technology
pursuant to terms requiring LeukoSite to make payments to such third
party, then, subject to the provisions of Section 3.8(g)(v) below, fifty
percent (50%) of the amount of any payments that LeukoSite is required to
pay in connection with such in-licensed Blocking Third Party Patent or
Complementary Technology shall be offset by LeukoSite against any and all
Aggregate Contingent Consideration Payments that LeukoSite is required to
pay pursuant to this Section 3.8 with respect to such Product Candidate or
Related Compound, provided that in no event shall the amount of any
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LeukoSite Contingent Milestone Payment, Contingent Partner Licensing
Payment or Contingent Royalty Payment that would otherwise be payable by
LeukoSite pursuant to this Section 3.8 be reduced by more than fifty
percent (50%) pursuant to this Section 3.8(g)(iii). In the event that
LeukoSite shall in-license Complementary Technology, LeukoSite shall use
commercially reasonable efforts to get the licensor of any such
Complementary Technology to agree to indemnify LeukoSite from third party
infringement claims arising from LeukoSite's use of such Complementary
Technology.
(iv) Payments under Harvard License Agreements in respect of
any HMR Compound. If, but only if, at any time after the Effective Time,
LeukoSite renegotiates the HMR Agreement such that the milestone or
royalty payments payable to LeukoSite or the Surviving Corporation under
the HMR Agreement are higher than the amount of any such payments that are
payable to the Surviving Corporation under the HMR Agreement as in effect
on the date hereof, then fifty percent (50%) of any payments made by
LeukoSite or the Surviving Corporation pursuant to either Harvard License
Agreement in connection with, or as a result of, the development,
manufacture, use or sale of any HMR Compound shall be offset by LeukoSite
against any and all HMR Payments that LeukoSite is required to pay
pursuant to Section 3.8(c) with respect to such HMR Compound.
Notwithstanding the foregoing, in no event shall the amount of any HMR
Payment with respect to any HMR Compound be less, by virtue of this
Section 3.8(g)(iv), than the amount that would have been received under
Section 3.8(c) with respect to such HMR Compound if the terms of the HMR
Agreement had not been renegotiated.
(v) Payments under Harvard License Agreements in respect of
any Product Candidates or Related Compounds. If LeukoSite, the Surviving
Corporation, any of LeukoSite's other Affiliates or any Partner makes any
royalty payment pursuant to either Harvard License Agreement in connection
with, or as a result of, the development, manufacture, use or sale of a
Product Candidate or Related Compound, and if such Product Candidate or
Related Compound is a member of the same lactacystin class of proteasome
inhibitors as PS-519, then (A) any and all Contingent Partner Licensing
Payments that LeukoSite is required to pay pursuant to clause (iii) of
Section 3.8(b) with respect to such Product Candidate shall be calculated
as if the percentage set forth in such clause (iii) were 25% instead of
12.5% and (B) any and all Contingent Partner Licensing Payments that
LeukoSite is required to pay pursuant to clause (v) of Section 3.8(b) with
respect to such Related Compound shall be calculated as if the percentage
set forth in such clause (v) were 12.5% instead of 6.25%. In addition, if
LeukoSite, the Surviving Corporation, any of LeukoSite's other Affiliates
or any Partner makes any royalty payment pursuant to either Harvard
License Agreement in connection with, or as a result of, the development,
manufacture, use or sale of a Product Candidate or Related Compound, and
if such Product Candidate or Related Compound is a member of the same
lactacystin class of proteasome inhibitors as PS-519, then fifty percent
(50%) of the amount of any such royalty payment shall be offset by
LeukoSite against any and all Contingent Partner Licensing Payments that
LeukoSite is required to pay pursuant to
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clauses (ii), (iii), (iv) and/or (v) of Section 3.8(b) with respect to
such Product Candidate or Related Compound, provided that (X) in no event
shall the amount of any Contingent Partner Licensing Payment payable by
LeukoSite pursuant to clauses (ii) and (iv) of Section 3.8(b) with respect
to such Product Candidate be less, by virtue of the operation of the
provisions of this Section 3.8(g)(v) and Section 3.8(g)(iii), than an
amount equal to one percent (1%) of the Net Sales generated by a Partner
and its Affiliates from sales of such Product Candidate to third parties
who are not Affiliates of such Partner and (Y) in no event shall the
amount of any Contingent Partner Licensing Payment payable by LeukoSite
pursuant to clauses (iii) and (v) of Section 3.8(b) with respect to such
Related Compound be less, by virtue of the operation of the provisions of
this Section 3.8(g)(v) and Section 3.8(g)(iii), than an amount equal to
one-half of one percent (0.5%) of the Net Sales generated by a Partner and
its Affiliates from sales of such Related Compound to third parties who
are not Affiliates of such Partner.
(h) Application of Offset Rights to Subsequent Payments. In the
event that, pursuant to any provision of this Agreement (including,
without limitation, any provision of this Section 3.8 or any provision of
Section 14 hereof), LeukoSite shall be entitled to offset or setoff any
amount or amounts (in each instance, a "Setoff Amount") against all or any
portion of the Merger Consideration (in accordance with the terms and
limitations set forth in this Agreement), and that, after giving effect to
any such offset or setoff right (in accordance with the terms and
limitations set forth in this Agreement), a portion of such Setoff Amount
remains unsatisfied, then the parties hereby agree that LeukoSite shall be
entitled to offset or setoff any such unsatisfied Setoff Amount against
any and all subsequent payments of Merger Consideration that LeukoSite is
required to make pursuant to this Agreement until such unsatisfied Setoff
Amount shall have been fully offset. Notwithstanding the foregoing, the
parties hereby acknowledge that the provisions of Sections 3.8(g)(iii),
(iv) and (v) contemplate and permit (under certain circumstances specified
therein) set-offs and offsets of certain amounts relating to a Product
Candidate, Related Compound or HMR Compound, as the case may be, solely
against the portion of any Merger Consideration then owed or that may be
payable in the future by LeukoSite pursuant to this Agreement with respect
to such Product Candidate, Related Compound or HMR Compound, as the case
may be, and that the provisions of this Section 3.8(h) shall not be
construed so as to permit LeukoSite to set-off or offset, pursuant to
Sections 3.8(g)(iii), (iv) and (v), any amount relating to a Product
Candidate, Related Compound or HMR Compound against any portion of the
Merger Consideration attributable to a Product Candidate, Related Compound
or HMR Compound other than such Product Candidate, Related Compound or HMR
Compound, as the case may be.
(i) Infringement Action Recoveries. In the event that LeukoSite
shall be awarded damages in connection with any suit or arbitration
against a third party for infringement of intellectual property rights
that pertain to any Section 3.8(f) Compound, then any amounts actually
received by LeukoSite in payment of such damages shall be treated, for
purposes of Section 3.8(f) hereof, as if they were Net
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Sales of such Section 3.8(f) Compound arising from sales of such Section
3.8(f) Compound during the years during which the infringement was
occurring. In the event that a Partner shall be awarded damages in
connection with any suit or arbitration against a third party for
infringement of intellectual property rights that pertain to a Product
Candidate or Related Compound being marketed by such Partner and that such
Partner makes payment to LeukoSite of a portion of such awarded damages,
then the portion of such awarded damages that is actually received by
LeukoSite from such Partner shall be treated, for purposes of Section
3.8(b) hereof, as if they were royalty payments received by LeukoSite from
such Partner arising from sales of such Product Candidate or Related
Compound by such Partner during the years during which the infringement
was occurring. If any infringement covered by the provisions of this
Section 3.8(h) occurred over a period of more than one year, then, for
purposes of this Section 3.8(h), any amounts actually received by
LeukoSite in connection with such infringement shall be apportioned
equally among the years during which such infringement was occurring and,
thereafter, the amount apportioned to each year shall be treated as either
(i) Net Sales or (ii) royalty payments received by LeukoSite, from sales
of the applicable Product Candidate or Related Compound, as the case may
be, during such year.
3.9 Delivery of Reports; Audit Rights; Interest. Simultaneously with the
delivery of each Contingent Partner Licensing Payment, HMR Payment and
Contingent Royalty Payment pursuant to the relevant portions of Section 3.8
above, LeukoSite shall deliver to the Stockholder Representatives a report
indicating the appropriate calculation(s) for each payment, including with
respect to each Product Candidate or Related Compound, an accounting of the
deductions from Net Sales permitted by the definition thereof, and the total
amounts owed. LeukoSite will keep records in sufficient detail to enable the
Stockholder Representatives to verify the accuracy of any report delivered
pursuant to this Section 3.9 for a period of not less than two (2) years after
the end of the calendar quarter to which such records apply. Subject to the
execution of a standard form confidentiality and non-disclosure agreement, an
independent certified public accountant selected by the Stockholder
Representatives shall have reasonable access to the records of LeukoSite, during
reasonable business hours, upon not less than five (5) business days' notice to
LeukoSite, solely for the purpose of verifying the accuracy of any report
delivered by LeukoSite pursuant to this Section 3.9, and not more than once
during any twelve (12) consecutive month period. The accountant selected by the
Stockholder Representatives shall not disclose any information other than
information relating solely to the accuracy of the reports and payments made
under Section 3.8 of this Agreement. Any audits under this Section 3.9 shall be
at the expense of the Stockholders and/or the Stockholder Representatives,
provided, however, that if LeukoSite has underpaid a Contingent Partner
Licensing Payment, HMR Payment or Contingent Royalty Payment due under this
Agreement by more than ten percent (10%), LeukoSite shall reimburse the
Stockholders and/or the Stockholder Representatives, as the case may be, for the
cost of such audit. Any Aggregate Contingent Consideration Payments not paid
when due under this Agreement shall bear interest at an annual rate equal to the
prime rate established by the Wall Street Journal as of the date such amount is
due until the date such amount is paid in full.
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4. Procedures.
4.1. Certificates. After the Effective Time, stock certificates
(each, a "Certificate," and collectively, the "Certificates") representing
shares of Company Stock that, pursuant to the provisions of Section 3.6(a)
above, entitle the holder thereof to receive therefor the Merger Consideration
pursuant to the Merger, will be conclusively deemed to represent the right to
receive such Merger Consideration.
4.2. Exchange of Certificates. As promptly as practicable after the
Effective Time, LeukoSite (or its designee) will send to each Stockholder
transmittal materials for use in exchanging their Certificates for the Merger
Consideration to which such Stockholder may be entitled as determined in
accordance with the provisions of this Agreement. Upon surrender of a
Certificate to LeukoSite (or its designee), together with a duly executed letter
of transmittal and any other documents reasonably required by LeukoSite, the
holder of such Certificate will be entitled to receive, in exchange for such
Certificate, the portion of the Merger Consideration to which such holder may be
entitled (as determined in accordance with the provisions of this Agreement),
and such Certificate will be canceled.
4.3. No Transfers. After the Effective Time, no transfers of shares
of Company Stock will be made in the stock transfer books of the Company. If,
after the Effective Time, Certificates are presented (for transfer or otherwise)
to the Surviving Corporation or its transfer agent for Company Stock, they will
be canceled and exchanged for the portion of the Merger Consideration
deliverable in respect thereof (or returned to the presenting person, if such
Certificate represents Dissenting Shares).
4.4. Termination of Rights. After the Effective Time, holders of
Company Stock will cease to be, and will have no rights as, stockholders of the
Company, other than (i) in the case of shares other than Dissenting Shares, the
rights to receive the Merger Consideration, as provided in this Agreement, and
(ii) in the case of Dissenting Shares, the rights afforded to the holders
thereof under Section 262 of the DGCL.
4.5. Abandoned Property. Neither LeukoSite nor the Company nor any
other person will be liable to any holder or former holder of shares of Company
Stock for any shares, or any dividends or other distributions with respect
thereto, properly delivered to a public official pursuant to applicable
abandoned property, escheat, or similar laws.
4.6. Lost Certificates, Etc. In the event that any Certificate has
been lost, stolen, or destroyed, then upon receipt by LeukoSite of appropriate
evidence as to such loss, theft, or destruction, and to the ownership of such
Certificate by the person claiming such Certificate to be lost, stolen, or
destroyed, and the receipt by LeukoSite (or its designee) of appropriate and
customary indemnification, then such person shall be entitled to receive the
appropriate portion of the Merger Consideration pursuant to the provisions of
Section 3.6(a) of this Agreement.
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4.7 Stockholders' Representatives.
(a) In order to efficiently administer the transactions
contemplated hereby, including (i) the waiver of any condition to the
obligations of the Stockholders to consummate the transactions contemplated
hereby, (ii) the defense and/or settlement of any claims for which the
Stockholders and the Bonus Recipients may be required to indemnify LeukoSite
and/or the Surviving Corporation pursuant to Section 14 below or for which
LeukoSite shall have the right of set-off pursuant to this Agreement, (iii) the
exercise of the rights of Stockholders and the Bonus Recipients hereunder, and
(iv) the orderly distribution of the Merger Consideration from LeukoSite to the
Stockholders and the Bonus Recipients, the Stockholders and the Bonus Recipients
hereby designate ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, acting
jointly, as their representatives (in such capacity, the "Stockholders'
Representatives"). Notwithstanding anything expressed or implied in the
foregoing provisions of this Section 4.7(a) or elsewhere in this Agreement to
the contrary, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇'▇ authority to act as a Stockholders'
Representative shall be limited only to those matters relating to the orderly
distribution of the Merger Consideration from LeukoSite to the Stockholders and
the Bonus Recipients, and with respect to any other matters on which the
Stockholders' Representatives have the authority to act ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ shall
not be a Stockholders' Representative.
(b) The Stockholders and the Bonus Recipients hereby authorize the
Stockholders' Representatives, acting jointly, (i) to take all action
necessary in connection with the waiver of any condition to the
obligations of the Stockholders to consummate the transactions
contemplated hereby, or the defense and/or settlement of any claims for
which the Stockholders and the Bonus Recipients may be required to
indemnify LeukoSite, the Merger Sub and/or the Surviving Corporation
pursuant to Section 14 below or for which LeukoSite shall have the right
of set-off pursuant to this Agreement, (ii) to determine the Stockholders
and the Bonus Recipients to whom Merger Consideration from LeukoSite shall
be distributed, the amount of consideration to be so distributed, and the
address of such Stockholders and the Bonus Recipients, and to receive such
Merger Consideration and distribute it pursuant to Section 3.6 hereof,
(iii) to give and receive all notices required to be given under this
Agreement, and (iv) to take any and all additional action as is
contemplated to be taken by or on behalf of the Stockholders and the Bonus
Recipients by the terms of this Agreement or to enforce against LeukoSite
its obligations under the terms of this Agreement. In order for any
action, consent, approval or determination taken or made by the
Stockholders' Representatives to be valid, binding and enforceable, it
must be taken or made by joint action of both Stockholders'
Representatives. Neither of the Stockholders' Representatives shall have
any power or authority to take any action individually without the other,
and, in the event that either of the Stockholders' Representatives takes
any action individually without the other, such action shall not be
binding or of any force or effect whatsoever.
(c) In the event that ▇▇▇▇▇▇ ▇▇▇▇▇▇ or ▇▇▇▇▇▇ ▇▇▇▇▇ or their
respective substitutes as one of the Stockholders' Representatives, dies,
becomes unable to
-31-
perform his responsibilities hereunder or resigns from such position, the
Stockholders entitled to an aggregate Merger Consideration Portion of
greater than 50% at such time shall select another representative to fill
such vacancy and such substituted representative shall be deemed to a
Stockholders' Representative for all purposes of this Agreement and the
documents delivered pursuant hereto. In the event that ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ or
his substitutes as one of the Stockholders' Representatives dies, becomes
unable to perform his responsibilities hereunder or resigns from such
position, the Note Holders, acting jointly, shall select another
representative to fill such vacancy and such substituted representative
shall be deemed to a Stockholders' Representative for all purposes of this
Agreement and the documents delivered pursuant hereto with respect to such
matters as ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ is authorized to act as Stockholders'
Representative pursuant to this Agreement.
(d) All decisions and actions by the Stockholders' Representatives,
including without limitation any agreement between the Stockholders'
Representatives and LeukoSite relating to the defense or settlement of any
claims for which the Stockholders and the Bonus Recipients may be required
to indemnify LeukoSite, Merger Sub and/or the Surviving Corporation
pursuant to Section 14 below or for which LeukoSite shall have the right
of set-off pursuant to this Agreement, shall be binding upon all of the
Stockholders and the Bonus Recipients and no Stockholder or Bonus
Recipient shall have the right to object, dissent, protest or otherwise
contest the same.
(e) By virtue of the adoption of this Agreement and the approval of
the Merger by the stockholders at a meeting of stockholders (or by written
consent in lieu of a meeting) pursuant to, and in accordance with, the
applicable provisions of the DGCL, each Stockholder (regardless of whether
or not such Stockholder votes in favor of the adoption of this Agreement
and the approval of the Merger at such meeting or by written consent) that
is not a holder of Dissenting Shares hereby agrees that:
(i) LeukoSite shall be able to rely conclusively on the joint
instructions and decisions of the Stockholders' Representatives as
to the settlement of any claims for indemnification by LeukoSite,
Merger Sub and/or the Surviving Corporation pursuant to Section 14
below or for which LeukoSite shall have the right of set-off
pursuant to this Agreement, or as to any other actions required or
permitted to be taken by the Stockholders' Representatives
hereunder, and no party hereunder shall have any cause of action
against LeukoSite to the extent LeukoSite has relied upon the joint
instructions or decisions of the Stockholders' Representatives;
(ii) all actions, decisions and instructions of the
Stockholders' Representatives shall be conclusive and binding upon
all of the Stockholders and no Stockholder shall have any cause of
action against either of the Stockholders' Representatives for any
action taken, decision made or instruction given by the
Stockholders' Representatives, acting jointly, under
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this Agreement, except for fraud or willful breach of this Agreement
by the Stockholders' Representatives;
(iii) the provisions of this Section 4.7 are independent and
severable, are irrevocable and coupled with an interest and shall be
enforceable notwithstanding any rights or remedies that any
Stockholder may have in connection with the transactions
contemplated by this Agreement;
(iv) remedies available at law for any breach of the
provisions of this Section 4.7 are inadequate; therefore, LeukoSite,
Merger Sub and/or the Surviving Corporation shall be entitled to
seek temporary and permanent injunctive relief without the necessity
of proving damages if either LeukoSite, Merger Sub and/or the
Surviving Corporation brings an action to enforce the provisions of
this Section 4.7; and
(v) the provisions of this Section 4.7 shall be binding upon
the executors, heirs, legal representatives, personal
representatives, successor trustees, and successors of each
Stockholder and any references in this Agreement to a Stockholder or
the Stockholders shall mean and include the successors to the
Stockholder's rights hereunder, whether pursuant to testamentary
disposition, the laws of descent and distribution or otherwise.
(f) All fees and expenses incurred by the Stockholders'
Representatives shall be paid by the Stockholders (other than holders of
Dissenting Shares) in proportion to the aggregate Merger Consideration
Portion held by each of them; provided, that in no event shall any
Stockholder be liable for any such fees or expenses in excess of the
aggregate Merger Consideration paid to such Stockholder, without such
Stockholder's prior written consent.
4.8. Effect of Stockholder Approval. Subject to the provisions of
the last sentence of this Section 4.8, the adoption of this Agreement and the
approval of the Merger by the stockholders at a meeting of stockholders (or by
written consent in lieu of a meeting) pursuant to, and in accordance with, the
applicable provisions of the DGCL shall be deemed to constitute approval by each
Stockholder individually (regardless of whether or not such Stockholder votes in
favor of the adoption of this Agreement and the approval of the Merger at such
meeting or by written consent), to the same extent as if such Stockholder were a
party to this Agreement, of (i) all of the provisions of this Agreement that
pertain to the Stockholders, that impose liabilities, obligations or burdens on
the Stockholders (including, without limitation, the indemnification provisions
of Section 14 hereof) or that limit the rights of the Stockholders (including,
without limitation, with respect to the right of the Stockholders to receive all
or any portion of the Merger Consideration), (ii) the appointment of the
Stockholders' Representatives, (iii) the grant to the Stockholders'
Representatives of all of the powers, rights and privileges contemplated under
this Agreement (including, without limitation, those set forth in Section 4.7
hereof), (iv) the provisions of this Agreement concerning the replacement and
substitution of either of the Stockholders' Representatives, and (v) the
provisions of this Agreement that authorize LeukoSite to
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exercise any right of set-off. The exercise of any Surviving Warrant by any
holder thereof shall be deemed to constitute approval by such holder, to the
same extent as if such holder were a party to this Agreement, of all of the
matters set forth in the foregoing clauses (i) through (v). Each Stockholder
(other than holders of Dissenting Shares) and Bonus Recipient acknowledges and
agrees that the payment by LeukoSite of the Merger Consideration to the
Stockholder Representatives shall constitute payment in accordance with Section
3.6. Notwithstanding the foregoing, the provisions of this Section 4.8 shall not
apply to those Stockholders that duly exercise the appraisal rights afforded to
dissenting stockholders pursuant to Section 262 of the DGCL.
