EXHIBIT 10.1
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
This Agreement and Plan of Merger and Reorganization dated as of
January 4, 1999 (this "Agreement"), is by and among LeukoSite, Inc., a Delaware
corporation ("LeukoSite"), LeukoSite Merger Corporation, a Delaware corporation
that is a wholly owned subsidiary of LeukoSite ("Merger Sub"), and CytoMed,
Inc., a Delaware corporation (the "Company").
WHEREAS, the parties desire 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 with reference to the
Company, the term "Affiliate" includes the Stockholders.
"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 Contingent
Third Party Payments, the LeukoSite Contingent Milestone Payments and the
Contingent Partner Licensing Payments.
"Approved Payments" means the Company's expenditures, payments,
expenses, costs or Indebtedness set forth in Section 10.2 to the Disclosure
Schedule.
"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.
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"Company Intellectual Property" shall mean that Intellectual Property
owned by, or licensed to, the Company that is set forth on Section 7.10 of the
Disclosure Schedule.
"Company Preferred Stock" means any or all, as the context may require
or allow, of the Company Series I Preferred Stock, the Company Series II
Preferred Stock, the Company Series III Preferred Stock, the Company Series V
Preferred Stock, the Company Series VI Preferred Stock and the Company Series
VII Preferred Stock.
"Company Series I Preferred Stock" means the Company's Series I
Convertible Preferred Stock, par value $.01 per share.
"Company Series II Preferred Stock" means the Company's Series II
Convertible Preferred Stock, par value $.01 per share.
"Company Series III Preferred Stock" means the Company's Series III
Convertible Preferred Stock, par value $.01 per share.
"Company Series V Preferred Stock" means the Company's Series V
Convertible Preferred Stock, par value $.01 per share.
"Company Series VI Preferred Stock" means the Company's Series VI
Convertible Preferred Stock, par value $.01 per share.
"Company Series VII Preferred Stock" means the Company's Series VII
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 Section 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 Section 7.10 of the Disclosure Schedule; and (c)
registered copyrights and applications for copyright registration, in each case
that are listed on Section 7.10 of the Disclosure Schedule.
"Company Stock" means, collectively, the Company Common Stock and the
Company Preferred Stock.
"CytoMed Programs" means, collectively, (i) the Company's ongoing
proprietary internal research and development program related to the compound
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CMI-977 and related compounds, (ii) the Company's ongoing proprietary internal
research and development program related to the compound CMI-392 and related
compounds, and (iii) the Company's ongoing proprietary internal research and
development program related to complement mediated disease.
"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, at no cost to the Company, for
pre-clinical and clinical development, regulatory approval, and
commercialization of a Product Candidate that was included in a CytoMed Program.
"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.
"Excluded Indebtedness" means all Indebtedness that is identified in
Section 3.7 of the Disclosure Schedule as "Excluded Indebtedness".
"First Commercial Sale" means the first sale for end use or consumption
of a Product Candidate in a country after required approvals have been granted
by the governing regulatory authority in such country.
"FDA" means the United States Food and Drug Administration.
"Included Additional Assets" means the fixed assets, prepaid expenses
and accounts receivable that are identified in Section 3.7 of the Disclosure
Schedule as "Included Additional Assets."
"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
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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 3.7 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, Clinical 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
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Merger Sub's chief executive, scientific, and/or financial officers has actual
knowledge after conducting a reasonable investigation.
"LeukoSite Common Stock" means the common stock, par value $0.01 per
share, of LeukoSite.
"LeukoSite Preferred Stock" means the preferred stock, par value $0.01
per share, of LeukoSite.
"LeukoSite Series A Preferred Stock" means the Series A Convertible
Preferred Stock, par value $0.01 per share, of LeukoSite, the terms, rights,
preferences and privileges of which shall be those set forth in EXHIBIT A
hereto.
"LeukoSite Stock" means, at the relevant time of reference thereto, (i)
LeukoSite Series A Preferred Stock or (ii) in the event that, on or prior to
such time, there has been a mandatory conversion of all issued and outstanding
shares of LeukoSite Series A Preferred Stock into shares of LeukoSite Common
Stock in accordance with the terms of the LeukoSite Series A Preferred Stock,
the LeukoSite Common Stock.
"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.
"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 Common Shares" means, collectively, (i) shares of LeukoSite
Common Stock issued by LeukoSite pursuant to the Merger and (ii) shares of
LeukoSite Common Stock issued by LeukoSite upon conversion of any and all
LeukoSite Series A Preferred Stock issued by LeukoSite pursuant to the Merger.
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"Merger Consideration" means the Merger Shares, the Contingent Third
Party Payments, the LeukoSite Contingent Milestone Payments and the Contingent
Partner Licensing Payments.
"Merger Conversion Shares" means shares of LeukoSite Common Stock
issued by LeukoSite upon conversion of any and all LeukoSite Series A Preferred
Stock issued by LeukoSite pursuant to the Merger.
"Merger Shares" means the Aggregate Base Consideration Shares, the
Aggregate Subsequent Consideration Shares, the Milestone Shares and the Merger
Conversion Shares.
"NDA" means a New Drug Application filed with the FDA or its
equivalent, or any corresponding application filed in any country other than the
United States.
"Net Cash Balance" means (a) the sum of (i) cash, cash equivalents and
marketable securities (with maturities less than 180 days) and (ii) Included
Additional Assets, MINUS (b) all Indebtedness other than Excluded Indebtedness.
"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 any product or compound for the
diagnosis, prophylaxis or treatment of human disease.
"PTO" means the United States Patent and Trademark Office.
"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.
"Shen Consulting Agreement" means the Consulting Agreement, dated
as of January 1, 1992, between the Company and ▇.▇. ▇▇▇▇.
"Stockholders" means the stockholders of the Company.
"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)
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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.
"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.
"UCB" means, collectively, UCB Research, Inc., a Delaware corporation,
UCB Farchim, S.A., a Swiss corporation, and UCB S.A., a Belgian corporation.
"UCB Agreement" means the Asset Purchase Agreement, dated as of October
23, 1998, between UCB and the Company.
"Unaudited Closing Net Cash Balance" means the Unaudited Signing Net
Cash Balance as adjusted by (a) the mutual agreement of LeukoSite and the
Company for (i) unrecorded liabilities, (ii) the Company's UCB transaction
retention program, and (iii) adjustments related to the accruals for tax
liabilities, the incentive bonus program, severance program, audit and closing
costs, if any, and (b) subtracting any and all expenditures, payments, accrued
expenses, costs or Indebtedness incurred, made or accrued by the Company during
the period from the date of this Agreement to and including the Closing (but
excluding (i) Approved Payments and (ii) any and all of such expenditures,
payments, accrued expenses, costs or Indebtedness that are approved in writing
by at least one member of the Transition Committee that is a representative of
LeukoSite in accordance with the provisions of Section 10.2 hereof).
1.2. TERMS DEFINED ELSEWHERE. The following terms are defined
herein in the sections identified below:
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Term Section Term Section
---- ------- ---- -------
Aggregate Base Consideration Incidental Shares 6.1(c)
Shares 3.7(c) Indemnification Agreement 13.13
Aggregate Subsequent Indemnified 14.2(b)
Consideration Shares 3.8(a) IRS 7.14(b)
Agreement Preamble LeukoSite Preamble
Audited Closing Balance LeukoSite Contingent
Sheet 3.7(d) Milestone Payment 3.8(c)
Audited Signing Balance LeukoSite Indemnified Party 14.2(b)
Sheet 3.7(d) LeukoSite R&D Programs 3.8(g)
Audited Closing Net Cash LeukoSite's SEC Reports 9.5
Balance 3.7(d) Material Contract 7.18
Audited Signing Net Cash Merger 2
Balance 3.7(d) Merger Certificate
Blocking Third Party Patent 3.8(c) Merger Sub Preamble
CERCLA 7.15(b) Milestone Shares 3.8(c)
Certificate 4.1 NMS 17.6
Claim Notice 14.4(b) November 30, 1998
Claimed Amount 14.4(b) Balance Sheet 7.7
Closing 2 PBGC 7.14(d)(ii)
Closing Date 2 Partner 3.5(c)
Company Preamble Piggyback Notice 6.1(b)
Company Indemnified Party 14.1 Qualified Holders 6.1(c)
Company Options 5 RCRA 7.15(b)
Company Warrants 5 Registering Stockholders 6.1(a)
Complementary Technology 3.8(c) Response Notice 14.4(c)
Contingent Partner Restricted Period 15.3
Licensing Payment 3.8(d) ▇▇▇▇ 7.15(b)
Contingent Third Party Stockholders' Representatives 4.10(a)
Payment 3.8(b) Stockholders Registration
DGCL 3.1 Statement 6.1(a)
Dissenting Shares 3.6(c) Surviving Corporation 3.1
Effective Period 6.1(a) Subsequent UCB Payment 3.8(a)
Effective Time 2 Suspension Period 6.2(a)
Employee Benefit Plan 7.14(a) Transition Committee 10.2
Environmental Laws 7.15(b) Unaudited Closing Balance
EPA 7.15(c) Sheet 3.7(b)
ERISA 7.14(c) Unaudited Signing Balance
Escrow Agreement 4.3 Sheet 3.7(a)
Escrowed Securities 4.3 Unaudited Signing Net Cash
Hazardous Substances 7.15(c) Balance 3.7(a)
Holder Inclusion Notice 6.1(b)
2. CLOSING. 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
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Certificate of Merger, substantially in the form of the attached EXHIBIT B (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.
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-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.
