-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CJzhS5D3i6cwPxslpjAr/l/dAdOdCVBl1S6w8oOlSXHCGNd1V8f7YChZenZImP4W 9teX6TANUybdCM9PkXlklg== /in/edgar/work/20000616/0000899140-00-000274/0000899140-00-000274.txt : 20000919 0000899140-00-000274.hdr.sgml : 20000919 ACCESSION NUMBER: 0000899140-00-000274 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20000616 GROUP MEMBERS: E.M. WARBURG, PINCUS & CO., LLC GROUP MEMBERS: WARBURG PINCUS EQUITY PARTNERS LP GROUP MEMBERS: WARBURG, PINCUS & CO. GROUP MEMBERS: WARBURG, PINCUS EQUITY PARTNERS, L.P. SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: TRANSKARYOTIC THERAPIES INC CENTRAL INDEX KEY: 0000885259 STANDARD INDUSTRIAL CLASSIFICATION: [2836 ] IRS NUMBER: 043027191 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-47221 FILM NUMBER: 656407 BUSINESS ADDRESS: STREET 1: 195 ALBANY ST CITY: CAMBRIDGE STATE: MA ZIP: 02139 BUSINESS PHONE: 6173490200 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: WARBURG PINCUS EQUITY PARTNERS LP CENTRAL INDEX KEY: 0001075598 STANDARD INDUSTRIAL CLASSIFICATION: [ ] FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 466 LEXINGTON AVE. CITY: NEW YORK STATE: NY ZIP: 10017 BUSINESS PHONE: 2128780600 SC 13D 1 0001.txt INITIAL FILING ON SCHEDULE 13D SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 TRANSKARYOTIC THERAPIES, INC. - -------------------------------------------------------------------------------- (Name of Issuer) Common Shares, $0.01 Par Value - -------------------------------------------------------------------------------- (Title of Class of Securities) 893735-10-0 - -------------------------------------------------------------------------------- (CUSIP Number of Class of Securities) Stephen Distler E.M. Warburg, Pincus & Co., LLC 466 Lexington Avenue New York, New York 10017 (212) 878-0600 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) Copies to: Peter H. Jakes, Esq. Willkie Farr & Gallagher 787 Seventh Avenue New York, NY 10019-6099 (212) 728-8000 June 9, 2000 - -------------------------------------------------------------------------------- (Date of Event which Requires Filing of this Schedule) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following: [ ] SCHEDULE 13D - --------------------- ------------------ CUSIP No. 893735-10-0 Page 2 of 23 Pages - --------------------- ------------------ - ----------- -------------------------------------------------------------------- 1 NAME OF REPORT PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Warburg, Pincus Equity Partners, L.P. I.D. #13-3986317 - ----------- -------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X] (b) [ ] - ----------- -------------------------------------------------------------------- 3 SEC USE ONLY - ----------- -------------------------------------------------------------------- 4 SOURCE OF FUNDS* WC - ----------- -------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] - ----------- -------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - --------------------- --------- ------------------------------------------------ 7 SOLE VOTING POWER 3,037,500 --------- ------------------------------------------------ NUMBER OF 8 SHARED VOTING POWER SHARES BENEFICIALLY OWNED BY EACH --------- ------------------------------------------------ REPORTING 9 SOLE DISPOSITIVE POWER PERSON 3,037,500 --------- ------------------------------------------------ 10 SHARED DISPOSITIVE POWER - ----------- -------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON 3,037,500 - ----------- -------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - ----------- -------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 11.8% - ----------- -------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* PN - ----------- -------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION. SCHEDULE 13D - --------------------- ------------------ CUSIP No. 893735-10-0 Page 3 of 23 Pages - --------------------- ------------------ - ----------- -------------------------------------------------------------------- 1 NAME OF REPORT PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Warburg, Pincus & Co. I.D. #13-6358475 - ----------- -------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X] (b) [ ] - ----------- -------------------------------------------------------------------- 3 SEC USE ONLY - ----------- -------------------------------------------------------------------- 4 SOURCE OF FUNDS* N/A - ----------- -------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] - ----------- -------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION New York - --------------------- --------- ------------------------------------------------ 7 SOLE VOTING POWER 38,667 --------- ------------------------------------------------ NUMBER OF 8 SHARED VOTING POWER SHARES BENEFICIALLY 3,214,476 OWNED BY EACH --------- ------------------------------------------------ REPORTING 9 SOLE DISPOSITIVE POWER PERSON 38,667 --------- ------------------------------------------------ 10 SHARED DISPOSITIVE POWER 3,214,476 - ----------- -------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON 3,253,083 - ----------- -------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - ----------- -------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 12.6% - ----------- -------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* PN - ----------- -------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION. SCHEDULE 13D - --------------------- ------------------ CUSIP No. 893735-10-0 Page 4 of 23 Pages - --------------------- ------------------ - ----------- -------------------------------------------------------------------- 1 NAME OF REPORT PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON E.M. Warburg, Pincus & Co., LLC I.D. #13-3536050 - ----------- -------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X] (b) [ ] - ----------- -------------------------------------------------------------------- 3 SEC USE ONLY - ----------- -------------------------------------------------------------------- 4 SOURCE OF FUNDS* N/A - ----------- -------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] - ----------- -------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION New York - --------------------- --------- ------------------------------------------------ 7 SOLE VOTING POWER 0 --------- ------------------------------------------------ NUMBER OF 8 SHARED VOTING POWER SHARES BENEFICIALLY 3,253,083 OWNED BY EACH --------- ------------------------------------------------ REPORTING 9 SOLE DISPOSITIVE POWER PERSON 0 --------- ------------------------------------------------ 10 SHARED DISPOSITIVE POWER 3,253,083 - ---------- --------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON 3,253,083 - ----------- -------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - ----------- -------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 12.6% - ---------- --------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* OO - ---------- --------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION. This Schedule 13D is being filed on behalf of Warburg, Pincus Equity Partners, L.P., a Delaware limited partnership ("WPEP"), Warburg, Pincus & Co., a New York general partnership ("WP"), and E.M. Warburg, Pincus & Co., LLC, a New York limited liability company ("EMW" and, together with WPEP and WP, the "Reporting Entities"). This Schedule 13D relates to the common shares, par value $0.01, of Transkaryotic Therapies, Inc., a Delaware corporation (the "Company"). Unless the context otherwise requires, references herein to the "Common Stock" are to the shares of common stock of the Company, par value $0.01 per share. The holdings of Common Stock of WP and EMW in this Schedule 13D include certain shares of Common Stock which may be deemed to be beneficially owned by Warburg, Pincus Netherlands Equity Partners I, C.V. ("WPNEPI"), Warburg, Pincus Netherlands Equity Partners II, C.V. ("WPNEPII") and Warburg, Pincus Netherlands Equity Partners III, C.V. ("WPNEPIII" and, together with WPNEPI, WPNEPII and WPEP, the "Investors"). WP, EMW and the Investors are referred to herein as the "Group Members." Item 1. Security and Issuer. This statement on Schedule 13D relates to the Common Stock of the Company, and is being filed pursuant to Rule 13d-1 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The address of the principal executive offices of the Company is 195 Albany Street, Cambridge, MA 02139. Item 2. Identity and Background. (a) This statement is filed by the Reporting Entities. The Group Members are deemed to be a group within the meaning of Rule 13d-5. The sole general partner of each of the Investors is WP. EMW manages each of the Investors. Lionel I. Pincus is the 6 managing partner of WP and the managing member of EMW and may be deemed to control both WP and EMW. The general partners of WP and the members of EMW are described in Schedule I hereto. (b) The address of the principal business and principal office of each of the Reporting Entities is 466 Lexington Avenue, New York, New York 10017. (c) The principal business of each of the Investors is that of a partnership engaged in making venture capital and related investments. The principal business of WP is acting as general partner of each of the Investors, Warburg, Pincus Ventures, L.P., Warburg, Pincus Investors, L.P., Warburg, Pincus Ventures International, L.P. and Warburg, Pincus Capital Company, L.P. The principal business of EMW is acting as manager of each of the Investors, Warburg, Pincus Ventures, L.P., Warburg, Pincus Investors, L.P., Warburg, Pincus Ventures International, L.P. and Warburg, Pincus Capital Company, L.P. (d) None of the Reporting Entities, nor, to the best of their knowledge, any of the directors, executive officers, general partners or members referred to in paragraph (a) has, during the last five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). (e) None of the Reporting Entities nor, to the best of their knowledge, any of the directors, executive officers, general partners or members referred to in paragraph (a) above has, during the last five years, been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting 7 or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. (f) Except for WPNEPI, WPNEPII, WPNEPIII, which are organized under the laws of The Netherlands and except as otherwise indicated on Schedule I hereto, each of the individuals referred to in paragraph (a) above is a United States citizen. Item 3. Source and Amount of Funds or Other Consideration. The total amount of funds required by the Investors to purchase the securities of the Company as described herein was US$90,000,000, and was furnished from the working capital of the Investors. Item 4. Purpose of Transaction. The purchases by the Investors of the securities of the Company as described herein were effected because of the Reporting Entities' belief that the Company represents an attractive investment based on the Company's business prospects and strategy. Subject to the terms of the Standstill Provision (as defined below) and depending on prevailing market, economic and other conditions, the Reporting Entities may from time to time acquire additional shares of the Company or engage in discussions with the Company concerning further acquisitions of shares of the Company or further investments by them in the Company. The Reporting Entities intend to review their investment in the Company on a continuing basis and, depending upon the price and availability of shares of Common Stock, subsequent developments affecting the Company, the Company's business and prospects, other investment and business opportunities available to the Reporting Entities, general stock market and economic 8 conditions, tax considerations and other factors considered relevant, and subject to the Standstill Provision (as defined below) may decide at any time to increase or to decrease the size of their investment in the Company. AGREEMENT TO PURCHASE SERIES A PREFERRED SHARES AND WARRANTS On May 18, 2000, the Investors entered into a Stock Purchase Agreement with the Company (the "Purchase Agreement"), attached hereto as Exhibit 2, pursuant to which the Company agreed to issue and sell and the Investors agreed to purchase an aggregate of 10,000 shares of Series A Convertible Preferred Shares (the "Series A Preferred Shares")1 at $10,000 for each Series A Preferred Share. On June 9, 2000, pursuant to the terms of the Purchase Agreement, the first 9,000 of such Shares were sold to the Investors. Each Series A Preferred Share is convertible into Common Stock at a conversion price of $28.00 per share and at a conversion rate of 357.142857 shares of Common Stock for each Series A Preferred Share converted. The conversion price and conversion rate are subject to certain adjustments as set forth in the Certificate of Designations, Number, Voting Powers, Preferences and Rights of Series A Convertible Preferred Stock of Transkaryotic Therapies, Inc. (the "Certificate of Designations"), attached hereto as Exhibit 3. - ---------- 1 The Purchase Agreement provides for 9,000 Series A Preferred Shares to be purchased within three days after the expiration of the waiting period under the Hart Scott Radino Antitrust Improvements Act of 1976, as amended. The additional 1,000 Series A Preferred Shares will be purchased within three days after the Company's Annual Meeting of Stockholders scheduled for June 15, 2000. 9 The Company may, at its option, redeem all (but not less than all) of the Series A Shares any time after December 15, 2000, if the average closing price of the Common Stock for any twenty consecutive trading days ending within twenty business days of the date on which notice of redemption is given is at least $35.00. The Company must provide thirty days written notice of such redemption to the holders of the Series A Preferred Shares. As set forth in the Certificate of Designations, Holders of Series A Preferred Shares are entitled to vote such Shares, together with the holders of Common Stock as a single class, on an as converted basis with respect to all matters. In addition, the Company will not, without the affirmative vote of the holders of a majority of the outstanding Series A Preferred Shares, authorize additional Series A Preferred Shares or any other series of shares that would materially and adversely affect the Series A Preferred Shares. Standstill Provision. Under the Purchase Agreement, each of the Investors has agreed that it will not, for a period of five years, acquire beneficial ownership of any Common Stock if, after giving effect to such acquisition or substantially contemporaneous acquisitions by any affiliates, the aggregate beneficial ownership of all the Investors and their affiliates would exceed 30% of the then outstanding Common Stock (assuming full conversion of all Series A Preferred Shares). This provision, referred to herein as the "Standstill Provision," does not restrict the ability of any Investor or any affiliate of any Investor to convert the Series A Preferred Shares. 