5. Stock Options and Warrants. Prior to the Effective Time, the Company
and its Board of Directors shall (i) take all actions necessary to effect the
exercise and/or termination of each option to purchase Company Stock ("Company
Options"), whether issued under one of the Company's option plans or otherwise,
and (ii) use reasonable efforts to cause each holder of a warrant to purchase
Company Stock outstanding at any time prior to the Effective Time (the "Company
Warrants") to exercise or agree to the termination of the warrant in full prior
to the Effective Time. LeukoSite will not assume any Company Option or Company
Warrant. Notwithstanding the foregoing, any Company Warrant not exercised or
terminated prior to the Effective Time (such Company Warrants being referred to
herein as the "Surviving Warrants") will be exercisable on the terms set forth
therein and, upon proper exercise and delivery of such original Surviving
Warrant to LeukoSite for cancellation and the payment of the exercise price of
such Surviving Warrant to LeukoSite, shall entitle the holder thereof to receive
from LeukoSite the aggregate Merger Consideration to which such holder would
have been entitled to if such Surviving Warrant, to the extent exercised, had
been so exercised immediately prior to the Effective Time. In the event that any
Surviving Warrant expires or terminates without having been exercised in full,
LeukoSite shall distribute, in accordance with the provisions of Section 3.6,
the Merger Consideration to which the holder of such Surviving Warrant would
have been entitled to prior to such expiration or termination if the unexercised
portion of such Surviving Warrant had been exercised in full immediately prior
to the Effective Time.
6. Registration and Lock-Up of LeukoSite Common Stock.
6.1 Registration of Shares.
(a) Demand Registrations on Form S-3
(i) Written Request; Inclusion of Shares. Subject to the
limitations set forth herein, in the event that LeukoSite shall receive
from any Note Holder or Note Holders a written request or requests that
LeukoSite effect a registration on Form S-3, or any successor or
substitute form (the "Stockholder Registration Statement"), with respect
to all or a portion of the Payment Shares owned by such Note Holder or
Note Holders, then LeukoSite will promptly give written notice of the
proposed registration and the Note Holder's or Note Holders' request
therefor to all other Note Holders (if any) and, as soon as practicable,
use reasonable best efforts to effect such registration of all or such
portion of such
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Payment Shares as are specified in such request, together with all or such
portion of the Payment Shares of any other Note Holder or Note Holders
joining in such request as are specified in a written request given within
twenty (20) days after receipt of such written notice from LeukoSite;
provided, however, that LeukoSite shall have no obligation under this
Section 6.1(a) if LeukoSite has previously given a notice to the
Noteholders of the type specified in Section 6.1(b) hereof, or this
Section 6.1(a), for so long as LeukoSite is continuing to pursue the
registration referred to in such notice. LeukoSite may not include in any
registration pursuant to this Section 6.1(a) additional shares of
LeukoSite Common Stock for sale for its own account or for the account of
any other person. No registration under this Section 6.1(a) shall be
underwritten unless LeukoSite shall otherwise elect in its sole and
absolute discretion.
(ii) Selection of Underwriters. If a registration under this
Section 6.1(a) involves an underwritten offering, the underwriter or
underwriters thereof shall be selected by LeukoSite.
(iii) Certain Limitations. In addition to the limitations set
forth in Section 6.2 below, LeukoSite shall not be required to effect (A)
more than two (2) registrations pursuant to the provisions of this Section
6.1(a), (B) more than one registration pursuant to the provisions of this
Section 6.1(a) within any twelve month period or (C) any registration
pursuant to this Section 6.1(a) if the Note Holder or Note Holders,
together with the holders of any other securities of LeukoSite entitled to
include such securities in such registration, propose to sell Payment
Shares and such other securities (if any) at an aggregate price to the
public of less than $750,000.
(iv) Limitation on Requests. Notwithstanding anything in this
Section 6.1(a) to the contrary, (A) no Note Holder may request a
registration pursuant to this Section 6.1(a) within one hundred eighty
(180) days of the effective date of any other registration statement filed
by the Company with the SEC pursuant to this Section 6.1(a) or Section
6.1(b) hereof, and (B) no Note Holder may request a registration pursuant
to this Section 6.1(a) at any time after the second anniversary of the
Closing Date.
(v) Unavailability for Form S-3. Notwithstanding anything to
the contrary expressed or implied in this Agreement, if Form S-3 or any
substitute form is not then available for the registration of such Payment
Shares that would otherwise have been proposed to be sold and distributed
by such Note Holder or Note Holders pursuant to this Section 6.1(a), the
Company shall be obligated to prepare and file a registration statement
pursuant to this Section 6.1(a) on Form S-1 at the written request or
requests from any Note Holder or Note Holders given in accordance with
Section 6.1(a)(i) and the provisions of this Section 6.1(a) shall govern
and apply to such request or requests and such registration on Form S-1.
(b) Piggyback Registration. From and after the date hereof and prior
to the expiration of the fifth anniversary of the Closing Date, whenever
LeukoSite proposes to file a registration statement relating to an
offering in which LeukoSite proposes to sell shares of LeukoSite Common
Stock for its own account (other than
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registration statements on Form S-4 or Form S-8 or any successor form for
securities to be offered in a transaction of the type contemplated by Rule
145 under the Securities Act or to employees or consultants of LeukoSite
pursuant to any employee benefit plan), it will, prior to such filing,
give at least 20 days' written notice to all Note Holders of its intention
to do so (subject to the limitations set forth in paragraph (d) below)
(the "Piggyback Notice") and, upon the written request of one or more Note
Holders given within ten (10) days after the LeukoSite Piggyback Notice is
given (which request shall state the intended method of disposition of
those Payment Shares requested to be included in such registration) (the
"Holder Inclusion Notice"), LeukoSite shall use reasonable best efforts to
cause all Payment Shares which LeukoSite has been requested by such Note
Holder or Note Holders to register to be registered under the Securities
Act to the extent necessary to permit their sale or other disposition in
accordance with the intended methods of distribution specified in the
Holder Inclusion Notice; provided, that (i) LeukoSite shall have the right
to postpone or withdraw any registration effected pursuant to this Section
6.1(b) hereof without obligation to any Note Holder, and (ii) the number
of Payment Shares proposed to be sold by any such Note Holder is at least
fifty percent (50%) of the total number of Payment Shares then held by
such Note Holder (or such lesser percentage if such Note Holder is
cut-back pursuant to the priorities for registration set forth in Section
6.1(c) below.
(c) Limits on Piggyback Registrations. In connection with any
offering under Section 6.1(b) hereof involving an underwriting, LeukoSite
shall not be required to include any Payment Shares in such underwriting
unless the holders thereof accept the terms of the underwriting as agreed
upon between LeukoSite and the underwriter(s) of such offering. If in the
written opinion of the managing underwriter(s) of such offering the
registration of all, or part of, the Payment Shares which the Note Holders
have requested to be included pursuant to Section 6.1(b) hereof (the
"Incidental Shares") and/or which other holders of shares of LeukoSite
Common Stock or other securities of LeukoSite entitled to include shares
of LeukoSite Common Stock in such registration have requested to be
included (collectively, the "Qualified Holders") would materially and
adversely affect the success of such public offering or the price that
would be received for any shares of LeukoSite Common Stock offered in the
offering, then, notwithstanding anything in this Section 6 to the
contrary, LeukoSite shall be required to include in the underwriting only
that number of such shares, if any, which the managing underwriter(s)
believe(s) may be sold without causing such adverse effect. If a
registration pursuant to this Section 6 hereof involves an underwritten
offering and the managing underwriter shall advise LeukoSite in writing
that, in its opinion, the number of shares of LeukoSite Common Stock
requested by the Qualified Holders to be included in such registration is
likely to affect materially and adversely the success of the public
offering or the price that would be received for any shares of LeukoSite
Common Stock offered in such offering, then, notwithstanding anything in
this Section 6 to the contrary, LeukoSite shall only be required to
include in such registration to the extent of the number of shares of
LeukoSite Common Stock which LeukoSite is so advised can be sold in such
offering, (i) first, the number of shares of
-▇▇-
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Stock proposed to be included in such registration for
the account of LeukoSite and/or any stockholders of LeukoSite that have
exercised demand registration rights in accordance with the priorities, if
any, then existing among LeukoSite and/or such stockholders of LeukoSite
with demand registration rights, and (ii) second, the shares of LeukoSite
Common Stock requested to be included in such registration by all other
stockholders of LeukoSite (including, without limitation, the Note
Holders), pro rata among such other stockholders (including, without
limitation, the Note Holders) on the basis of the number of shares of
LeukoSite Common Stock that each of them requested to be included in such
registration.
(d) Further Limitations. Notwithstanding anything in this Section 6
to the contrary, LeukoSite shall not be required to provide any advance
notice to Note Holders in connection with any offering involving an
underwriting if LeukoSite has been informed in writing that in the opinion
of the managing underwriter(s) the inclusion of any Incidental Shares in
such offering would materially and adversely affect the success of the
offering or the price that would be received for any shares of LeukoSite
Common Stock offered in the offering. In such event, LeukoSite will
provide written notice to all Note Holders containing a copy of such
managing underwriter's(s') opinion, which notice need not be given prior
to the filing of the applicable registration statement.
6.2 Limitations on Registration Rights. Notwithstanding anything in
this Section 6 to the contrary, if the Company shall furnish to the Note Holder
or Note Holders a certificate signed by the President or Chief Executive Officer
of LeukoSite stating that the Board of Directors of LeukoSite has made the good
faith determination (i) either that filing a registration statement for purposes
of enabling any Note Holder to effect offers or sales of Payment Shares pursuant
thereto or that continued use by any Note Holder of any registration statement
or the prospectus relating thereto for such purposes, as the case may be, would
require, under the Securities Act and the rules and regulations promulgated
thereunder, premature disclosure in the registration statement (or the
prospectus relating thereto) of material, nonpublic information concerning
LeukoSite, its business or prospects or any proposed material transaction
involving LeukoSite, (ii) that such premature disclosure would be materially
adverse to LeukoSite, its business or prospects or any such proposed material
transaction or would make the successful consummation by LeukoSite of any such
material transaction significantly less likely and (iii) that it is therefore
essential either to defer the filing of any such registration statement or to
suspend the use of any such registration statement (and the prospectus relating
thereto) for purposes of effecting offers or sales of Payment Shares pursuant
thereto, as the case may be, then LeukoSite shall have the right either to defer
the filing of any such registration statement or to suspend the right of the
Note Holders to use any such registration statement (and the prospectus relating
thereto) for purposes of effecting offers or sales of Payment Shares pursuant
thereto, as the case may be, in either case for a period (the "Suspension
Period") of no more than 120 days after delivery by the Company of the
certificate referred to above in this Section 6.2(a). LeukoSite may not exercise
its rights under this Section 6.2 with respect to any or all registrations under
this Section 6 for more than 120 days in any twelve-month period.
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During the Suspension Period, none of the Note Holders shall offer or sell any
Payment Shares pursuant to or in reliance upon any such registration statement
(or the prospectus relating thereto). LeukoSite agrees that, as promptly as
practicable after the consummation, abandonment or public disclosure of the
event or transaction that caused LeukoSite either to defer the filing of any
such registration statement or to suspend the use of any such registration
statement (and the prospectus relating thereto), as the case may be, in either
case pursuant to this Section 6.2, LeukoSite, as applicable, either will file
any such registration statement or will provide to the Note Holders with revised
prospectuses, if required, and will notify the Note Holders of their ability to
effect offers or sales of Payment Shares pursuant to or in reliance upon any
such registration statement (and the prospectus related thereto). LeukoSite
agrees that no other holder of LeukoSite Common Stock seeking to resell shares
of LeukoSite Common Stock pursuant to a shelf registration statement on Form S-3
will be permitted to sell shares of LeukoSite Common Stock pursuant to such
shelf registration statement during a Suspension Period. LeukoSite shall not be
required to disclose to the Note Holders the reasons for requiring a suspension
of sales hereunder, and the Registering Stockholders shall not disclose to any
third party the existence of any such suspension.
6.3 Registration Procedures.
(a) With respect to any registration statement relating to any
request for registration pursuant to Section 6.1(a) hereof, LeukoSite
shall, subject to Section 6.2 hereof, prepare and file with the SEC such
registration statement and use commercially reasonable efforts to cause
such registration statement to become and remain effective; provided,
however, that LeukoSite shall in no event be obligated to cause any such
registration to remain effective for more ninety (90) days.
(b) If LeukoSite has delivered preliminary or final prospectuses to
the Note Holders and after having done so such prospectuses are amended or
supplemented to comply with the requirements of the Securities Act,
LeukoSite shall promptly notify the Note Holders and, if requested by
LeukoSite, the Note Holders shall immediately cease making offers or sales
of shares pursuant to any such prospectuses and the registration statement
to which such prospectuses relate and shall return to LeukoSite all copies
of any such prospectuses in their possession. LeukoSite shall promptly
provide the Note Holders with revised prospectuses and, following receipt
of the revised prospectuses, the Note Holders shall be free to resume
making offers and sales pursuant to any such revised prospectuses and the
registration statement to which such revised prospectuses relate. The
provisions of this Section 6.3(b) shall not limit in any way the
provisions of Section 6.2 hereof.
(c) LeukoSite shall furnish to each requesting Note Holder (i) such
number of conformed copies of any registration statement that, pursuant to
any of the provisions of this Section 6, includes any of such requesting
Note Holder's Payment Shares and of each such amendment and supplement
thereto (in each case including all exhibits thereto), (ii) such number of
copies of the prospectus included in such registration statement
(including each preliminary prospectus) and (iii) such number
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of documents, if any, incorporated by reference in any such registration
statement or prospectus, as such requesting Note Holder may reasonably
request.
(d) LeukoSite shall use reasonable best efforts to register or
qualify the Payment Shares covered by the Stockholder Registration
Statement under the securities or "blue sky" laws of such states as the
Note Holders shall reasonably request; provided, however, that LeukoSite
shall not be required in connection with this paragraph (b) to qualify as
a foreign corporation or execute a general consent to service of process
in any jurisdiction.
(e) LeukoSite shall pay the expenses incurred by it in complying
with its obligations under this Section 6, including all registration and
filing fees, exchange listing fees, fees and expenses of counsel for
LeukoSite, and fees and expenses of accountants for LeukoSite, but
excluding (i) any brokerage fees, selling commissions or underwriting
discounts incurred by the Note Holders in connection with sales under the
Stockholder Registration Statement and (ii) the fees and expenses of any
counsel retained by Note Holders.
6.4 Requirements of Company Note Holders. LeukoSite shall not be
required to include any Payment Shares in any registration statement pursuant to
the terms of this Section 6 unless:
(a) the Note Holder owning such shares furnishes to LeukoSite in
writing such information regarding such Note Holder and the proposed sale
of Payment Shares by such Note Holder as LeukoSite may reasonably request
in writing in connection with the Stockholder Registration Statement or as
shall be required in connection therewith by the SEC or any state
securities law authorities;
(b) such Note Holder shall have provided to LeukoSite its written
agreement:
(i) to indemnify LeukoSite and each of its directors and
officers under the circumstances and substantially in the form set
forth in Section 6.5(b) hereof; and
(ii) From the Closing Date to the second anniversary of the
Closing Date, each Note Holder which holds or owns (at the time of
the written request of the managing underwriter referred to below in
this Section 6.4(b) or at any time during the 90 day period
commencing on the effective date of the registration statement
relating to such underwritten public offering of LeukoSite Common
Stock) of record or beneficially (within the meaning of Section
13(d) of the Exchange Act and the rules and regulations promulgated
thereunder) Payment Shares hereby agrees that, at the written
request of any managing underwriter of any underwritten public
offering of LeukoSite Common Stock, such Note Holder shall not,
without the prior written consent of LeukoSite or such managing
underwriter, sell, make any short sale of, loan,
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grant any option for the purchase of, pledge, encumber, or otherwise
dispose of, or exercise any registration rights with respect to, any
Payment Shares during the 90 day period commencing on the effective
date of the registration statement relating to such underwritten
public offering of LeukoSite Common Stock; provided that no Note
Holder shall be obligated to enter into such lock-up agreement
described in this Section 6.4(b)(ii) unless all executive officers
and directors of LeukoSite enter into similar agreements. In order
to enforce the foregoing covenant, LeukoSite may impose stop
transfer instructions with respect to the Payment Shares of each
Note Holder (and the shares or securities of every other person
subject to the foregoing restriction) until the end of such
reasonable and customary period, and the Note Holders agree to enter
into a customary agreement with the underwriters of such offering
reflecting the lock-up agreement set forth herein.
(c) Each Note Holder hereby agrees that, without the prior written
consent of LeukoSite, such Note Holder shall not sell, make any short sale
of, loan, grant any option for the purchase of, pledge, encumber, or
otherwise dispose of any Payment Shares during the 180 day period
commencing on the Closing Date.
6.5 Indemnification. In the event that any Payment Shares of any
Note Holder are included in a registration statement pursuant to this Agreement:
(a) To the fullest extent permitted by law, LeukoSite will indemnify
and hold harmless such Note Holder, any underwriter (as defined in the
Securities Act) for LeukoSite, and each officer, director, fiduciary,
employee, member, general partner and limited partner (and affiliates
thereof) of such Note Holder or such underwriter, each broker or other
person acting on behalf of such Note Holder and each person, if any, who
controls such Note Holder or such underwriter within the meaning of the
Securities Act, against any losses, claims, damages or liabilities, joint
or several, to which they may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue or
alleged untrue statement of any material fact contained in such
registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto, or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, or any violation by LeukoSite of
the Securities Act or state securities or blue sky laws applicable to
LeukoSite and leading to action or inaction required of LeukoSite in
connection with such registration or qualification under such Securities
Act or state securities or blue sky laws; and will reimburse on demand
such Note Holder, such underwriter, such broker or other person acting on
behalf of such Note Holder or such officer, director, fiduciary, employee,
member, general partner, limited partner, affiliate or controlling person
for any legal or other expenses reasonably incurred by any of them in
connection with investigating or defending any such loss, claim, damage,
liability or action, subject to the provisions of Section 6.5(c);
provided, however, that the indemnity agreement contained in this Section
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6.5(a) shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or action if such settlement is effected without
the consent of LeukoSite (which consent shall not be unreasonably
withheld), nor shall LeukoSite be liable in any such case for any such
loss, damage, liability or action to the extent that it arises out of or
is based upon an untrue statement or alleged untrue statement or omission
made in connection with such registration statement, preliminary
prospectus, final prospectus, or amendments or supplements thereto, in
reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by the Note
Holders, any underwriter for them or controlling person with respect to
them.
(b) To the fullest extent permitted by law, such Note Holder will
severally and not jointly indemnify and hold harmless LeukoSite, each of
its directors, each of its officers who have signed such registration
statement, each person, if any, who controls LeukoSite within the meaning
of the Securities Act, any underwriter for LeukoSite (within the meaning
of the Securities Act), and all other Note Holders against any losses,
claims, damages or liabilities to which LeukoSite or any such director,
officer, controlling person, or underwriter may become subject to, under
the Securities Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereto) arise out of or are based
upon any untrue or alleged untrue statement of any material fact contained
in such registration statement, including any preliminary prospectus or
final prospectus contained therein or any amendments or supplements
thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to
the extent that such untrue statement or alleged untrue statement or
omission or alleged omission was made in such registration statement,
preliminary prospectus, final prospectus, or amendments or supplements
thereto, in reliance upon and in conformity with written information
furnished by such Note Holder expressly for use in connection with such
registration; and such Note Holder will reimburse any legal or other
expenses reasonably incurred by LeukoSite or any such director, officer,
controlling person, underwriter or other Note Holder in connection with
investigating or defending any such loss, claim, damage, liability or
action, subject to the provisions of Section 6.5(c), provided, however,
that the maximum amount of liability of such Note Holder hereunder shall
be limited to the proceeds (net of underwriting discounts and commissions,
if any) actually received by such Note Holder from the sale of Payment
Shares covered by such registration statement, and provided, further,
however, that the indemnity agreement contained in this Section 6.5(b)
shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the
consent of such Note Holder against which the request for indemnity is
being made (which consent shall not be unreasonably withheld).