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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 (as defined in Section
3.6(c) below) and other than any shares of Company Stock held directly
or indirectly by the Company) will be cancelled and, subject to the
provisions of Sections 3.6(c), 4.3 and 4.6 hereof, each Stockholder
shall have the right to receive, in lieu of all shares of Company Stock
held by such Stockholder that will be so cancelled, (i) that number of
shares of LeukoSite Stock representing the percentage of the Aggregate
Base Consideration Shares to which such Stockholder may be entitled, if
any, in accordance with the provisions of SCHEDULE A hereto, (ii) that
number of shares of LeukoSite Stock representing the percentage of the
Aggregate Subsequent Consideration Shares to which such Stockholder may
be entitled, if any, in accordance with the provisions of SCHEDULE A
hereto (it being understood that any such right of such Stockholder to
receive such number of shares of LeukoSite Stock is a contingent right
that is dependent, among other things, on whether LeukoSite is required
to issue any Aggregate Subsequent Consideration Shares pursuant to
Section 3.8(a) hereof), (iii) that number of shares of LeukoSite Stock
representing the percentage of the Milestone Shares to which such
Stockholder may be entitled, if any, in accordance with the provisions
of SCHEDULE A hereto (it being understood that any such right of such
Stockholder to receive such number of shares of LeukoSite Stock is a
contingent right that is dependent, among other things, on whether
LeukoSite is required to issue any Milestone Shares pursuant to Section
3.8(c) hereof), and (iv) cash payments each equal to the percentage of
any Aggregate Contingent Consideration Payment to which such
Stockholder may be entitled, if any, in accordance with the provisions
of SCHEDULE A hereto (it being understood that any such right of such
Stockholder to receive any such cash payment 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(b), 3.8(c), 3.8(d), 3.8(e) or 3.8(f) hereof). Notwithstanding
anything in this Section 3.6(a) or in SCHEDULE A hereto to the
contrary, no fractional shares of LeukoSite Stock shall be issued in
connection with the Merger, but cash payments shall be made in lieu of
such fractional shares pursuant to, and in accordance with, the
provisions of Section 4.6 hereof.
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(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 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 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 with the written
consent of the Stockholders' Representatives), then LeukoSite shall be
entitled to reduce the aggregate amount of consideration payable to the
Stockholders pursuant to and in connection with the Merger by an amount
equal to the sum of any such payment made by LeukoSite to such
Stockholder in respect of his, her or its Dissenting Shares PLUS 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, and such Stockholder's share of the Merger
Consideration on SCHEDULE A shall be allocated pro rata among the other
Stockholders in the respective tranche. Any such reduction in the
aggregate amount of consideration payable by LeukoSite to the
Stockholders shall be accomplished by LeukoSite making a claim against
the Escrowed Securities pursuant to, and in accordance with, the
provisions of the Escrow Agreement and/or by LeukoSite exercising its
set-off rights pursuant to Section 14.5(b) hereof against any future
payment owed by LeukoSite to the Stockholders in connection with the
Merger. LeukoSite shall not settle any claims for appraisal rights with
respect to Dissenting Shares without the consent of the Stockholders'
Representatives, which consent shall not be unreasonably withheld or
delayed.
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3.7. AGGREGATE BASE CONSIDERATION.
(a) UNAUDITED SIGNING BALANCE SHEET. Section 3.7(a) of the
Disclosure Schedule sets forth the unaudited balance sheet of the
Company as of the date hereof (the "Unaudited Signing Balance Sheet")
and a calculation of the Net Cash Balance as of the date hereof (the
"Unaudited Signing Net Cash Balance"), together with a certificate
signed by the Chief Financial Officer of the Company certifying (i)
that the Unaudited Signing 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 Signing Balance Sheet fairly and accurately presents the
financial condition of the Company as of the date hereof, and (iii) as
to the calculation of the Unaudited Signing Net Cash Balance. The
Unaudited Signing Balance Sheet shall have been prepared in
consultation with LeukoSite and LeukoSite's representatives after
LeukoSite and 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 Signing
Balance Sheet. The parties shall use their good faith efforts to
resolve any disagreements between them concerning the Unaudited Signing
Balance Sheet.
(b) UNAUDITED CLOSING BALANCE SHEET. On the Closing Date, the
Company shall deliver to LeukoSite an unaudited balance sheet of the
Company as of the Closing Date (the "Unaudited Closing Balance Sheet")
and a calculation of the Unaudited Closing Net Cash Balance, together
with a certificate signed by the 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 calculation of the Unaudited Closing Net Cash Balance. The
Unaudited Closing Balance Sheet shall have been prepared in
consultation with LeukoSite and LeukoSite's representatives after
LeukoSite and 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. The parties shall use their good faith efforts to
resolve any
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disagreements between them concerning the Unaudited Closing Balance
Sheet.
(c) AGGREGATE BASE CONSIDERATION SHARES. The aggregate number
of shares of LeukoSite Stock that LeukoSite shall issue at the
Effective Time to the Stockholders (other than holders of Dissenting
Shares), in accordance with their respective interests as determined
pursuant to Section 3.6(a), pursuant to the Merger (the "Aggregate Base
Consideration Shares") shall be equal to the quotient obtained by
dividing (i) the product of 1.25 and the Unaudited Closing Net Cash
Balance by (ii) $11.88 (such amount to be proportionately adjusted to
reflect stock splits, stock dividends, reverse stock splits, and other
recapitalizations, reorganizations, and similar events affecting
LeukoSite Common Stock and occurring after the date of this Agreement
but prior to the Effective Time).
(d) AUDITED BALANCE SHEETS. LeukoSite shall have the right,
exercisable at any time during the period commencing on the Closing
Date and ending with the completion of LeukoSite's first audit after
the Closing Date, to have an independent certified public accounting
firm of national reputation prepare an audited balance sheet of the
Company as of the date hereof (the "Audited Signing Balance Sheet"), an
audited balance sheet as of the Closing Date (the "Audited Closing
Balance Sheet"), an audited calculation of the Net Cash Balance as of
the date hereof (the "Audited Signing Net Cash Balance") and an audited
calculation of the Unaudited Closing Net Cash Balance (the "Audited
Closing Net Cash Balance"). The Audited Signing Balance Sheet and the
Audited Closing Balance Sheet shall be prepared in accordance with
generally accepted accounting principles, consistently applied, and
shall fairly and accurately present the financial condition of the
Company as of the respective dates thereof. In the event that the
Audited Closing Net Cash Balance will be the basis for an adjustment in
the number of Aggregate Base Consideration Shares pursuant to Section
3.7(e), then a copy of the Audited Signing Balance Sheet, the Audited
Closing Balance Sheet, the Audited Signing Net Cash Balance and the
Audited Closing Net Cash Balance shall be made available to the
Stockholders' Representatives.
(e) ADJUSTMENT TO AGGREGATE BASE CONSIDERATION SHARES. In the
event that the Unaudited Closing Net Cash Balance exceeds the Audited
Closing Net Cash Balance, then the number of Aggregate Base
Consideration Shares shall be reduced by a number of shares of
LeukoSite Stock equal to the quotient obtained by dividing (i) the
product of 1.25 and the amount by which the Unaudited Closing Net Cash
Balance exceeds the Audited Closing Net Cash Balance by (ii) $11.88
(such amount to be proportionately adjusted to reflect stock splits,
stock dividends, reverse
14
stock splits, and other recapitalizations, reorganizations, and
similar events affecting LeukoSite Common Stock and occurring after
the date of this Agreement). In the event that the Audited Closing Net
Cash Balance exceeds the Unaudited Closing Net Cash Balance, then the
number of Aggregate Base Consideration Shares shall be increased by a
number of shares of LeukoSite Stock equal to the quotient obtained by
dividing (i) the product of 1.25 and the amount by which the Audited
Closing Net Cash Balance exceeds the Unaudited Closing Net Cash
Balance by (ii) $11.88 (such amount to be proportionately adjusted to
reflect stock splits, stock dividends, reverse stock splits, and other
recapitalizations, reorganizations, and similar events affecting
LeukoSite Common Stock and occurring after the date of this
Agreement). If the number of Aggregate Base Consideration Shares
increases as a result of any adjustment pursuant to this Section
3.7(e), the increased number of shares shall be allocated among the
Stockholders (other than holders of Dissenting Shares) in accordance
with their respective interests as provided on SCHEDULE A, and
LeukoSite shall deliver (A) to the Escrow Agent, to be held in escrow
pursuant to the provisions of Section 4.3 hereof and the Escrow
Agreement, a stock certificate registered in the name of each
Stockholder that is entitled to a portion of such increased number of
shares, which stock certificate shall represent twenty percent (20%)
of the portion of such increased number of shares that is allocated to
such Stockholder, and (B) to each Stockholder a stock certificate,
registered in the name of such Stockholder, representing the balance
of the portion of such increased number of shares allocated to such
Stockholder. If the number of Aggregate Base Consideration Shares is
reduced as a result of any adjustment pursuant to this Section 3.7(e),
the correct number of shares for each Stockholder shall be
recalculated by allocating such smaller number of Aggregate Base
Consideration Shares among the Stockholders (other than holders of
Dissenting Shares) in accordance with their respective interests as
determined pursuant to Section 3.6(a), and LeukoSite shall have the
right to recover any excess number of shares of LeukoSite Stock
previously issued by LeukoSite to the Stockholders in connection with
the Merger by, at LeukoSite's option, (i) making a claim against the
Escrowed Securities pursuant to, and in accordance with, the
provisions of the Escrow Agreement, and/or (ii) exercising its set-off
rights pursuant to Section 14.5(b) hereof against any future payment
owed by LeukoSite to the Stockholders in connection with the Merger.