10 Board Representation. The terms of the Series A Preferred Shares, as set forth in the Certificate of Designations, provide for the holders of such shares to elect one member to the Board, voting separately as a class. This provision shall remain in effect for so long as at least 90% of the Series A Preferred Shares issued pursuant to the Purchase Agreement remain outstanding. The Purchase Agreement provides that the Company will use its best efforts to nominate and effect the election as directors of two individuals designated by the Investors and acceptable to the Company's Board acting in good faith for so long as the Investors own at least 20% of the outstanding shares of Common Stock (including stock issuable upon conversion of the Series A Preferred Shares) and one such director for so long as the Investors own at least (a) 10% of the outstanding Common Stock or (b) 90% of the Series A Preferred Shares or shares of Common Stock issued on conversion of the Series A Preferred Shares. A director elected separately by the holders of the Series A Preferred Shares voting as a class will be deemed a director satisfying this provision of the Purchase Agreement. The foregoing summary of the Purchase Agreement is qualified in its entirety by reference to the Stock Purchase Agreement, a copy of which is set forth as Exhibit 2 and is incorporated herein by reference. Except as set forth above, none of the Reporting Entities nor, to the best of their knowledge, any person listed in Schedule I hereto, has any plans or proposals which relate to or would result in: (a) the acquisition by any person of additional securities of the Company, or the disposition of securities of the Company; (b) an extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Company or any of its subsidiaries; (c) a sale or transfer of a material amount of assets of 11 the Company or any of its subsidiaries; (d) any change in the present Board of Directors or management of the Company, including any plans or proposals to change the number or term of directors or to fill any existing vacancies on the board; (e) any material change in the present capitalization or dividend policy of the Company; (f) any other material change in the Company's business or corporate structure; (g) changes in the Company's charter, By-laws or instruments corresponding thereto or other actions which may impede the acquisition of control of the Company by any person; (h) causing a class of securities of the Company to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association; (i) a class of equity securities of the Company becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Exchange Act; or (j) any action similar to any of those enumerated above. Item 5. Interest in Securities of the Issuer. (a) The Reporting Entities beneficially own shares of Common Stock of the Company by virtue of their ownership of shares of Common Stock and Series A Preferred Shares, which are convertible into shares of Common Stock. As of June 9, 2000, WP and EMW each beneficially owned 3,253,083 shares of Common Stock. Also as of this date, WPEP beneficially owned 3,037,500 shares of Common Stock. Of the shares beneficially owned by WP and EMW, 176,786 shares represent the aggregate shares of Common Stock beneficially held by WPNEPI, WPNEPII and WPNEPIII and 191 shares represent the shares of Common Stock held by Warburg, Pincus Capital Company, L.P. ("WPCC"). By reason of WP's and EMW's respective relationships with the Investors and WPCC, under Rule 13d-3 under the Exchange Act, WP and EMW may 12 be deemed to own beneficially all of the shares of Common Stock which are beneficially owned by these entities. Assuming full conversion of the corresponding Series A Preferred Shares, as of June 9, 2000, the 3,253,083 shares of Common Stock beneficially held by the Reporting Entities represented approximately 12.6% of the sum of the outstanding shares of Common Stock (based on the 22,683,306 shares of Common Stock outstanding as of April 21, 2000, as set forth in the Company's definitive Proxy Statement for its Annual Meeting of Stockholders on June 15, 2000) together with the 3,214,285 shares of Common Stock issuable upon conversion of the Series A Preferred Shares held by the Reporting Entities. Assuming full conversion of the corresponding Series A Preferred Shares, as of June 9, 2000, the 3,037,500 shares of Common Stock beneficially held by WPEP represented approximately 11.8% of the sum of 3,057,500 and the 22,683,306 outstanding shares of Common Stock. As of June 9, 2000, assuming full conversion of the Series A Preferred Shares, WPNEPI, WPNEPII and WPNEPIII held beneficial ownership of an aggregate of 176,786 shares of Common Stock, which is 0.7% of the sum of 176,786 and 22,683,306. (b) WPEP has beneficial ownership over 3,037,500 shares of Common Stock. WPNEPI, WPNEPII and WPNEPIII have beneficial ownership of an aggregate of 176,786 shares of Common Stock. WPEP, WPNEPI, WPNEPII and WPNEPIII each share voting power and dispositive power over their holdings of such shares with EMW and WP. 13 (c) Except for securities acquired pursuant to the Purchase Agreement, during the last sixty days there were no transactions effected by the Reporting Entities or by any of the persons set forth on Schedule I hereto. (d) Except as set forth in this Item 5, no person other than each respective record owner referred to herein of securities is known to have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, such securities. (e) Not applicable. Item 6. Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer. Pursuant to Rule 13d-1(k) promulgated under the Exchange Act, the Reporting Entities have entered into an agreement with respect to the joint filing of this statement, and any amendment or amendments hereto. A Stock Purchase Agreement by and among the Investors and the Company was entered into on May 18, 2000 and is described herein in Item 4, supra. In connection with this transaction, a Registration Rights Agreement was also entered into by these parties on that date. This Agreement contains standard provisions found in agreements of such type, including "demand" and "piggyback" registration rights. It requires the Company to effect two registrations of the Common Stock received upon conversion of the Shares (or three registrations upon Form S-3). 14 The foregoing summary of the Registration Rights Agreement is qualified in its entirety by reference to the Registration Rights Agreement, a copy of which is set forth as Exhibit 4. Except as referred to above, there are no contracts, arrangements, understandings or relationships among the persons named in Item 2 or between such persons and any other person with respect to any securities of the Company. By virtue of the relationships among the Reporting Entities as described in Item 2, the Reporting Entities may be deemed to be a "group" under the Federal securities laws. Lionel I. Pincus disclaims any beneficial ownership of the shares of Common Stock reported herein as being beneficially owned by the Reporting Entities. Item 7. Material to be Filed as Exhibits. 1. Joint Filing Agreement, dated as of July 22, 1999, by and among the Reporting Entities. 2. Stock Purchase Agreement, dated as of May 18, 2000, by and among the Investors and the Company. 3. Certificate of Designations, Number, Voting Powers, Preferences and Rights of Series A Convertible Preferred Shares of Transkaryotic Therapies, Inc. 4. Registration Rights Agreement, dated as of June 9, 2000, by and among the Investors and the Company. 15 SIGNATURES After reasonable inquiry and to the best of our knowledge and belief, the undersigned certify that the information set forth in this statement is true, complete and correct. Dated: June 16, 2000 WARBURG, PINCUS EQUITY PARTNERS, L.P. By: Warburg, Pincus & Co., General Partner By: /s/ Stephen Distler ------------------------------ Stephen Distler Partner Dated: June 16, 2000 WARBURG, PINCUS & CO. By: /s/ Stephen Distler ------------------------------ Stephen Distler Partner Dated: June 16, 2000 E.M. WARBURG, PINCUS & CO., LLC By: /s/ Stephen Distler -------------------------- Stephen Distler Member 16 EX-99.1 2 0002.txt JOINT FILING AGREEMENT Joint Filing Agreement The undersigned hereby agree that the statement on Schedule 13D with respect to the Common Stock of Transkaryotic Therapies, Inc. is, and any amendment thereto signed by each of the undersigned shall be, filed on behalf of each undersigned pursuant to and in accordance with the provisions of 13d-1(k) under the Securities Exchange Act of 1934, as amended. Dated: June 16, 2000 WARBURG, PINCUS EQUITY PARTNERS, L.P. By: Warburg, Pincus & Co., General Partner By: /s/ Stephen Distler ------------------------------ Stephen Distler Partner WARBURG, PINCUS & CO. By: /s/ Stephen Distler ------------------------------ Stephen Distler Partner E.M. WARBURG, PINCUS & CO., LLC By: /s/ Stephen Distler ------------------------------ Stephen Distler Member SCHEDULE I ---------- Set forth below is the name, position and present principal occupation of each of the general partners of Warburg, Pincus & Co. ("WP") and members of E.M. Warburg, Pincus & Co., LLC ("EMW LLC"). The sole general partner of Warburg, Pincus Equity Partners, L.P. ("WPEP") is WP. WPEP, WP, and EMW LLC are hereinafter collectively referred to as the "Reporting Entities". Except as otherwise indicated, the business address of each of such persons is 466 Lexington Avenue, New York, New York 10017, and each of such persons is a citizen of the United States. GENERAL PARTNERS OF WP ---------------------- - ---------------------------- --------------------------------------------------- PRESENT PRINCIPAL OCCUPATION IN ADDITION TO POSITION WITH WP, AND POSITIONS NAME WITH THE REPORTING ENTITIES - ---------------------------- --------------------------------------------------- Joel Ackerman Partner of WP; Member and Managing Director of EMW LLC - ---------------------------- --------------------------------------------------- Harold Brown Partner of WP; Member and Senior Managing Director of EMW LLC - ---------------------------- --------------------------------------------------- W. Bowman Cutter Partner of WP; Member and Managing Director of EMW LLC - ---------------------------- --------------------------------------------------- Cary J. Davis Partner of WP; Member and Managing Director of EMW LLC - ---------------------------- --------------------------------------------------- Stephen Distler Partner of WP; Member, Managing Director and Treasurer of EMW LLC - ---------------------------- --------------------------------------------------- Stewart K. P. Gross Partner of WP; Member and Managing Director of EMW LLC - ---------------------------- --------------------------------------------------- - ---------------------------- --------------------------------------------------- Patrick T. Hackett Partner of WP; Member and Managing Director of EMW LLC - ---------------------------- --------------------------------------------------- Jeffrey A. Harris Partner of WP; Member and Managing Director of EMW LLC - ---------------------------- --------------------------------------------------- William H. Janeway Partner of WP; Member and Senior Managing Director of EMW LLC - ---------------------------- --------------------------------------------------- Douglas M. Karp Partner of WP; Member and Managing Director of EMW LLC - ---------------------------- --------------------------------------------------- Charles R. Kaye Partner of WP; Member and Managing Director of EMW LLC - ---------------------------- --------------------------------------------------- Henry Kressel Partner of WP; Member and Managing Director of EMW LLC - ---------------------------- --------------------------------------------------- Joseph P. Landy Partner of WP; Member and Managing Director of EMW LLC - ---------------------------- --------------------------------------------------- Sidney Lapidus Partner of WP; Member and Managing Director of EMW LLC - ---------------------------- --------------------------------------------------- Kewsong Lee Partner of WP; Member and Managing Director of EMW LLC - ---------------------------- --------------------------------------------------- Jonathan S. Leff Partner of WP; Member and Managing Director of EMW LLC - ---------------------------- --------------------------------------------------- Reuben S. Leibowitz Partner of WP; Member and Managing Director of EMW LLC - ---------------------------- --------------------------------------------------- David E. Libowitz Partner of WP; Member and Managing Director of EMW LLC - ---------------------------- --------------------------------------------------- Nancy Martin Partner of WP; Member and Managing Director of EMW LLC - ---------------------------- --------------------------------------------------- Edward J. McKinley Partner of WP; Member and Managing Director of EMW LLC - ---------------------------- --------------------------------------------------- Rodman W. Moorhead III Partner of WP; Member and Senior Managing Director of EMW LLC - ---------------------------- --------------------------------------------------- Howard H. Newman Partner of WP; Member and Managing Director of EMW LLC - ---------------------------- --------------------------------------------------- - ---------------------------- --------------------------------------------------- Gary D. Nusbaum Partner of WP; Member and Managing Director of EMW LLC - ---------------------------- --------------------------------------------------- Dalip Pathak Partner of WP; Member and Managing Director of EMW LLC - ---------------------------- --------------------------------------------------- Lionel I. Pincus Managing Partner of WP; Managing Member, Chairman of the Board and Chief Executive Officer of EMW LLC - ---------------------------- --------------------------------------------------- John D. Santoleri Partner of WP; Member and Managing Director of EMW LLC - ---------------------------- --------------------------------------------------- Henry Schacht Partner of WP; Member and Managing Director of EMW LLC - ---------------------------- --------------------------------------------------- Steven G. Schneider Partner of WP; Member and Managing Director of EMW LLC - ---------------------------- --------------------------------------------------- John L. Vogelstein Partner of WP; Member and Vice Chairman of EMW LLC - ---------------------------- --------------------------------------------------- Elizabeth H. Weatherman Partner of WP; Member and Managing Director of EMW LLC - ---------------------------- --------------------------------------------------- Pincus & Co.* - ---------------------------- --------------------------------------------------- NL & Co.** - ---------------------------- --------------------------------------------------- - --------------------- * New York limited partnership; primary activity is ownership interest in WP and EMW LLC. ** New York limited partnership; primary activity is ownership interest in WP. As of 6/00 MEMBERS OF EMW LLC ------------------ - ---------------------------- --------------------------------------------------- PRESENT PRINCIPAL OCCUPATION IN ADDITION TO POSITION WITH EMW LLC, AND POSITIONS NAME WITH THE REPORTING ENTITIES - ---------------------------- --------------------------------------------------- Joel Ackerman Member and Managing Director of EMW LLC; Partner of WP - ---------------------------- --------------------------------------------------- Frank M. Brochin (1) Member and Managing Director of EMW LLC - ---------------------------- --------------------------------------------------- Harold Brown Member and Senior Managing Director of EMW LLC; Partner of WP - ---------------------------- --------------------------------------------------- W. Bowman Cutter Member and Managing Director of EMW LLC; Partner of WP - ---------------------------- --------------------------------------------------- Cary J. Davis Member and Managing Director of EMW LLC; Partner of WP - ---------------------------- --------------------------------------------------- Stephen Distler Member, Managing Director, and Treasurer of EMW LLC; Partner of WP - ---------------------------- --------------------------------------------------- Tetsuya Fukagawa (2) Member and Managing Director of EMW LLC - ---------------------------- --------------------------------------------------- Stewart K. P. Gross Member and Managing Director of EMW LLC; Partner of WP - ---------------------------- --------------------------------------------------- Alf Grunwald (3) Member and Managing Director of EMW LLC - ---------------------------- --------------------------------------------------- Patrick T. Hackett Member and Managing Director of EMW LLC; Partner of WP - ---------------------------- --------------------------------------------------- Jeffrey A. Harris Member and Managing Director of EMW LLC; Partner of WP - ---------------------------- --------------------------------------------------- Roberto Italia (4) Member and Managing Director of EMW LLC - ---------------------------- --------------------------------------------------- William H. Janeway Member and Senior Managing Director of EMW LLC; Partner of WP - ---------------------------- --------------------------------------------------- - ---------------------------- --------------------------------------------------- Douglas