(c) Promptly after receipt by an indemnified party under this
Section 6.5 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against any
indemnifying party under this Section
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6.5, notify the indemnifying party in writing of the commencement thereof
and the indemnifying party shall have the right to participate in and, to
the extent the indemnifying party desires, jointly with any other
indemnifying party similarly noticed, to assume at its expense the defense
thereof with counsel mutually satisfactory to the parties; provided,
however, that, if any indemnified party shall have reasonably concluded
that there may be one or more legal defenses available to such indemnified
party which are different from or additional to those available to the
indemnifying party, or that such claim or litigation involves or could
have an effect upon matters beyond the scope of the indemnity agreement
provided in this Section 6.5, the indemnifying party shall not have the
right to assume the defense of such action on behalf of such indemnified
party, and such indemnifying party shall reimburse such indemnified party
and any person controlling such indemnified party for the fees and
expenses of counsel retained by the indemnified party which are reasonably
related to the matters covered by the indemnity agreement provided in this
Section 6.5. Subject to the foregoing, an indemnified party shall have the
right to employ separate counsel in any such action and to participate in
the defense thereof but the fees and expenses of such counsel shall not be
at the expense of the indemnifying party. The failure to notify an
indemnifying party promptly of the commencement of any such action, if
materially prejudicial to his ability to defend such action, shall relieve
such indemnifying party of any liability to the indemnified party under
this Section 6.5, but the omission so to notify the indemnifying party
will not relieve him of any liability which the indemnifying party may
have to any indemnified party otherwise other than under this Section 6.5.
(d) Notwithstanding anything in this Section 6 to the contrary, if,
in connection with an underwritten public offering, LeukoSite, such Note
Holder and the underwriters enter into an underwriting or purchase
agreement relating to such offering which contains provisions covering
indemnification among the parties, then the indemnification provision of
this Section 6.5 shall be deemed inoperative for purposes of such
offering.
6.6 Rule 144. LeukoSite shall comply with the requirements of Rule
144(c) under the Securities Act, as such Rule may be amended from time to time
(or any similar rule or regulation hereafter adopted by the SEC), regarding the
availability of current public information to the extent required to enable each
Note Holder to sell Payment Shares without registration under the Securities Act
pursuant to the resale provisions of Rule 144 (or any similar rule or
regulation). Upon the request of a Note Holder, LeukoSite will deliver to such
Note Holder a written statement as to whether it has complied with such
requirements and, upon a Note Holder's compliance with the applicable provisions
of Rule 144, will take such action as may be required (including, without
limitation, causing legal counsel to issue an appropriate opinion) to cause its
transfer agent to effectuate any transfer of Payment Shares properly requested
by such Note Holder, in accordance with the terms and conditions of Rule 144.
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6.7. Securities Laws Transfer Restrictions, Legends.
(a) No Note Holder shall sell, assign, pledge, transfer or otherwise
dispose or encumber any of those Payment Shares received by it, except (i)
pursuant to the Stockholder Registration Statement or other effective
registration statement under the Securities Act, (ii) pursuant to an
available exemption from registration under the Securities Act and
applicable state securities laws and, if requested by LeukoSite, upon
delivery by such Note Holder of an opinion of counsel of such Note Holder
reasonably satisfactory to LeukoSite to the effect that the proposed
transfer is exempt from registration under the Securities Act and
applicable state securities law or (iii) pursuant to the resale provisions
of Rule 144 (or any similar rule or regulation). Any transfer or purported
transfer in violation of this Section 6.7(a) shall be voidable by
LeukoSite. LeukoSite shall not be required or obligated to register any
transfer of the Payment Shares in violation of this Section 6.7(a).
LeukoSite may, and may instruct any transfer agent for LeukoSite Common
Stock, to place such stop transfer orders as may be required on the
transfer books of LeukoSite in order to ensure compliance with the
provisions of this Section 6.7(a).
(b) To the extent applicable, each certificate or other document
evidencing any of the Payment Shares shall be endorsed with the legend set
forth below, and each Note Holder covenants that, except to the extent
such restrictions are waived by LeukoSite, it shall not transfer the
shares represented by any such certificate without complying with the
restrictions on transfer described in this Agreement and the legends
endorsed on such certificate:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED, SOLD,
ASSIGNED, PLEDGED, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT (I)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT, (II)
PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER SAID ACT AND,
IF REQUESTED BY THE COMPANY, UPON DELIVERY OF AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY THAT THE PROPOSED TRANSFER IS
EXEMPT FROM SAID ACT OR (III) PURSUANT TO THE RESALE PROVISIONS OF RULE
144."
7. Representations and Warranties of the Company.
The Company hereby represents and warrants to LeukoSite and Merger Sub as
follows, subject in each case to such exceptions as are specifically
contemplated by this Agreement or as are set forth in the attached Disclosure
Schedule.
7.1. Incorporation; Authority. The Company is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to own or lease and
operate its properties and to carry on its business as now conducted. The
Company has delivered to LeukoSite
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complete and correct copies of its Certificate of Incorporation and by-laws, in
each case with all amendments thereto, which Certificate of Incorporation and
by-laws are in full force and effect.
7.2. Authorization and Enforceability. The Company has all requisite
corporate power to enter into the Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of the Company, subject only to
the approval of the Merger and this Agreement by the Company's stockholders. The
Board of Directors of the Company has (i) approved this Agreement and the
transactions contemplated hereby and (ii) determined that the Merger is in the
best interests of the stockholders of the Company and is on terms that are fair
to such stockholders. This Agreement has been duly executed and delivered by the
Company and constitutes the valid and binding obligation of the Company,
enforceable in accordance with its terms except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors' rights generally and (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies. The combined voting power of the shares of
Company Stock held of record by the Designated Preferred Stockholders is such
that the affirmative vote (whether at a meeting of stockholders of the Company
or by written consent in lieu of a meeting) of all shares of Company Stock held
of record by the Designated Preferred Stockholders in favor of the adoption of
this Agreement and the approval of the Merger would be sufficient to constitute
the required stockholder approval thereof pursuant to, and in accordance with,
the terms of the Company's Certificate of Incorporation, the Company's by-laws
and the DGCL.
7.3. Governmental and Other Third-Party Consents, Non-Contravention,
Etc. Except for the filing of the Merger Certificate and except as described in
Section 7.3 of the Disclosure Schedule, no consent, approval, or authorization
of or registration, designation, declaration, or filing with any governmental
authority, federal or other, or any other person, is required on the part of the
Company in connection with the execution, delivery, and performance of this
Agreement or the consummation of the Merger and the other transactions
contemplated hereby. Except as described in Schedule 7.3 of the Disclosure
Schedule, the execution, delivery, and performance of this Agreement and the
consummation of such transactions will not violate (a) any provision of the
Company's Certificate of Incorporation or by-laws, (b) any order, judgment,
injunction, award or decree of any court or state or federal governmental or
regulatory body applicable to the Company, or (c) any judgment, decree, order,
statute, rule, regulation, agreement, instrument, or other obligation to which
the Company is a party or by or to which it or any of its assets is bound or
subject, which violation will not have a Material Adverse Effect on the Company.
7.4. Capitalization. The authorized and outstanding capital stock
and other securities of the Company as of the date hereof are as set forth in
Schedule 7.4 of the Disclosure Schedule. All of such outstanding shares of
capital stock of the Company are duly authorized, validly issued, fully paid and
non-assessable, and all of such outstanding shares and other securities are
owned of record as set forth in Schedule 7.4 of the Disclosure
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Schedule, and were issued in compliance with all applicable laws, including
securities laws, and all applicable preemptive or similar rights of any person.
The Company is not aware of any person who has a valid right to rescind any
purchase of any shares of the Company's capital stock or other securities.
There are no agreements or other obligations to which the Company is a
party or by which it is bound to purchase or sell, other than as set forth in
Schedule 7.4 of the Disclosure Schedule, no convertible or exchangeable
securities, options, warrants or other rights to acquire from the Company any
shares of its capital stock or other securities. Section 7.4 of the Disclosure
Schedule sets forth the name of each person who holds any option, warrant or
other right to acquire shares of the Company's capital stock, the number and
type of shares subject to such option or right, the per-share exercise price
payable therefor and, in the case of warrants, the priority and amount of
consideration to be payable upon exercise thereof after the Merger.
7.5. Qualification. The Company is duly qualified and in good
standing as a foreign corporation in all jurisdictions in which the character of
its owned or leased properties or the nature of its activities makes such
qualification necessary, except for such failures to be so qualified or in good
standing as would not, either individually or in the aggregate, be reasonably
likely to have a Material Adverse Effect on the Company.
7.6. Subsidiaries. The Company does not have any Subsidiaries or own
any legal and/or beneficial interests in or to any other business enterprise or
other person.
7.7. Financial Statements. Included in Section 7.7 of the Disclosure
Schedule are copies of (i) the audited balance sheets of the Company as of the
last day of December in each of the years 1996 through 1997, inclusive, and the
related audited statements of income and retained earnings and cash flows,
respectively, of the Company, for the fiscal years ended on such dates,
certified by Coopers & ▇▇▇▇▇▇▇ LLP, independent public accountants, and (ii) the
unaudited balance sheets of the Company as of December 31, 1998 and May 31,
1999, and the related unaudited statements of income and retained earnings and
cash flows, respectively, of the Company, for the 12-month and 5-month periods,
respectively, ended on such dates (such balance sheet as of May 31, 1999, the
"May 31, 1999 Balance Sheet"). Each of such financial statements have been
prepared in accordance with generally accepted accounting principles applied on
a basis consistent with prior periods; each of such balance sheets presents
fairly and accurately in all material respects the financial condition of the
Company as of its respective date; and each of such statements of income and
retained earnings and cash flows, respectively, presents fairly and accurately
in all material respects the results of operations and retained earnings, or
cash flows, as the case may be, of the Company for the period covered thereby;
in each case, subject, with respect to the unaudited financial statements
referred to in clauses (ii) and (iii) of this section to the absence of footnote
disclosure and to normal, recurring end-of-period adjustments, the effect of
which, both individually and in the aggregate, is not and will not be material.
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7.8. Absence of Certain Changes. Since May 31, 1999, except as
disclosed in Section 7.8 of the Disclosure Schedule there has not been any: (i)
change in the assets, liabilities, sales, income, or business of the Company or
in its relationships with suppliers, customers, or lessors, other than changes
that were both in the ordinary course of business and have not caused, either in
any case or in the aggregate, a Material Adverse Effect on the Company; (ii)
acquisition or disposition by the Company of any material asset or property;
(iii) damage, destruction or loss, whether or not covered by insurance,
materially and adversely affecting, either in any case or in the aggregate, the
business or any material property of the Company; (iv) declaration, setting
aside or payment of any dividend or any other distributions in respect of any
shares of capital stock of the Company; (v) issuance of any shares of the
capital stock of the Company or any direct or indirect redemption, purchase, or
other acquisition by the Company of any such capital stock; (vi) loss of the
services of any officer or key employee or consultant, or any increase in the
compensation, pension, or other benefits payable or to become payable by the
Company to any of its officers or key employees or consultants, or any bonus
payments or arrangements made to or with any of them; (vii) forgiveness or
cancellation of any debts or claims by the Company or any waivers of any rights;
(viii) entry by the Company into any transaction with any of its Affiliates;
(ix) incurrence by the Company of any obligations or liabilities, whether
absolute, accrued, contingent or otherwise (including without limitation
liabilities as guarantor or otherwise with respect to obligations of others),
other than obligations and liabilities incurred in the ordinary course of
business with persons other than Affiliates of the Company; (x) incurrence or
imposition of any Lien on any of the assets, tangible or intangible, of the
Company; or (xi) discharge or satisfaction by the Company of any Lien or payment
by the Company of any obligation or liability (fixed or contingent) other than
(A) current liabilities included in the May 31, 1999 Balance Sheet, (B) current
liabilities to persons other than Affiliates of the Company incurred since May
31, 1999 in the ordinary course of business, and (C) current liabilities
incurred in connection with the transactions contemplated hereby and disclosed
in Schedule 7.8 of the Disclosure Schedule.
7.9. Properties and Assets. The Company has good and marketable
title or leasehold title, as the case may be, to all of its assets and
properties that it purports to own or lease, including without limitation all
those reflected in the unaudited balance sheet referred to in clause (ii) of
Section 7.7 hereof (except for properties or assets sold, consumed, or otherwise
disposed of in the ordinary course of business since May 31, 1999), all free and
clear of Liens on the Company's interest therein. All such properties and assets
are in good condition and repair, reasonable wear-and-tear excepted, and are,
and as of the Closing Date will be, adequate and sufficient to carry on the
business of the Company as presently conducted. Section 7.9(a) of the Disclosure
Schedule sets forth a complete and correct list of all capital assets of the
Company.
The Company does not own any real property. The Company has not received
any notice that either the whole or any portion of any real property leased by
it is to be condemned, requisitioned, or otherwise taken by any public authority
or is to be the subject of any public improvements that may result in special
assessments against or otherwise affect such real property. Section 7.9(b) of
the Disclosure Schedule sets forth a complete and correct description of all
leases of real property to which the Company is a party.
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Complete and correct copies of all such leases have been delivered to LeukoSite.
Each such lease is valid and subsisting and no event or condition exists that
constitutes, or after notice or lapse of time or both could constitute, a
default thereunder by the Company, or to the best of its knowledge, any other
person. The leasehold interests of the Company are subject to no Lien, and the
Company is in quiet possession of the properties covered by such leases.
7.10. Intellectual Property.
(a) Section 7.10(a) of the Disclosure Schedule lists all inter
partes proceedings or actions known to the Company before any court or
tribunal (including the PTO or equivalent authority anywhere in the world)
related to any Company Intellectual Property. To the best of the Company's
knowledge, no Company Intellectual Property is the subject of any inter
partes proceeding or outstanding decree, order, judgment, agreement, or
stipulation restricting in any manner the use, transfer, or licensing
thereof by the Company or any of its Subsidiaries, or which may affect the
validity, use or enforceability of such Company Intellectual Property.
(b) With respect to each item of Company Registered Intellectual
Property, necessary registration, maintenance and renewal fees in
connection with such Company Registered Intellectual Property have been
made and all necessary documents and certificates in connection with such
Company Registered Intellectual Property have been filed with the relevant
patent authorities in the United States for the purposes of maintaining
such Company Registered Intellectual Property and no information material
to patentability under applicable law has been withheld from the examining
office that would constitute fraud or inequitable conduct.
(c) The Company owns and has good and exclusive title or the Company
exclusively licenses, in each case free and clear of any Lien, all Company
Registered Intellectual Property listed on Section 7.10(c) of the
Disclosure Schedule (for purposes of this Section 7.10(c), joint ownership
with third parties of such Company Registered Intellectual Property
constitutes "good and exclusive title").
(d) To the extent that any work, invention, or material has been
developed or created by a third party for the Company, the Company and
each of its Subsidiaries has a written agreement with such third party
with respect thereto and the Company has obtained ownership of, and is the
exclusive owner of, or has a valid license to use, all Company
Intellectual Property in such work, material or invention by operation of
law or by valid assignment or by agreement, as the case may be.
(e) Except as set forth on Schedule 7.10(e) of the Disclosure
Schedule, the Company has not transferred ownership of, or granted any
license with respect to, any Company Intellectual Property to any third
party. Section 7.10(e) of the Disclosure Schedule lists all contracts,
licenses and agreements to which the Company is a party that are currently
in effect (i) with respect to Company Intellectual Property licensed or
offered to any third party; or (ii) pursuant to which a
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third party has licensed or transferred any Company Intellectual Property
to the Company.
(f) To the best of the Company's knowledge, the contracts, licenses
and agreements listed on Section 7.10(e) of the Disclosure Schedule are in
full force and effect. The consummation of the transactions contemplated
by this Agreement will neither violate nor result in the breach,
modification, cancellation, termination, or suspension of such contracts,
licenses and agreements listed on Section 7.10(e) of the Disclosure
Schedule. The Company is in material compliance with, and has not
materially breached any term any of such contracts, licenses and
agreements listed on Section 7.10(e) of the Disclosure Schedule and, to
the knowledge of the Company, all other parties to such contracts,
licenses and agreements listed on Section 7.10(e) of the Disclosure
Schedule are in compliance with, and have not breached any term of, such
contracts, licenses and agreements. To the best of the Company's
knowledge, following the Closing Date, the Surviving Corporation will be
permitted to exercise all of the Company's rights under the contracts,
licenses and agreements listed on Section 7.10(e) of the Disclosure
Schedule to the same extent the Company would have been able to had the
transaction contemplated by this Agreement not occurred and without the
payment of any additional funds other than ongoing fees, royalties or
payments which the Company would otherwise be required to pay.
(g) To the best of the Company's knowledge, Section 7.10(g) of the
Disclosure Schedule lists all contracts, licenses and agreements between
the Company and any third party wherein or whereby the Company has agreed
to, or assumed, any obligation or duty to warrant, indemnify, hold
harmless or otherwise assume or incur any obligation or liability with
respect to the infringement or misappropriation by the Company of any
third party's Intellectual Property.
(h) The Company (including its executive officer, directors and, to
the best of the Company's knowledge, employees) has not received notice
from any third party that the operation of its business or any act,
product, drug candidate or service of the Company, infringes or
misappropriates the Intellectual Property of any third party or
constitutes unfair competition or trade practices under the laws of any
jurisdiction.
(i) To the best of the Company's knowledge, (i) no Person has nor is
infringing or misappropriating any Company Intellectual Property and (ii)
there have been, and are, no claims asserted against the Company or
against any licensee of the Company with respect to the Company
Intellectual Property.
(j) The Company maintains reasonable security measures for the
preservation of the secrecy and proprietary nature of such of the Company
Intellectual Property as constitute trade secrets or other confidential
information. To the best of the Company's knowledge, no officer, director,
employee, or consultant of the Company is obligated under or bound by any
agreement or instrument, or any judgment, decree, or order of any court of
administrative agency, that (i) conflicts or
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may conflict with his agreements and obligations to use his best efforts
to promote the interest of the Company, (ii) conflicts or may conflict
with the business or operations of the Company, or (iii) restricts or may
restrict the use or disclosure of any information that may be useful to
the Company.
7.11. Indebtedness. At the date hereof, the Company has no
Indebtedness outstanding except as set forth in Section 7.11 of the Disclosure
Schedule. The Company is not in default with respect to any outstanding
Indebtedness or any agreement, instrument, or other obligation relating thereto
and no such Indebtedness or any agreement, instrument or other obligation
relating thereto purports to limit the issuance of any securities by the
Company, or (except as set forth in Section 7.11 of the Disclosure Schedule) the
operation of its businesses. Complete and correct copies of all agreements,
instruments, and other obligations (including all amendments, supplements,
waivers, and consents) relating to any Indebtedness of the Company have been
furnished to LeukoSite.
7.12. Absence of Undisclosed Liabilities. Except to the extent (a)
reflected or reserved against in the May 31, 1999 Balance Sheet, or (b)
described in Section 7.12 of the Disclosure Schedule, the Company does not have
any liabilities or obligations of any nature, whether accrued, absolute,
contingent, or otherwise (including, without limitation, liabilities, as
guarantor or otherwise, in respect of obligations of others) that would be
required to be reflected or reserved against in a balance sheet prepared in
accordance with generally accepted accounting principles or referred to in the
notes thereto.
7.13. Taxes.
(a) Elections. All material elections with respect to Taxes
(including, without limitation, any elections under Sections 108(b)(5),
338(g), 565, 936(a) or 936(e) of the Code or Treasury Regulation Section
1.1502-20(g) or Treasury Regulation Section 1.1502-32(f)(2) as in effect
prior to August 12, 1994) affecting the Company have been provided to
LeukoSite in the Tax Returns and Financial Statements.
(b) Filing of Tax Returns and Payment of Taxes. The Company has
timely filed all Tax Returns required to be filed by it, each such Tax
Return has been prepared in compliance with all applicable laws and
regulations, and all such Tax Returns are true and accurate in all
respects. All Taxes due and payable by the Company have been paid, and the
Company will not be liable for any additional Taxes in respect of any
taxable period ending on or before the Closing Date in an amount that
exceeds the corresponding reserve for unpaid Taxes, if any, reflected in
the May 31, 1999 Balance Sheet. The Company has delivered or made
available to LeukoSite true and complete copies of all Tax Returns filed
by or with respect to it with respect to taxable periods ended on or after
December 31, 1994, and all relevant material documents and information
with respect thereto in the possession of the Company, its tax advisers
and its auditors, including without limitation examination reports and
statements of deficiencies assessed against or agreed to by the Company
with respect thereto.