15
3.8. AGGREGATE SUBSEQUENT CONSIDERATION.
(a) AGGREGATE SUBSEQUENT CONSIDERATION SHARES. In the event
that LeukoSite or the Surviving Corporation shall receive payment from
UCB pursuant to Section 4.2(b) of the UCB Agreement (the "Subsequent
UCB Payment") of up to $6,000,000, LeukoSite will issue to the
Stockholders, at the time specified below in this Section 3.8(a), an
additional number of shares of LeukoSite Stock (the "Aggregate
Subsequent Consideration Shares") equal to the quotient obtained by
dividing (i) the product of 1.25 and the amount of the Subsequent UCB
Payment actually received by LeukoSite or the Surviving Corporation
(less any adjustment for taxes pursuant to Section 3.8(h)) by (ii)
$11.88 (such amount to be proportionately adjusted to reflect stock
splits, stock dividends, reverse stock splits, and other
recapitalizations, reorganizations, and similar events affecting
LeukoSite Common Stock and occurring after the date of this Agreement
but prior to the issuance of the Aggregate Subsequent Consideration
Shares pursuant to this Section 3.8(a)). The Aggregate Subsequent
Consideration Shares shall be allocated among the Stockholders (other
than those who are holders of Dissenting Shares who shall not be
entitled to receive any portion of the Aggregate Subsequent
Consideration Shares) in accordance with their respective interests as
determined pursuant to Section 3.6(a). Within thirty (30) days after
receiving the Subsequent UCB Payment, LeukoSite shall cause its
transfer agent to issue to each Stockholder a stock certificate or
stock certificates representing the portion, if any, of the Aggregate
Subsequent Consideration Shares to which such Stockholder is entitled.
(b) CONTINGENT THIRD PARTY PAYMENTS. In the event that,
subsequent to the date hereof, LeukoSite or the Surviving Corporation
shall receive any payment (a "Contingent Third Party Payment") under
(i) Sections 4.2(c), (d) or (e) of the UCB Agreement, which Sections
provide, in the aggregate, for up to $6,000,000 in milestone payments
to the Company, or (ii) Section 4.1 of the License Agreement between
the Company and ▇▇▇▇▇▇▇ Laboratories, Inc. ("▇▇▇▇▇▇▇"), which Section
provides for a license fee of $1,000,000 payable to the Company upon
execution of the License Agreement by ▇▇▇▇▇▇▇, then, subject to the
provisions of Section 3.8(e), LeukoSite shall, within thirty (30) days
of the receipt of any such Contingent Third Party Payment, make payment
of such Contingent Third Party Payment (less any adjustment for taxes
pursuant to Section 3.8(h)) to the Stockholders (other than holders of
Dissenting Shares) in accordance with their respective interests as
determined pursuant to Section 3.6(a).
16
(c) LEUKOSITE CONTINGENT MILESTONE PAYMENTS. If a CytoMed
Program conducted internally by LeukoSite, its Affiliates or its
sublicensees (other than a Partner pursuant to Section 3.8(d)) as a
Drug Development Program yields a Product Candidate which achieves the
drug development milestones set forth in the table below (whether such
milestones are achieved by LeukoSite, its Affiliates or its
sublicensees (other than a Partner pursuant to Section 3.8(d)), then,
subject to the provisions of Section 3.8(e), LeukoSite shall make
payment and/or delivery to the Stockholders (other than holders of
Dissenting Shares), in accordance with their respective interests as
determined pursuant to Section 3.6(a), of the consideration set forth
in the table below (a "LeukoSite Contingent Milestone Payment") within
sixty (60) days of the occurrence of the drug development milestones
set forth in the table below; PROVIDED, HOWEVER, that, except as
provided below, LeukoSite shall be obligated to pay consideration for
each drug development milestone only once, regardless of how many
Product Candidates achieve such drug development milestone and
regardless of where in the world such drug development milestone is
achieved. If (a) LeukoSite reasonably determines that (i) a third party
patent covers the manufacture, use or sale of a Product Candidate (a
"Blocking Third Party Patent") or (ii) a patented or proprietary
complementary technology owned by a third party is necessary for
LeukoSite's clinical development of a Product Candidate (a
"Complementary Technology"), and (b) LeukoSite in-licenses such
Blocking Third Party Patent or Complementary Technology pursuant to
terms requiring LeukoSite to make milestone payments to such third
party upon the achievement of any drug development milestones, then
fifty percent (50%) of the amount of any milestone payment that
LeukoSite is required to pay in connection with such in-licensed
Blocking Third Party Patent or Complementary Technology shall be offset
against the milestone payments that LeukoSite is required to pay
pursuant to this Section 3.8(c) with respect to such Product Candidate,
PROVIDED THAT the aggregate amount of all such offsets with respect to
any of such milestone payments shall in no event exceed fifty percent
(50%) of any of such milestone payments. In the event that there has
been an offset against a milestone payment pursuant to the preceding
sentence, the balance of the scheduled milestone payment not paid as a
result of such offset shall remain payable if and when a subsequent
Product Candidate achieves the applicable drug development milestone
(subject to the offset provided for in the preceding sentence).
17
-------------------------------------------------- --------------------------------------------------
EVENT PAYMENT
-------------------------------------------------- --------------------------------------------------
Completion of a successful and acceptable Phase $1,500,000
II study and the determination by LeukoSite to and 84,175 shares of LeukoSite Stock (subject to
commence a pivotal Phase III study proportional adjustment for stock splits, stock
dividends, recapitalizations and the like affecting
LeukoSite Common Stock and occurring after the date
of this Agreement but prior to the issuance of such
shares pursuant to this Section 3.8(c)), or such
lesser number of shares as may have a Fair Market
Value (as defined in SCHEDULE A) as of the date of
issuance of $4,000,000 (the "Milestone Shares")
-------------------------------------------------- --------------------------------------------------
Completion of a successful and acceptable Phase $5,000,000
III study and decision by LeukoSite to prepare
and file an NDA
-------------------------------------------------- --------------------------------------------------
Filing of NDA $1,000,000
-------------------------------------------------- --------------------------------------------------
Approval of NDA $3,000,000
-------------------------------------------------- --------------------------------------------------
First Commercial Sale $6,000,000
-------------------------------------------------- --------------------------------------------------
(d) CONTINGENT PARTNER LICENSING PAYMENTS. If LeukoSite
determines, in its sole discretion, to license, transfer or sell a
Product Candidate to a third party which is not an Affiliate of
LeukoSite (a "Partner") for use in the treatment of asthma, skin,
opthalmic or gastro-intestinal disease or complement mediated
inflammation in cardiovascular disease or organ transplantation, and
such Product Candidate was being developed by the Company to treat such
medical indications, then, subject to the provisions of Section 3.8(e),
LeukoSite shall make payment to the Stockholders (other than holders of
Dissenting Shares), in accordance with their respective interests as
determined pursuant to Section 3.6(a), of an amount equal to
twenty-five percent (25%) of the license fees, milestone payments or
royalties received by LeukoSite from the Partner in respect of such
Product Candidate (a "Contingent Partner Licensing Payment"). Any
payment that LeukoSite is required to make pursuant to this Section
3.8(d) shall be made within thirty (30) days following LeukoSite's
receipt of consideration from the Partner. Consideration received by
LeukoSite from a Partner that is not
18
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.
(e) ROYALTY PAYMENTS TO ▇▇. ▇▇▇▇. Notwithstanding anything in
this Agreement (including, without limitation, this Section 3.8)
expressed or implied to the contrary, LeukoSite shall reduce the Merger
Consideration required to be paid or delivered to the Stockholders
pursuant to this Agreement relating to a Contingent Third Party Payment
or any Product Candidate included in a CytoMed Program by any amounts
which LeukoSite or the Surviving Corporation are obligated or become
obligated to pay to ▇.▇. ▇▇▇▇ under the Shen Consulting Agreement in
respect of any Contingent Third Party Payment or any Product Candidate
included in a CytoMed Program.
(f) MAXIMUM PAYMENT. Notwithstanding anything in this Section
3.8 expressed or implied to the contrary, (A) in no event shall the
cumulative aggregate amount or value of consideration that LeukoSite
shall be required to provide to the Stockholders (other than holders of
Dissenting Shares) pursuant to Sections 3.8(c) and/or 3.8(d) (after
giving effect to any and all reductions to such consideration that may
be required pursuant to Section 3.8(e) above) exceed the sum of
$16,500,000 plus the Milestone Shares; PROVIDED, HOWEVER, that such
cumulative aggregate amount or value of consideration shall be
$17,500,000 in the event that no Milestone Shares have been issued at
the time such cumulative aggregate amount or value of consideration
exceeds $16,500,000, (B) in no event shall LeukoSite issue Milestone
Shares to the Stockholders if such cumulative aggregate amount or value
of consideration has already exceeded $16,500,000 prior to the issuance
of any Milestone Shares and (C) in no event shall LeukoSite issue
Milestone Shares to the Stockholders if and to the extent that (i) the
number of such Milestone Shares is subject to reduction pursuant to
Section 3.8(e) above or (ii) the Fair Market Value (as defined on
SCHEDULE A) of such Milestone Shares on the date of their issuance
(after giving effect to any and all reductions to the number of such
Milestone Shares that may be required pursuant to Section 3.8(e) above)
exceeds $4,000,000. Consideration 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.
(g) CYTOMED 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 CytoMed
Programs. However, it is agreed by the Company and LeukoSite that, from
and after the date hereof, the CytoMed Programs shall be evaluated by
LeukoSite in the context of the overall research and development
19
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 CytoMed 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 CytoMed 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 CytoMed
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 CytoMed 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 CytoMed Programs
pursuant to Section 9.15 hereof.