M. Karp Member and Managing Director of EMW LLC; Partner of WP - ---------------------------- --------------------------------------------------- Charles R. Kaye Member and Managing Director of EMW LLC; Partner of WP - ---------------------------- --------------------------------------------------- Henry Kressel Member and Managing Director of EMW LLC; Partner of WP - ---------------------------- --------------------------------------------------- Rajiv B. Lall (5) Member and Managing Director of EMW LLC - ---------------------------- --------------------------------------------------- Joseph P. Landy Member and Managing Director of EMW LLC; Partner of WP - ---------------------------- --------------------------------------------------- Sidney Lapidus Member and Managing Director of EMW LLC; Partner of WP - ---------------------------- --------------------------------------------------- Kewsong Lee Member and Managing Director of EMW LLC; Partner of WP - ---------------------------- --------------------------------------------------- Jonathan S. Leff Member and Managing Director of EMW LLC; Partner of WP - ---------------------------- --------------------------------------------------- Reuben S. Leibowitz Member and Managing Director of EMW LLC; Partner of WP - ---------------------------- --------------------------------------------------- David E. Libowitz Member and Managing Director of EMW LLC; Partner of WP - ---------------------------- --------------------------------------------------- Nicholas J. Lowcock (6) Member and Managing Director of EMW LLC - ---------------------------- --------------------------------------------------- John W. MacIntosh (7) Member and Managing Director of EMW LLC - ---------------------------- --------------------------------------------------- Nancy Martin Member and Managing Director of EMW LLC; Partner of WP - ---------------------------- --------------------------------------------------- Edward J. McKinley Member and Managing Director of EMW LLC; Partner of WP - ---------------------------- --------------------------------------------------- James McNaught-Davis (6) Member and Managing Director of EMW LLC - ---------------------------- --------------------------------------------------- Rodman W. Moorhead III Member and Managing Director of EMW LLC; Partner of WP - ---------------------------- --------------------------------------------------- Howard H. Newman Member and Managing Director of EMW LLC; Partner of WP - ---------------------------- --------------------------------------------------- - ---------------------------- --------------------------------------------------- Gary D. Nusbaum Member and Managing Director of EMW LLC; Partner of WP - ---------------------------- --------------------------------------------------- Dalip Pathak Member and Managing Director of EMW LLC; Partner of WP - ---------------------------- --------------------------------------------------- Lionel I. Pincus Managing Member, Chairman of the Board and Chief Executive of EMW LLC; Managing Partner of WP - ---------------------------- --------------------------------------------------- John D. Santoleri Member and Managing Director of EMW LLC; Partner of WP - ---------------------------- --------------------------------------------------- Henry Schacht Member and Managing Director of EMW LLC; Partner of WP - ---------------------------- --------------------------------------------------- Steven G. Schneider Member and Managing Director of EMW LLC; Partner of WP - ---------------------------- --------------------------------------------------- Dominic H. Shorthouse (6) Member and Managing Director of EMW LLC - ---------------------------- --------------------------------------------------- Melchior Stahl (3) Member and Managing Director of EMW LLC - ---------------------------- --------------------------------------------------- Chang Q. Sun (8) Member and Managing Director of EMW LLC - ---------------------------- --------------------------------------------------- John L. Vogelstein Member and Vice Chairman of EMW LLC; Partner of WP - ---------------------------- --------------------------------------------------- Elizabeth H. Weatherman Member and Managing Director of EMW LLC; Partner of WP - ---------------------------- --------------------------------------------------- Jeremy S. Young (6) Member and Managing Director of EMW LLC - ---------------------------- --------------------------------------------------- Pincus & Co.* - ---------------------------- --------------------------------------------------- (1) - Citizen of France (2) - Citizen of Japan (3) - Citizen of Germany (4) - Citizen of Italy (5) - Citizen of India (6) - Citizen of United Kingdom (7) - Citizen of Canada (8) - Citizen of China * New York limited partnership; primary activity is ownership interest in WP and EMW LLC As of 6/00 EX-99.2 3 0003.txt STOCK PURCHASE AGREEMENT Conformed Copy STOCK PURCHASE AGREEMENT This STOCK PURCHASE AGREEMENT is dated as of the 18th day of May, 2000 by and among Transkaryotic Therapies, Inc., a Delaware corporation with its principal office at 195 Albany Street, Cambridge, MA 02139 (the "Company"), and the several purchasers named in the attached EXHIBIT A (individually, a "Purchaser" and collectively, the "Purchasers"). WHEREAS, the Company desires to issue and sell to the Purchasers pursuant to this Agreement shares (the "Shares") of its Series A Convertible Preferred Stock, which Shares are, or will be upon issuance, convertible into authorized but unissued shares of common stock, $.01 par value per share, of the Company (the "Common Stock"); and WHEREAS, the Purchasers, severally, wish to purchase the Shares on the terms and subject to the conditions set forth in this Agreement. NOW THEREFORE, in consideration of the mutual agreements, representations, warranties and covenants herein contained, the parties hereto agree as follows: 1. Definitions. As used in this Agreement, the following terms shall have the following respective meanings: (a) "Affiliate" of a party means any corporation or other business entity controlled by, controlling or under common control with such party. For this purpose "control" shall mean direct or indirect beneficial ownership of fifty percent (50%) or more of the voting or income interest in such corporation or other business entity. (b) "Disclosure Documents" means the Company's Annual Report on Form 10-K for its fiscal year ended December 31, 1999, the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2000, the Company's Proxy Statement for its Annual Meeting of Stockholders on June 15, 2000, the Company's Current Report on Form 8-K filed on April 28, 2000 together in each case with any documents incorporated by reference therein, and any disclosure schedule delivered by the Company to the Purchasers simultaneously with the execution of this Agreement. (c) "Exchange Act" means the Securities Exchange Act of 1934, as amended, and all of the rules and regulations promulgated thereunder. (d) "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. (e) "Initial Closing Date" shall mean the date of the Initial Closing. (f) "Registration Rights Agreement" shall mean that certain Registration Rights Agreement, among the Company and the Purchasers, in the form of EXHIBIT C attached hereto. (g) "SEC" shall mean the Securities and Exchange Commission. (h) "Second Closing Date" shall mean the date of the Second Closing. (i) "Securities Act" shall mean the Securities Act of 1933, as amended, and all of the rules and regulations promulgated thereunder. (j) "Warburg" shall refer collectively to all of the Purchasers. 2. Authorization, Purchase and Sale of Shares. 2.1 Authorization of Series A Preferred Stock. The Company has, or before the Initial Closing Date will have, authorized and created a series of its preferred stock consisting of 10,000 shares, par value $0.01 per share, designated as its "Series A Convertible Preferred Stock" (the "Series A Preferred Stock"). The terms, limitations and relative rights and preferences of the Series A Preferred Stock are set forth in the Certificate of Designation, Number, Voting Powers, Preferences and Rights of the Series A Convertible Preferred Stock of the Company, which has been filed or will be filed before the Initial Closing Date with the Secretary of State of the State of Delaware and a copy of which is attached hereto as EXHIBIT B (the "Certificate of Designation"). 2.2 Purchase and Sale. Subject to and upon the terms and conditions set forth in this Agreement, the Company agrees to issue and sell to each Purchaser, and each Purchaser, severally, hereby agrees to purchase from the Company, at the Closings, the number of shares of Series A Preferred Stock set forth opposite the name of such Purchaser under the heading "Number of Shares to be Purchased" on EXHIBIT A hereto with respect to each applicable Closing, at a purchase price of $10,000 per share (the "Purchase Price"). The total purchase price payable by each Purchaser for the number of shares of Series A Preferred Stock that such Purchaser is hereby agreeing to purchase at each Closing is set forth opposite the name of such Purchaser under the heading "Initial Closing Purchase Price" and "Second Closing Purchase Price", respectively, on EXHIBIT A hereto. The aggregate purchase price payable by the Purchasers to the Company for all of the Shares shall be $100 million. 2.3 Closing. (a) The initial closing (the "Initial Closing"), which shall involve the sale and purchase of 9,000 Shares under this Agreement, shall take place at the offices of Hale and Dorr LLP, 60 State Street, Boston, Massachusetts on the third business day after the waiting period (and any extension thereof) under the HSR Act applicable to the purchase of the Shares shall have expired or been terminated. At the Initial Closing, the Company shall deliver to each of the 2 Purchasers a certificate for the number of Shares being purchased at the Initial Closing by such Purchaser, registered in the name of such Purchaser, against payment to the Company of the purchase price therefor set forth opposite the name of such Purchaser on EXHIBIT A, under the caption "Initial Closing Purchase Price," by wire transfer to the Company. (b) The second closing (the "Second Closing"), which shall involve the sale and purchase of 1,000 Shares under this Agreement, shall take place at the offices of Hale and Dorr LLP, 60 State Street, Boston, Massachusetts on the third business day following the later of (x) the expiration of the waiting period (and any extension thereof) under the HSR Act or (y) the meeting of stockholders of the Company at which the increase in authorized Common Stock of the Company contemplated by Section 3.2(b) shall have occurred. At the Second Closing, the Company shall deliver to each of the Purchasers a certificate for the number of Shares being purchased at the Second Closing by such Purchaser, registered in the name of such Purchaser, against payment to the Company of the purchase price therefor set forth opposite the name of such Purchaser on EXHIBIT A, under the caption "Second Closing Purchase Price," by wire transfer to the Company. (c) The Initial Closing and the Second Closing are collectively referred to as the "Closings". If the Initial Closing Date does not occur on or before July 31, 2000, this Agreement shall automatically terminate and be of no further force and effect; provided, however, that such termination shall not release any party from liability for any breach of this Agreement by such party that occurs prior to such termination. The obligations of the parties to effect the transactions to be effected at the Second Closing shall terminate if the Second Closing does not occur on or before December 31, 2000; provided, however, that such termination shall not release any party from liability for any breach of this Agreement by such party that occurs prior to such termination. 3. Representations and Warranties of the Company. Except as set forth in the Disclosure Documents, the Company hereby represents and warrants to each of the Purchasers as follows. 3.1 Incorporation. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and is qualified to do business in each jurisdiction in which the character of its properties or the nature of its business requires such qualification, except where the failure to so qualify would not have a material adverse effect upon the Company. The Company has all requisite corporate power and authority to carry on its business as now conducted. The Company has no subsidiaries. 3.2 Capitalization. (a) As of the date of this Agreement, the authorized capital stock of the Company consists of 30,000,000 shares of Common Stock and 10,000,000 shares of Preferred Stock, par value $0.01 per share. As of the date of this Agreement, there are no shares of Preferred Stock issued and outstanding. The number of outstanding shares of Common Stock as of March 31, 2000 is as set forth in the Disclosure Documents. Except for the issuance of shares 3 of Common Stock pursuant to the exercise of outstanding options granted pursuant to the Company's option plans, including such options granted after March 31, 2000, the Company has not issued any capital stock since March 31, 2000 except as described in or contemplated by the Disclosure Documents and this Agreement. Except as set forth in or contemplated by the Disclosure Documents and this Agreement, and except for the issuance of options to purchase shares of the Company's Common Stock pursuant to the Company's option plans, there are no existing options, warrants, calls, preemptive (or similar) rights, subscriptions or other rights, agreements, arrangements or commitments of any character obligating the Company to issue, transfer or sell, or cause to be issued, transferred or sold, any shares of the capital stock of the Company or other equity interests in the Company or any securities convertible into or exchangeable for such shares of capital stock or other equity interests, and there are no outstanding contractual obligations of the Company to repurchase, redeem or otherwise acquire any shares of its capital stock or other equity interests. (b) Prior to the Initial Closing Date, the Company will have filed the Certificate of Designation with the Secretary of State of the State of Delaware designating 10,000 shares of its preferred stock as Series A Preferred Stock and, after such filing, the Company's authorized preferred stock will include such Series A Preferred Stock. Prior to the Second Closing Date, subject to approval thereof by the Company's stockholders, the Company will have filed an amendment to its Amended and Restated Certificate of Incorporation authorizing an additional 70,000,000 shares of Common Stock (the "Common Stock Charter Amendment") with the Secretary of State of the State of Delaware and will have issued the 9,000 Shares to be issued at the Initial Closing. 3.3 Authorization. Except for approval of the Common Stock Charter Amendment by the Company's Stockholders and the filing of such amendment with the Secretary of the State of Delaware, all corporate action on the part of the Company, its officers, directors and stockholders necessary for the authorization of the Series A Preferred Stock and the Common Stock Charter Amendment and the filing of the Certificate of Designation, the authorization, execution, delivery and performance of this Agreement and the Registration Rights Agreement and the consummation of the transactions contemplated herein and therein has been taken. When executed and delivered by the Company, each of this Agreement and the Registration Rights Agreement shall constitute the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as rights to indemnity and contribution may be limited by state or federal securities laws or the public policy underlying such laws, and except as may be limited by bankruptcy, insolvency, reorganization or other laws affecting creditors' rights generally and by general equitable principles. The Company has all requisite corporate power to enter into this Agreement and the Registration Rights Agreement and to carry out and perform its obligations under the terms of this Agreement and the Registration Rights Agreement. The Board of Directors of the Company has taken all action necessary to render inapplicable, as it relates to the Purchasers, the provisions of Section 203 of the General Corporation Law of Delaware. At or prior to the Initial Closing, the Company will have reserved for issuance the shares of Common Stock initially issuable upon conversion of the Series A Preferred Stock to be issued at the Initial Closing. Subject to the approval by its stockholders of the Common Stock Charter Amendment and the filing of such amendment with 4 the Secretary of State of the State of Delaware, the Company will have reserved for issuance the shares of Common Stock initially issuable upon conversion of the Series A Preferred Stock to be issued at the Second Closing. 