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(c) Audit History. With respect to each taxable period of the
Company ended on or before December 31, 1994, either such taxable period
has been audited by the relevant taxing authority or the time for
assessing or collecting Tax with respect to each such taxable period has
closed and such taxable period is not subject to review by any relevant
taxing authority.
(d) Deficiencies. No deficiency or proposed adjustment in respect of
Taxes that has not been settled or otherwise resolved has been asserted or
assessed by any taxing authority against the Company.
(e) Liens. There are no Liens for Taxes (other than current Taxes
not yet due and payable) on the assets of the Company.
(f) Extensions to Statute of Limitations for Assessment of Taxes.
The Company does not currently have in effect any consent to extend the
time in which any Tax may be assessed or collected by any taxing
authority.
(g) Extensions of the Time for Filing Tax Returns. Except as set
forth in Section 7.13(g) of the Disclosure Schedule, the Company has not
requested or been granted an extension of the time for filing any Tax
Return to a date on or after the Closing Date.
(h) Pending Proceedings. There is no action, suit, taxing authority
proceeding, or audit with respect to any Tax now in progress, pending, or
to the best of the Company's knowledge, threatened, against or with
respect to (i) the Company, or (ii) any Affiliated Group with respect to a
taxable period during which the Company was a member of such Affiliated
Group.
(i) No Failures to File Tax Returns. No claim has ever been made by
a taxing authority in a jurisdiction where the Company does not pay Tax or
file Tax Returns that the Company is or may be subject to Taxes assessed
by such jurisdiction.
(j) Membership in Affiliated Groups, Etc. The Company has never been
a member of any Affiliated Group, or filed or been included in a combined,
consolidated, or unitary Tax Return.
(k) Adjustments under Section 481. The Company will not be required,
as a result of a change in method of accounting for any period ending on
or before the Closing Date other than as a result of the transactions
contemplated by the Agreement, to include any adjustment under Section
481(c) of the Code (or any similar or corresponding provision or
requirement under any Tax law) in taxable income for any period ending on
or after the Closing Date.
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(l) Tax Sharing, Allocation, or Indemnity Agreements. The Company is
not a party to or bound by any Tax sharing or allocation agreement or has
any current or potential contractual obligation to indemnify any other
person with respect to Taxes.
(m) Withholding Taxes. The Company has withheld and paid all Taxes
required to have been withheld and paid by it in connection with amounts
paid or owing to any employee, creditor, independent contractor, or other
person.
(n) Foreign Permanent Establishments and Branches. Except as set
forth in Section 7.13(n) of the Disclosure Schedule, the Company does not
have a permanent establishment in any foreign country, as defined in the
relevant tax treaty between the United States of America and such foreign
country, and does not otherwise operate or conduct business through any
branch in any foreign country.
(o) U.S. Real Property Holding Corporation. The Company is not and
has not been a United States real property holding corporation within the
meaning of Code Section 897(c)(2), during the applicable period specified
in Code Section 897(c)(1)(A)(ii).
(p) Safe Harbor Lease Property. None of the property owned or used
by the Company is subject to a tax benefit transfer lease executed in
accordance with Section 168(f)(8) of the Internal Revenue Code of 1954, as
amended by the Economic Recovery Tax Act of 1981.
(q) Tax-Exempt Use Property. Except as set forth in Schedule 7.13(q)
of the Disclosure Schedule, none of the property owned by the Company is
"tax-exempt use property" within the meaning of Section 168(h) of the
Code.
(r) Security for Tax-Exempt Obligations. None of the assets of the
Company directly or indirectly secures any indebtedness, the interest on
which is tax-exempt under Section 103(a) of the Code, and the Company is
not directly or indirectly an obligor or a guarantor with respect to any
such indebtedness.
(s) Section 341(f) Consent. The Company has not filed a consent
under Code Section 341(f) concerning collapsible corporations.
(t) Parachute Payments. The Company has not made any payments, is
not obligated to make any payments, and is not a party to any agreement
that under certain circumstances could obligate it to make any payments,
that will not be deductible under Code Sections 162(m) or 280G.
7.14. Employee Benefit Plans.
(a) Except as described in Section 7.14(a) of the Disclosure
Schedule, the Company does not now maintain or contribute to, and has not
in the current or
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preceding six calendar years maintained or contributed to, any pension,
profit-sharing, deferred compensation, bonus, stock option, share
appreciation right, severance, group or individual health, dental,
medical, life insurance, survivor benefit, or similar plan, policy, or
arrangement, whether formal or informal, for the benefit of any director,
officer, consultant or employee, whether active or terminated, of the
Company. Each of the arrangements set forth in Section 7.14(a) of the
Disclosure Schedule is hereinafter referred to as an "Employee Benefit
Plan," except that any such arrangement that is a multi-employer plan will
be treated as an Employee Benefit Plan only for purposes of Sections
7.14(d)(iv), (vi), and (viii) and 7.14(g) below.
(b) The Company has delivered or made available to LeukoSite true,
correct, and complete copies of each Employee Benefit Plan, and with
respect to each such Plan (i) any associated trust, custodial, insurance,
or service agreements, (ii) any annual report, actuarial report, or
disclosure materials (including specifically any summary plan
descriptions) submitted to any governmental agency or distributed to
participants or beneficiaries thereunder in the current calendar year or
any of the six preceding calendar years, and (iii) the most recently
received Internal Revenue Service ("IRS") determination letters and any
governmental advisory opinions or rulings.
(c) To the best of the Company's knowledge, each Employee Benefit
Plan is and has heretofore been maintained and operated in material
compliance with the terms of such Plan and with the requirements
prescribed (whether as a matter of substantive law or as necessary to
secure favorable tax treatment) by any and all statutes, governmental or
court orders, and governmental rules or regulations in effect from time to
time, including, but not limited to, the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), and the Code, and applicable
to such Plan. Each Employee Benefit Plan that is intended to qualify under
Section 401(a) of the Code and each trust forming part of an Employee
Benefit Plan which is intended to qualify under Section 501(c)(9) of the
Code is specifically so identified in Section 7.14(a) of the Disclosure
Schedule and has been determined by the IRS to be so qualified, and to the
best of the Company's knowledge, nothing has occurred since the date of
the last such determination as to each such Plan or trust that has
resulted or is likely to result in the revocation of such determination as
to such Plan or trust, other than such failures as may be corrected
without expenditure of more than $10,000.
(d) (i) There is no pending, or to the best of the Company's
knowledge, threatened, legal action, proceeding, or investigation, other
than routine claims for benefits, concerning any Employee Benefit Plan, or
to the best of the Company's knowledge, any fiduciary or service provider
thereof, and to the best of the Company's knowledge, there is no basis for
any such legal action, proceeding, or investigation.
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(ii) No liability (contingent or otherwise) to the Pension
Benefit Guaranty Corporation ("PBGC") or any multi-employer plan has
been incurred by the Company or any of its ERISA affiliates (other
than insurance premiums satisfied in due course).
(iii) No reportable event, or event or condition that presents
a material risk of termination by the PBGC, has occurred with
respect to any Employee Benefit Plan, or any retirement plan of an
ERISA affiliate of the Company, which is subject to Title IV of
ERISA.
(iv) To the best of the Company's knowledge, no Employee
Benefit Plan nor any party in interest with respect thereto, has
engaged in a prohibited transaction that could subject the Company
directly or indirectly to liability under Section 409 or 502(i) of
ERISA or Section 4975 of the Code.
(v) No communication, report, or disclosure has been made
that, at the time made, did not reflect accurately in all material
respects the terms and operations of any Employee Benefit Plan.
(vi) No Employee Benefit Plan provides welfare benefits
subsequent to termination of employment to employees or their
beneficiaries (except to the extent required by applicable state
insurance laws and Title I, Part 6 of ERISA), other than (A)
coverage mandated by applicable law, (B) benefits the full cost of
which is borne by the current or former employees (or their
beneficiaries), and (C) benefits that have already been satisfied in
full.
(vii) No benefits due under any Employee Benefit Plan have
been forfeited subject to the possibility of reinstatement (which
possibility would still exist at or after the Closing) except as
required by applicable law.
(viii) The Company has not undertaken to maintain any Employee
Benefit Plan for any period of time and each such Plan is terminable
at the sole discretion of the Company, subject only to such
constraints as may be imposed by applicable law.
(e) With respect to each Employee Benefit Plan for which a separate
fund of assets is or is required to be maintained, full payment has been
made of all amounts that the Company is required, under the terms of each
such Plan, to have paid as contributions to that Plan as of the end of the
most recently ended plan year of that Plan, and no accumulated funding
deficiency (as defined in Section 302 of ERISA and Section 412 of the
Code), whether or not waived, exists with respect to any such Plan. The
current value of the assets of each such Employee Benefit Plan, as of the
end of the most recently ended plan year of that Plan, exceeded the
current value of all accrued benefits under that Plan.
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(f) The execution of this Agreement and the consummation of the
transactions contemplated hereby will not result in any payment (whether
of severance pay or otherwise) becoming due from any Employee Benefit Plan
to any current or former director, officer, consultant, or employee of the
Company or result in the vesting, acceleration of payment, or increases in
the amount of any benefit payable to or in respect of any such current or
former director, officer, consultant, or employee. No representation or
warranty is made as to the foregoing with respect to actions taken by
LeukoSite after the Closing with respect to the Employee Benefit Plans.
(g) No Employee Benefit Plan is a multi-employer plan.
(h) For purposes of this Section 7.14, "multi-employer plan," "party
in interest," "current value," "accrued benefit," "reportable event," and
"benefit liability" have the same meaning assigned such terms under Sections 3,
4043(b) or 4001(a) of ERISA, and "ERISA affiliate" means any entity that under
Section 414 of the Code is treated as a single employer with the Company.
7.15. Safety and Environmental Matters. Except as set forth in
Section 7.15 of the Disclosure Schedule:
(a) None of the activities carried on by the Company at any plants,
offices, or properties in or on which the Company operates are in
violation of any zoning, health, or safety law or regulation, including
without limitation the Occupational Safety and Health Act of 1970, as
amended, excluding only such violations as will not, either individually
or in the aggregate, have a Material Adverse Effect on the Company.
(b) Neither the Company, nor to the best of the Company's knowledge,
any operator of any real property presently or formerly owned, leased, or
operated by the Company is in violation or alleged violation of any
judgment, decree, order, law, license, rule or regulation pertaining to
environmental matters, including without limitation the Resource
Conservation and Recovery Act ("RCRA"), the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended ("CERCLA"),
the Superfund Amendments and Reauthorization Act of 1986 ("▇▇▇▇"), the
Federal Clean Water Act, the Federal Clean Air Act, the Toxic Substances
Control Act, and applicable federal, state, foreign, and local statutes,
regulations, ordinances, orders, and decrees relating to health, safety,
or the environment (all of the foregoing, collectively, "Environmental
Laws"), excluding only such violations as will not, either individually or
in the aggregate, have a Material Adverse Effect on the Company.
(c) The Company has not received notice from any third party,
including without limitation any federal, state, foreign, or local
governmental authority, that (i) the Company has been identified by the
United States Environmental Protection Agency (the "EPA") as a potentially
responsible party under CERCLA with respect
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to a site listed on the National Priorities List, 40 C.F.R. Part ▇▇▇
▇▇▇▇▇▇▇▇ ▇ (1986); (ii) any hazardous waste as defined by 42 U.S.C.
ss.6903(5), any hazardous substance as defined by 42 U.S.C. ss. 9601(14),
any pollutant or contaminant as defined by 42 U.S.C. ss. 9601(33) or any
toxic substance, oil, or hazardous material or other chemical or substance
regulated by any Environmental Laws (collectively, "Hazardous Substances")
that the Company has generated, transported, handled, used, or disposed of
has been found at any site at which a federal, state, foreign, or local
agency or other third party has conducted or has ordered that the Company
conduct a remedial investigation, removal, or other response action
pursuant to any Environmental Law; or (iii) the Company is or will be a
named party to any claim, action, cause of action, complaint (contingent
or otherwise), or legal or administrative proceeding arising out of any
third party's incurrence of costs, expenses, losses, or damages of any
kind whatsoever in connection with the release of Hazardous Substances.
(d) (i) No portion of any real property presently or formerly owned,
leased, or operated by the Company has been used by the Company, or to the
best of the Company's knowledge, by any other person, to handle, use,
manufacture, transport, store, or dispose of Hazardous Substances except
in accordance in all material respects with applicable Environmental Laws;
and no underground tank or other underground storage receptacle for
Hazardous Substances used by the Company is located on any real property
presently owned, leased, or operated by the Company, or to the best of the
Company's knowledge, any real property formerly owned, leased, or operated
by it; (ii) in the course of the activities conducted by the Company and
to the best of the Company's knowledge, without investigation, those of
any other operators of any real property presently or formerly owned,
leased, or operated by the Company, no Hazardous Substances have been
generated, stored, or used on such properties except in accordance with
applicable Environmental Laws; (iii) to the best of the Company's
knowledge, there have been no releases (i.e. any past or present
releasing, spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, disposing, or dumping) or threatened
releases of Hazardous Substances by the Company on, upon, into, or from
any real property presently or formerly owned, leased, or operated by the
Company; (iv) to the best of the Company's knowledge, there have been no
releases on, upon, from, or into any real property in the vicinity of any
real property presently or formerly owned, leased, or operated by the
Company that, through soil or groundwater contamination, have come to be
located on, any of the real property presently or formerly owned, leased,
or operated by the Company; and (v) to the extent required by applicable
Environmental Laws, any Hazardous Substances that have been generated by
the Company, or to the Company's actual knowledge, by any other person, on
any real property presently or formerly owned, leased, or operated by the
Company, have been transported offsite only by carriers having an
identification number issued by the EPA and treated or disposed of only by
treatment or disposal facilities having, to the Company's actual
knowledge, valid permits as required under applicable Environmental Laws,
which transporters and facilities, to the Company's actual
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knowledge, have been and are operating substantially in compliance with
such permits and applicable Environmental Laws.
(e) No real property presently owned, leased, or operated by the
Company, and to the best of the Company's knowledge, no real property
formerly owned, leased, or operated by the Company, and as a result of the
present or past activities of the Company, is subject to any Environmental
Law requiring the performance of any Hazardous Substances site assessment,
the removal or remediation of any Hazardous Substances, the giving of
notice to any governmental agency or other person, or the recording and/or
delivery to any governmental agency or other person of any environmental
disclosure statement or document, by reason of, or as a condition to the
effectiveness of, the Merger and/or any other transaction contemplated
hereby.
7.16. Labor Relations. The Company is and has been in compliance in
all material respects with all federal and state laws respecting employment and
employment practices, terms and conditions of employment, wages and hours, and
nondiscrimination in employment, and is not and has not been engaged in any
unfair labor practice. There is no charge or proceeding pending, or to the best
of the Company's knowledge, threatened, against the Company alleging unlawful
discrimination in employment practices or unfair labor practice before any court
or agency, including without limitation the National Labor Relations Board.
There is no labor strike, dispute, work slow-down, or work stoppage pending, or
to the best of the Company's knowledge, threatened against or involving the
Company. No one has petitioned within the last five years or is now petitioning
for union representation of any of the employees of the Company. No grievance or
arbitration proceeding arising out of or under any collective bargaining
agreement is pending against the Company and no claim therefor has been
asserted. None of the employees of the Company is covered by any collective
bargaining agreement, and no collective bargaining agreement is currently being
negotiated by the Company. The Company has not experienced any work stoppage or
other material labor difficulty during the last five years.
7.17. Litigation. No litigation, arbitration, action, suit,
proceeding, or investigation (whether conducted by any judicial or regulatory
body, arbitrator, or other person) is pending (as evidenced by the Company's
receipt of service of process or other written notice of such pendency), or to
the best of the Company's knowledge, threatened, against the Company, nor is
there any basis therefor known to the Company.
7.18. Contracts. Section 7.18 of the Disclosure Schedule sets forth
a complete and accurate list of all "Material Contracts" to which the Company is
a party or by or to which it or any of its assets or properties is bound or
subject. As used in this Agreement, the term "Material Contract" means every
agreement or understanding of any kind, written or oral, that is legally
enforceable by or against or otherwise binding on the Company and which is
material to the Company's business, and specifically includes without
limitation: (a) agreements with any current or former officer, director,
employee, consultant, or stockholder, or any partnership, corporation, joint
venture, or any other entity in which any such person has an interest (other
than agreements terminable by the Company upon 30 days notice and which
termination does not result in any obligations or liabilities to
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the Company); (b) agreements with any labor union or association representing
any employee; (c) agreements for the provision of services by or to the Company
in excess of $25,000; (d) bonds or other security agreements provided by any
party in connection with the business of the Company; (e) agreements for the
purchase or other acquisition or the sale or other disposition of assets or
properties (other than in the ordinary course of business), or for the grant to
any person of any preferential rights to purchase any such assets or properties;
(f) joint venture agreements relating to the assets, properties, or business of
the Company or by or to which it or any of its assets or properties is bound or
subject; (g) agreements under which the Company agrees to indemnify any party,
to share tax liability of any party, or to refrain from competing with any
party; (h) agreements with regard to Indebtedness, including, without
limitation, any indenture or other agreements in connection with issuances of
bonds, debentures or other debt securities by the Company and any agreements in
connection with bank financings by the Company; (i) any agreement, contract,
commitment, transaction or series of transaction for any purpose other than in
the ordinary course of the Company's business relating to capital expenditures
or commitments or long-term obligations; (j) any purchase order or contract for
the purchase of raw materials; (k) any distribution, joint marketing or
development agreement; (l) any assignment, license or other agreement with
respect to any form of intangible property; (m) any research collaboration
agreement; (n) any agreements relating to venture capital and other equity
financings by the Company; (o) any stockholder agreements or other agreements
with any of the Stockholders pertaining to the shares of Company Stock held by
them or their rights as stockholders of the Company; and (p) to the knowledge of
the Company, any voting trust or voting agreements among the Stockholders.
All of the contracts listed in Section 7.18 of the Disclosure Schedule are
in full force and effect, and neither the Company, nor to the best of the
Company's knowledge, any other party thereto, is in default under or material
breach of any of the material terms thereof, nor does any event or condition
exist that after notice or lapse of time or both could constitute a default
thereunder or material breach thereof on the part of the Company, or to the best
of the Company's knowledge, any other party thereto. No approval or consent of
any person that has not already been obtained and listed in Section 7.18 of the
Disclosure Schedule is needed in order that the contracts listed in Section 7.18
of the Disclosure Schedule continue in full force and effect following the
consummation of the Merger and the other transactions contemplated hereby, and
no such contract includes any provision, the effect of which may be to terminate
(or give rise to a right of termination under) such contract, to enlarge or
accelerate any obligations of the Company thereunder, or to give additional
rights to any other person, as a result of the consummation of the Merger or the
other transactions contemplated hereby. The Company has delivered or made
available to LeukoSite true, correct, and complete copies of all such Material
Contracts, including all amendments, modifications, and supplements thereto.
7.19. Potential Conflicts of Interest. No officer, director, or, to
best of the Company's knowledge, stockholder of the Company (a) owns, directly
or indirectly, any interest (excepting not more than 5% stock holdings for
investment purposes in securities of publicly held and traded companies) in, or
is an officer, director, employee, or consultant of, any person that furnishes
or sells services, drug candidates or products that the Company
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furnishes or sells or proposes to furnish or sell or is a lessor, lessee,
customer, or supplier of the Company; (b) owns, directly or indirectly, in whole
or in part (other than solely as a result of his or its ownership of Company
Stock), any tangible or intangible property that the Company is using or the use
of which is necessary for the business of the Company; or (c) to the best of the
Company's knowledge, has any cause of action or other claim whatsoever against,
or owes any amount to, the Company, except for claims in the ordinary course of
business, such as for accrued vacation pay, accrued benefits under Employee
Benefit Plans, and similar matters and agreements.
7.20. Insurance. Section 7.20 of the Disclosure Schedule lists the
policies of products liability, theft, fire, liability, worker's compensation,
life, property and casualty, and other insurance owned or held by the Company.
Such policies of insurance are of the kinds, cover such risks, and are in such
amounts and with such deductibles and exclusions, as are consistent with prudent
business practice for companies in the Company's line of business and of a
similar size and location. All such policies are in full force and effect; are
sufficient for compliance by the Company with all requirements of law and of all
agreements to which the Company is a party; are valid, outstanding, and
enforceable policies and provide that they will remain in full force and effect
through the respective dates set forth in the Disclosure Schedule; and will not
in any way be affected by, or terminate or lapse as a result of the consummation
of, the transactions contemplated by this Agreement.