(h) REDUCTION FOR ADDITIONAL TAX LIABILITY. To the extent that
any of the payments to be received by LeukoSite pursuant to Sections
3.8(a) or (b) will result (i) in an additional ultimate Tax liability
(other than an "alternative minimum tax" Tax liability) of LeukoSite
despite reasonable tax planning by LeukoSite which shall include
without limitation maximizing the benefits of filing consolidated
returns, preserving and maximizing the prompt use of any available net
operating loss and credit carryforwards of the Company, and maximizing
the tax benefits available to LeukoSite by virtue of paying tax on and
making payments with respect to the Subsequent UCB Payment or the
Contingent Third Party Payments, or (ii) in "alternative minimum tax"
Tax liability of LeukoSite, LeukoSite shall be entitled to retain the
amount of the Subsequent UCB Payment and the Contingent Third Party
Payments necessary to pay such Tax liability and shall reduce on a
dollar for dollar basis (i) in the case of Section 3.8(a), the amount
of Subsequent UCB Payment used to determine the number of Aggregate
Subsequent Consideration Shares issued to the Stockholders or (ii) in
the case of Section 3.8(b), the Contingent Third Party Payments paid to
the Stockholders.
20
4. PROCEDURES; ESCROWED SECURITIES.
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 shares of LeukoSite Stock or other Merger
Consideration pursuant to the Merger, will be conclusively deemed to represent
the right to receive such shares of LeukoSite Stock or other Merger
Consideration.
4.2. EXCHANGE OF CERTIFICATES. As promptly as practicable after the
Effective Time, LeukoSite or its transfer agent for LeukoSite Stock will send to
each Stockholder transmittal materials for use in exchanging their Certificates
for certificates for the shares of LeukoSite Stock or such other 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 transfer agent, as the case may be, together
with a duly executed letter of transmittal and any other reasonably required
documents, the holder of such Certificate will be entitled to receive (subject
to the escrow arrangements referred to in Section 4.3), in exchange for such
Certificate, a certificate or certificates for the number of shares of LeukoSite
Stock or such other 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. ESCROWED SECURITIES. Notwithstanding any other provision of this
Agreement to the contrary, at the Closing, LeukoSite, the Stockholders'
Representatives and the Escrow Agent will execute and deliver an Escrow
Agreement in the form attached hereto as EXHIBIT C (the "Escrow Agreement"),
pursuant to which LeukoSite shall deliver to the Escrow Agent stock certificates
representing twenty percent (20%) of the Aggregate Base Consideration Shares to
be issued to the Stockholders (the "Escrowed Securities"), to be held in escrow
pursuant to the terms of the Escrow Agreement until either (i) December 31,
1999, if but only if on or prior to December 31, 1999 there has not been a Claim
against the Escrowed Securities pursuant to the terms of this Agreement and the
Escrow Agreement or any exercise by LeukoSite of its right of set-off pursuant
to the terms of this Agreement, or (ii) the second anniversary of the Closing
Date, if on or prior to December 31, 1999 there has been a Claim against the
Escrowed Securities pursuant to the terms of this Agreement and the Escrow
Agreement or any exercise by LeukoSite of its right of set-off pursuant to the
terms of this Agreement. Notwithstanding anything in this Section 4.3 to the
contrary, a claim for an adjustment in the Aggregate Base Consideration Shares
pursuant to Section 3.7(e) that is made on or prior to December 31, 1999 shall
not be taken into account in determining whether the Escrowed Securitites
21
should be held in escrow under the Escrow Agreement beyond December 31, 1999.
Notwithstanding anything in this Agreement expressed or implied to the contrary,
any Merger Conversion Shares issued upon conversion of shares of LeukoSite
Series A Preferred Stock held in escrow pursuant to this Agreement (including,
without limitation, this Section 4.3) or the Escrow Agreement shall also be held
in escrow pursuant to, and in accordance with, the provisions of this Agreement
(including, without limitation, this Section 4.3) and the Escrow Agreement to
the same extent and on the same basis as such shares of LeukoSite Series A
Preferred Stock, and any reference in this Agreement to the term "ESCROWED
SECURITIES" shall be deemed to include any and all of such Merger Conversion
Shares.
4.4. DISTRIBUTIONS. No dividend or other distribution payable after the
Effective Time with respect to LeukoSite Stock will be paid to the holder of any
unsurrendered Certificate until the holder thereof surrenders such Certificate,
at which time such holder will receive all dividends and distributions, without
interest thereon, previously payable but withheld from such holder pursuant
hereto.
4.5. 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 shares of LeukoSite Stock or other Merger
Consideration deliverable in respect thereof as determined in accordance with
this Agreement (or returned to the presenting person, if such Certificate
represents Dissenting Shares).
4.6. NO FRACTIONAL SHARES. In lieu of the issuance of fractional shares
of LeukoSite Stock, cash adjustments will be paid (without interest) to the
Stockholders in respect of any fractional share of LeukoSite Stock that would
otherwise be issuable to them and the amount of such cash adjustments will be
determined by multiplying each relevant holder's fractional interest by $11.88
(such amount to be proportionately adjusted to reflect stock splits, stock
dividends, reverse stock splits, and other recapitalizations, reorganizations,
and similar events affecting LeukoSite Common Stock and occurring after the date
of this Agreement). For purposes of determining whether, and in what amounts, a
particular Stockholder would be entitled to receive cash adjustments under this
section, shares held of record by such holder and represented by two or more
Certificates will be aggregated.
4.7. 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 and/or payments made in lieu of
22
fractional shares, 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.
4.8. 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.
4.9. LOST CERTIFICATES, ETC. In the event that any Certificate has been
lost, stolen, or destroyed, then upon receipt 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 transfer agent for LeukoSite Stock of appropriate
and customary indemnification, LeukoSite or such transfer agent will issue in
exchange for such lost, stolen, or destroyed Certificate the shares of LeukoSite
Stock and the fractional share payment, if any, deliverable in respect thereof
as determined in accordance with this Agreement.
4.10 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) any adjustment in the number of Aggregate
Base Consideration Shares pursuant to Section 3.7(e), (iii) the ability
to consent, approve and agree on behalf of the Stockholders to any
adjustment or change in the Unaudited Closing Net Cash Balance that may
be agreed upon by LeukoSite and the Company, (iv) the defense and/or
settlement of any claims for which the Stockholders may be required to
indemnify LeukoSite and/or the Surviving Corporation pursuant to
Section 14 below or for which LeukoSite shall have the right to make a
claim against the Escrowed Securities pursuant to this Agreement and
the Escrow Agreement or the right of set-off pursuant to this
Agreement, (v) the ability, subject to and upon the terms and
conditions set forth in Section 9.14 hereof, to take all action
necessary against UCB in connection with breaches of payment
obligations by UCB under the UCB Agreement, and (vi) the orderly
distribution of Merger Consideration from LeukoSite to the
Stockholders, the Stockholders hereby designate ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and
▇▇▇▇ ▇▇▇▇▇▇▇, acting jointly, as their representatives (in such
capacity, the "Stockholders' Representatives").
23
(b) The Stockholders hereby authorize the Stockholders'
Representatives, acting jointly, (i) to make all decisions on behalf of
the Stockholders relating to any adjustment in the number of Aggregate
Base Consideration Shares pursuant to Section 3.7(e), (ii) to make all
decisions and grant all consents and approvals on behalf of the
Stockholders relating to any adjustments or changes to the Unaudited
Closing Net Cash Balance that have been agreed upon by LeukoSite and
the Company, (iii) 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 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 to make a claim against the Escrowed Securities pursuant to this
Agreement and the Escrow Agreement or the right of set-off pursuant to
this Agreement, (iv) subject to and upon the terms and conditions set
forth in Section 9.14 hereof, to take all action necessary against UCB
in connection with breaches of payment obligations by UCB under the UCB
Agreement, (v) to determine the Stockholders to whom consideration from
LeukoSite shall be distributed, the amount of consideration to be so
distributed, and the address of such Stockholders, (vi) to give and
receive all notices required to be given under this Agreement and the
Escrow Agreement, and (vii) to take any and all additional action as is
contemplated to be taken by or on behalf of the Stockholders by the
terms of this Agreement or the Escrow 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:
(i) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, or his substitute as one of the
Stockholders' Representatives, dies, becomes unable to perform
his responsibilities hereunder or resigns from such position,
the Stockholders holding, immediately prior to the Closing, a
majority of the combined voting power of the Company Stock
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.
24
(ii) ▇▇▇▇ ▇▇▇▇▇▇▇, or his substitute as one of the
Stockholders' Representatives, dies, becomes unable to perform
his responsibilities hereunder or resigns from such position,
the Stockholders holding, immediately prior to the Closing, a
majority of the shares of Company Series VII Preferred Stock
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.
(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 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 to proceed against the Escrowed Securities pursuant to this
Agreement and the Escrow Agreement or the right of set-off pursuant to
this Agreement, shall be binding upon all of the Stockholders and no
Stockholder 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 to make a claim against the
Escrowed Securities pursuant to this Agreement and the Escrow
Agreement or 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 or under the
Escrow Agreement, 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;
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(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 this Agreement, except for fraud or willful
breach of this Agreement by the Stockholders' Representatives;
(iii) the provisions of this Section 4.10 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 4.10 are inadequate; therefore,
LeukoSite, Merger Sub and/or the Surviving Corporation shall
be entitled to 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 4.10; and
(v) the provisions of this Section 4.10 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 their ownership of Company
Stock.