3.4 Valid Issuance of the Shares. The Shares being purchased by the Purchasers hereunder will, upon issuance pursuant to the terms hereof, be duly authorized and validly issued, fully paid and non-assessable shares of Series A Preferred Stock, free of preemptive or similar rights. Upon their issuance in accordance with the terms of the Series A Preferred Stock, the shares of Common Stock issuable upon conversion of the Shares will be duly authorized, validly issued, fully paid and non-assessable shares of Common Stock, free of all preemptive or similar rights. 3.5 Financial Statements. The financial statements of the Company included in the Disclosure Documents present fairly, in all material respects, the consolidated financial condition of the Company, results of operations and cash flows as of the dates and for the periods indicated. Such financial statements are fairly presented, in all material respects, in accordance with generally accepted accounting principles (except in the case of quarterly financial statements for the absence of footnote disclosure and subject, in the case of interim periods, to normal year-end adjustments which, individually, and in the aggregate, will not be material). Since March 31, 2000, the Company has not incurred any material liabilities or obligations, direct or contingent, other than in the ordinary course of business, and there has been no material adverse change (actual or, to the Company's knowledge, threatened) in the assets, liabilities (contingent or other), affairs, operations, prospects or condition (financial or other) of the Company, other than the continued incurrence of losses in the ordinary course of business. 3.6 Disclosure Documents. The information contained or incorporated by reference in the Disclosure Documents was true and correct in all material respects as of the respective dates of the filing thereof with the SEC; and, as of such respective dates, the Disclosure Documents did not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. 3.7 Consents. All consents, approvals, orders and authorizations required on the part of the Company in connection with the execution, delivery or performance of this Agreement and the Registration Rights Agreement and the consummation of the transactions contemplated herein and therein, other than the (i) expiration of the applicable HSR Act waiting period, (ii) the appropriate notification to the Nasdaq National Market, (iii) stockholder approval of the Common Stock Charter Amendment and the filing of such amendment with the Secretary of State of the State of Delaware and (iv) the filing of the Certificate of Designation with the Secretary of State of the State of Delaware, have been obtained and will be effective as of the Initial Closing Date, other than such filings required to be made after each Closing under applicable federal and state securities laws. 3.8 No Conflict. The execution and delivery of this Agreement and the Registration Rights Agreement by the Company and the consummation of the transactions 5 contemplated hereby and thereby will not conflict with or result in any violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or to a loss of a material benefit under (i) any provision of the Certificate of Incorporation or By-laws of the Company or (ii) any agreement or instrument, permit, franchise, license, judgment, order, statute, law, ordinance, rule or regulations, applicable to the Company or its properties or assets. 3.9 Brokers or Finders. The Company has not incurred, and shall not incur, directly or indirectly, any liability for any brokerage or finders' fees or agents commissions or any similar charges in connection with this Agreement or any transaction contemplated hereby. 3.10 Nasdaq National Market. The Common Stock is listed on the Nasdaq National Market System, and there are no proceedings to revoke or suspend such listing. 3.11 Absence of Litigation. Except as set forth in the Disclosure Documents, there is no action, suit or proceeding or, to the Company's knowledge, any investigation, pending, or to the Company's knowledge, threatened by or before any governmental body against the Company and in which an unfavorable outcome, ruling or finding in any said matter, or for all matters taken as a whole, would reasonably be expected to have a material adverse effect on the Company. The foregoing includes, without limitation, any such action, suit, proceeding or investigation that questions this Agreement or the Registration Rights Agreement or the right of the Company to execute, deliver and perform under same. 4. Representations and Warranties of the Purchasers. Each Purchaser severally for itself, and not jointly with the other Purchasers, represents and warrants to the Company as follows: 4.1 Authorization. All action on the part of such Purchaser necessary for the authorization, execution, delivery and performance of this Agreement and the Registration Rights Agreement and the consummation of the transactions contemplated herein and therein has been taken. Each of this Agreement and the Registration Rights Agreement constitutes the legal, valid and binding obligation of such Purchaser, enforceable against such Purchaser in accordance with its terms, except as such may be limited by bankruptcy, insolvency, reorganization or other laws affecting creditors' rights generally and by general equitable principles. Such Purchaser has all requisite power to enter into each of this Agreement and the Registration Rights Agreement and to carry out and perform its obligations under the terms of this Agreement and the Registration Rights Agreement. 4.2 Purchase Entirely for Own Account, Etc. Such Purchaser is acquiring the Shares for its own account, and not with a view to, or for sale in connection with, any distribution of the Shares in violation of the Securities Act. Except as contemplated by this Agreement, such Purchaser has no present agreement, undertaking, arrangement, obligation or commitment providing for the disposition of the Shares. Such Purchaser is a partnership that has not been organized, reorganized or recapitalized specifically for the purpose of investing in the Shares or any shares of Common Stock issuable upon conversion of the Shares. 6 4.3 Investor Status; Etc. Such Purchaser certifies and represents to the Company that at the time such Purchaser acquires any of the Shares, such Purchaser will be an "accredited investor" as defined in Rule 501 of Regulation D promulgated under the Securities Act. Such Purchaser's financial condition is such that it is able to bear the risk of holding the Shares for an indefinite period of time and the risk of loss of its entire investment. Such Purchaser has been afforded the opportunity to ask questions of and receive answers from the management of the Company concerning this investment and has sufficient knowledge and experience in investing in companies similar to the Company in terms of the Company's stage of development so as to be able to evaluate the risks and merits of its investment in the Company. 4.4 Shares Not Registered. Such Purchaser understands that the Shares (and any shares of Common Stock issuable upon conversion of the Shares) have not been registered under the Securities Act, by reason of their issuance by the Company in a transaction exempt from the registration requirements of the Securities Act, and that the Shares (and any shares of Common Stock issuable upon conversion of the Shares) must continue to be held by such Purchaser unless a subsequent disposition thereof is registered under the Securities Act or is exempt from such registration. The Purchaser understands that the exemptions from registration afforded by Rule 144 (the provisions of which are known to it) promulgated under the Securities Act depend on the satisfaction of various conditions, and that, if applicable, Rule 144 may afford the basis for sales only in limited amounts. 4.5 No Conflict. The execution and delivery of this Agreement and the Registration Rights Agreement by such Purchaser and the consummation of the transactions contemplated hereby and thereby will not conflict with or result in any violation of or default by such Purchaser (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or to a loss of a material benefit under (i) any provision of the organizational documents of such Purchaser or (ii) any agreement or instrument, permit, franchise, license, judgment, order, statute, law, ordinance, rule or regulations, applicable to such Purchaser or its respective properties or assets. 4.6 Brokers. Such Purchaser has not retained, utilized or been represented by any broker or finder in connection with the transactions contemplated by this Agreement. 4.7 Consents. All consents, approvals, orders and authorizations required on the part of such Purchaser in connection with the execution, delivery or performance of this Agreement and the consummation of the transactions contemplated herein, other than the expiration of the applicable HSR Act waiting period, have been obtained and will be effective as of the Closing Date. 5. Covenants. 5.1. HSR Act Filing. The Company and the Purchasers shall, as soon as practicable after the date of this Agreement, file Notification and Report Forms under the HSR Act with the Federal Trade Commission (the "FTC") and the Antitrust Division of the 7 Department of Justice (the "Antitrust Division") relating to the transaction contemplated by this Agreement and shall use their reasonable efforts to respond as promptly as practicable to all inquiries received from the FTC or the Antitrust Division for additional information or documentation. 5.2 Board Nominees. The Company will nominate, recommend the election by the Company's stockholders and use its best efforts to effect the election as directors of (a) two (2) individuals designated by Warburg, acceptable to the Company's Board of Directors acting in good faith, for so long as Warburg owns beneficially (within the meaning of Rule 13d-3 under the Exchange Act) at least 20% of the outstanding shares of Common Stock (including as outstanding for this purpose shares of Common Stock issuable upon conversion of the Series A Preferred Stock), and (b) one (1) individual designated by Warburg, acceptable to the Company's Board of Directors acting in good faith, for so long as Warburg owns beneficially (within the meaning of such Rule 13d-3) at least (i) 10% of the outstanding shares of Common Stock (including as outstanding for this purpose shares of Common Stock issuable upon conversion of the Series A Preferred Stock) or (ii) 90% of the Shares purchased pursuant to this Agreement (or shares of Common Stock issuable upon conversion of such Shares). Any director elected by the holders of the Series A Preferred Stock shall be deemed to be a director satisfying the requirements of this Section 5.2. Any vacancy created by the death, disability, retirement or removal of any such individual shall be filled by an individual similarly designated by Warburg and acceptable to the Company's Board of Directors acting in good faith. 5.3 Standstill. Each of the Purchasers and Warburg, Pincus & Co., the sole general partner of each of the Purchasers ("WP"), hereby agree that, for a period of five years from the date of this Agreement, neither WP, the Purchasers nor any Affiliate or others with whom WP is acting in concert will, directly or indirectly, and WP will not, for its own account, without the prior written consent of the Board: (a) acquire or agree to acquire, publicly offer, or make any public proposal with respect to the possible acquisition of (A) beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of any securities of the Company in excess of the thirty percent (30%) of the then outstanding shares of Common Stock (including as outstanding for this purpose shares of Common Stock issuable upon conversion of the Series A Preferred Stock), (B) any Company business or any substantial part of the Company's assets, or any subsidiary or division thereof or successor to the Company, or (C) any rights or options to acquire any of the foregoing from any Person; (b) make, or in any way participate, directly or indirectly, in any "solicitation" of "proxies" to vote (as such terms are used in the rules under the Exchange Act), or seek to advise or influence any person or entity with respect to the voting of any voting securities of the Company; (c) make any public announcement with respect to any transaction or proposed or contemplated transaction between the Company or any of its security holders and the Purchasers or WP, including, without limitation, any tender or exchange offer, merger or other business combination or acquisition of a material portion of the assets of the Company; 8 (d) publicly propose or publicly disclose an intent to propose any form of business combination, acquisition, restructuring, recapitalization or other similar transaction relating to the Company; (e) enter into any discussions, negotiations, arrangements or understandings with any third party with respect to the Company in connection with any of matters referred to in clauses (a)-(d) above; (f) publicly disclose any intention, plan or arrangement inconsistent with the foregoing; (g) publicly request the Company, directly or indirectly, to amend or waive any provisions of this Section 5.3; or (h) take any action which would be reasonably likely to require the Company to make a public announcement regarding a possible transaction involving the Company. Notwithstanding the foregoing, (i) the provisions of this Section 5.3 shall not limit or restrict any designees of Warburg who are members of the Company's Board of Directors pursuant to Section 5.2 from taking any actions in their capacities as such members of the Company's Board of Directors, and (iii) this Section 5.3 shall not affect the Company's obligations under Section 5.2. 5.4 Covenant Pending Each Closing. Between the date of this Agreement and the date of each Closing, the Company will promptly advise the Purchasers of any action or event of which it becomes aware which has the effect of making incorrect any of the Company's representations or warranties or which has the effect of rendering any of the Company's covenants incapable of performance. 5.5 Reasonable Efforts. All of the parties to this Agreement shall use commercially reasonable efforts to cause the conditions to each Closing to be satisfied as promptly as reasonably practicable. In this connection, the Company shall seek confirmation from the NASDAQ National Market that the voting provisions of the Series A Preferred Stock are consistent with its qualification requirements; provided, however, that if such voting provisions would adversely affect the continued listing of the Company's Common Stock on the NASDAQ National Market, the parties shall agree in good faith to an appropriate modification of such provisions to eliminate such adverse effect. 6. Conditions Precedent. 