7.21. Bank Accounts, Signing Authority, Powers of Attorney. Section
7.21 of the Disclosure Schedule sets forth a complete and accurate list of all
bank, brokerage, and other accounts, and all safe-deposit boxes, of the Company
and the persons with signing or other authority to act with respect thereto.
Except as so listed, the Company does not have any account or safe deposit box
in any bank, and no person has any power, whether singly or jointly, to sign any
checks on behalf of the Company, to withdraw any money or other property from
any bank, brokerage, or other account of the Company, or to act under any agency
or power of attorney granted by the Company at any time for any purpose. Section
7.21 of the Disclosure Schedule also sets forth the names of all persons
authorized to borrow money or sign notes on behalf of the Company.
7.22. Relationships With Suppliers and Licensors. No current
supplier to the Company has notified the Company of an intention to terminate or
substantially alter its existing business relationship with the Company, nor has
any licensor under a license agreement with the Company notified the Company of
an intention to terminate or substantially alter the Company's rights under such
license, which termination or alteration would have a Material Adverse Effect on
the Company.
7.23. Employment of Officers, Employees. The name and current annual
salary and other compensation payable by the Company to each exempt non-hourly
employee whose current total annual compensation or estimated compensation from
the Company (including but not limited to wages, salary, commissions, normal
bonus, profit sharing, deferred compensation, and other extra compensation) are
as set forth in Section 7.23 of the Disclosure Schedule. Except to the extent
otherwise disclosed in Section 7.23 of the Disclosure Schedule, none of the
current or former officers, directors, employees or
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consultants of the Company is a party to, or the beneficiary of, any agreement,
plan or arrangement that provides for any payment (whether of severance pay or
otherwise) becoming due to such current or former officer, director, employee or
consultant upon termination of his or her relationship with the Company or as a
result of the Merger, or that provides for the vesting, acceleration of payment,
or increases in the amount of any benefit payable to or in respect of such
current or former director, officer, consultant, or employee upon termination of
his or her relationship with the Company or as a result of the Merger.
7.24. Minute Books. The minute books of the Company made available
to LeukoSite for inspection accurately record therein all material actions taken
by its Board of Directors, all committees thereof, and its stockholders.
7.25. Brokers. No finder, broker, agent, or other intermediary has
acted for or on behalf of the Company in connection with the negotiation,
preparation, execution, or delivery of this Agreement or the consummation of the
Merger or the other transactions contemplated hereby.
7.26. Compliance with Other Agreements, Laws, Etc. The Company has
complied with, and is in compliance with, (a) all laws, statutes, governmental
regulations and all judicial or administrative tribunal orders, judgments,
writs, injunctions, decrees or similar commands applicable to its business, (b)
all unwaived terms and provisions of all contracts, agreements and indentures to
which the Company is a party, or by which the Company or any of its properties
is subject, and (c) its Certificate of Incorporation and by-laws, respectively,
each as amended to date; in the case of the preceding clauses (a) and (b),
excepting only any such noncompliances that, both individually and in the
aggregate, have not resulted and will not result in any Material Adverse Effect
with respect to the Company. The Company has not been charged with, or to the
best of its knowledge, been under investigation with respect to, any violation
of any provision of any federal, state, or local law or administrative
regulation.
7.27. Permits, Licenses, and Programs; No Debarment.
(a) Section 7.27 of the Disclosure Schedule contains a complete and
correct copy of (i) each pending application or registration for
governmental approval and each governmental approval held by the Company
to develop, manufacture, test (including, without limitation, preclinical
tests and clinical trials), import, export, store, market and sell the
Company's products or drug candidates, (ii) the most recent report by or
on behalf of the FDA or any other governmental body involving or relating
to any facility inspection of the Company's facilities, and (iii) a
description of all ongoing proprietary internal research and development
programs included in the ProScript Programs. Except as are set forth in
Section 7.27 of the Disclosure Schedule, (i) the Company possesses such
governmental approvals from all governmental bodies including, without
limitation, all FDA approvals, necessary to permit the operation of its
business in the manner as the same is currently conducted, and to operate,
own or occupy its properties, (ii) there have been no product recalls,
field corrective activity, medical device reports, warning letters or
administrative
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actions by the FDA or any other governmental body, and (iii) to the
knowledge of the Company, (aa) there is no administrative action pending
or threatened for the revocation of any such governmental approval and
(bb) assuming the obtaining of the authorizations, consents, approvals and
other actions listed in Section 7.27 of the Disclosure Schedule, no
governmental approvals and other actions listed in Section 7.27 of the
Disclosure Schedule of the Disclosure Schedule, no governmental approval
by any governmental body having jurisdiction over the operation of the
Company's business, whether in whole or in part, will be revoked, or
become ineffective or subject to revocation, as a consequence of the
transactions contemplated by this Agreement.
(b) The Company (i) has not been debarred or received notice of
action or threat of action with respect to its debarment under the
provisions of the Generic Drug Enforcement Act of 1992, 31 U.S.C. Section
335(a) and (b), or (ii) to the best of the Company's knowledge, has used
in any capacity the services of any individual, corporation, partnership
or association which has been debarred under the provisions of the Generic
Drug Enforcement Act of 1992, 21 U.S.C. Section 335(a) and (b).
7.28. Distribution of Merger Consideration. The Merger
Consideration, when distributed in accordance with the terms of this Agreement,
will have been distributed to the holders of Company Stock in accordance with
the provisions of the Company's Certificate of Incorporation in effect
immediately prior to the Effective Time and any other document or agreement
among the Company and such holders related to the distribution of the Merger
Consideration.
7.29. Disclosure. No representation or warranty of the Company in
this Agreement (including the exhibits and schedules hereto) or in any other
agreement, instrument, certificate, or other document delivered by the Company
in connection with this Agreement, the Merger, or any of the other transactions
contemplated hereby contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact required to be stated
therein or necessary to make the statements contained therein not false or
misleading.
7A. Representations and Warranties of Note Holders.
Each Note Holder hereby represents and warrants, severally, to
LeukoSite and Merger Sub as follows, subject in each case to such exceptions as
are specifically contemplated by this Agreement or as are set forth in the
attached Disclosure Schedule.
7A.1. Incorporation; Authority. Each Note Holder is a limited
partnership duly organized, validly existing, and in good standing under the
laws of the State of Delaware.
7A.2. Authorization and Enforceability. Each Note Holder has all
requisite partnership power to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation
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of the transactions contemplated hereby have been duly authorized by all
necessary partnership action on the part of each Note Holder. This Agreement has
been duly executed and delivered by each Note Holder and constitutes the valid
and binding obligation of each Note Holder, enforceable in accordance with its
terms except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors' rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies and (iii) as limited by public policy considerations.
7A.3. Governmental and Other Third-Party Consents,
Non-Contravention, Etc. No consent, approval, or authorization of or
registration, designation, declaration, or filing with any governmental
authority, federal or other, or any other person, is required on the part of the
Note Holders in connection with the execution, delivery, and performance of this
Agreement or the consummation of the Merger and the other transactions
contemplated hereby. The execution, delivery, and performance of this Agreement
and the consummation of such transactions will not violate (a) any provision of
the Note Holders' respective partnership agreements, (b) any order, judgment,
injunction, award or decree of any court or state or federal governmental or
regulatory body applicable to the Note Holders, or (c) any judgment, decree,
order, statute, rule, regulation, agreement, instrument, or other obligation to
which any Note Holder is a party or by or to which it or any of its assets is
bound or subject, other than violations which will not have a Material Adverse
Effect on the Note Holders.
7A.4. Title to Convertible Notes. Each Note Holder is the lawful
owner of, has good and marketable title to, and is the record and beneficial
owner and holder of, each Convertible Note held by such Note Holder. Each Note
Holder has the full right to sell, convey, transfer, assign and deliver the
Convertible Note held by such Note Holder to LeukoSite as required by the terms
of this Agreement. The Convertible Notes have not been assigned or transferred
to any other person or entity and are entirely free and clear of all Liens.
7A.5. Litigation. No litigation, arbitration, action, suit,
proceeding, or investigation (whether conducted by any judicial or regulatory
body, arbitrator, or other person) is pending (as evidenced by any Note Holder's
receipt of service of process or other written notice of such pendency), or to
the best of each of the Note Holder's knowledge, threatened, against such Note
Holder, nor is there any basis therefor known to such Note Holder, the effect of
which would prohibit or interfere with the transactions contemplated by this
Agreement.
7A.6. Brokers. No finder, broker, agent, or other intermediary has
acted for or on behalf of either Note Holder in connection with the negotiation,
preparation, execution, or delivery of this Agreement or the consummation of the
Merger or the other transactions contemplated hereby.
7A.7. Investor Representations. Each Note Holder is an "accredited
investor" as defined in Rule 501(a) promulgated under the Securities Act and has
such
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knowledge and experience in financial and business matters that it is capable of
evaluating the merits and risks of the transactions contemplated under this
Agreement, including the investment in Leukosite Common Stock. Each Note Holder
represents and warrants that (a) it has total assets in excess of $5,000,000,
(b) it was not formed for the specific purpose of acquiring the Payment Shares,
(c) a substantial part of its business activities consist of investment,
purchasing, selling or trading in securities issued by others, and (iv) its
investment decisions are made by persons who have such knowledge and experience
in financial and business matters as to be capable of evaluating the merits and
risks of an investment in the Payment Shares. Each Note Holder's financial
condition is such that it is able to bear all economic risks of investment in
the Payment Shares, including a complete loss of its investment therein.
LeukoSite has provided each Note Holder with adequate access to financial and
other information concerning LeukoSite (including, without limitation,
LeukoSite's SEC Reports (as defined below) as requested and each Note Holder has
had the opportunity to ask questions of and receive answers from LeukoSite
concerning the transactions contemplated by this Agreement and to obtain
therefrom any additional information necessary to make an informed decision
regarding an investment in LeukoSite. Each Note Holder is acquiring the Payment
Shares solely for investment purposes, with no present intention of distributing
or reselling any of the Payment Shares or any interest therein. Each Note Holder
is aware that, (y) except as contemplated in Section 6 hereof, the Payment
Shares will not be registered under the Securities Act, and that neither the
Payment Shares nor any interest therein may be sold, pledged, or otherwise
transferred unless the Payment Shares are registered under the Securities Act or
qualify for an exemption under the Securities Act and (z) the certificate(s)
representing such shares will bear appropriate restrictive legends referring to
such restrictions on transfer.
8. Representations and Warranties of LeukoSite and Merger Sub to Company.
LeukoSite and Merger Sub hereby jointly and severally represent and
warrant to the Company as follows:
8.1. Incorporation; Authority. Each of LeukoSite and Merger Sub is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware and has all requisite corporate power and
authority to own or lease and operate its properties and to carry on its
business as now conducted. LeukoSite is duly qualified or licensed to conduct
its business and is in good standing as a foreign corporation in each
jurisdiction in which the failure to be so qualified would have, or would be
reasonably expected to have, a Material Adverse Effect on LeukoSite.
8.2. Authorization and Enforceability. Each of LeukoSite and Merger
Sub has all requisite corporate power and authority (including due approval of
its Board of Directors) to enter into this Agreement and to consummate the
transactions contemplated hereby and thereby. This Agreement has been duly
executed and delivered by each of LeukoSite and Merger Sub and constitutes a
legal, valid, and binding obligation of each of them, enforceable against each
of them in accordance with its terms, except as enforceability may be subject to
the effect of any applicable bankruptcy, insolvency, fraudulent
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conveyance, moratorium, reorganization, marshaling, or other similar laws or
rules of law affecting creditors' rights and remedies generally, and to general
principles of equity. LeukoSite does not require any approval from its
stockholders in connection with this Agreement, the Merger or any of the
transactions contemplated hereby or thereby (including the issuance of the
Payment Shares). None of the stockholders of LeukoSite or Merger Sub will have
any appraisal rights under Section 262 of the DGCL by reason of the consummation
of the Merger or the other transactions contemplated hereby.
8.3. Governmental and Other Third-Party Consents, Non-Contravention,
Etc. Except for (i) filing a listing application for purposes of listing the
Payment Shares in the Nasdaq Stock Market and obtaining approval of such
proposed listing, (ii) the filing of the Merger Certificate or of any
registration statement that LeukoSite is required to file pursuant to Section 6
hereof and (iii) any filings required in order to comply with federal and state
securities laws that may be applicable to the issuance of the Payment Shares, no
consent, approval, or authorization of or registration, designation,
declaration, or filing with any governmental authority, federal or other, or any
other person, is required on the part of LeukoSite or Merger Sub in connection
with this Agreement, the Merger, or any of the other transactions contemplated
hereby (including the issuance of the Payment Shares). The execution, delivery,
and performance of this Agreement and the consummation of such transactions will
not violate (a) any provision of LeukoSite's or Merger Sub's Certificate of
Incorporation or by-laws, (b) any order, judgment, injunction, award or decree
of any court or state or federal governmental or regulatory body applicable to
LeukoSite or Merger Sub, or (c) any judgment, decree, order, statute, rule,
regulation, agreement, instrument, or other obligation to which LeukoSite or
Merger Sub is a party or by or to which either of them or any of their
respective assets is bound or subject.
8.4. Merger Sub. Merger Sub has been organized for the specific
purpose of engaging in the Merger and the other transactions contemplated hereby
and has not incurred any liabilities, conducted any business, or entered into
any contracts or commitments, in each case except such as are in furtherance of
or incidental to such transactions.
8.5. LeukoSite's SEC Statements, Reports and Documents. Since August
15, 1997, LeukoSite has timely filed with the SEC all forms, reports,
registration statements, and documents required to be filed by it. LeukoSite has
delivered to the Company true and complete copies of (i) its Annual Report on
Form 10-K for its fiscal year ended December 31, 1998, (ii) its proxy statements
relating to all meetings of its stockholders (whether annual or special) held
since August 15, 1997, and (iii) all other forms, reports (including without
limitation annual reports pursuant to Exchange Act rule 14a-3), registration
statements, and documents filed or required to be filed by it with, or provided
or required to be provided by it to, the SEC since August 15, 1997
(collectively, all of the foregoing documents, "LeukoSite's SEC Reports"). As of
their respective dates, LeukoSite's SEC Reports complied in all material
respects with all applicable requirements of the Securities Act and the Exchange
Act and the rules and regulations promulgated thereunder, and did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
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light of the circumstances under which they were made, not misleading. None of
LeukoSite's SEC Reports is required to be amended or supplemented as of the date
hereof. The financial statements (including any related notes) of LeukoSite
included in LeukoSite's SEC Reports were prepared in conformity with generally
accepted accounting principles applied on a consistent basis (except as
otherwise stated in the financial statements or, in the case of audited
statements, the related report of LeukoSite's independent certified public
accountants) and present fairly in all material respects the consolidated
financial position, results of operations, changes in stockholders' equity, and
cash flows, as applicable, of LeukoSite and its consolidated Subsidiaries as of
the dates and for the periods indicated; subject, in the case of unaudited
interim consolidated financial statements, to condensation, the absence of
footnote disclosure, and normal, recurring end-of-period adjustments, the effect
of which was not and will not be material.
Except to the extent (a) reflected or reserved against in LeukoSite's
consolidated balance sheet as of March 30, 1998, included in its Quarterly
Report on Form 10-Q for its fiscal quarter ended on that date, or (b) incurred
with persons other than any Affiliate of LeukoSite in the ordinary course of
business after the date of such balance sheet, the Company does not have any
liabilities or obligations of any nature, whether accrued, absolute, contingent,
or otherwise (including without limitation liabilities, as guarantor or
otherwise, in respect of obligations of others) that would be required to be
reflected or reserved against in a balance sheet prepared in accordance with
generally accepted accounting principles or referred to in the notes thereto.
8.6. Certificate of Incorporation and By-Laws. LeukoSite's
Certificate of Incorporation and by-laws set forth as Exhibits 3.1 through 3.4,
respectively, to LeukoSite's Registration Statement on Form S-1 (Registration
No. 333-30213), as declared effective under the Securities Act on August 15,
1997, are complete and correct copies thereof, and have not been amended since
the date of such filing. LeukoSite has previously provided to the Company a
complete and correct copy of the Certificate of Incorporation and by-laws of
Merger Sub, neither of which has been amended or restated. Such Certificates of
Incorporation and by-laws of LeukoSite and Merger Sub, respectively, are in full
force and effect. Neither LeukoSite nor Merger Sub is in violation of any
provisions of its Certificate of Incorporation or by-laws.
8.7. Absence of Certain Changes. Since March 31, 1999, there has not
been any material adverse change in the assets, business, financial condition,
results of operations of LeukoSite and its Subsidiaries, taken as a whole.
8.8. Ownership of Company Stock. Neither LeukoSite nor Merger Sub
beneficially owns, directly or indirectly, or is a party to any agreement (other
than this Agreement and the Designated Preferred Stockholders Agreement),
arrangement, or understanding with respect to the acquisition, holding, voting,
or disposition of any shares of the capital stock or other securities of the
Company.
8.9. Brokers. No finder, broker, agent, or other intermediary has
acted for or on behalf of LeukoSite or Merger Sub in connection with the
negotiation, preparation,
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execution, or delivery of this Agreement or the consummation of the transactions
contemplated hereby.
8.10. Disclosure. No representation or warranty of LeukoSite in this
Agreement (including the exhibits and schedules hereto) or in any other
agreement, instrument, certificate, or other document delivered by LeukoSite in
connection with this Agreement, the Merger, or any of the other transactions
contemplated hereby contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact required to be stated
therein or necessary to make the statements contained therein not false or
misleading.
8A. Representations and Warranties of LeukoSite and Merger Sub to Note
Holders.
LeukoSite and Merger Sub hereby jointly and severally represent and
warrant to the Note Holders as follows:
8A.1. Incorporation; Authority. LeukoSite is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to own or lease and
operate its properties and to carry on its business as now conducted. LeukoSite
is duly qualified or licensed to conduct its business and is in good standing as
a foreign corporation in each jurisdiction in which the failure to be so
qualified would have, or would be reasonably expected to have, a Material
Adverse Effect on LeukoSite.
8A.2. Authorization and Enforceability. LeukoSite has all requisite
corporate power and authority (including due approval of its Board of Directors)
to enter into this Agreement and to consummate the transactions contemplated
hereby and thereby. This Agreement has been duly executed and delivered by
LeukoSite and constitutes a legal, valid, and binding obligation of LeukoSite,
enforceable against LeukoSite in accordance with its terms, except as
enforceability may be subject to the effect of any applicable bankruptcy,
insolvency, fraudulent conveyance, moratorium, reorganization, marshaling, or
other similar laws or rules of law affecting creditors' rights and remedies
generally, and to general principles of equity. LeukoSite does not require any
approval from its stockholders in connection with this Agreement, the Merger or
any of the transactions contemplated hereby or thereby (including the issuance
of the Payment Shares).
8A.3. Governmental and Other Third-Party Consents,
Non-Contravention, Etc. Except for (i) filing a listing application for purposes
of listing the Payment Shares in the Nasdaq Stock Market and obtaining approval
of such proposed listing, (ii) the filing of the Merger Certificate or of any
registration statement that LeukoSite may be required to file pursuant to
Section 6 hereof and (iii) any filings required in order to comply with federal
and state securities laws that may be applicable to the issuance of the Payment
Shares, no consent, approval, or authorization of or registration, designation,
declaration, or filing with any governmental authority, federal or other, or any
other person, is required on the part of LeukoSite in connection with this
Agreement, the
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Merger, or any of the other transactions contemplated hereby (including the
issuance of the Payment Shares). The execution, delivery, and performance of
this Agreement and the consummation of such transactions will not violate (a)
any provision of LeukoSite's Certificate of Incorporation or by-laws, (b) any
order, judgment, injunction, award or decree of any court or state or federal
governmental or regulatory body applicable to LeukoSite, or (c) any judgment,
decree, order, statute, rule, regulation, agreement, instrument, or other
obligation to which LeukoSite is a party or by or to which either of them or any
of their respective assets is bound or subject.