4.11. EFFECT OF STOCKHOLDER APPROVAL OF MERGER. Subject to the
provisions of the last sentence of this Section 4.11, 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
26
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,
Section 4.10 hereof), (iv) the provisions of this Agreement concerning the
replacement and substitution of either of the Stockholders' Representatives, (v)
the Escrow Agreement and all of the arrangements relating thereto, including,
without limitation, the placement of the Escrowed Securities in escrow and the
appointment of the Escrow Agent pursuant to the Escrow Agreement, (vi) the
provisions of this Agreement that authorize LeukoSite to make a claim or proceed
against the Escrowed Securities held in escrow pursuant to the Escrow Agreement,
(vii) the provisions of this Agreement that authorize LeukoSite to exercise any
right of set-off (including, without limitation, the provisions of Section
14.5(b) hereof) and (viii) any and all provisions of this Agreement that
contemplate, authorize or provide for any increase, reduction or other
adjustment in the Merger Consideration payable to the Stockholders pursuant to
the Merger (including, without limitation, any provisions of this Agreement that
specify or provide a procedure for determining or implementing any such
increase, reduction or other adjustment in the Merger Consideration).
Notwithstanding the foregoing, the provisions of this Section 4.11 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 commercially 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 not exercised prior to the Effective Time.
6. REGISTRATION AND LOCK-UP OF LEUKOSITE COMMON STOCK.
6.1 REGISTRATION OF SHARES.
(a) LeukoSite shall file with the SEC, on or before the 60th
day following the Closing Date, a registration statement on Form S-3
(or on Form S-1 if LeukoSite does not qualify for Form S-3) covering
the resale to the public by the Stockholders who hold or may hold
Merger Common Shares (the "Registering Stockholders"), of the Merger
Common Shares
27
(the "Stockholder Registration Statement"). LeukoSite shall use its
best efforts to cause the Stockholder Registration Statement to be
declared effective by the SEC as soon as practicable following the
filing thereof and to remain effective until the second anniversary of
the Closing Date or such earlier time as all of the Merger Common
Shares covered by the Stockholder Registration Statement have been
sold pursuant thereto (the "Effective Period"). Thereafter LeukoSite
shall be entitled to withdraw the Stockholder Registration Statement
and the Stockholders shall have no further right to offer or sell any
of the Merger Common Shares pursuant to the Stockholders Registration
Statement (or any prospectus pursuant thereto). The shares subject to
the Stockholder Registration Statement shall not be underwritten
unless LeukoSite shall otherwise consent in its sole discretion.
(b) From and after the date hereof and prior to the expiration
of the Effective Period, 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 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 Registering Stockholders 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 Registering Stockholders
given within ten days after the LeukoSite Piggyback Notice is given
(which request shall state the intended method of disposition of such
Merger Common Shares) (the "Holder Inclusion Notice"), LeukoSite shall
use its best efforts to cause all Merger Common Shares which LeukoSite
has been requested by such Registering Stockholder or Registering
Stockholders 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 Registering
Stockholder, (ii) the number of Merger Common Shares proposed to be
sold by any such Registering Stockholder is at least twenty-five
percent (25%) of the total number of Merger Common Shares then held by
such Registering Stockholder.
(c) In connection with any offering under Section 6.1(b)
hereof involving an underwriting, LeukoSite shall not be required to
include any Merger Common Shares in such underwriting unless the
holders thereof accept the terms of the underwriting as agreed upon
between LeukoSite
28
and the underwriter(s) of such offering. If in the opinion of the
managing underwriter(s) of such offering the registration of all, or
part of, the shares of LeukoSite Common Stock (the "Incidental
Shares") which the Registering Stockholders have requested to be
included pursuant to Section 6.1(b) hereof 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 LeukoSite
Common Stock proposed to be included in such registration for the
account of LeukoSite and/or any stockholders of LeukoSite that have
exercised demand registration rights in accordance with the
priorities, if any, then existing among LeukoSite and/or such
stockholders of LeukoSite with demand registration rights, and (ii)
second, the shares of LeukoSite Common Stock requested to be included
in such registration by all other stockholders of LeukoSite
(including, without limitation, the Registering Stockholders), PRO
RATA among such other stockholders (including, without limitation, the
Registering Stockholders) on the basis of the number of shares of
LeukoSite Common Stock that each of them requested to be included in
such registration.
(d) Notwithstanding anything in this Section 6 to the
contrary, LeukoSite shall not be required to provide any advance
notice to Registering Stockholders in connection with any offering
under this Section 6.1 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
29
event, LeukoSite will provide written notice to all Registering
Stockholders 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.
(a) Notwithstanding anything in this Section 6 to the
contrary, if the Company shall furnish to the Registering Stockholders
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) that continued use by the Registering
Stockholders of the Stockholder Registration Statement filed by
LeukoSite for purposes of effecting offers or sales of Merger Common
Shares pursuant thereto 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 to suspend the use by the Registering
Stockholders of such Stockholder Registration Statement (and the
prospectus relating thereto) for purposes of effecting offers or sales
of Merger Common Shares pursuant thereto, then the right of the
Registering Stockholders to use such Stockholder Registration Statement
(and the prospectus relating thereto) for purposes of effecting offers
or sales of Merger Common Shares pursuant thereto shall be suspended
for a period (the "Suspension Period") of not more than 90 days after
delivery by the Company of the certificate referred to above in this
Section 6.2(a). During the Suspension Period, none of the Registering
Stockholders shall offer or sell any Merger Common Shares pursuant to
or in reliance upon such Stockholder 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 to suspend the use of
the Registration Statement (and the prospectus relating thereto)
pursuant to this Section 6.2(a), LeukoSite will provide the Registering
Stockholders with revised prospectuses, if required, and will notify
the Registering Stockholders of their ability to effect offers or sales
of Merger Common Shares pursuant to or in reliance upon such
Stockholder Registration Statement.
30
(b) LeukoSite agrees that no other holder of LeukoSite 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 Registering Stockholders 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.
(c) If LeukoSite suspends the Stockholder Registration
Statement or requires the Stockholders to cease sales of shares
pursuant to Section 6.2(a) above, LeukoSite shall, as promptly as
practicable following the termination of the circumstance which
entitled LeukoSite to do so, take such actions as may be necessary to
reinstate the effectiveness of the Stockholder Registration Statement
and/or give written notice to all Registering Stockholders authorizing
them to resume sales pursuant to the Stockholder Registration
Statement. If as a result thereof the prospectus included in the
Stockholder Registration Statement has been amended to comply with the
requirements of the Securities Act, LeukoSite shall enclose such
revised prospectus with a notice to Registering Stockholders given
pursuant to this Section 6.2(c).
6.3 REGISTRATION PROCEDURES.
(a) In connection with the filing by LeukoSite of the
Stockholder Registration Statement, LeukoSite shall furnish to each
Registering Stockholder a copy of the prospectus, including a
preliminary prospectus, in conformity with the requirements of the
Securities Act. Subject to Section 6.2 hereof, LeukoSite shall prepare
and file with the SEC such amendments and supplements to the
Stockholder Registration Statement and the prospectus used in
connection with such Stockholder Registration Statement as may be
reasonably necessary to keep such Stockholder Registration Statement
effective and to comply with the provisions of the Securities Act with
respect to the disposition of all Merger Common Shares pursuant to such
Stockholder Registration Statement until the earlier of (i) such time
as all such Merger Common Shares have been disposed of, (ii) such time
as such Merger Common Shares are eligible for sale pursuant to Rule 144
(without being subject to volume limitations), or (iii) the second
anniversary of the Closing Date. LeukoSite shall furnish to each
Registering Stockholder a copy of any amendment or supplement to such
Stockholder Registration Statement or prospectus prior to filing the
same with the SEC, and shall not file any such amendment or supplement
to which any such requesting Registering Stockholder shall reasonably
have objected to in writing prior to the filing thereof on the
31
grounds that such amendment or supplement contains a material
inaccuracy with respect to the description of such Registering
Stockholder.
(b) If LeukoSite has delivered preliminary or final
prospectuses to the Registering Stockholders and after having done so
the prospectus is amended or supplemented to comply with the
requirements of the Securities Act as described in Section 6.3(a)
hereof, LeukoSite shall promptly notify the Registering Stockholders
and, if requested by LeukoSite, the Registering Stockholders shall
immediately cease making offers or sales of shares under the
Stockholder Registration Statement and return all prospectuses to
LeukoSite. LeukoSite shall promptly provide the Registering
Stockholders with revised prospectuses and, following receipt of the
revised prospectuses, the Registering Stockholders shall be free to
resume making offers and sales under the Stockholder Registration
Statement.
(c) LeukoSite shall furnish to each requesting Registering
Stockholder such number of conformed copies of the Stockholder
Registration Statement and of each such amendment and supplement
thereto (in each case including all exhibits thereto), such number of
copies of the prospectus included in such Stockholder Registration
Statement (including each preliminary prospectus) and such number of
documents, if any, incorporated by reference in such Stockholder
Registration Statement or prospectus, as such requesting Registering
Stockholder may reasonably request.
(d) LeukoSite shall use its best efforts to register or
qualify the Merger Common Shares covered by the Stockholder
Registration Statement under the securities or "blue sky" laws of such
states as the Registering Stockholders 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 Registering Stockholders in
connection with sales under the Stockholder Registration Statement and
(ii) the fees and expenses of any counsel retained by Registering
Stockholders.
32
6.4 REQUIREMENTS OF COMPANY STOCKHOLDERS. LeukoSite shall not be
required to include any Merger Common Shares in the Stockholder Registration
Statement unless:
(a) the Registering Stockholder owning such shares furnishes
to LeukoSite in writing such information regarding such Registering
Stockholder and the proposed sale of Merger Common Shares by such
Registering Stockholder 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 Registering Stockholder 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 Registering Stockholder which holds
or owns (at the time of the written request of LeukoSite or
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) Merger Common Shares hereby agrees that, at the
written request of LeukoSite or any managing underwriter of
any underwritten public offering of LeukoSite Common Stock,
such Registering Stockholder shall not, without the prior
written consent of LeukoSite or such managing underwriter,
sell, make any short sale of, loan, grant any option for the
purchase of, pledge, encumber, or otherwise dispose of, or
exercise any registration rights with respect to, any Merger
Common 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 Registering Stockholder 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 Merger Common Shares of each
Registering Stockholder (and the shares or securities of every
other person subject to the foregoing restriction)
33
until the end of such reasonable and customary period, and
the Registering Stockholders agree to enter into a customary
agreement with the underwriters of such offering reflecting
the lock-up agreement set forth herein.