6.1. Conditions to the Obligation of the Purchasers to Consummate each Closing. The obligation of each Purchaser to consummate the transactions to be consummated at a Closing and to purchase and pay for the Shares being purchased by it at such Closing pursuant to this Agreement is subject to the satisfaction of the following conditions precedent: 9 (a) The representations and warranties contained herein of the Company shall be true and correct on and as of the Closing Date with the same force and effect as though made on and as of the Closing Date (it being understood and agreed by each Purchaser that, in the case of any representation and warranty of the Company contained herein (i) which is not hereinabove qualified by application thereto of a materiality standard, such representation and warranty need be true and correct only in all material respects in order to satisfy as to such representation or warranty the condition precedent set forth in the foregoing provisions of this Section 6.1 (a) or (ii) which is made as of a specific date, such representation and warranty need be true and correct only as of such specific date in order to satisfy as to such representation and warranty the condition precedent set forth in the foregoing provisions of this Section 6.1(a)), provided, however, .that the occurrence of any event or circumstance specified on Schedule 6.1(a) hereto between the date hereof and the applicable Closing Date shall not be deemed to result in any representation or warranty in this Agreement being untrue or incorrect on and as of such Closing Date. (b) The Company shall have performed in all material respects all obligations and conditions herein required to be performed or observed by the Company on or prior to such Closing Date. (c) The Purchasers shall have received a certificate, dated such Closing Date, signed by each of the President and the Chief Financial Officer of the Company, certifying on behalf of the Company, that the conditions specified in the foregoing Sections 6.1(a) and (b) have been fulfilled. (d) The Registration Rights Agreement shall have been executed and delivered by the Company. (e) The purchase of and payment for the Shares by the Purchasers shall not be prohibited or enjoined by any law or governmental or court order or regulation. (f) The Purchasers shall have received from the Company's counsel, Hale and Dorr LLP, an opinion substantially in the form of EXHIBIT D hereto. (g) All instruments and corporate proceedings in connection with the transactions contemplated by this Agreement to be consummated at such Closing shall be reasonably satisfactory in form and substance to the Purchasers and their counsel, Willkie Farr & Gallagher, and the Purchasers and their counsel shall have received copies (executed or certified, as may be appropriate) of all documents which the Purchasers or their counsel may have reasonably requested in connection with such transactions. (h) The waiting period under the HSR Act shall have expired or been terminated. (i) The Certificate of Designation shall have been filed by the Company with the Secretary of State of the State of Delaware. 10 (j) In the case of the Second Closing, the Common Stock Charter Amendment shall have been approved by the Company's stockholders and filed by the Company with the Secretary of State of the State of Delaware. (k) The Company shall have filed an Additional Listing Application with the Nasdaq National Market for the shares of Common Stock to be issued upon conversion of the Shares purchased at such Closing. 6.2. Conditions to the Obligation of the Company to Consummate each Closing. The obligation of the Company to consummate the transactions to be consummated at a Closing and to issue and sell to each of the Purchasers the Shares to be purchased by it at such Closing pursuant to this Agreement is subject to the satisfaction of the following conditions precedent: (a) The representations and warranties contained herein of such Purchaser shall be true and correct on and as of such Closing Date with the same force and effect as though made on and as of such Closing Date (it being understood and agreed by the Company that, in the case of any representation and warranty of each Purchaser contained herein which is not hereinabove qualified by application thereto of a materiality standard, such representation and warranty need be true and correct only in all material respects in order to satisfy as to such representation or warranty the condition precedent set forth in the foregoing provisions of this Section 6.2(a)). (b) The Registration Rights Agreement shall have been executed and delivered by each Purchaser. (c) The Purchasers shall have performed in all material respects all obligations and conditions herein required to be performed or observed by the Purchasers on or prior to such Closing Date. (d) The sale of the Shares by the Company shall not be prohibited or enjoined by any law or governmental or court order or regulation. (e) Each of the other Purchasers shall have purchased, in accordance with this Agreement, the number of shares of Series A Preferred Stock set forth opposite its name with respect to such Closing under the heading "Number of Shares to be Purchased" as set forth on Exhibit A hereto. (f) All instruments and corporate proceedings in connection with the transactions contemplated by this Agreement to be consummated at such Closing shall be reasonably satisfactory in form and substance to the Company, and the Company shall have received counterpart originals, or certified or other copies of all documents, including without limitation records of corporate or other proceedings, which it may have reasonably requested in connection therewith. 11 (g) The waiting period under the Hartt-Scott-Rodino Act shall have expired or been terminated. (h) The Certificate of Designation shall have been filed by the Company with the Secretary of State of the State of Delaware. (i) In the case of the Second Closing, the Common Stock Charter Amendment shall have been approved by the Company's stockholders and filed by the Company with the Secretary of State of the State of Delaware. (j) The Company shall have filed an Additional Listing Application with the Nasdaq National Market for the shares of Common Stock to be issued upon conversion of the Shares purchased at such Closing. 7. Transfer, Legends. 7.1. Securities Law Transfer Restrictions. No Purchaser shall sell, assign, pledge, transfer or otherwise dispose or encumber any of the Shares being purchased by it hereunder or any shares of Common Stock issuable upon conversion of the Shares, except (i) pursuant to an effective registration statement under the Securities Act or (ii) pursuant to an available exemption from registration under the Securities Act and applicable state securities laws and, if requested by the Company, upon delivery by such Purchaser of an opinion of counsel reasonably satisfactory to the Company to the effect that the proposed transfer is exempt from registration under the Securities Act and applicable state securities laws. Any transfer or purported transfer of the Shares or underlying shares of Common Stock in violation of this Section 7.1 shall be voidable by the Company. The Company shall not register any transfer of the Shares or underlying shares of Common Stock in violation of this Section 7.1. The Company may, and may instruct any transfer agent for the Company, to place such stop transfer orders as may be required on the transfer books of the Company in order to ensure compliance with the provisions of this Section 7.1. 7.2. Legends. Each certificate representing any of the Shares, and each certificate representing any shares of Common Stock issuable upon conversion of the Shares, shall be endorsed with the legends set forth below, and each Purchaser covenants that, except to the extent such restrictions are waived by the Company, it shall not transfer the shares represented by any such certificate without complying with the restrictions on transfer described in this Agreement and the legends endorsed on such certificate: "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE OFFERED, SOLD, ASSIGNED, PLEDGED TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER SAID ACT AND, IF REQUESTED BY THE COMPANY, UPON DELIVERY OF AN OPINION OF 12 COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT THE PROPOSED TRANSFER IS EXEMPT FROM SAID ACT." 8. Miscellaneous Provisions. 8.1 Public Statements or Releases. None of the Purchasers shall make, issue, or release any announcement, whether to the public generally, or to any of its suppliers or customers, with respect to this Agreement or the transactions provided for herein, or make any statement or acknowledgment of the existence of, or reveal the status of, this Agreement or the transactions provided for herein, without the prior consent of the other parties, which shall not be unreasonably withheld or delayed, provided that nothing in this Section 8.1 shall prevent any of the parties hereto from making such public announcements as it may consider necessary in order to satisfy its legal obligations, but to the extent not inconsistent with such obligations, it shall provide the other parties with an opportunity to review and comment on any proposed public announcement before it is made. 8.2 Further Assurances. Each party agrees to cooperate fully with the other party and to execute such further instruments, documents and agreements and to give such further written assurances, as may be reasonably requested by the other party to better evidence and reflect the transactions described herein and contemplated hereby, and to carry into effect the intents and purposes of this Agreement. 8.3 Rights Cumulative. Each and all of the various rights, powers and remedies of the parties shall be considered to be cumulative with and in addition to any other rights, powers and remedies which such parties may have at law or in equity in the event of the breach of any of the terms of this Agreement. The exercise or partial exercise of any right, power or remedy shall neither constitute the exclusive election thereof nor the waiver of any other right, power or remedy available to such party. 8.4 Pronouns. All pronouns or any variation thereof shall be deemed to refer to the masculine, feminine or neuter, singular or plural, as the identity of the person, persons, entity or entities may require. 8.5 Notices. (a) Any notices, reports or other correspondence (hereinafter collectively referred to as "correspondence") required or permitted to be given hereunder shall be sent by postage prepaid first class mail, courier or fax or delivered by hand to the party to whom such correspondence is required or permitted to be given hereunder. The date of giving any notice shall be the date of its actual receipt. (b) All correspondence to the Company shall be addressed as follows: Daniel E. Geffken, Vice President-- Finance and Chief Financial Officer 13 Transkaryotic Therapies, Inc. 195 Albany Street Cambridge, MA 02139 With a copy to: David E. Redlick, Esq. Hale and Dorr, LLP 60 State Street Boston, MA 02109 (c) All correspondence to any Purchaser shall be sent to such Purchaser at the address set forth in EXHIBIT B. (d) Any entity may change the address to which correspondence to it is to be addressed by notification as provided for herein. 8.6 Captions. The captions and paragraph headings of this Agreement are solely for the convenience of reference and shall not affect its interpretation. 8.7 Severability. Should any part or provision of this Agreement be held unenforceable or in conflict with the applicable laws or regulations of any jurisdiction, the invalid or unenforceable part or provisions shall be replaced with a provision which accomplishes, to the extent possible, the original business purpose of such part or provision in a valid and enforceable manner, and the remainder of this Agreement shall remain binding upon the parties hereto. 8.8 Governing Law; Injunctive Relief. (a) This Agreement shall be governed by and construed in accordance with the internal and substantive laws of Delaware and without regard to any conflicts of laws concepts which would apply the substantive law of some other jurisdiction. (b) Each of the parties hereto acknowledges and agrees that damages will not be an adequate remedy for any material breach or violation of this Agreement if such material breach or violation would cause immediate and irreparable harm (an "Irreparable Breach"). Accordingly, in the event of a threatened or ongoing Irreparable Breach, each party hereto shall be entitled to seek, in any state or federal court in Delaware, equitable relief of a kind appropriate in light of the nature of the ongoing or threatened Irreparable Breach, which relief may include, without limitation, specific performance or injunctive relief; provided, however, that if the party bringing such action is unsuccessful in obtaining the relief sought, the moving party shall pay the non-moving party's reasonable costs, including attorney's fees, incurred in connection with defending such action. Such remedies shall not be the parties' exclusive remedies, but shall be in addition to all other remedies provided in this Agreement. 14 8.9 Waiver. No waiver of any term, provision or condition of this Agreement, whether by conduct or otherwise, in any one or more instances, shall be deemed to be, or be construed as, a further or continuing waiver of any such term, provision or condition or as a waiver of any other term, provision or condition of this Agreement. 8.10 Expenses. The Company shall pay the reasonable fees and expenses of Warburg incurred in connection with its due diligence related to its investment in the Shares and in connection with the negotiation, preparation, execution and delivery of this Agreement, the Registration Rights Agreement and the other instruments and agreements entered into pursuant to this Agreement, and any amendments to the same, up to an aggregate amount of $125,000, said payment to be made no later than 30 days after a bill for such fees and expenses has been sent by Warburg to the Company. 8.11 Assignment. The rights and obligations of the parties hereto shall inure to the benefit of and shall be binding upon the authorized successors and permitted assigns of each party. Neither party may assign its rights or obligations under this Agreement or designate another person (i) to perform all or part of its obligations under this Agreement or (ii) to have all or part of its rights and benefits under this Agreement, in each case without the prior written consent of the other party. In the event of any assignment in accordance with the terms of this Agreement, the assignee shall specifically assume and be bound by the provisions of the Agreement by executing and agreeing to an assumption agreement reasonably acceptable to the other party. 8.12 Survival. The respective representations and warranties given by the parties hereto, and the other covenants and agreements contained herein (other than the covenants and agreements in Sections 5.2 and 5.3 of this Agreement, which shall survive without limitation), shall survive the Closings and the consummation of the transactions contemplated herein for a period of two years, without regard to any investigation made by any party. 8.13 Entire Agreement. This Agreement and the Registration Rights Agreement together constitute the entire agreement between the parties hereto respecting the subject matter hereof and supersede all prior agreements, negotiations, understandings, representations and statements respecting the subject matter hereof, whether written or oral. No modification, alteration, waiver or change in any of the terms of this Agreement shall be valid or binding upon the parties hereto unless made in writing and duly executed by the Company and the Purchasers beneficially holding in the aggregate at least a majority of the Common Stock of the Company issued or issuable upon the conversion of the Shares. [Remainder of page intentionally left blank.] 15 IN WITNESS WHEREOF, the parties hereto have executed this Agreement under seal as of the day and year first above written. TRANSKARYOTIC THERAPIES, INC. By: /s/ DANIEL E. GEFFKEN ------------------------------ Name: Daniel E. Geffken Title: VP, Finance; Chief Financial Officer WARBURG, PINCUS EQUITY PARTNERS, L.P. By: WARBURG, PINCUS & CO., General Partner By: /s/ JONATHAN LEFF ------------------------------ Name: Jonathan Leff Title: Partner WARBURG, PINCUS NETHERLANDS EQUITY PARTNERS I, C.V. By: WARBURG, PINCUS & CO., General Partner By: /s/ JONATHAN LEFF ------------------------------ Name: Jonathan Leff Title: Partner WARBURG, PINCUS NETHERLANDS EQUITY PARTNERS II, C.V. By: WARBURG, PINCUS & CO., General Partner By: /s/ JONATHAN LEFF ------------------------------ Name: Jonathan Leff Title: Partner WARBURG, PINCUS NETHERLANDS EQUITY PARTNERS III, C.V. By: WARBURG, PINCUS & CO., General Partner By: /s/ JONATHAN LEFF ------------------------------ Name: Jonathan Leff Title: Partner 16 For purposes of Section 5.3: WARBURG, PINCUS & CO., General Partner By: /s/ JONATHAN LEFF ------------------------------ Name: Jonathan Leff Title: Partner 17 Exhibit A