8A.4. Certificate of Incorporation and By-Laws. LeukoSite's
Certificate of Incorporation and by-laws set forth as Exhibits 3.1 through 3.4,
respectively, to LeukoSite's Registration Statement on Form S-1 (Registration
No. 333-30213), as declared effective under the Securities Act on August 15,
1997, are complete and correct copies thereof, and have not been amended since
the date of such filing. LeukoSite has previously provided to the Company a
complete and correct copy of the Certificate of Incorporation and by-laws of
Merger Sub, neither of which has been amended or restated. Such Certificates of
Incorporation and by-laws of LeukoSite and Merger Sub, respectively, are in full
force and effect. Neither LeukoSite nor Merger Sub is in violation of any
provisions of its Certificate of Incorporation or by-laws.
8A.5. Capitalization. The authorized capital of LeukoSite consists
of 25,000,000 shares of LeukoSite Common Stock and 5,000,000 shares of LeukoSite
Preferred Stock.
(i) As of May 7, 1999, 11,970,168 shares of LeukoSite Common Stock were
issued and outstanding, all of which were duly authorized, validly issued, fully
paid and non-assessable, and (ii) as of June 21, 1999, options granted pursuant
to the LeukoSite Stock Plans to acquire up to an aggregate of not more than
2,114,106 shares of LeukoSite Common Stock were outstanding. Since that date, no
shares of LeukoSite Common Stock have been issued except upon exercise of
options granted under the LeukoSite Stock Plans.
Except for stock options issued pursuant to the LeukoSite Stock Plans and
as set forth on Section 8A.5 of the Disclosure Schedule, there are no options,
warrants, or other rights, agreements, arrangements, or commitments of any
character to which LeukoSite is a party or by which it is bound relating to the
issued or unissued shares of the capital stock of LeukoSite or any of its
Subsidiaries (including any agreement relating to the manner in which any of
such shares will be voted at any regular or special meeting of the stockholders
of LeukoSite) or obligating LeukoSite or any of its Subsidiaries to issue or
sell any shares of capital stock of, or other equity interests in, LeukoSite or
any of its Subsidiaries.
Except as set forth on Section 8A.5 of the Disclosure Schedule, there are
no outstanding contractual obligations of LeukoSite or any of its Subsidiaries
to repurchase, redeem, or otherwise acquire, or (except pursuant to Section 6
hereof) to register any shares of any of them under the Securities Act.
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Each outstanding share of the capital stock of each of LeukoSite's
Subsidiaries is duly authorized, validly issued, fully paid, and non-assessable,
owned by LeukoSite, and free and clear of all Liens.
8A.6. LeukoSite's SEC Statements, Reports and Documents. Since
August 15, 1997, LeukoSite has timely filed with the SEC all forms, reports,
registration statements, and documents required to be filed by it. LeukoSite has
delivered to the Company true and complete copies of (i) its Annual Report on
Form 10-K for its fiscal year ended December 31 1998, (ii) its proxy statements
relating to all meetings of its stockholders (whether annual or special) held
since August 15, 1997, and (iii) all other forms, reports (including without
limitation annual reports pursuant to Exchange Act rule 14a-3), registration
statements, and documents filed or required to be filed by it with, or provided
or required to be provided by it to, the SEC since August 15, 1997
(collectively, all of the foregoing documents, "LeukoSite's SEC Reports"). As of
their respective dates, LeukoSite's SEC Reports complied in all material
respects with all applicable requirements of the Securities Act and the Exchange
Act and the rules and regulations promulgated thereunder, and did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. None of
LeukoSite's SEC Reports is required to be amended or supplemented as of the date
hereof. The financial statements (including any related notes) of LeukoSite
included in LeukoSite's SEC Reports were prepared in conformity with generally
accepted accounting principles applied on a consistent basis (except as
otherwise stated in the financial statements or, in the case of audited
statements, the related report of LeukoSite's independent certified public
accountants) and present fairly in all material respects the consolidated
financial position, results of operations, changes in stockholders' equity, and
cash flows, as applicable, of LeukoSite and its consolidated Subsidiaries as of
the dates and for the periods indicated; subject, in the case of unaudited
interim consolidated financial statements, to condensation, the absence of
footnote disclosure, and normal, recurring end-of-period adjustments, the effect
of which was not and will not be material.
Except to the extent (a) reflected or reserved against in LeukoSite's
consolidated balance sheet as of March 30, 1998, included in its Quarterly
Report on Form 10-Q for its fiscal quarter ended on that date, or (b) incurred
with persons other than any Affiliate of LeukoSite in the ordinary course of
business after the date of such balance sheet, the Company does not have any
liabilities or obligations of any nature, whether accrued, absolute, contingent,
or otherwise (including without limitation liabilities, as guarantor or
otherwise, in respect of obligations of others) that would be required to be
reflected or reserved against in a balance sheet prepared in accordance with
generally accepted accounting principles or referred to in the notes thereto.
8A.7. Legality of Payment Shares. All of the Payment Shares have
been duly authorized and, when issued and delivered in accordance with the terms
hereof, will be validly issued, fully paid and non-assessable, and free of
preemptive rights. Assuming the accuracy of the representations and warranties
set forth in Section 7A.7, the offer and sale of
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the Payment Shares to the Note Holders pursuant to, and in accordance with, the
terms of this Agreement, do not require registration under the Securities Act of
1933, as amended.
8A.8. Absence of Certain Changes. Since March 31, 1999, there has
not been any material adverse change in the assets, business, financial
condition, results of operations of LeukoSite and its Subsidiaries, taken as a
whole.
8A.9. Brokers. No finder, broker, agent, or other intermediary has
acted for or on behalf of LeukoSite or Merger Sub in connection with the
negotiation, preparation, execution, or delivery of this Agreement or the
consummation of the transactions contemplated hereby.
8A.10. Disclosure. No representation or warranty of LeukoSite in
this Agreement (including the exhibits and schedules hereto) or in any other
agreement, instrument, certificate, or other document delivered by LeukoSite in
connection with this Agreement, the Merger, or any of the other transactions
contemplated hereby contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact required to be stated
therein or necessary to make the statements contained therein not false or
misleading.
9. Mutual Covenants.
9.1. Satisfaction of Conditions. Each of the parties will use its
best reasonable efforts to cause the satisfaction as promptly as possible, but
in any event by August 22, 1999, of the conditions contained in Sections 11
through 13 of this Agreement that impose obligations on it or require action on
its part or the part of any of its stockholders or Affiliates.
9.2. Accounting Consequences. It is intended by the parties hereto
that the Merger shall be accounted for as a purchase, not a pooling of
interests.
9.3. Blue Sky Approvals. LeukoSite will file all documents required
to obtain the Blue Sky permits and approvals, if any, required to carry out the
transactions contemplated by this Agreement (to the extent required prior to the
Effective Time), will pay all expenses incident thereto and will use its best
efforts to obtain such permits and approvals; provided, however, that LeukoSite
shall not be required in connection with this Section 9.3 to qualify as a
foreign corporation or execute a general consent to service of process in any
jurisdiction.
9.4. Tax Matters. The parties understand and agree that none of them
is making any representation or warranty with respect to the tax consequences of
this Agreement, the Merger or the other transactions contemplated hereby.
9.5. Further Assurances. Subject to the terms and conditions set
forth in this Agreement, from time to time both before and after the Effective
Time, each of the parties will use his or its best reasonable efforts, as
promptly as is practicable, to take or
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cause to be taken all actions, and to do or cause to be done all other things,
as are necessary, proper, or advisable to consummate and make effective the
Merger and the other transactions contemplated hereby.
9.6. Stockholder Approval. The Company will take all steps necessary
or appropriate duly to call, give notice of, convene and hold a stockholders
meeting, and/or obtain the necessary written consents of stockholders in
accordance with the DGCL, as the case may be, as soon as reasonably practicable
for the purpose of adopting and approving this Agreement and the transactions
contemplated hereunder, and for such other purposes as may be necessary or
desirable. The Company will recommend to its stockholders the adoption and
approval of this Agreement and the transactions contemplated hereby and the
other matters to be submitted to its stockholders in connection therewith,
except to the extent that legal counsel to the Company provides legal advice to
the Board of Directors that such recommendation would cause the Board of
Directors of the Company to breach its fiduciary duties, in which case the
Company shall not be required to make such recommendation. The Company shall use
all reasonable efforts to obtain the necessary approvals by its stockholders of
this Agreement and the transactions contemplated hereby.
9.7. NASDAQ/NMS Application. LeukoSite will prepare and submit to
the National Association of Securities Dealers, Inc. a listing application
covering all of the Payment Shares, and will use its best reasonable efforts to
cause all of the Payment Shares to be approved for listing in the National
Market System (the "NMS") of the National Association of Securities Dealers,
Inc., subject to official notice of issuance.
9.8. Dissenting Shares. As promptly as practicable after any such
meeting of the Stockholders of the Company at which this Agreement and the
transactions contemplated hereunder are submitted to such Stockholders for
adoption and approval, or after sending any notices required under the DGCL
after this Agreement and the transactions contemplated hereunder have been
adopted and approved by the Stockholders of the Company by written consent in
accordance with the DGCL, the Company shall furnish to LeukoSite the names and
addresses of any dissenting stockholder and the number of Dissenting Shares.
9.9. Intellectual Property. LeukoSite and the Company each agree
that, prior to the Merger, any and all Intellectual Property, including trade
secrets, created or developed by either party shall remain the exclusive
property of the party who created or developed such property, notwithstanding
the sharing of information prior to the Merger.
9.10. Public Disclosure. Between the date hereof and the Effective
Time of the Merger, neither the Company nor LeukoSite will furnish any
communications to the public generally if the subject matter thereof relates to
the other party or to the transactions contemplated under this Agreement,
without the prior approval of the other party as to the contents thereof, which
approval shall not be unreasonably withheld or delayed; provided, however, that
the foregoing provisions of this Section 9.10 shall not apply with respect to
any communication that either party is required to release, furnish or send to
comply with such party's obligations under applicable law (in which case such
party shall use
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commercially reasonable efforts to provide a copy of such communication to the
other party for review, comment and approval within a commercially reasonable
period of time prior to the release, publication or dissemination of such
communication).
9.11. Consents. The Company shall use its best efforts to obtain the
consents, waivers and approvals under any of the Contracts as may be required in
connection with the Merger (all of such consents, waivers and approvals are set
forth in Disclosure Schedule), so as to preserve all rights of and benefits to
the Company thereunder.
9.12. Notification of Certain Matters.
(a) Between the date hereof and the Effective Time of the Merger,
each of LeukoSite and the Company shall, upon obtaining knowledge of any
of the following, promptly notify the other of:
(i) any notice or other communication from any Person alleging
that the consent of such Person is or may be required in connection
with the Merger;
(ii) any actions, suits, claims, investigations or other
judicial proceedings known to its executive officers commenced or
threatened against such party or any of its Subsidiaries which, if
pending on the date of this Agreement, would have been required to
have been disclosed pursuant to Section 7.17 or which relate to the
consummation of the Merger;
(iii) occurrence or non-occurrence of any other event known to
its executive officers which is likely to cause any representation
or warranty of such party contained in this Agreement to be
materially untrue or inaccurate at or prior to the Effective Time;
and
(iv) any failure of such party known to its executive officers
to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder.
(b) In addition to its obligations set forth in Section 9.12(a), the
Company shall promptly notify LeukoSite of any adverse determination or
recommendation in connection with any governmental proceeding to license
any of the Company's products and any report filed with the FDA regarding
an unexpected fatal or life-threatening experience with respect to any
such product.
(c) The delivery of any notice pursuant to this Section 9.12 shall
not limit or otherwise affect any remedies available to a party.
9.13. Access to Data. The Stockholders' Representatives shall have
the right from and after the Closing Date to have reasonable access, upon
request and reasonable notice and during normal business hours, to the books,
records and accounts of LeukoSite
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and its Affiliates, and to the Chief Executive Officer and the Chief Financial
Officer of LeukoSite, for the limited purpose of confirming the calculations
made pursuant to Section 3.8 hereof and obtaining an update concerning the
status of the Drug Development Programs.
9.14. Indemnification Provision in Charter. As of the Effective
Time, the Certificate of Incorporation of the Surviving Corporation shall
contain provisions no less favorable with respect to indemnification of
directors, officers or employees of the Company than are set forth in the
Certificate of Incorporation of the Company, which provisions shall not be
amended, repealed or otherwise modified for a period of six (6) years from the
Effective Time in any manner that would adversely affect the rights thereunder
of individuals who at the Effective Time were directors, officers or employees
of the Company. The Surviving Corporation or LeukoSite shall maintain in effect
for three years (or such shorter period as LeukoSite maintains similar policies
for the benefit of its directors and officers) from the Effective Time
directors' and officers' liability insurance providing to the directors and
officers of the Company as of the Effective Time with standard and customary
directors' and officers' liability insurance coverage for companies similar to
the Company. LeukoSite and the Company agree that the directors, officers and
employees of the Company covered by the provisions of this Section 9.14 are
intended to be third party beneficiaries under this Section 9.14 and shall have
the right to enforce the obligations of the Surviving Corporation. If at any
time the Surviving Corporation or LeukoSite is required to make indemnification
payments to persons who were directors, officers or employees of the Company at
or prior to the Effective Time pursuant to this Section 9.14, then LeukoSite
shall have the right to offset against any Aggregate Contingent Consideration
Payment all or any portion of such indemnification payments.
10. Conduct of the Company's Business Pending the Closing. From and after
the date of this Agreement and until the Closing, except as otherwise
specifically agreed by LeukoSite and the Company:
10.1. Full Access. The Company will afford to LeukoSite and its
authorized representatives full access, upon request and reasonable notice and
during normal business hours, to all of the properties, books, records,
contracts, and documents of the Company, and a reasonable opportunity to make
such investigations as LeukoSite desires to make, and will furnish or cause to
be furnished to LeukoSite and its authorized representatives all such
information with respect to the Company's affairs and businesses as LeukoSite
reasonably requests. No information or knowledge obtained in any investigation
pursuant to this Section 10.1 shall affect or be deemed to modify any
representation or warranty contained herein or the conditions of the parties to
consummate the Merger.
10.2. Course of Business Pending the Closing. Except with the prior
written consent of LeukoSite or except for expenditures made by the Company in
the ordinary course of business that do not exceed $10,000 for any individual
item or series of related items, the Company will not (i) make any expenditure,
accrue any expense, or incur any costs, Indebtedness or other liability,
including, without limitation, in connection with any ongoing clinical trials or
drug development programs or in connection with any ongoing
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research collaborations with third parties, (ii) initiate or agree to initiate
any clinical trials, drug development programs, or research collaborations with
third parties, (iii) make any decisions, determinations or evaluations
concerning the Company's ongoing clinical trials, drug development programs, or
research collaborations with third parties (including, without limitation, any
decision to amend, change or modify any of the Company's ongoing clinical
trials, drug development programs, or research collaborations with third
parties), (iv) in-license or out-license any intellectual property, technology
or drug candidate, (v) make or institute any new, unusual, or novel methods of
manufacture, purchase, sale, lease, management, accounting, or operation or take
or permit to occur or exist any action or circumstance referred to in Section
7.8 hereof, (vi) amend in any manner the HMR Agreement without the prior written
consent of LeukoSite, and (vii) authorize or consummate any stock split, stock
dividend, stock combination, recapitalization of shares or other similar
transaction affecting Company Stock. The Company will use its best efforts to
maintain its owned and leased properties in good operating condition and repair
and make all necessary renewals, additions, and replacements thereto.
10.3. No Dividends, Issuances, Repurchases, Etc. The Company will
not declare, set aside, or pay any dividends (whether in cash, shares of stock,
other property, or otherwise) on, or make any other distribution in respect of,
any shares of its capital stock or other securities, or issue, purchase, redeem,
or otherwise acquire for value any shares of its capital stock or other
securities. The Company will not issue any shares of its capital stock or other
securities (including without limitation any options, warrants, or other rights
to acquire Company Stock), other than shares of Company Stock issued upon the
due exercise of vested Company Stock Options or Company Warrants listed in
Section 7.4 of the Disclosure Schedule (which exercises will be disclosed by the
Company in a supplement to the Disclosure Schedule pursuant to Section 10.13
hereof).
10.4. No Compensation Changes. The Company will not increase the
compensation payable or to become payable to any of its officers, directors, key
employees, or agents, or increase any severance, bonus, insurance, pension, or
other benefit plan, payment, or arrangement made to, for, or with any such
officers, directors, key employees, or agents, nor will it effect any general or
uniform increase in the compensation payable or to become payable to its
employees or consultants, including without limitation any increase in the
benefits under any severance, bonus or pension plan or other contract or
commitment, except as described in Section 10.4 of the Disclosure Schedule. The
Company shall not pay any severance benefits to, enter into any contract,
agreement or arrangement to provide severance benefits to, or implement any
severance plan for the benefit of, any of the Company's officers, directors,
employees or consultants, except pursuant to any severance plan, contract or
arrangement described in Section 7.14 of the Disclosure Schedule.
10.5. Contracts and Commitments. The Company will not enter into any
contract or commitment, or engage in any other transaction, other than as
specifically contemplated by this Agreement or with the prior written consent of
LeukoSite.
10.6. Purchase and Sale of Capital Assets. The Company will not
purchase, lease as lessee, license as licensee, or otherwise acquire any
interest in, or sell,
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lease as lessor, license as licensor, or otherwise dispose of any interest in,
any capital asset(s).
10.7. Insurance. The Company will maintain the insurance referred to
on Section 7.20 of the Disclosure Schedule.
10.8. Preservation of Organization. The Company will use
commercially reasonable efforts to preserve its business organization intact, to
preserve for the benefit of the Surviving Corporation its present business
relationships with its suppliers and customers and others having business
relationships with it.
10.9. No Default. The Company will not take or omit to take any
action, or permit any action or omission to act, that would cause a default
under or a breach of any of its material contracts, commitments, or obligations.
10.10. Compliance with Laws. The Company will duly comply in all
material respects with all applicable laws, regulations, and orders.
10.11. Advice of Change. The Company will promptly advise LeukoSite
in writing of any event or occurrence (other than operating losses incurred by
the Company in the ordinary course of business and consistent with past
practices and the projections prepared by the Company's management and delivered
to LeukoSite prior to the date of this Agreement) which results in or is
reasonably likely to result in a Material Adverse Effect on the Company.
10.12. No Shopping. The Company will not negotiate for, solicit,
discuss, negotiate, or enter into any agreement or understanding, whether or not
binding, with respect to the issuance, sale, or transfer of any of the capital
stock or any material portion of the assets of the Company or any merger or
other business combination of the Company, to or with any person other than
LeukoSite and Merger Sub.
10.13. Disclosure Supplements. From time to time before the Closing,
and in any event immediately before the Closing, each of LeukoSite and the
Company will promptly advise the other in writing of any matter hereafter
arising or becoming known to the disclosing person that, if existing, occurring,
or known at or before the date of this Agreement, would have been required to be
set forth or described in the Disclosure Schedule, or that is necessary to
correct any information in the Disclosure Schedule that is or has become
inaccurate. No such disclosure will be taken into account in determining whether
the conditions to (i) in the case of any such supplemental disclosure by
LeukoSite, the obligations of the Company, and (ii) in the case of any such
supplemental disclosure by the Company, the respective obligations of LeukoSite
and Merger Sub, to consummate the transactions contemplated by this Agreement
have been satisfied. If the Merger is consummated, then for purposes of the
indemnification provisions of this Agreement, such supplemental disclosures
pursuant to this Section 10.13 will be deemed to have been made as of the date
hereof, and no indemnification will be payable in respect thereof by reason of
the fact that such disclosure was not made on the date hereof.
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11. Mutual Conditions to the Parties' Obligations. The parties'
obligations to consummate the Merger are subject to the satisfaction (or waiver
by each such party, in its sole discretion) of each of the conditions set forth
in this section on or before the Closing Date. If the Merger is consummated,
such conditions will conclusively be deemed to have been satisfied or waived.
11.1. Stockholder Approval. This Agreement and the Merger shall have
been approved and adopted by the stockholders of the Company by the requisite
vote under applicable law and the Company's Certificate of Incorporation.
11.2. No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction, or other order issued by any court of
competent jurisdiction, or other legal restraint or prohibition preventing the
consummation of the Merger, will be in effect, and no petition or request for
any such injunction or other order will be pending.
11.3. Securities Law Compliance. Any authorizations from all
applicable securities regulatory authorities that are required in connection
with the issuance and delivery to the Note Holders of the Payment Shares will
have been obtained.
11.4. Proceedings and Documents Satisfactory. All proceedings in
connection with the transactions contemplated by this Agreement and all
certificates and other documents delivered to such party pursuant to this
Agreement or in connection with the Closing will be reasonably satisfactory to
such party and its counsel.