(c) Each Stockholder hereby agrees that, without the prior
written consent of LeukoSite, such Stockholder shall not sell, make any
short sale of, loan, grant any option for the purchase of, pledge,
encumber, or otherwise dispose of any Merger Common Shares during the
180 day period commencing on the Closing Date.
6.5 INDEMNIFICATION. In the event that any Merger Common Shares of the
Registering Stockholders are included in a registration statement pursuant to
this Agreement:
(a) To the fullest extent permitted by law, LeukoSite will
indemnify and hold harmless each Registering Stockholder, 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 Registering
Stockholder or such underwriter, each broker or other person acting on
behalf of such Registering Stockholder and each person, if any, who
controls such Registering Stockholder 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
Registering Stockholder, such underwriter, such broker or other person
acting on behalf of such Registering Stockholder 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 6.5(a) shall not
apply to amounts paid in settlement of any such
34
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 Registering Stockholders, any underwriter for them
or controlling person with respect to them.
(b) To the fullest extent permitted by law, each Registering
Stockholder will 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 Registering
Stockholders 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 Registering Stockholder expressly for use in
connection with such registration; and such Registering Stockholder
will reimburse any legal or other expenses reasonably incurred by
LeukoSite or any such director, officer, controlling person,
underwriter or other Registering Stockholder 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 each Registering Stockholder
hereunder shall be limited to the proceeds (net of underwriting
discounts and commissions, if any) actually received by such
Registering Stockholder from the sale of Merger Common 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
35
action if such settlement is effected without the consent
of those Registering Stockholder(s) against which the request for
indemnity is being made (which consent shall not be unreasonably
withheld).
(c) Promptly after receipt by an indemnified party under this
Section 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 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, the Registering Stockholders 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
36
(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
Registering Stockholder to sell Merger Common 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 Registering Stockholder, LeukoSite
will deliver to such Registering Stockholder a written statement as to whether
it has complied with such requirements and, upon a Registering Stockholder'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 Merger Common Shares properly requested by such Registering Stockholder, in
accordance with the terms and conditions of Rule 144.
6.7. SECURITIES LAWS TRANSFER RESTRICTIONS, LEGENDS.
(a) No Stockholder shall sell, assign, pledge, transfer or
otherwise dispose or encumber any of those Merger 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 Stockholder of an opinion of
counsel of such Stockholder 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 Merger Shares in violation of
this Section 6.7(a). LeukoSite may, and may instruct any transfer agent
for LeukoSite 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 Merger Shares shall be endorsed with the
legend set forth below, and each Stockholder 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 OTHERWISED DISPOSED OF EXCEPT
37
(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 REASONABLE 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 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, (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, and (iii) recommended that the stockholders to the Company
approve this Agreement and the Merger. 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. On or prior to the Closing, the
Escrow Agreement will be duly executed and delivered by the Stockholders'
Representatives, and the Escrow Agreement, when duly executed and delivered by
the Stockholders' Representatives, shall constitute the valid and binding
obligation of the
38
Stockholders' Representatives and each Stockholder, 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 Designated Preferred Stockholder Agreement has been duly
executed and delivered by Designated Preferred Stockholders and constitutes the
valid and binding obligation of the Designated Preferred Stockholders,
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 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 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 Section 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.
7.4. CAPITALIZATION. The authorized and outstanding capital stock and
other securities of the Company are as set forth in Section 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 Section 7.4 of the Disclosure Schedule, and were issued in compliance
with all applicable laws, including securities laws, and all applicable
preemptive or
39
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, and other than as set forth
in Section 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.
(a) 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 1995 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 PriceWaterhouseCoopers LLP, independent public
accountants, and (ii) the unaudited balance sheet of the Company as of
November 30, 1998, and the related unaudited statements of income and
retained earnings and cash flows, respectively, of the Company, for the
eleven-month period ended on such date (such balance sheet as of
November 30, 1998, the "November 30, 1998 Balance Sheet"). Each of such
financial statements and the Unaudited Signing Balance Sheet have been
prepared in accordance with generally accepted accounting principles
applied on a basis consistent with prior periods; each of such balance
sheets and the Unaudited Signing Balance Sheet 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
40
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 clause (ii) of this
section and with respect to the Unaudited Signing Balance Sheet, 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.
(b) When delivered to LeukoSite at the Closing, the Unaudited
Closing Balance Sheet will have been prepared in accordance with
generally accepted accounting principles applied on a basis consistent
with prior periods; the Unaudited Closing Balance Sheet will present
fairly and accurately in all material respects the financial condition
of the Company as of the Closing Date, subject 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.
7.8. ABSENCE OF CERTAIN CHANGES. Since November 30, 1998, 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
41
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 November 30, 1998
Balance Sheet, (B) current liabilities to persons other than Affiliates of the
Company incurred since November 30, 1998 in the ordinary course of business, and
(C) current liabilities incurred in connection with the transactions
contemplated hereby and disclosed in Section 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(a) hereof
(except for properties or assets sold, consumed, or otherwise disposed of in the
ordinary course of business since November 30, 1998), 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. 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
42
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
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
43
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
may conflict with his agreements and obligations to use his best
efforts to promote the interest
44
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 November 30, 1998 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.
(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 Unaudited Closing 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
45
after December 31, 1992, 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.
(c) AUDIT HISTORY. With respect to each taxable period of the
Company ended on or before December 31, 1992, 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. 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.
46
(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.
(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. 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.
47
(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 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
48
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.
(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
49
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.
(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.
50
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 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. Section
6903(5), any hazardous substance as defined by 42 U.S.C. Section
9601(14), any pollutant or contaminant as defined by 42 U.S.C. Section
9601(33) or any toxic substance, oil, or hazardous material or other
chemical or substance regulated by any Environmental Laws
(collectively, "Hazardous Substances") that the Company has generated,
transported, handled, used, or disposed of has been found at any site
at which a federal, state, foreign, or local agency or other third
party has conducted or has ordered that the Company conduct a remedial
investigation, removal, or other response action pursuant to any
Environmental Law; or (iii) the Company is or will be a named party to
any claim, action, cause of action, complaint (contingent or
otherwise), or legal or administrative proceeding arising out of any
third party's
51
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 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
52
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;
(b) agreements with any
53
labor union or association representing any employee; (c) agreements for the
provision of services by or to the Company; (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) 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.
54
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 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
55
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 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
56
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
CytoMed 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 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
57
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.
8. REPRESENTATIONS AND WARRANTIES OF LEUKOSITE AND MERGER SUB.
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 the Company.
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 conveyance,
moratorium, reorganization, marshaling, or other similar laws or rules of law
affecting creditors' rights and remedies generally, and to general principles of
equity. On or prior to the Closing, the Escrow Agreement will be duly executed
and delivered by LeukoSite, and the Escrow Agreement, when duly executed and
delivered by LeukoSite, shall constitute the valid and binding obligation of
LeukoSite, enforceable in accordance with its terms, except as limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting enforcement of creditors' rights generally and as
limited also by laws relating to the availability of specific performance,
injunctive relief or other
58
equitable remedies. LeukoSite does not require any approval from its
stockholders in connection with this Agreement, the Escrow Agreement, the Merger
or any of the transactions contemplated hereby or thereby (including the
issuance of the Merger Shares), except that LeukoSite requires approval from a
majority of the outstanding shares of LeukoSite Common Stock present and
entitled to vote at a stockholders' meeting in order for any shares of LeukoSite
Series A Preferred Stock issued pursuant to the Merger to convert into shares of
LeukoSite Common Stock. 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) obtaining approval from the stockholders of LeukoSite with
respect to the conversion of shares of LeukoSite Series A Preferred Stock issued
pursuant to the Merger into shares of LeukoSite Common Stock, (ii) filing a
listing application for purposes of listing the Merger Conversion Shares in the
Nasdaq Stock Market and obtaining approval of such proposed listing, (iii) the
filing of the Merger Certificate and the Stockholder Registration Statement and
(iv) any filings required in order to comply with federal and state securities
laws that may be applicable to the issuance of the Merger 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 Escrow Agreement, the Merger, or any of the other transactions
contemplated hereby (including the issuance of the Merger Shares). The
execution, delivery, and performance of this Agreement and the Escrow Agreement
and the filing of the Stockholders Registration Statement pursuant to Section 6
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
59
delivered to the Company true and complete copies of (i) its Annual Report on
Form 10-K for its fiscal year ended December 31 1997, (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 September 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
60
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. 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. No shares of LeukoSite Preferred Stock are issued and
outstanding.
As of December 24, 1998, (i) 11,923,670 shares of LeukoSite Common
Stock were issued and outstanding, all of which were duly authorized, validly
issued, fully paid and non-assessable, and (ii) options granted pursuant to the
LeukoSite Stock Plans to acquire up to an aggregate of not more than 1,359,447
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 8.7 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 8.7 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.
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.
8.8. 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.
8.9. OWNERSHIP OF COMPANY STOCK. Neither LeukoSite nor Merger Sub
beneficially owns, directly or indirectly, or is a party to any agreement
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(other than this 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.
8.10. LEGALITY OF MERGER SHARES. All of the Merger 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.
8.11. ABSENCE OF CERTAIN CHANGES. Since September 30, 1998, 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.
8.12. 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 February 28, 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.
