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Agreement And Plan of Merger And Reorganization

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Sectors: Biotechnology / Pharmaceuticals
Governing Law: Delaware, View Delaware State Laws
Effective Date: January 04, 1999
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Exhibit 10.3


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 mark registration and applications therefor throughout the world; (f) all databases and data collections and all rights therein throughout the world; and (g) any similar or equivalent rights to any of the foregoing anywhere in the world.


"Knowledge," when used to qualify a representation or warranty in this Agreement, has the following meaning: Where a representation or warranty is made to the best of the Company's knowledge, or with a similar qualification, the Company will be conclusively deemed to have knowledge of any matter with respect to which the Company's chief executive, operating, scientific and/or financial officers and/or Vice President, 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 T.Y. Shen.


"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) SARA 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 Bingham Dana LLP, 150 Federal Street, Boston, Massachusetts 02110, as soon as is reasonably practicable following satisfaction or waiver of the conditions set forth in Sections 11 through 13 (the date on which the Closing actually occurs is hereinafter referred to as the "Closing Date"). On the Closing Date, Merger Sub and the Company will execute a


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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 s
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