12. Conditions to the Company's Obligations. The obligations of the
Company to consummate the Merger are subject to the satisfaction (or waiver by
the Company, in its sole discretion) of each of the conditions set forth in this
section on or before the Closing Date. If the Merger is consummated, such
conditions will conclusively be deemed to have been satisfied or waived.
12.1. Representations and Warranties. Each of the representations
and warranties made by LeukoSite and/or Merger Sub in or pursuant to this
Agreement or in any statement, certificate, or other document delivered to the
Company, the Stockholders or the Note Holders in connection with this Agreement,
the Merger, or any of the other transactions contemplated hereby will have been
true and correct in all material respects when made and will be true and correct
in all material respects at and as of the Closing (in each case, except that any
representation or warranty that expressly includes a materiality standard will
have been and be true and correct in all respects, giving effect to such
standard), subject only to the effect of any activities or transactions
occurring after the date hereof and either expressly contemplated by this
Agreement or consented to in writing by the Company and except for
representations and warranties made as of a specific date, which shall be true
and correct in all material respects as of such date.
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12.2. Compliance with Agreement. LeukoSite and Merger Sub will have
performed and complied in all material respects with all of their respective
obligations under this Agreement to be performed or complied with by them before
or at the Closing, including without limitation the execution and delivery of
all documents to be executed and delivered by any of them in connection with
this Agreement and/or the consummation of the Merger and the other transactions
contemplated hereby.
12.3. Material Adverse Development. There shall not have occurred
any event or occurrence which results in or would reasonably be likely to have a
Material Adverse Effect on LeukoSite.
12.4. Closing Certificate. LeukoSite and Merger Sub will have
executed and delivered to the Company, at and as of the Closing, a certificate
(without qualification as to knowledge or materiality) certifying that the
conditions referred to in Sections 12.1, 12.2 and 12.3 have been satisfied.
12.5. Opinion of Counsel. ▇▇▇▇▇▇▇ ▇▇▇▇ LLP, counsel to LeukoSite and
Merger Sub, will have delivered to the Company a written legal opinion addressed
to the Company, dated on and as of the Closing Date, and in substantially the
form attached hereto as Exhibit B.
13. Conditions to LeukoSite's and Merger Sub's Obligations. The
obligations of each of LeukoSite and Merger Sub, respectively, to consummate the
Merger are subject to the satisfaction (or waiver by LeukoSite, in its sole
discretion) of each of the conditions set forth in this section on or before the
Closing Date. If the Merger is consummated, such conditions will conclusively be
deemed to have been satisfied or waived.
13.1. Representations and Warranties. Each of the representations
and warranties made by the Company and the Note Holders in or pursuant to this
Agreement or in any statement, certificate, or other document delivered to
LeukoSite or Merger Sub in connection with this Agreement, the Merger, or any of
the other transactions contemplated hereby will have been true and correct in
all material respects when made and will be true and correct in all material
respects at and as of the Closing (in each case, except that any representation
or warranty that expressly includes a materiality standard will have been and be
true and correct in all respects, giving effect to such standard), subject only
to the effect of any activities or transactions occurring after the date hereof
and either expressly contemplated by this Agreement or consented to in writing
by LeukoSite and except for representations and warranties made as of a specific
date, which shall be true and correct in all material respects as of such date.
13.2. Compliance with Agreement. The Company and each Note Holder
will have performed and complied in all material respects with all of its
respective obligations under this Agreement to be performed or complied with by
it before or at the Closing, including without limitation the execution and
delivery of all documents to be executed and delivered by the Company (or the
Stockholders or Note Holders) in connection
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with this Agreement and/or the consummation of the Merger and the other
transactions contemplated hereby.
13.3. Material Adverse Development. There shall not have occurred
any event or occurrence (other than operating losses incurred by the Company in
the ordinary course of business and consistent with past practices and the
projections prepared by the Company's management and delivered to LeukoSite
prior to the date of this Agreement) which results in or would reasonably be
likely to have a Material Adverse Effect on the Company.
13.4. Closing Certificates. The Company will have executed and
delivered to LeukoSite, at and as of the Closing, a certificate (without
qualification as to knowledge or materiality) certifying that the conditions
referred to in Sections 13.1, 13.2, 13.3, 13.9, 13.10, 13.11, 13.12 and 13.13
have been satisfied (it being understood that such certification will not, in
the case of Sections 13.1 and 13.2, include or cover any matter therein to the
extent it pertains to the Note Holders). Each Note Holder will have executed and
delivered to LeukoSite, at and as of the Closing, a certificate (without
qualification as to knowledge or materiality) certifying with respect to itself
that the conditions referred to in Sections 13.1 and 13.2 have been satisfied.
13.5. Opinion of Counsel. ▇▇▇▇ and ▇▇▇▇ LLP, counsel to the Company,
will have delivered to LeukoSite a written legal opinion addressed to LeukoSite,
dated on and as of the Closing Date, and substantially in the form attached
hereto as Exhibit C.
13.6. Third Party Consents. LeukoSite shall have been furnished with
evidence satisfactory to it that the Company has obtained the consents,
approvals and waivers set forth in Sections 7.3 and 7.18 of the Disclosure
Schedule and any other consents, approvals and waivers that are necessary or
required as a result of the Merger to preserve all of the Company's rights and
benefits in its business, assets, properties, leases and contracts following the
Merger.
13.7. Company Options. All of the Company Options shall have been
exercised or terminated immediately prior to the Closing.
13.8. Resignation of Directors and Officers. The directors and
officers of the Company in office immediately prior to the Effective Time shall
have resigned as directors and officers of the Surviving Corporation effective
immediately following the Effective Time.
13.9. Dissenters' Rights. Any applicable period during which
Stockholders have the right to exercise appraisal, dissenters' or other similar
rights under Section 262 of the DGCL or other applicable law shall have expired
and Stockholders holding in the aggregate more than five per cent (5%) of the
outstanding shares of the Company Stock shall not have exercised appraisal,
dissenters' or similar rights under applicable law with respect to their shares
of the Company Stock by virtue of the Merger.
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13.10. Designated Preferred Stockholders Agreement. The Designated
Preferred Stockholders Agreement shall remain in full force and effect, and no
Designated Preferred Stockholder shall have taken any action to terminate or
rescind the Designated Preferred Stockholders Agreement.
13.11. Waiver of Redemption and Special Liquidation. The holders of
Company Series A Preferred Stock and the holders of Company Series B Preferred
Stock shall have waived (a) the obligation of the Company to redeem all of the
outstanding shares of Company Preferred Stock under Section A.4(f) of the
Company's Certificate of Incorporation, and (b) the right of such holders of
Company Preferred Stock to receive the Special Liquidation (as defined in and
pursuant to Section A.4(f) of the Company's Certificate of Incorporation).
13.12. Written Consent of Stockholders. The written consent of the
Designated Preferred Stockholders, dated as of the date of this Agreement,
approving all of the transactions contemplated by this Agreement, including the
Merger, shall remain in full force and effect and no Designated Preferred
Stockholder shall have withdrawn, rescinded or modified such written consent.
13.13. Excess Net Closing Liabilities. The Excess Net Closing
Liabilities shall not be greater than $250,000 as of the Closing Date.
14. Indemnification Between LeukoSite and Stockholders and Company.
14.1. Indemnification by LeukoSite and Merger Sub. Subject to the
limitations set forth in Section 14.6 hereof, LeukoSite and Merger Sub, jointly
and severally, will indemnify, defend, and hold harmless the Stockholders (but
only if the Merger is consummated) and, if the Merger is not consummated, the
Company, and each of their respective directors, officers, employees, agents,
representatives and other Affiliates, in each case to the same extent as
LeukoSite and Merger Sub have agreed to indemnify the Stockholders or the
Company, as the case may be (all persons entitled to indemnification under this
Section 14.1 being hereinafter referred to as the "Company Indemnified
Parties"), from and against any and all Damages related to or arising, directly
or indirectly, out of or in connection with any breach by LeukoSite and/or
Merger Sub of any representation, warranty, covenant, agreement, obligation, or
undertaking made by LeukoSite and/or Merger Sub in this Agreement (including any
schedule or exhibit hereto), or any other agreement, instrument, certificate, or
other document delivered by or on behalf of LeukoSite and/or Merger Sub in
connection with this Agreement, the Merger, or any of the other transactions
contemplated hereby.
14.2. Indemnification by the Company. Subject to the limitations set
forth in Section 14.6 hereof, if the Merger is not consummated the Company will
indemnify, defend, and hold harmless LeukoSite, Merger Sub and each of their
respective directors, officers, employees, agents, representatives and other
Affiliates (all persons entitled to indemnification under this Section 14.2,
Section 14.3 and Section 14A.1 hereof being hereinafter referred to as the
"LeukoSite Indemnified Parties", and, together with the
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Company Indemnified Parties, the "Section 14 Indemnified Parties"), from and
against any and all Damages related to or arising, directly or indirectly, out
of or in connection with any breach by the Company of any representation,
warranty, covenant, agreement, obligation, or undertaking made by the Company in
this Agreement (including any schedule or exhibit hereto), or any other
agreement, instrument, certificate, or other document delivered by or on behalf
of the Company in connection with this Agreement, the Merger, or any of the
other transactions contemplated hereby.
14.3. Indemnification by the Stockholders. Subject to the
limitations set forth in Section 14.6 hereof, if the Merger is consummated the
Stockholders and the Bonus Recipients, jointly and severally, will indemnify,
defend, and hold harmless the LeukoSite Indemnified Parties from and against any
and all Damages related to or arising, directly or indirectly, out of or in
connection with:
(i) any breach by the Company of any representation, warranty,
covenant, agreement, obligation, or undertaking made by the Company
in this Agreement (including any schedule or exhibit hereto), or any
other agreement, instrument, certificate, or other document
delivered by or on behalf of the Company in connection with this
Agreement, the Merger, or any of the other transactions contemplated
hereby; or
(ii) any claim for infringement of patent or other
intellectual property rights by a third party with respect to any
Product Candidate or Related Compound.
14.4. Claims.
(a) All claims for indemnification by a Section 14 Indemnified Party
pursuant to this Section 14 shall be made in accordance with the
provisions of this Section 14.
(b) If a Section 14 Indemnified Party has incurred or suffered
Damages for which it is entitled to indemnification under this Section 14,
such Section 14 Indemnified Party shall, prior to the expiration of the
representation, warranty, covenant or agreement to which such claim
relates, give prompt written notice of such claim (a "Claim Notice") to
the Stockholders' Representatives, in the case of a claim by a LeukoSite
Indemnified Party, or to LeukoSite, in the case of a claim by a Company
Indemnified Party (the Stockholders or LeukoSite, as the case may be,
being referred to, for purposes of this Section 14, as the "Section 14
Indemnifying Party"). Each Claim Notice shall state the amount of claimed
Damages (the "Claimed Amount"), if known, and the basis for such claim.
(c) Within 20 days after delivery of a Claim Notice, the Section 14
Indemnifying Party (who for purposes of this Section 14 shall be
represented by the Stockholders' Representatives in the case of a claim by
a LeukoSite Indemnified Party) shall provide to the Section 14 Indemnified
Party a written response
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(the "Response Notice") in which the Section 14 Indemnifying Party shall:
(i) agree that all of the Claimed Amount is owed to the Section 14
Indemnified Party, (ii) agree that part, but not all, of the Claimed
Amount (the "Agreed Amount") is owed to the Section 14 Indemnified Party,
or (iii) contest that any of the Claimed Amount is owed to the Section 14
Indemnified Party. The Section 14 Indemnifying Party may contest the
payment of all or a portion of the Claimed Amount only based upon a good
faith belief that all or such portion of the Claimed Amount does not
constitute Damages for which the Section 14 Indemnified Party is entitled
to indemnification under this Section 14. If no Response Notice is
delivered by the Section 14 Indemnifying Party within such 20-day period,
the Section 14 Indemnifying Party shall be deemed to have agreed that all
of the Claimed Amount is owed to the Section 14 Indemnified Party.
(d) If the Section 14 Indemnifying Party in the Response Notice
agrees (or is deemed to have agreed) that all of the Claimed Amount is
owed to the Section 14 Indemnified Party, the Section 14 Indemnifying
Party shall owe to the Section 14 Indemnified Party an amount equal to the
Claimed Amount to be paid in the manner set forth in this Section 14. If
the Section 14 Indemnifying Party in the Response Notice agrees that part,
but not all, of the Claimed Amount is owed to the Section 14 Indemnified
Party, the Section 14 Indemnifying Party shall owe to the Section 14
Indemnified Party an amount equal to the Agreed Amount set forth in such
Response Notice to be paid in the manner set forth in this Section 14.
(e) The Section 14 Indemnified Party shall give prompt written
notification to the Section 14 Indemnifying Party of the commencement of
any action, suit or proceeding relating to a third party claim for which
indemnification pursuant to this Section may be sought; provided, however,
that no delay on the part of the Section 14 Indemnified Party in notifying
the Section 14 Indemnifying Party shall relieve the Section 14
Indemnifying Party of any liability or obligation hereunder except to the
extent of any damage or liability caused by or arising out of such delay.
Within 20 days after delivery of such notification, the Section 14
Indemnifying Party may (except to the extent otherwise provided below in
this Section 14.4(e)), upon written notice thereof to the Section 14
Indemnified Party, assume control of the defense of such action, suit or
proceeding with counsel reasonably satisfactory to the Section 14
Indemnified Party, provided (i) the Section 14 Indemnifying Party
acknowledges in writing to the Section 14 Indemnified Party, on behalf of
the Section 14 Indemnifying Party, that any damages, fines, costs or other
liabilities that may be assessed against the Section 14 Indemnified Party
in connection with such action, suit or proceeding constitute Damages for
which the Section 14 Indemnified Party shall be entitled to
indemnification pursuant to this Section 14, and (ii) the third party
seeks monetary damages only. If the Section 14 Indemnifying Party does not
so assume control of such defense, the Section 14 Indemnified Party shall
control such defense. The party not controlling such defense may
participate therein at its own expense; provided that if the Section 14
Indemnifying Party assumes control of such defense and the Section 14
Indemnified Party reasonably concludes that the Section 14 Indemnifying
Parties and the Section
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14 Indemnified Party have conflicting interests or different defenses
available with respect to such action, suit or proceeding, the reasonable
fees and expenses of counsel to the Section 14 Indemnified Party shall be
considered "Damages" for purposes of this Agreement. The party controlling
such defense shall keep the other party advised of the status of such
action, suit or proceeding and the defense thereof and shall consider in
good faith recommendations made by the other party with respect thereto.
The Section 14 Indemnified Party shall not agree to any settlement of such
action, suit or proceeding without the prior written consent of the
Section 14 Indemnifying Party, which shall not be unreasonably withheld or
delayed. The Section 14 Indemnifying Party shall not agree to any
settlement of or the entry of a judgment in any action, suit or proceeding
without the prior written consent of the Section 14 Indemnified Party,
which shall not be unreasonably withheld (it being understood that it is
reasonable to withhold such consent if, among other things, the settlement
or the entry of a judgment (A) lacks a complete release of the Section 14
Indemnified Party for all liability with respect thereto or (B) imposes
any liability or obligation on the Section 14 Indemnified Party).
Notwithstanding anything in this Section 14.4(e) to the contrary, the
provisions of this Section 14.4(e) shall not apply to any claim for
indemnification pursuant to Section 14.3(ii) (it being understood that in
no event shall any Section 14 Indemnifying Party have the right to assume
the defense of any claim for which any Section 14 Indemnified Party shall
be entitled to make a claim for indemnification pursuant to Section
14.3(ii) hereof but that the Section 14 Indemnifying Party shall be
entitled to notice of such claim).
14.5 Payment of Claims.
(a) A Section 14 Indemnifying Party shall make payment of any
portion of any Claimed Amount that such Section 14 Indemnifying Party has
agreed in a Response Notice that it owes to a Section 14 Indemnified Party
or that such Section 14 Indemnifying Party is deemed to have agreed it
owes to such Section 14 Indemnifying Party pursuant to the provisions of
Section 14.4(c) hereof, said payment to be made within thirty (30) days
after such Response Notice is delivered by such Section 14 Indemnifying
Party or should have been delivered by such Section 14 Indemnifying Party,
as the case may be.
(b) Anything in this Agreement to the contrary notwithstanding,
subject to the provisions of Section 14.6 (other than Section 14.6(e)
hereof), LeukoSite may withhold and set-off against any Aggregate
Contingent Consideration Payment otherwise required to be paid or
delivered by LeukoSite pursuant to this Agreement any amount as to which
the Stockholders and the Bonus Recipients are obligated to indemnify
LeukoSite pursuant to any provision of this Agreement; provided, however,
that in no event shall the amount of any LeukoSite Contingent Milestone
Payment, Contingent Partner Licensing Payment or Contingent Royalty
Payment that would otherwise be payable by LeukoSite pursuant to Section
3.8 hereof be reduced by more than fifty percent (50%) in order to satisfy
any indemnification claim pursuant to Section 14.3(ii) hereof. LeukoSite's
set-off rights under this Section 14.5(b) shall be in addition to, and not
in lieu of, any other rights that LeukoSite may
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have elsewhere in this Agreement to set-off, off-set or reduce all or any
portion of the Merger Consideration.
14.6. Limitations of Liability.
(a) Limited Recourse; Maximum Liability. Notwithstanding any other
provision in this Agreement, all claims for indemnification by a LeukoSite
Indemnified Party under this Section 14 shall be satisfied solely by the
right of set-off set forth in Section 14.5(b) above, and no Stockholder or
Bonus Recipient shall otherwise have any direct or indirect liability to
any LeukoSite Indemnified Party.
(b) Time Limit. No Section 14 Indemnifying Party will be liable for
any Damages hereunder unless a written claim for indemnification is given
by the Section 14 Indemnified Party to the Section 14 Indemnifying Party
on or prior to the second anniversary of the Closing Date; provided,
however, that the foregoing provisions of this Section 14.6(b) shall not
apply to any claim by LeukoSite for indemnification pursuant to clause
(ii) of Section 14.3 hereof.
(c) Tax and Insurance Benefits. The amount of any Damages otherwise
payable to any Section 14 Indemnified Party hereunder will be reduced (i)
to the extent that such Section 14 Indemnified Party actually realizes, by
reason of such Damages, any tax benefit that is not offset by any
corresponding adjustment of the tax attributes of such Section 14
Indemnified Party or any of his or its assets (e.g., any tax deduction
available to such Section 14 Indemnified Party in respect of such Damages
will not be deemed to result in a tax benefit to such Section 14
Indemnified Party to the extent that such deduction results in a decrease
in such Section 14 Indemnified Party's tax basis in any securities or
other assets), and (ii) by any insurance proceeds actually received by
such Section 14 Indemnified Party in respect thereof, to the extent that
such reduction is permitted without reduction of the amount of such
proceeds payable under the applicable insurance policy.
(d) Insurance Collection. Each Section 14 Indemnified Party will use
reasonable efforts to collect any Damages from any available insurer
before attempting to collect from the Section 14 Indemnifying Party at any
time. If any Section 14 Indemnified Party recovers any amount from any
insurer after payment to such Section 14 Indemnified Party by one or more
Section 14 Indemnifying Parties of all Damages suffered or incurred by
such Section 14 Indemnified Party in respect of the matters to which such
insurance payment relates, then such Section 14 Indemnified Party will
promptly pay over to such Section 14 Indemnifying Parties the amount so
recovered, to the extent not in excess of the amount previously paid by
such Section 14 Indemnifying Party to such Section 14 Indemnified Party in
respect of such matter.
(e) Damages Limit. With respect to claims for indemnification
pursuant to clause (ii) of Section 14.3, the Stockholders shall be liable
for fifty percent (50%) of all such Damages of the LeukoSite Indemnified
Parties.
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14.7. Subrogation. A Section 14 Indemnifying Party who indemnifies a
Section 14 Indemnified Party pursuant to this Section 14 will, upon indefeasible
payment in full of the amount owed with respect to such matter pursuant to this
Section 14, be subrogated to the extent of such payment to the rights of such
Section 14 Indemnified Party against all other persons in respect of the matter
for which such indemnification payment was made, to the extent permitted by
applicable insurance policies of such Section 14 Indemnified Party, and upon
such subrogation may assert such rights against such other persons.
14.8. Exclusive Remedies. The parties hereby acknowledge and agree
that the sole and exclusive remedies of any and all Section 14 Indemnified
Parties in respect of any and all claims relating to any breach or purported
breach of any representation, warranty, covenant, agreement, obligation, or
undertaking of any Section 14 Indemnifying Party that is contained in this
Agreement will be pursuant to the indemnification provisions of this Section 14.