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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 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, or otherwise obtain the necessary consents of Stockholders, 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, and the Company shall use all reasonable
efforts to obtain the necessary approvals by its Stockholders of this Agreement
and the transactions contemplated hereby. LeukoSite will take all steps
necessary or appropriate duly to call, give notice of, convene and hold its
annual (or a special) stockholders meeting, no later than May 31, 1999, for the
purpose, among other purposes, of proposing to the stockholders of LeukoSite
that they approve resolutions authorizing (i) the conversion of the shares of
LeukoSite Series A Preferred Stock issued pursuant to the Merger into shares of
LeukoSite Common and (ii) the issuance of any other Merger Shares issuable
pursuant to this Agreement in the form of LeukoSite Common Stock. LeukoSite will
recommend to its stockholders the adoption and approval of such resolutions
authorizing (i) the conversion of the shares of LeukoSite Series A Preferred
Stock issued pursuant to the Merger into shares of LeukoSite Common Stock and
(ii) the issuance of any other Merger Shares issuable pursuant to this Agreement
in the form of LeukoSite Common Stock. Prior to Closing, LeukoSite and the
Company shall use their best reasonable efforts to obtain irrevocable binding
commitments or proxies, in substantially the form of either EXHIBIT D-1 or D-2
attached hereto or such other form as may be acceptable to the Company,
representing at least an aggregate of sixty percent (60%) of the shares of
LeukoSite Common Stock outstanding at the Closing, to vote such shares of
LeukoSite Common Stock in favor of (i) the conversion of the shares of LeukoSite
Series A Preferred Stock issued pursuant to the Merger into shares of LeukoSite
Common Stock and (ii) the issuance of any other Merger Shares issuable pursuant
to this Agreement in the form of LeukoSite Common Stock.
9.7. NASDAQ/NMS APPLICATION. Subject to obtaining the approval of the
stockholders of LeukoSite to (i) the conversion of the shares of LeukoSite
Series A Preferred Stock issued pursuant to the Merger into shares of LeukoSite
Common Stock and (ii) the issuance of any other Merger Shares issuable
63
pursuant to this Agreement in the form of LeukoSite Common Stock, LeukoSite will
prepare and submit to the National Association of Securities Dealers, Inc. a
listing application covering all of the Merger Common Shares, and will use its
best reasonable efforts to cause all of the Merger Common 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, the Company shall furnish LeukoSite with the name and
address 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 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:
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(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. COMPANY AUDITORS. The Company will use its best efforts to cause
its management and its independent auditors to facilitate on a timely basis (i)
the preparation of financial statements of the Company (including pro forma
financial statements if required) as required by LeukoSite to comply with
applicable SEC regulations and (ii) the review of the Company's audit work
papers for up to the past three years, including the examination of selected
interim financial statements and data.
9.14 UCB AGREEMENT. Neither LeukoSite nor any of its Affiliates
(including, after the Closing Date, the Surviving Corporation) shall, directly
or indirectly terminate, modify, alter or otherwise amend Article IV, Section
5.2, Section 5.3 or Article XIII of the UCB Agreement or agree that UCB or any
of its Affiliates are entitled to any indemnification payment under the UCB
Agreement without the prior written consent of the Stockholders'
65
Representatives. LeukoSite and its Affiliates shall provide the Stockholders'
Representatives with a copy of any Claim Notice (as defined in the UCB
Agreement) it receives under the UCB Agreement within 15 days of receipt of such
notice. LeukoSite agrees that, in the event that the Subsequent UCB Payment is
not made by UCB on its due date pursuant to the UCB Agreement and LeukoSite
shall determine not to take action to enforce its legal rights thereunder, the
Stockholders' Representatives shall have the right to take any necessary action
against UCB to collect the Subsequent UCB Payment on behalf of LeukoSite. In the
event that the Stockholders' Representatives are entitled pursuant to the
provisions of the foregoing sentence to take action against UCB, the
Stockholders' Representatives shall have the right, on behalf of LeukoSite, to
settle any claims against UCB relating to the Subsequent UCB Payment with the
prior written consent of LeukoSite, which consent shall not be unreasonably
withheld or delayed.
9.15. 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 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 CytoMed Programs.
9.16. EQUITY FINANCINGS. LeukoSite agrees that, prior to the conversion
of the shares of LeukoSite Series A Preferred Stock into shares of LeukoSite
Common Stock, LeukoSite will not issue shares of LeukoSite Common Stock or
LeukoSite Preferred Stock in an equity financing (other than in connection with
a public offering pursuant to a registration statement) without either (a)
obtaining irrevocable binding commitments or proxies from each purchaser in such
equity financing or such lesser number of such purchasers as may be required to
obtain stockholder approval in favor of (i) the conversion of the shares of
LeukoSite Series A Preferred Stock issued pursuant to the Merger into shares of
LeukoSite Common Stock and (ii) the issuance of any other Merger Shares issuable
pursuant to this Agreement in the form of LeukoSite Common Stock, or (b) the
prior written consent of the holders of a majority of the outstanding shares of
LeukoSite Series A Preferred Stock.
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
66
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. ACTIVITIES PENDING THE CLOSING. The Company and LeukoSite will
form a transition committee (the "Transition Committee") to oversee the
operations of the Company pending the consummation of the Merger and to provide
LeukoSite with veto power over decisions concerning the Company's business,
finances and operations during the period commencing on the date hereof and
ending on the earlier of the Effective Time of the Merger or the termination of
this Agreement pursuant to Section 15. The Transition Committee will be composed
of representatives of the Company and one or more representatives of LeukoSite.
The Company agrees that, without the written consent of at least one member of
the Transition Committee that is a representative of LeukoSite (which written
consent may be obtained by having such member of the Transition Committee sign
minutes of meetings of the Transition Committee at which decisions concerning
the Company's business, finances and operations have been made), the Company
will not (i) except with respect to any Approved Payments or any Excluded
Indebtedness, make any expenditure, spend any money, 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 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. 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
67
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
contemplated by this Agreement.
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, 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 its best
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.
68
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 which results in or is reasonably likely to
result in a Material Adverse Effect.
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.
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
69
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. All filings necessary under federal
and state securities laws to permit the issuance and delivery to the
Stockholders of the shares of LeukoSite Common Stock issuable pursuant to the
Merger will have been made, and any authorizations in connection therewith from
all applicable securities regulatory authorities 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 or
the Stockholders 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.
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.
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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 a form reasonably
acceptable to the Company and its counsel.
12.6. ESCROW AGREEMENT. LeukoSite and the Escrow Agent shall have
executed and delivered the Escrow Agreement.
12.7. PROXIES. The Company and LeukoSite shall have obtained
irrevocable binding commitments or proxies, in substantially the form of either
EXHIBIT D-1 or D-2 attached hereto or such other form as may be acceptable to
the Company, representing at least a majority of the shares of LeukoSite Common
Stock outstanding prior to the Closing, to vote such shares of LeukoSite Common
Stock in favor of (i) the conversion of the shares of LeukoSite Series A
Preferred Stock issued pursuant to the Merger into shares of LeukoSite Common
Stock and (ii) the issuance of any other Merger Shares issuable pursuant to this
Agreement in the form of LeukoSite Common Stock.
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 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
71
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 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) in connection 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 which results in or would reasonably be likely to have a
Material Adverse Effect on the Company.
13.4. CLOSING CERTIFICATE. 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 with respect to themselves that the
conditions referred to in Sections 13.1, 13.2 and 13.3 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 in a form reasonably satisfactory to
LeukoSite and its counsel.
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 AND COMPANY WARRANTS. All of the Company Options
and Company Warrants (other than those Company Warrants exercisable for no
greater than 71,000 shares of Company Preferred Stock and 720,000 shares of
Company Common Stock) 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.
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13.9. DISSENTERS' RIGHTS. Stockholders holding in the aggregate more
than fifteen per cent (15%) 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.
13.10. ESCROW AGREEMENT. The Stockholders' Representatives and the
Escrow Agent shall have executed and delivered the Escrow Agreement.
13.11. 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.
14. INDEMNIFICATION.
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, 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.
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14.3. INDEMNIFICATION BY THE STOCKHOLDERS. Subject to the limitations
set forth in Section 14.6 hereof, if the Merger is consummated the Stockholders,
jointly and severally, will indemnify, defend, and hold harmless LeukoSite, the
Surviving Corporation, and each of their respective directors, officers,
employees, agents, representatives and other Affiliates (all persons entitled to
indemnification under Section 14.2 and this Section 14.3 being hereinafter
referred to as the "LeukoSite Indemnified Parties", and, together with the
Company Indemnified Parties, the "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;
(ii) any claim for indemnification made by UCB
pursuant to the UCB Agreement or any breach by the Company of
any representation, warranty, covenant, agreement, obligation
or undertaking made by the Company in the UCB Agreement;
(iii) any claim for payment of the appraised value of
Dissenting Shares of Company Stock in accordance with the
provisions of Section 262 of the DGCL and Section 3.6(c) of
this Agreement and/or any and all costs, expenses and Damages
incurred by LeukoSite in connection with such claim,
including, without limitation, (1) any payment made by
LeukoSite pursuant to Section 3.6(c) hereof in connection with
any such claim (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 with the
consent of the Stockholders' Representatives) and (2) any and
all court costs and reasonable legal fees and disbursements
incurred by LeukoSite in connection with any litigation or
judicial proceeding and/or settlement relating to such claim;
or
(iv) any claim by LeukoSite that the Unaudited
Closing Net Cash Balance exceeds the Audited Closing Net Cash
Balance and any claim that the number of Aggregate Base
Consideration Shares should be reduced pursuant to Section
3.7(e) as a result of such excess.