Initial Second Aggregate Closing No. Initial Closing Closing No. Second Closing Investor Name and Address Number of Shares of Shares Purchase Price of Shares Purchase Price ------------------------- ---------------- --------- -------------- --------- -------------- Warburg, Pincus Equity Partners, L.P. 9,450 8,505 $85,050,000 945 $9,450,000 466 Lexington Avenue New York, NY 10017 Facsimile: (212) 878-9351 Attention: Mr. Jonathan Leff Warburg, Pincus Netherlands Equity 300 270 $2,700,000 30 $300,000 Partners I, C.V. 466 Lexington Avenue New York, NY 10017 Facsimile: (212) 878-9351 Attention: Mr. Jonathan Leff Warburg, Pincus Netherlands Equity 200 180 $1,800,000 20 $200,000 Partners II, C.V. 466 Lexington Avenue New York, NY 10017 Facsimile: (212) 878-9351 Attention: Mr. Jonathan Leff Warburg, Pincus Netherlands Equity 50 45 $450,000 5 $50,000 Partners III, C.V. 466 Lexington Avenue New York, NY 10017 Facsimile: (212) 878-9351 Attention: Mr. Jonathan Leff
DISCLOSURE SCHEDULE FOR STOCK PURCHASE AGREEMENT BY AND AMONG TRANSKARYOTIC THERAPIES, INC. AND SEVERAL PURCHASERS COLLECTIVELY KNOWN AS "WARBURG PINCUS" DATED: May 18, 2000 3.1 Incorporation ------------- (a) TKT Securities Corp., organized to do business under the laws of the Commonwealth of Massachusetts, is a wholly-owned subsidiary of the Company. (b) TKT Europe - 5S AB, organized to do business under the laws of Sweden, is an 80% owned subsidiary of the Company. This subsidiary was organized to market the Company's Niche Protein products in Sweden and other European countries. The Company is obligated to fund this entity's operating losses. The Company is also obligated under certain put and call arrangements relating to the capital stock not owned by the Company. 3.2 Capitalization -------------- The Company's option plans provide that the Company may issue up to 4,250,000 shares of Common Stock. As of March 31, 2000, options to purchase 2,335,381 shares of Common Stock were outstanding. Subsequent to March 31, 2000, the Company may issue additional options to purchase shares of its Common Stock under its stock option plans. 3.3 Authorization ------------- None 3.4 Valid Issuance of the Shares ---------------------------- None 3.5 Financial Statements -------------------- (a) See Section 3.1(b). (b) The Company is presently engaged in negotiations with the Massachusetts Institute of Technology for the long term lease of over 125,000 square feet of office and laboratory space in Cambridge, Massachusetts. This lease would be a material liability of the Company. (c) On May 15, 2000, the trial between the Company and Amgen Inc. opened. The trial will decide Amgen's allegations that the Company's Gene-Activated erythopoietin ("GA-EPO") and processes for producing GA-EPO infringe Amgen's U.S. Patent Nos. 5,547,933, 5,618,698, 5,621,080, 5,756,349 and 5,955,422. If the outcome of the trial is not favorable to the Company, the Company's prospects may be materially and adversely affected. In connection with the trial, on April 26, 2000, the U.S. District Court of Massachusetts granted Amgen, Inc.'s Motion for Summary Judgment of literal infringement on Claim 1 of U.S. Patent No. 5,955,422. (d) On May 2, 2000, Genzyme General announced completion of a preliminary analysis of the results of a phase 3 trial involving Fabrazyme and its intent to file a Biologics License Application with the Food and Drug Administration. 3.6 Disclosure Documents -------------------- None 3.7 Consents -------- None 3.8 No Conflict ----------- None 3.9 Brokers or Finders ------------------ None 3.10 Nasdaq National Market ---------------------- None 3.11 Absence of Litigation --------------------- See Section 3.5(c). EX-99.3 4 0004.txt CERTIFICATE OF DESIGNATIONS CERTIFICATE OF DESIGNATION, NUMBER, VOTING POWERS, PREFERENCES AND RIGHTS OF SERIES A CONVERTIBLE PREFERRED STOCK OF TRANSKARYOTIC THERAPIES, INC. Pursuant to Section 151 of the General Corporation Law of the State of Delaware The undersigned DOES HEREBY CERTIFY that the following resolution was duly adopted by the Board of Directors of Transkaryotic Therapies, Inc., a Delaware corporation (hereinafter called the "Corporation"), with the preferences and rights set forth therein relating to dividends, conversion, redemption, dissolution and distribution of assets of the Corporation having been fixed by the Board of Directors pursuant to authority granted to it under Article IV of the Corporation's Certificate of Incorporation and in accordance with the provisions of Section 151 of the General Corporation Law of the State of Delaware: RESOLVED: That, pursuant to authority conferred upon the Board of Directors by the Certificate of Incorporation of the Corporation, the Board of Directors hereby authorizes the issuance of 10,000 shares of Series A Convertible Preferred Stock of the Corporation, and hereby fixes the designations, powers, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, of such shares, in addition to those set forth in the Certificate of Incorporation of the Corporation, as follows: 1. DESIGNATION AND AMOUNT. The shares of such series shall be designated "Series A Convertible Preferred Stock" (the "Series A Preferred Stock"), par value $0.01 per share, and the number of shares constituting such series shall be 10,000. 2. DIVIDENDS. The holders of Series A Preferred Stock shall be entitled to receive, when, as and if dividends are declared on shares of Common Stock by the Board of Directors of the Corporation (the "Board of Directors"), dividends per share of Series A Preferred Stock in such an amount as the holders of the Series A Preferred Stock would have received had such holders converted Series A Preferred Stock into Common Stock immediately prior to the record date for such distribution. All dividends declared upon Series A Preferred Stock shall be declared pro rata per share. 3. LIQUIDATION, DISSOLUTION OR WINDING UP. (a) In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, the holders of shares of Series A Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Corporation available for distribution to its stockholders, after and subject to the payment in full of all amounts required to be distributed to the holders of any other Preferred Stock of the Corporation ranking on liquidation prior and in preference to the Series A Preferred Stock (such Preferred Stock being referred to hereinafter as "Senior Preferred Stock") upon such liquidation, dissolution or winding up, but before any payment shall be made to the holders of Common Stock, an amount in cash equal to Ten Thousand Dollars ($10,000) per share, subject to appropriate adjustment in the event of any stock dividend, stock split, stock distribution or combination with respect to the Series A Preferred Stock (the "Stated Value") plus any dividends thereon declared but unpaid (such amount being referred to hereinafter as the "Series A Liquidation Value"). If upon any such liquidation, dissolution or winding up of the Corporation the remaining assets of the Corporation available for the distribution to its stockholders after payment in full of amounts required to be paid or distributed to holders of Senior Preferred Stock shall be insufficient to pay the holders of shares of Series A Preferred Stock the full amount to which they shall be entitled, the holders of shares of Series A Preferred Stock, and any class of stock ranking on liquidation on a parity with the Series A Preferred Stock, shall share ratably in any distribution of the remaining assets and funds of the Corporation in proportion to the respective amounts which would otherwise be payable in respect to the shares held by them upon such distribution if all amounts payable on or with respect to said shares were paid in full. (b) After the payment of all preferential amounts required to be paid to the holders of Senior Preferred Stock and Series A Preferred Stock and any other series of Preferred Stock upon the dissolution, liquidation or winding up of the Corporation, the holders of shares of Common Stock then outstanding shall be entitled to receive the remaining assets and funds of the Corporation available for distribution to its stockholders. (c) The merger or consolidation of the Corporation into or with another corporation, the merger or consolidation of any other corporation into or with the Corporation, or the sale, conveyance, mortgage, pledge or lease of all or substantially all the assets of the Corporation to a person shall not be deemed to be a liquidation, dissolution or winding up of the Corporation for purposes of this Section 3. 4. VOTING. (a) Each issued and outstanding share of Series A Preferred Stock shall be entitled to the number of votes equal to the number of shares of Common Stock into which each such share of Series A Preferred Stock is convertible (as adjusted from time to time pursuant to Section 5 6 hereof), at each meeting of stockholders of the Corporation (or pursuant to any action by written consent) with respect to any and all matters presented to the stockholders of the Corporation for their action or consideration. Except as provided by law, by the provisions of Sections 4(b) and 4(c) below or by the provisions establishing any other series of Preferred Stock, holders of Series A Preferred Stock shall vote together with the holders of Common Stock as a single class. (b) For so long as at least 9,000 shares of the Series A Preferred Stock remain outstanding, the holders of Series A Preferred Stock shall have the exclusive right, voting separately as a class, to elect one director (herein referred to as the "Series A Director"). A Series A Director shall be elected by the affirmative vote of the holders of record of a majority of the outstanding shares of Series A Preferred Stock either at meetings of stockholders at which directors are elected or a special meeting of holders of Series A Preferred Stock. A Series A Director so elected shall serve for a term of one year and until his successor is elected and qualified. Any vacancy in the position of a Series A Director may be filled only by the holders of the Series A Preferred Stock. A Series A Director may, during his or her term of office, be removed at any time, with or without cause, by and only by the affirmative vote, at a special meeting of holders of Series A Preferred Stock called for such purpose, or the written consent, of the holders of record of a majority of the outstanding shares of Series A Preferred Stock. Any vacancy created by such removal may also be filled at such meeting or by such consent. (c) In addition to any other rights provided by law, the Corporation shall not, without first obtaining the affirmative vote or written consent of the holders of a majority of the outstanding shares of Series A Preferred Stock, authorize any additional shares of Series A Preferred Stock or amend, alter or repeal the preferences, special rights or other powers of the Series A Preferred Stock so as to affect adversely the Series A Preferred Stock. For purposes of this Section 4(c), the authorization or issuance of any series of Senior Preferred Stock shall be deemed to affect materially and adversely the Series A Preferred Stock. 5. OPTIONAL CONVERSION. Each share of Series A Preferred Stock may be converted at any time, at the option of the holder thereof, into the number of fully-paid and nonassessable shares of Common Stock obtained by dividing the Stated Value by the Conversion Price then in effect (the "Conversion Rate"), provided, however, that on any redemption of any Series A Preferred Stock or any liquidation of the Corporation, the right of conversion shall terminate at the close of business on the full business day next preceding the date fixed for such redemption or for the payment of any amounts distributable on liquidation to the holders of Series A Preferred Stock. (a) The initial conversion price, subject to adjustment as provided herein, is equal to $28.00 (the "Conversion Price"). The initial Conversion Rate for the Series A Preferred Stock shall be 357.142857 shares of Common Stock for each one share of Series A Preferred Stock surrendered for conversion. The applicable Conversion Rate and Conversion Price from time to time in effect is subject to adjustment as hereinafter provided. 2 (b) The Corporation shall not issue fractions of shares of Common Stock upon conversion of Series A Preferred Stock or scrip in lieu thereof. If any fraction of a share of Common Stock would, except for the provisions of this Section 5(b), be issuable upon conversion of any Series A Preferred Stock, the Corporation shall in lieu thereof pay to the person entitled thereto an amount in cash equal to the current value of such fraction, calculated to the nearest one-hundredth (1/100) of a share, to be computed (i) if the Common Stock is listed on any national securities exchange, on the basis of the last sales price of the Common Stock on such exchange (or the quoted closing bid price if there shall have been no sales) on the date of conversion, or (ii) if the Common Stock shall not be listed, on the basis of the mean between the closing bid and asked prices for the Common Stock on the date of conversion as reported by NASDAQ, or its successor, and if there are not such closing bid and asked prices, on the basis of the fair market value per share as determined by the Board of Directors. (c) Whenever the Conversion Rate and Conversion Price shall be adjusted as provided in Section 6 hereof, the Corporation shall forthwith file at each office designated for the conversion of Series A Preferred Stock, a statement, signed by the Chairman of the Board, the President, any Vice President or Treasurer of the Corporation, showing in reasonable detail the facts requiring such adjustment and the Conversion Rate that will be effective after such adjustment. The Corporation shall also cause a notice setting forth any such adjustments to be sent by mail, first class, postage prepaid, to each record holder of Series A Preferred Stock at his or its address appearing on the stock register. If such notice relates to an adjustment resulting from an event referred to in Section 6(d) hereof, such notice shall be included as part of the notice required to be mailed and published under the provisions of Section 6(d) hereof. (d) In order to exercise the conversion privilege, the holder of any Series A Preferred Stock to be converted shall surrender his or its certificate or certificates therefore to the principal office of the transfer agent for the Series A Preferred Stock (or if no transfer agent be at the time appointed, then the Corporation at its principal office), and shall give written notice to the Corporation at such office that the holder elects to convert the Series A Preferred Stock represented by such certificates, or any number thereof. Such notice shall also state the name or names (with address) in which the certificate or certificates for shares of Common Stock which shall be issuable on such conversion shall be issued, subject to any restrictions on transfer relating to shares of the Series A Preferred Stock or shares of Common Stock upon conversion thereof. If so required by the Corporation, certificates surrendered for conversion shall be endorsed or accompanied by written instrument or instruments of transfer, in form satisfactory to the Corporation, duly authorized in writing. The date of receipt by the transfer agent (or by the Corporation if the Corporation serves as its own transfer agent) of the certificates and notice shall be the conversion date. As soon as practicable after receipt of such notice and the surrender of the certificate or certificates for Series A Preferred Stock as aforesaid, the Corporation shall cause to be issued and delivered at such office to such holder, or on his or its written order, a certificate or certificates for the number of full shares of Common Stock issuable on such conversion in accordance with the provisions hereof, cash as provided in Section 5(b) hereof in respect of any fraction of a share of Common Stock otherwise issuable upon such conversion and, if less than all shares of Series A Preferred Stock represented by the certificate or certificates so surrendered are being converted, a residual certificate or certificates representing the shares of Series A Preferred Stock not converted. (e) The Corporation shall at all times when the Series A Preferred Stock shall be outstanding reserve and keep available out of its authorized but unissued stock, for the purposes of effecting the conversion of the Series A Preferred Stock, such number of its duly authorized shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding Series A Preferred Stock. Before taking any action that would cause an adjustment reducing the Conversion Price below the then par value of the shares of Common Stock issuable upon conversion of the Series A Preferred Stock, the Corporation will take any corporate action that may, in the opinion of its counsel, be necessary in order that the Corporation may validly and legally issue fully-paid and nonassessable shares of such Common Stock at such adjusted conversion price. (f) All shares of Series A Preferred Stock which shall have been surrendered for conversion as herein provided shall no longer be deemed to be outstanding and all rights with respect to such shares, including the rights, if any, to receive notices and to vote, shall forthwith cease and terminate except only the right of the holder thereof to receive shares of Common Stock in exchange therefor and payment of any declared and unpaid dividends thereon. Any shares of Series A Preferred Stock so converted shall be retired and canceled and shall not be reissued, and the Corporation may from time to time take such appropriate action as may be necessary to reduce the authorized Series A Preferred Stock accordingly. 