No breach of any such representation, warranty, covenant, agreement, obligation,
or undertaking will give rise to any right of any party hereto to rescind this
Agreement or any of the transactions contemplated hereby.
14A. Indemnification Between LeukoSite and Note Holders.
14A.1. Indemnification by the Note Holders. Subject to the
limitations set forth in Section 14A.6 hereof, whether or not the Merger is
consummated, each Note Holder, severally and not jointly, will indemnify,
defend, and hold harmless the LeukoSite Indemnified Parties, from and against
any and all Damages related to or arising, directly or indirectly, out of or in
connection with (i) any breach by such Note Holders of any representation or
warranty made by such Note Holder in Section 7A.4 and Section 7A.7 hereof and
(ii) any breach by such Note Holder of any agreement, obligation or undertaking
made by such Note Holder in Section 2.2 of this Agreement.
14A.2. Indemnification by LeukoSite. Subject to the limitations set
forth in Section 14A.6 hereof, whether or not the Merger is consummated,
LeukoSite will indemnify, defend, and hold harmless the Note Holders and each of
their respective partners, directors, officers, employees, agents,
representatives and other Affiliates (all persons entitled to indemnification
under this Section 14A.2 being hereinafter referred to as the "Note Holder
Indemnified Parties"), from and against any and all Damages related to or
arising, directly or indirectly, out of or in connection with any breach by
LeukoSite of any representation, warranty, covenant, agreement, obligation, or
undertaking made by LeukoSite to the Note Holders in this Agreement (including
any schedule or exhibit hereto), or in any other agreement, instrument,
certificate, or other document delivered by or on behalf of LeukoSite to the
Note Holders in connection with this Agreement, the Merger, or any of the other
transactions contemplated hereby.
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14A.3. Claims.
(a) All claims for indemnification by a LeukoSite Indemnified Party
or a Note Holder Indemnified Party pursuant to this Section 14A shall be
made in accordance with the provisions of this Section 14A.
(b) If a LeukoSite Indemnified Party or a Note Holder Indemnified
Party has incurred or suffered Damages for which it is entitled to
indemnification under this Section 14A, such LeukoSite Indemnified Party
or Note Holder Indemnified Party, as the case may be, shall, prior to the
expiration of the representation, warranty, covenant or agreement to which
such claim relates, give prompt written notice of such claim (a "Section
14A Claim Notice") to the Note Holders or to LeukoSite, as applicable.
Each Section 14A Claim Notice shall state the amount of claimed Damages
(the "Section 14A Claimed Amount"), if known, and the basis for such
claim.
(c) Within 20 days after delivery of a Section 14A Claim Notice, the
indemnifying party under this Section 14A (the "Section 14A Indemnifying
Party") shall provide to the LeukoSite Indemnified Party or the Note
Holder Indemnified Party, as the case may be (the "Section 14A Indemnified
Party"), a written response (the "Section 14A Response Notice") in which
the Section 14A Indemnifying Party shall: (i) agree that all of the
Section 14A Claimed Amount is owed to the Section 14A Indemnified Party,
(ii) agree that part, but not all, of the Section 14A Claimed Amount (the
"Section 14A Agreed Amount") is owed to the Section 14A Indemnified Party,
or (iii) contest that any of the Section 14A Claimed Amount is owed to the
Section 14A Indemnified Party. The Section 14A Indemnifying Party may
contest the payment of all or a portion of the Section 14A Claimed Amount
only based upon a good faith belief that all or such portion of the
Section 14A Claimed Amount does not constitute Damages for which the
Section 14A Indemnified Party is entitled to indemnification under this
Section 14A. If no Section 14A Response Notice is delivered by the Section
14A Indemnifying Party within such 20-day period, the Section 14A
Indemnifying Party shall be deemed to have agreed that all of the Section
14A Claimed Amount is owed to the Section 14A Indemnified Party.
(d) If the Section 14A Indemnifying Party in the Section 14A
Response Notice agrees (or is deemed to have agreed) that all of the
Section 14A Claimed Amount is owed to the Section 14A Indemnified Party,
the Section 14A Indemnifying Party shall owe to the Section 14A
Indemnified Party an amount equal to the Section 14A Claimed Amount to be
paid in the manner set forth in this Section 14A. If the Section 14A
Indemnifying Party in the Section 14A Response Notice agrees that part,
but not all, of the Section 14A Claimed Amount is owed to the Section 14A
Indemnified Party, the Section 14A Indemnifying Party shall owe to the
Section 14A Indemnified Party an amount equal to the agreed amount set
forth in such Section 14A Response Notice to be paid in the manner set
forth in this Section 14A.
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(e) The Section 14A Indemnified Party shall give prompt written
notification to the Section 14A Indemnifying Party of the commencement of
any action, suit or proceeding relating to a third party claim for which
indemnification pursuant to this Section 14A may be sought; provided,
however, that no delay on the part of the Section 14A Indemnified Party in
notifying the Section 14A Indemnifying Party shall relieve the Section 14A
Indemnifying Party of any liability or obligation hereunder except to the
extent of any damage or liability caused by or arising out of such delay.
Within 20 days after delivery of such notification, the Section 14A
Indemnifying Party may, upon written notice thereof to the Section 14A
Indemnified Party, assume control of the defense of such action, suit or
proceeding with counsel reasonably satisfactory to the Section 14A
Indemnified Party, provided (i) the Section 14A Indemnifying Party
acknowledges in writing to the Section 14A Indemnified Party, on behalf of
the Section 14A Indemnifying Party, that any damages, fines, costs or
other liabilities that may be assessed against the Section 14A Indemnified
Party in connection with such action, suit or proceeding constitute
Damages for which the Section 14A Indemnified Party shall be entitled to
indemnification pursuant to this Section 14A, and (ii) the third party
seeks monetary damages only. If the Section 14A Indemnifying Party does
not so assume control of such defense, the Section 14A Indemnified Party
shall control such defense. The party not controlling such defense may
participate therein at its own expense; provided that if the Section 14A
Indemnifying Party assumes control of such defense and the Section 14A
Indemnified Party reasonably concludes that the Section 14A Indemnifying
Parties and the Section 14A Indemnified Party have conflicting interests
or different defenses available with respect to such action, suit or
proceeding, the reasonable fees and expenses of counsel to the Section 14A
Indemnified Party shall be considered "Damages" for purposes of this
Agreement. The party controlling such defense shall keep the other party
advised of the status of such action, suit or proceeding and the defense
thereof and shall consider in good faith recommendations made by the other
party with respect thereto. The Section 14A Indemnified Party shall not
agree to any settlement of such action, suit or proceeding without the
prior written consent of the Section 14A Indemnifying Party, which shall
not be unreasonably withheld or delayed. The Section 14A Indemnifying
Party shall not agree to any settlement of or the entry of a judgment in
any action, suit or proceeding without the prior written consent of the
Section 14A Indemnified Party, which shall not be unreasonably withheld
(it being understood that it is reasonable to withhold such consent if,
among other things, the settlement or the entry of a judgment (A) lacks a
complete release of the Section 14A Indemnified Party for all liability
with respect thereto or (B) imposes any liability or obligation on the
Section 14A Indemnified Party).
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14A.5 Payment of Claims. A Section 14A Indemnifying Party shall make
payment of any portion of any Section 14A Claimed Amount that such Section
14A Indemnifying Party has agreed in a Section 14A Response Notice that it
owes to a Section 14A Indemnified Party or that such Section 14A
Indemnifying Party is deemed to have agreed it owes to such Section 14A
Indemnifying Party pursuant to the provisions of Section 14A.4(c) hereof,
said payment to be made within thirty (30) days after such Section 14A
Response Notice is delivered by such Section 14A Indemnifying Party or
should have been delivered by such Section 14A Indemnifying Party, as the
case may be.
14A.6. Limitations of Liability.
(a) Maximum Liability. No Note Holder shall be liable for any
Damages hereunder in excess of the Convertible Note Amount with respect to
such Note Holder's Convertible Note.
(b) Time Limit. No Section 14A Indemnifying Party will be liable for
any Damages hereunder unless a written claim for indemnification is given
by the Section 14A Indemnified Party to the Section 14A Indemnifying Party
on or prior to the second anniversary of the Closing Date.
(c) Tax and Insurance Benefits. The amount of any Damages otherwise
payable to any Section 14A Indemnified Party hereunder will be reduced (i)
to the extent that such Section 14A Indemnified Party actually realizes,
by reason of such Damages, any tax benefit that is not offset by any
corresponding adjustment of the tax attributes of such Section 14A
Indemnified Party or any of his or its assets (e.g., any tax deduction
available to such Section 14A Indemnified Party in respect of such Damages
will not be deemed to result in a tax benefit to such Section 14A
Indemnified Party to the extent that such deduction results in a decrease
in such Section 14A Indemnified Party's tax basis in any securities or
other assets), and (ii) by any insurance proceeds actually received by
such Section 14A Indemnified Party in respect thereof, to the extent that
such reduction is permitted without reduction of the amount of such
proceeds payable under the applicable insurance policy.
(d) Insurance Collection. Each Section 14A Indemnified Party will
use reasonable efforts to collect any Damages from any available insurer
before attempting to collect from the Section 14A Indemnifying Party at
any time. If any Section 14A Indemnified Party recovers any amount from
any insurer after payment to such Section 14A Indemnified Party by one or
more Section 14A Indemnifying Parties of all Damages suffered or incurred
by such Section 14A Indemnified Party in respect of the matters to which
such insurance payment relates, then such Section 14A Indemnified Party
will promptly pay over to such Section 14A Indemnifying Parties the amount
so recovered, to the extent not in excess of the amount previously paid by
such Section 14A Indemnifying Party to such Section 14A Indemnified Party
in respect of such matter.
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14A.7. Subrogation. A Section 14A Indemnifying Party who indemnifies
a Section 14A Indemnified Party pursuant to this Section 14A will, upon
indefeasible payment in full of the amount owed with respect to such matter
pursuant to this Section 14A, be subrogated to the extent of such payment to the
rights of such Section 14A Indemnified Party against all other persons in
respect of the matter for which such indemnification payment was made, to the
extent permitted by applicable insurance policies of such Section 14A
Indemnified Party, and upon such subrogation may assert such rights against such
other persons.
14A.8. Applicability. The provisions of this Section 14A will not
apply to claims for indemnification or contribution arising under or in
connection with Section 6 hereof and/or any of the transactions contemplated by
Section 6 hereof.
14A.9. Exclusive Remedies. The parties hereby acknowledge and agree
that the sole and exclusive remedies of any and all Section 14A Indemnified
Parties in respect of any and all claims relating to any breach or purported
breach of any representation, warranty, covenant, agreement, obligation, or
undertaking of any Section 14A Indemnifying Party that is contained in this
Agreement will be pursuant to the indemnification provisions of this Section
14A. No breach of any such representation, warranty, covenant, agreement,
obligation, or undertaking will give rise to any right of any party hereto to
rescind this Agreement or any of the transactions contemplated hereby..
15. Releases. If the Merger is consummated, then, effective as of the
Effective Time, each of the Stockholders and the Note Holders, for himself or
itself and his or its heirs, legatees, successors, and assigns, hereby fully and
irrevocably releases, remises, and discharges the Surviving Corporation and its
officers, directors, employees, agents, representatives, successors, and assigns
from any and all Damages, regardless of whether known, unknown, or unknowable,
and regardless of whether absolute, contingent, or otherwise, and regardless of
whether at law, in equity, or otherwise, without limitation, whether now
existing or arising in the future, in each case to the extent based on actions,
omissions, and/or events occurring at or before the Effective Time, including
without limitation all rights to indemnification and/or contribution, but
excluding Damages and rights of indemnification arising expressly under this
Agreement and claims for accrued but unpaid salaries and reimbursable expenses
(the aggregate amount of which salaries and expenses does not exceed $50,000).
Furthermore, each of such releasing persons hereby irrevocably agrees not to
▇▇▇, or to commence, maintain, or aid in the prosecution of any litigation,
arbitration, or other action or proceeding against or adverse to any of such
released persons, or otherwise to seek any recourse against any of such released
persons, in respect of any matter hereby released or purported or attempted to
be released.
16. Termination.
(a) This Agreement may be terminated at any time before the
Effective Time by agreement of LeukoSite and the Company, notwithstanding
the approval of this Agreement and/or of the Merger by the Stockholders.
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(b) If (i) any temporary restraining order, preliminary or permanent
injunction, or other order issued by any court of competent jurisdiction,
or other binding legal restraint or prohibition preventing the
consummation of the Merger or the other transactions contemplated hereby
is at any time in effect for a period of more than 20 consecutive days, or
(ii) the Closing does not occur on or before August 22, 1999, then either
LeukoSite or the Company may terminate this Agreement by delivering
written notice to the other at any time after the close of business on
date such termination right arises hereunder, provided that such failure
to close is not the result of a breach of this Agreement by the
terminating party (including, in the case of any such termination by
LeukoSite, any breach by Merger Sub, or in the case of any such
termination by the Company, any breach by any of the Stockholders or Note
Holders).
(c) Any termination of this Agreement will not affect the rights or
obligations of any party arising, or based on actions or omissions
occurring, before such termination. The provisions of Section 1
("Definitions"), Section 14 ("Indemnification"), this Section 16
("Termination") and Section 17 ("General") will survive any
termination of this Agreement.
17. General.
17.1. Cooperation. Each of the parties will cooperate with the
others and use its best reasonable efforts to prepare all necessary
documentation, to effect all necessary filings, and to obtain all necessary
permits, consents, approvals, and authorizations of all governmental bodies and
other third parties necessary to consummate the transactions contemplated by
this Agreement.
17.2. Survival of Provisions. The provisions of this Agreement,
including without limitation the representations and warranties of the parties,
and the provisions of the other documents executed and delivered in connection
with this Agreement, the Merger, and the other transactions contemplated hereby
will be deemed material, and, notwithstanding any investigation by or on behalf
of any other party, will be deemed to have been relied on by each other party,
and will survive the Closing and the consummation of the Merger and the other
transactions contemplated hereby until terminated or no longer in effect in
accordance with their respective terms, except that (i) the representations and
warranties made by the parties pursuant to this Agreement shall survive the
Closing and the consummation of the Merger and the other transactions
contemplated hereby until the second anniversary of the Closing Date and (ii)
the covenants set forth in Section 9.13 shall survive the Closing and the
consummation of the Merger and the other transactions contemplated hereby until
such date as the payments set forth in Section 3.8 have been made.
17.3. Expenses. LeukoSite, on the one hand, and the Company, on the
other hand, will be responsible for and will pay all of their own respective
expenses in connection with the negotiation and preparation of this Agreement
and the consummation of the Merger and the other transactions contemplated
hereby.
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17.4. Benefits of Agreement; No Assignments; No Third-Party
Beneficiaries.
(a) This Agreement will bind and inure to the benefit of the parties
hereto and their respective heirs, successors, and permitted assigns.
(b) No party will assign any rights or delegate any obligations
hereunder without the consent of the other parties, other than in the case
of LeukoSite, in connection with (i) a merger or consolidation of
LeukoSite or (ii) a sale of the assets to which this transaction relates
(provided that, in the event of such sale of assets, the buyer agrees in
writing with the Stockholders' Representatives to be bound by the
obligations of LeukoSite under this Agreement), and any attempt to do so
will be void.
(c) Nothing in this Agreement is intended to or will confer any
rights or remedies on any person other than the parties hereto and their
respective heirs, successors, and permitted assigns, except as expressly
provided in Section 13 hereof; provided however, that the provisions in
Section 3 concerning the payment of the Merger Consideration for the
Company Stock, the representations of LeukoSite and the Merger Sub set
forth in Section 8, and the indemnification provisions in Section 14 are
for the benefit of the Stockholders.
17.5. Notices. All notices, requests, payments, instructions, or
other documents to be given hereunder will be in writing or by written
telecommunication, and will be deemed to have been duly given if (i) delivered
personally (effective upon delivery), (ii) mailed by registered or certified
mail, return receipt requested, postage prepaid (effective five business days
after dispatch), (iii) sent by a reputable, established courier service that
guarantees next business day delivery (effective the next business day), or (iv)
sent by telecopier followed within 24 hours by confirmation by one of the
foregoing methods (effective upon receipt of the telecopy in complete, readable
form), addressed as follows (or to such other address as the recipient party may
have furnished to the sending party for the purpose pursuant to this section):
(a) If to LeukoSite, Merger Sub, and/or (after the Effective Time),
the Surviving Corporation to:
LeukoSite Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Ph.D.
Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇
with a copy sent at the same time and by the same means to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
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▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to the Company (before the Effective Time) to:
ProScript, Inc.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇
If to the Company (after the Effective Time) or to the Stockholders'
Representatives to:
▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
Ticonderoga Capital Group
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇
Mr. ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇
▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
HealthCare Ventures LLC
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇
with a copy sent at the same time and by the same means to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇ and ▇▇▇▇ LLP
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇
(c) If to the Note Holders to:
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HealthCare Ventures III, LP
HealthCare Ventures IV, LP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇
with a copy sent at the same time and by the same means to:
▇▇▇▇ ▇▇▇▇▇▇, Esq.
Pepper, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇
17.6. Counterparts. This Agreement may be executed by the parties in
separate counterparts, each of which when so executed and delivered will be an
original, but all of which together will constitute one and the same agreement.
In pleading or proving this Agreement, it will not be necessary to produce or
account for more than one such counterpart.
17.7. Captions. The captions of sections or subsections of this
Agreement are for reference only and will not affect the interpretation or
construction of this Agreement.
17.8. Equitable Relief. Each of the parties hereby acknowledges that
any breach by him or it of his or its obligations under this Agreement would
cause substantial and irreparable damage to the parties, and that money damages
would be an inadequate remedy therefor, and accordingly, acknowledges and agrees
that each other party will be entitled to an injunction, specific performance,
and/or other equitable relief to prevent the breach of such obligations.
17.9. Construction. The language used in this Agreement is the
language chosen by the parties to express their mutual intent, and no rule of
strict construction will be applied against any party.
17.10. Waivers. No waiver of any breach or default hereunder will be
valid unless in a writing signed by the waiving party. No failure or other delay
by any party exercising any right, power, or privilege hereunder will be or
operate as a waiver thereof, nor will any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power, or privilege.
17.11. Entire Agreement. This Agreement, together with the exhibits
and schedules hereto and the other agreements, instruments, certificates, and
other documents referred to herein as having been or to be executed and
delivered in connection with the
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transactions contemplated hereby, contains the entire understanding and
agreement among the parties, and supersedes any prior understandings or
agreements among them, or between or among any of them, with respect to the
subject matter hereof. Notwithstanding the foregoing, the provisions of the
Confidentiality Agreement by and between the Company and LeukoSite, will survive
the execution and delivery of this Agreement and the consummation of the Merger.
17.12. Governing Law. This Agreement will be governed by and
interpreted and construed in accordance with the internal laws of Commonwealth
of Massachusetts, as applied to contracts under seal made, and entirely to be
performed, within Massachusetts, and without reference to principles of
conflicts or choice of laws.
17.13. Amendment. This Agreement may not be amended, modified, or
supplemented except by a writing duly executed by LeukoSite, Merger Sub and the
Company; provided however, that any amendment effected subsequent to the time
the Stockholders approve this Agreement shall be subject to the provisions of
the DGCL and approval by the Stockholders Representatives; and provided,
further, that any amendments that affect the rights or obligations of the Note
Holders hereunder shall be approved by the Note Holders.
[ Signature Page to Follow ]
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement and Plan of Merger and Reorganization under seal as of the date first
above written.
LEUKOSITE: LEUKOSITE, INC.
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President, Corporate
Development and Chief Financial
Officer
MERGER SUB: PROSCRIPT ACQUISITION CO.
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Treasurer and Secretary
COMPANY: PROSCRIPT, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President and CEO
NOTE HOLDERS: HEALTHCARE VENTURES IV, L.P.
By:
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Administrative Partner of
HealthCare Partners IV, L.P. The
General Partner of HealthCare
Ventures, IV, L.P.
HEALTHCARE VENTURES III, L.P.
By:
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Administrative Partner of
HealthCare Partners III, L.P.
The General Partner of
HealthCare Ventures III, L.P.
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EXHIBITS AND SCHEDULES
Exhibits
--------
A Merger Certificate
B Form of Legal Opinion of Buyer's Counsel
C Form of Legal Opinion of Sellers' Counsel
Schedules
---------
Disclosure Schedules of the Company
Disclosure Schedule of LeukoSite