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14.4. CLAIMS.
(a) All claims for indemnification by an Indemnified Party
pursuant to this Section 14 shall be made in accordance with the
provisions of this Section 14 and, if applicable, the Escrow Agreement.
(b) If an Indemnified Party has incurred or suffered Damages
for which it is entitled to indemnification under this Section 14, such
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,
the "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
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 Indemnified
Party a written response (the "Response Notice") in which the
Indemnifying Party shall: (i) agree that all of the Claimed Amount is
owed to the Indemnified Party, (ii) agree that part, but not all, of
the Claimed Amount (the "Agreed Amount") is owed to the Indemnified
Party, or (iii) contest that any of the Claimed Amount is owed to the
Indemnified Party. The Indemnifying Party may contest the payment of
all or a portion of the Claimed Amount only based upon a good faith
belief that all or such portion of the Claimed Amount does not
constitute Damages for which the Indemnified Party is entitled to
indemnification under this Section 14. If no Response Notice is
delivered by the Indemnifying Party within such 20-day period, the
Indemnifying Party shall be deemed to have agreed that all of the
Claimed Amount is owed to the Indemnified Party.
(d) If the Indemnifying Party in the Response Notice agrees
(or is deemed to have agreed) that all of the Claimed Amount is owed to
the Indemnified Party, the Indemnifying Party shall owe to the
Indemnified Party an amount equal to the Claimed Amount to be paid in
the manner set forth in this Section 14. If the Indemnifying Party in
the Response Notice agrees that part, but not all, of the Claimed
Amount is owed to the Indemnified Party, the Indemnifying Party shall
owe to the Indemnified Party an amount equal to the Agreed Amount set
forth in such Response Notice to be paid in the manner set forth in
this Section 14.
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(e) The Indemnified Party shall give prompt written
notification to the 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 Indemnified Party in
notifying the Indemnifying Party shall relieve the 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 Indemnifying Party may,
upon written notice thereof to the Indemnified Party, assume control of
the defense of such action, suit or proceeding with counsel reasonably
satisfactory to the Indemnified Party, provided (i) the Indemnifying
Party acknowledges in writing to the Indemnified Party, on behalf of
the Indemnifying Party, that any damages, fines, costs or other
liabilities that may be assessed against the Indemnified Party in
connection with such action, suit or proceeding constitute Damages for
which the Indemnified Party shall be entitled to indemnification
pursuant to this Section 14, (ii) the third party seeks monetary
damages only, and (iii) an adverse resolution of the third party's
claim would not have a material adverse effect on the goodwill or the
reputation of the Indemnified Party or the business, operations or
future conduct of the Indemnified Party. If the Indemnifying Party does
not so assume control of such defense, the Indemnified Party shall
control such defense. The party not controlling such defense may
participate therein at its own expense; provided that if the
Indemnifying Party assumes control of such defense and the Indemnified
Party reasonably concludes that the Indemnifying parties and the
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 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 Indemnified Party shall not agree to any
settlement of such action, suit or proceeding without the prior written
consent of the Indemnifying Party, which shall not be unreasonably
withheld or delayed. The 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 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 Indemnified Party for all liability with respect thereto or (B)
imposes any liability or obligation on the Indemnified Party).
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14.5 PAYMENT OF CLAIMS.
(a) An Indemnifying Party shall make payment of any portion of
any Claimed Amount that such Indemnifying Party has agreed in a
Response Notice that it owes to an Indemnified Party or that such
Indemnifying Party is deemed to have agreed it owes to such
Indemnifying Party 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 Indemnifying Party or should have
been delivered by such Indemnifying Party, as the case may be.
(b) Anything in this Agreement to the contrary
notwithstanding, subject to the provisions of Section 14.6, LeukoSite
may withhold and set-off against any Merger Consideration otherwise
required to be paid or delivered to the Stockholders pursuant to this
Agreement any amount as to which the Stockholders are obligated to
indemnify LeukoSite pursuant to any provision of this Agreement.
14.6. LIMITATIONS OF LIABILITY.
(a) THRESHOLD. No Indemnifying Party will be required to
indemnify an Indemnified Party hereunder with respect to any Damages
arising on account of or related to any breach of a representation or
warranty made by such Indemnifying Party pursuant to this Agreement
until such time as the aggregate amount of Damages for which (i)
LeukoSite, Merger Sub and their respective directors, officers,
employees, representatives and other Affiliates, on the one hand, or
(ii) the Company and its directors, officers, employees,
representatives and other Affiliates, as the case may be, on the other
hand, are otherwise entitled to indemnification pursuant to this
Section 14 exceeds $50,000, whereupon such Indemnified Party will be
entitled to indemnification for the full amount of all such Damages
without regard to such threshold amount.
(b) 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 from the Escrowed Securities or by the right of set-off set
forth in Section 14.5(b) above, and no Stockholder shall otherwise have
any direct or indirect liability to any LeukoSite Indemnified Party.
For purposes of this Section 14.6(b), the value of the shares of
LeukoSite Stock issued to such Stockholder pursuant to the Merger and
of the Merger Conversion Shares shall be conclusively deemed to be
equal to be $11.88 per share of LeukoSite Common Stock (such dollar
figure to be proportionately adjusted to reflect stock splits, stock
dividends, reverse stock splits, and
77
other recapitalizations, reorganizations and similar events affecting
LeukoSite Common Stock and occuring after the date of this Agreement).
(c) TIME LIMIT. No Indemnifying Party will be liable for any
Damages hereunder unless a written claim for indemnification is given
by the Indemnified Party to the Indemnifying Party on or prior to the
second anniversary of the Closing Date; PROVIDED, HOWEVER, that the
foregoing provisions of this Section 14.6(c) shall not apply to any
claim by LeukoSite for indemnification pursuant to clause (ii) of
Section 14.3 hereof.
(d) TAX AND INSURANCE BENEFITS. The amount of any Damages
otherwise payable to any Indemnified Party hereunder will be reduced
(i) to the extent that such 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 Indemnified
Party or any of his or its assets (E.G., any tax deduction available to
such Indemnified Party in respect of such Damages will not be deemed to
result in a tax benefit to such Indemnified Party to the extent that
such deduction results in a decrease in such Indemnified Party's tax
basis in any securities or other assets), and (ii) by any insurance
proceeds actually received by such 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.
Each Indemnified Party will use reasonable efforts to collect any
Damages from any available insurer before attempting to collect from the
Indemnifying Party at any time. If any Indemnified Party recovers any amount
from any insurer after payment to such Indemnified Party by one or more
Indemnifying Parties of all Damages suffered or incurred by such Indemnified
Party in respect of the matters to which such insurance payment relates, then
such Indemnified Party will promptly pay over to such Indemnifying Parties the
amount so recovered, to the extent not in excess of the amount previously paid
by such Indemnifying Party to such Indemnified Party in respect of such matter.
14.7. SUBROGATION. An Indemnifying Party who indemnifies an 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 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 Indemnified Party, and upon such subrogation may
assert such rights against such other persons.
78
14.8. EXCLUSIVE REMEDIES. The parties acknowledge and agree that their
sole and exclusive remedies in respect of any and all claims relating to any
breach or purported breach of any representation, warranty, covenant, agreement,
obligation, or undertaking contained in this Agreement (including any schedule
or exhibit hereto), or any other agreement, instrument, certificate, or other
document delivered by or on behalf of any party hereto in connection with this
Agreement, the Merger, or any of the other transactions contemplated hereby 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.
14.9. APPLICABILITY. The provisions of this Section 14 will not apply
to claims for indemnification or contribution arising under or in connection
with Section 6 hereof and/or the Stockholder Registration Statement and the
other transactions contemplated by Section 6 hereof.
15. RELEASES. If the Merger is consummated, then, effective as of the
Effective Time, each of the Stockholders, 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 of any party.
79
(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
February 28, 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).
(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 Sections 9.14 and 9.15 shall survive the Closing and
the consummation of the Merger and the other transactions contemplated
80
hereby until such date as the payments set forth in Section 3.8(b) and Section
3.8(d), respectively, 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.
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 issuance of the consideration
for the Company Stock, the registration thereof pursuant to Section 6,
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):
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(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.
▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to the Company (before the Effective Time) to:
CytoMed, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇
If to the Company (after the Effective Time) or to the
Stockholders' Representatives to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Q.E.D. Technologies
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇
Oracle Partners L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier No. ______________
82
with a copy sent at the same time and by the same means to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
▇▇▇▇ and ▇▇▇▇ LLP
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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 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,
83
the provisions of the Confidentiality Agreement dated as of October 16, 1998, 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, the
Company and the Stockholder Representatives; PROVIDED however, that any
amendment effected subsequent to the time the Stockholders approve this
Agreement shall be subject to the provisions of the DGCL. Notwithstanding the
foregoing, SCHEDULE A to this Agreement may be amended solely by the Company and
the Stockholders Representatives, without the consent of LeukoSite or Merger
Sub, if such amendment is (a) consistent with the liquidation provisions of the
Company's Certificate of Incorporation and (b) would not result in the
Designated Preferred Stockholders having the ability to revoke the proxy granted
pursuant to Section 3 of the Designated Preferred Stockholders Agreement.
84
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: President
MERGER SUB: LEUKOSITE MERGER CORPORATION
By /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President
COMPANY: CYTOMED, INC.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Executive Vice President and
and Chief Operating Officer
85
EXHIBITS AND SCHEDULES
Exhibits
A. Terms of LeukoSite Series A Preferred Stock
B Merger Certificate
C Escrow Agreement
D-1 Voting Agreement
D-2 Voting Agreement and Irrevocable Proxy
Schedules
Schedule A Distribution of Merger Consideration
Disclosure Schedules of the Company