3 6. CONVERSION PRICE ADJUSTMENTS. (a) In case the Corporation shall at any time (i) subdivide the outstanding Common Stock or (ii) issue a dividend on its outstanding Common Stock payable in shares of Common Stock, the number of shares of Common Stock issuable upon conversion of the Series A Preferred Stock shall be proportionately increased by the same ratio as the subdivision or dividend (with appropriate adjustments to the Conversion Price in effect immediately prior to such subdivision or dividend). In case the Corporation shall at any time combine its outstanding Common Stock, the number of shares issuable upon conversion of the Series A Preferred Stock immediately prior to such combination shall be proportionately decreased by the same ratio as the combination (with appropriate adjustments to the Conversion Price in effect immediately prior to such combination). (b) In the event the Corporation shall declare a dividend upon the Common Stock (other than a dividend payable in Common Stock) payable otherwise than out of earnings or earned surplus, determined in accordance with generally accepted accounting principles, including the making of appropriate deductions for minority interests, if any, in subsidiaries (herein referred to as "Liquidating Dividends"), then, as soon as possible after the conversion of any shares of Series A Preferred Stock, the Corporation shall pay to the person converting such shares of Series A Preferred Stock an amount equal to the aggregate value of all Liquidating Dividends that such person would have received had the person converted such shares of Series A Preferred Stock immediately prior to the record date for such Liquidating Dividend. For the purposes of this Section 6(b), a dividend other than in cash shall be considered payable out of earnings or earned surplus only to the extent that such earnings or earned surplus are charged an amount equal to the fair value of such dividend as determined in good faith by the Board of Directors. (c) If any capital reorganization or reclassification of the capital stock of the Corporation, or consolidation or merger of the Corporation with another corporation in which the holders of Common Stock and Series A Preferred Stock prior to such consolidation or merger hold at least 51% of the combined voting power of the surviving person in such merger or consolidation immediately following its effective date, shall be effected in such a way that holders of Common Stock shall be entitled to receive stock, securities, cash or other property with respect to or in exchange for Common Stock, then, as a condition of such reorganization, reclassification, consolidation or merger, lawful and adequate provision shall be made whereby the holders of the Series A Preferred Stock shall have the right to acquire and receive upon conversion of the Series A Preferred Stock such shares of stock, securities, cash or other property issuable or payable (as part of such reorganization, reclassification, consolidation or merger) with respect to or in exchange for such number of outstanding shares of Common Stock as would have been received upon conversion of the Series A Preferred Stock at the Conversion Price then in effect. Any other consolidation or merger of the Corporation with another corporation or the sale of all or substantially all of its assets to another corporation shall be effected in such a way that the holders of the Series A Preferred Stock shall be entitled to receive, in exchange for their shares of Series A Preferred Stock, the stock, securities, cash or other property payable to holders of Common Stock as if the holders of Series A Preferred Stock had converted the Series A Preferred Stock in to Common Stock immediately prior to the effective date of such consolidation, merger or sale. The Corporation will not effect any such consolidation, merger or sale, unless prior to the consummation thereof the successor corporation (if other than the Corporation) resulting from such consolidation or merger or the corporation purchasing such assets shall assume by written instrument mailed or delivered to the holders of the Series A Preferred Stock at the last address of each such holder appearing on the books of the Corporation, the obligation to deliver to each such holder such shares of stock, securities or assets as, in accordance with the foregoing provisions, such holder may be entitled to receive. (d) In the event that: (1) the Corporation shall offer for subscription pro rata to the holders of its Common Stock any additional shares of stock of any class or other rights, or (2) there shall be any capital reorganization or reclassification of the capital stock of the Corporation, including any subdivision or combination of its outstanding shares of Common Stock, or consolidation or merger of the Corporation with, or sale of all or substantially all of its assets to, another corporation, or 4 (3) there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Corporation; then, in connection with such event, the Corporation shall give to the holders of the Series A Preferred Stock: (i) at least twenty (20) days prior written notice of the date on which the books of the Corporation shall close or a record shall be taken for such dividend, distribution or subscription rights or for determining rights to vote in respect of any such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding up; and (ii) in the case of any such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding up, at least twenty (20) days prior written notice of the date when the same shall take place. Such notice in accordance with the foregoing clause (i) shall also specify, in the case of any such dividend, distribution or subscription rights, the date on which the holders of Common Stock shall be entitled thereto, and such notice in accordance with the foregoing clause (ii) shall also specify the date on which the holders of Common Stock shall be entitled to exchange their Common Stock for securities or other property deliverable upon such reorganization, reclassification consolidation, merger, sale, dissolution, liquidation or winding up, as the case may be. Each such written notice shall be given by first class mail, postage prepaid, addressed to the holders of the Series A Preferred Stock at the address of each such holder as shown on the books of the Corporation. (e) If at any time or from time to time on or after the date on which shares of Series A Preferred Stock are initially issued, the Corporation shall grant, issue or sell any options, convertible securities or rights to purchase property (the "Purchase Rights") pro rata to the record holders of any class of Common Stock and such Purchase Rights are not issued to the holders of Series A Preferred Stock and such grants, issuances or sales do not result in an adjustment of the Conversion Price under this Section 6, then each holder of Series A Preferred Stock shall be entitled to acquire (within thirty (30) days after the later to occur of the initial exercise date of such Purchase Rights or receipt by such holder of the notice concerning Purchase Rights to which such holder shall be entitled under Section 6(d)) and upon the terms applicable to such Purchase Rights either: (i) the aggregate Purchase Rights which such holder could have acquired if it had held the number of shares of Common Stock acquirable upon conversion of the Series A Preferred Stock immediately before the grant, issuance or sale of such Purchase Rights; provided that if any Purchase Rights were distributed to holders of Common Stock without the payment of additional consideration by such holders, corresponding Purchase Rights shall be distributed to the holders of the Series A Preferred Stock as soon as possible and it shall not be necessary for the holder of the Series A Preferred Stock specifically to request delivery of such rights; or (ii) in the event that any such Purchase Rights shall have expired or shall expire prior to the end of said thirty (30) day period, the right to acquire the number of shares of Common Stock or the amount of property which such holder could have acquired upon such exercise at the time or times at which the Corporation granted, issued or sold such expired Purchase Rights on the terms of the Purchase Rights so granted. 7. REDEMPTION. (a) The Corporation, at its option, may redeem (to the extent that such redemption shall not violate any applicable provisions of the General Corporation Law of the State of Delaware) all, but not less than all, of the shares of Series A Preferred Stock at a price equal to the then Series A Liquidation Value (subject to adjustment in the event of any stock dividend, stock split, stock distribution or combination with respect to such shares) (such price is hereinafter referred to as the "Redemption Price"), at any time after December 15, 2000 (any such date of redemption is hereafter referred to as an "Redemption Date"), provided that no shares of Series A 5 Preferred Stock may be so called for redemption unless the average of the closing prices per share of Common Stock for any twenty (20) consecutive trading days ending within twenty (20) business days of the date on which notice of such redemption is given to the holders of the Series A Preferred Stock, shall have been at least $35.00 (subject to appropriate adjustment in the event of any stock dividend, stock split, stock distribution or combination). For purposes of the foregoing calculation, "closing price" shall mean for any given date: (i) if the Common Stock is listed on any national securities exchange or quoted on Nasdaq, on the basis of the last sales price of the Common Stock on such exchange or Nasdaq (or the quoted closing bid price if there shall have been no sales) on such date, or (ii) if no last sales prices are then being quoted for the Common Stock, on the basis of the mean between the closing bid and asked prices for the Common Stock on such date as reported by Nasdaq, or its successor, or (iii) if there are no such closing bid and asked prices, on the basis of the fair market value per share as determined by the Board of Directors of the Corporation. (b) At least thirty (30) days prior to each Redemption Date, written notice shall be mailed, postage prepaid, to each holder of record of Series A Preferred Stock to be redeemed, at his or its post office address last shown on the records of the Corporation, notifying such holder of the number of shares so to be redeemed, specifying the Redemption Date and the date on which such holder's conversion rights (pursuant to Section 5 hereof) as to such shares terminate and calling upon such holder to surrender to the Corporation, in the manner and at the place designated, his or its certificate or certificates representing the shares to be redeemed (such notice is hereinafter referred to as the "Redemption Notice"). On or prior to the Redemption Date, each holder of Series A Preferred Stock to be redeemed shall surrender his or its certificate or certificates representing such shares to the Corporation, in the manner and at the place designated in the Redemption Notice, and thereupon the Redemption Price of such shares shall be payable to the order of the person whose name appears on such certificate or certificates as the owner thereof and each surrendered certificate shall be canceled. From and after the Redemption Date, unless there shall have been a default in payment of the Redemption Price, all rights of the holders of the Series A Preferred Stock designated for redemption in the Redemption Notice as holders of Series A Preferred Stock of the Corporation (except the right to receive the Redemption Price without interest upon surrender of their certificate or certificates) shall cease with respect to such shares, and such shares shall not thereafter be transferred on the books of the Corporation or be deemed to be outstanding for any purpose whatsoever. (c) Except as provided in paragraph (a) above, the Corporation shall have no right to redeem the shares of Series A Preferred Stock other than with the consent of the holders of 66 2/3% of the then outstanding shares of Series A Preferred Stock. Any shares of Series A Preferred Stock so redeemed shall be permanently retired, shall no longer be deemed outstanding and shall not under any circumstances be reissued, and the Corporation may from time to time take such appropriate corporate action as may be necessary to reduce the authorized Series A Preferred Stock accordingly. Nothing herein contained shall prevent or restrict the purchase by the Corporation, from time to time either at public or private sale, of the whole or any part of the Series A Preferred Stock at such price or prices as the Corporation may determine, subject to the provisions of applicable law. IN WITNESS WHEREOF, Transkaryotic Therapies, Inc. has caused this Certificate of Designation, Number, Voting Powers, Preferences and Rights of Series A Convertible Preferred Stock to be duly executed by its ____________ this day of June, 2000. TRANSKARYOTIC THERAPIES, INC. By ------------------------------ [Name:] [Title:] (TM) 6 EX-99.4 5 0005.txt REGISTRATION RIGHTS AGREEMENT Conformed Copy TRANSKARYOTIC THERAPIES, INC. REGISTRATION RIGHTS AGREEMENT REGISTRATION RIGHTS AGREEMENT, dated as of June 9, 2000, among the investors listed on Schedule I hereto (the "Investors") and Transkaryotic Therapies, Inc., a Delaware corporation (the "Company"). R E C I T A L S - - - - - - - - WHEREAS, the Investors have, pursuant to the terms of the Stock Purchase Agreement, dated as of May 18, 2000, by and among the Company and the Investors (the "Purchase Agreement"), agreed to purchase shares of Series A Convertible Preferred Stock, par value $0.01 per share, of the Company (the "Series A Preferred Stock"); and WHEREAS, the shares of Series A Preferred Stock are convertible into shares of common stock, par value $0.01 per share, of the Company (the "Common Stock"); and WHEREAS, the Company has agreed, as a condition precedent to the Investors' obligations under the Purchase Agreement, to grant the Investors certain registration rights; and WHEREAS, the Company and the Investors desire to define the registration rights of the Investors on the terms and subject to the conditions herein set forth. NOW, THEREFORE, in consideration of the foregoing premises and for other good and valuable consideration, the parties hereby agree as follows: SECTION 1. DEFINITIONS As used in this Agreement, the following terms have the respective meaning set forth below: (a) Commission: shall mean the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act; (b) Exchange Act: shall mean the Securities Exchange Act of 1934, as amended and the rules and regulations of the Commission issued under such Act as they may, from time to time, be in effect; (c) Holder: shall mean the Investors and any persons or entities to whom the rights granted under this Agreement are transferred by any Investor in accordance with the terms of this Agreement; (d) Initiating Holder: shall mean any Holder or Holders who in the aggregate are Holders of more than 50% of the then outstanding Registrable Securities; (e) Person: shall mean an individual, partnership, joint-stock company, corporation, trust or unincorporated organization, and a government or agency or political subdivision thereof; (f) register, registered and registration: shall mean a registration effected by preparing and filing a registration statement in compliance with the Securities Act (and any post-effective amendments filed or required to be filed) and the declaration or ordering of effectiveness of such registration statement; (g) Registrable Securities: shall mean (A) shares of Common Stock issuable upon conversion of the shares of Series A Preferred Stock and (B) any additional shares of Common Stock acquired by the Investors, and (C) any stock of the Company issued as a dividend or other distribution with respect to, or in exchange for or in replacement of, the shares of Series A Preferred Stock or Common Stock referred to in clause (A) or (B); provided, however, that shares of Common Stock which are Registrable Shares shall cease to be Registrable Shares upon (i) any sale pursuant to a Registration Statement or Rule 144 under the Securities Act or (ii) any sale in any manner to a person or entity which is not entitled to the rights provided by this Agreement. Wherever reference is made in this Agreement to a request or consent of holders of a certain percentage of Registrable Shares, the determination of such percentage shall include shares of Common Stock issuable upon conversion of the Shares even if such conversion has not been effected. (h) Registration Expenses: shall mean all expenses incurred by the Company in compliance with Sections 2(a), (b) and (c) hereof, including, without limitation, all registration and filing fees, printing expenses, fees and disbursements of counsel for the Company, fees and expenses of one counsel for all the Holders in an amount not to exceed $15,000, blue sky fees and expenses and the expense of any special audits incident to or required by any such registration (but excluding the compensation of regular employees of the Company, which shall be paid in any event by the Company), but excluding Selling Expenses; (i) Security, Securities: shall have the meaning set forth in Section 2(1) of the Securities Act; (j) Securities Act: shall mean the Securities Act of 1933, as amended; and (k) Selling Expenses: shall mean all underwriting discounts and selling commissions applicable to the sale of Registrable Securities and all fees and disbursements of counsel for each of the Holders other than fees and expenses of one counsel for all the Holders in an amount not to exceed $15,000. -2- SECTION 2. REGISTRATION RIGHTS (a) Requested Registration. (i) Request for Registration. If the Company shall receive from an Initiating Holder, at any time, a written request that the Company effect any registration with respect to all or a part of the Registrable Securities, the Company will: (1) promptly give written notice of the proposed registration, qualification or compliance to all other Holders; and (2) as soon as practicable, use its commercially reasonable efforts to effect such registration (including, without limitation, filing post-effective amendments and effecting appropriate qualification under applicable blue sky or other state securities laws and appropriate compliance with applicable regulations issued under the Securities Act) as may be so requested and as would permit or facilitate the sale and distribution of all or such portion of such Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any Holder or Holders joining in such request as are specified in a written request received by the Company within 10 business days after written notice from the Company is given under Section 2(a)(i)(1) above; provided that the Company may effect such registration on such available form of registration statement as the Company determines (but, in the case of an underwritten offering, shall include such additional information, such as a customary "Business" section, as the Initiating Holders shall reasonably request); and provided further that the Company shall not be obligated to effect, or take any action to effect, any such registration pursuant to this Section 2(a): (w) Within 180 days of the effective date of the most recent registration pursuant to this Section 2 in which securities held by the requesting Holder could have been included for sale or distribution. (x) In any particular jurisdiction in which the Company would be required to qualify to do business as a foreign corporation or execute a general consent to service of process in effecting such registration, qualification or compliance, unless the Company is already subject to qualification to do business or service in such jurisdiction and except as may be required by the Securities Act or applicable rules or regulations thereunder; (y) After the Company has effected (A) two (2) registrations pursuant to this Section 2(a) or (B) three (3) registrations pursuant to Section 2(a) or 2(c), whichever occurs sooner, and such registrations have been declared or ordered effective; or (z) If the Registrable Securities requested by all Holders to be registered pursuant to such request do not have an anticipated -3- aggregate public offering price (before any underwriting discounts and commissions) of not less than $15,000,000. The registration statement filed pursuant to the request of the Initiating Holders may, subject to the provisions of Section 2(a)(ii) below, include other securities of the Company which are held by Persons who, by virtue of agreements with the Company, are entitled to include their securities in any such registration ("Other Stockholders"). In the event any Holder requests a registration pursuant to this Section 2(a) in connection with a distribution of Registrable Securities to its partners, the registration shall provide for the resale by such partners, if requested by such Holder if distributee partners are transferees under the last paragraph of this Section 2(a)(i)(2). The registration rights set forth in this Section 2 may be assigned by an Investor to (i) any person or entity to which at least 15% of the Registrable Securities held by such Investor are transferred by such Investor, provided that the transferee provides written notice of such assignment to the Company and agrees in writing to be bound hereby or (ii) to any partner of such Investor (or nominee or subsidiary of such partner), and such transferee shall be deemed an "Investor" for purposes of this Agreement;. (ii) Underwriting. If the Initiating Holders intend to distribute the Registrable Securities covered by their request by means of an underwriting, they shall so advise the Company as a part of their request made pursuant to Section 2(a). If Other Stockholders request such inclusion, the Holders shall offer to include the securities of such Other Stockholders in the underwriting and may condition such offer on their acceptance of the further applicable provisions of this Section 2. The Holders whose shares are to be included in such registration and the Company shall (together with all Other Stockholders proposing to distribute their securities through such underwriting) enter into an underwriting agreement in customary form with the representative of the underwriter or underwriters selected for such underwriting by the Initiating Holders and reasonably acceptable to the Company. Notwithstanding any other provision of this Section 2(a), if the representative advises the Holders in writing that marketing factors require a limitation on the number of shares to be underwritten, the securities of the Company held by Other Stockholders shall be excluded from such registration to the extent so required by such limitation. If, after the exclusion of such shares, further reductions are still required, the number of shares included in the registration by each Holder shall be reduced on a pro rata basis (based on the number of shares held by such Holder), by such minimum number of shares as is necessary to comply with such request. No Registrable Securities or any other securities excluded from the underwriting by reason of the underwriter's marketing limitation shall be included in such registration. If any Other Stockholder who has requested inclusion in such registration as provided above disapproves of the terms of the underwriting, such person may elect to withdraw therefrom by written notice to the Company, the underwriter and the Initiating Holders. The securities so withdrawn shall also be withdrawn from registration. If the underwriter has not limited the number of Registrable Securities or other securities to be underwritten, the Company and officers and directors of the Company may include its or their securities for its or their own account in such registration if the representative so -4- agrees and if the number of Registrable Securities and other securities which would otherwise have been included in such registration and underwriting will not thereby be limited. (b) Company Registration. (i) If the Company shall determine to register any of its equity securities either for its own account or for the account of Other Stockholders, other than a registration relating solely to employee benefit plans, or a registration relating solely to a Commission Rule 145 transaction, or a registration on any registration form which does not permit secondary sales or does not include substantially the same information as would be required to be included in a registration statement covering the sale of Registrable Securities, the Company will: (1) promptly give to each of the Holders a written notice thereof (which shall include a list of the jurisdictions in which the Company intends to attempt to qualify such securities under the applicable blue sky or other state securities laws); and (2) include in such registration (and any related qualification under blue sky laws or other compliance), and in any underwriting involved therein, all the Registrable Securities specified in a written request or requests, made by the Holders within fifteen (15) days after receipt of the written notice from the Company described in clause (1) above, except as set forth in Section 2(b)(ii) below. Such written request may specify all or a part of the Holders' Registrable Securities. In the event any Holder requests inclusion in a registration pursuant to this Section 2(b) in connection with a distribution of Registrable Securities to its partners, the registration shall provide for the resale by such partners, if requested by such Holder if distributee partners are transferees under the last paragraph of Section 2(a)(i)(2); provided that the Company shall have the right to postpone or withdraw any registration effected pursuant to this Section 2(b) without obligation to any Holder. (ii) Underwriting. (1) If the registration of which the Company gives notice is for a registered public offering involving an underwriting initiated by the Company or initiated pursuant to a demand by Other Stockholders, the Company shall so advise each of the Holders as a part of the written notice given pursuant to Section 2(b)(i)(1). In such event, the right of each of the Holders to registration pursuant to this Section 2(b) shall be conditioned upon such Holders' participation in such underwriting and the inclusion of such Holders' Registrable Securities in the underwriting to the extent provided herein. The Holders whose shares are to be included in such registration shall (together with the Company and the Other Stockholders distributing their securities through such underwriting) enter into an underwriting agreement in customary form with the representative of the underwriter or underwriters selected for underwriting by the Company. -5- (2) Notwithstanding any other provision of this Section 2(b), if the underwriting is initiated by the Company and if the representative determines that marketing factors require a limitation on the number of shares to be underwritten, the Company shall have priority in including shares in the underwriting and the representative may (subject to the allocation priority set forth below) limit the number of Registrable Securities to be included in the registration and underwriting. The Company shall so advise all holders of securities requesting registration, and the number of shares of securities that are entitled to be included in the registration and underwriting shall be allocated in the following manner: The securities of the Company held by officers, directors and Other Stockholders of the Company (other than Registrable Securities and other than securities held by Other Stockholders) shall be excluded from such registration and underwriting to the extent required by such limitation, and, if a limitation on the number of shares is still required, the number of shares that may be included in the registration and underwriting by each of the Holders and Other Stockholders shall be reduced, on a pro rata basis (based on the number of shares held by such Holder or Other Stockholder), by such minimum number of shares as is necessary to comply with such limitation. If any of the Holders or any officer, director or Other Stockholder disapproves of the terms of any such underwriting, he may elect to withdraw therefrom by written notice to the Company and the underwriter. Any Registrable Securities or other securities excluded or withdrawn from such underwriting shall be withdrawn from such registration. (3) Notwithstanding any other provision of this Section 2(b), if the underwriting is initiated pursuant to a demand by Other Stockholders and if the representative determines that marketing factors require a limitation on the number of shares to be underwritten, the Other Stockholders shall have priority in including shares in the underwriting and the representative may (subject to the allocation priority set forth below) limit the number of Registrable Securities to be included in the registration and underwriting. The Company shall so advise all holders of securities requesting registration, and the number of shares of securities that are entitled to be included in the registration and underwriting shall be allocated in the following manner: The securities of the Company held by the Company and officers and directors of the Company (other than Other Stockholders) shall be excluded from such registration and underwriting to the extent required by such limitation, and, if a limitation on the number of shares is still required, the number of shares that may be included in the registration and underwriting by each of the Holders shall be reduced, on a pro rata basis (based on the number of shares held by such Holder), by such minimum number of shares as is necessary to comply with such limitation. If any of the Holders or the Company, or any officer or director of the Company disapproves of the terms of any such underwriting, he may elect to withdraw therefrom by written notice to the Company and the underwriter. Any Registrable Securities or other securities excluded or withdrawn from such underwriting shall be withdrawn from such registration. -6- (c) Form S-3. The Holders shall have the right to request three (3) registrations on Form S-3 (such requests shall be in writing and shall state the number of shares of Registrable Securities to be disposed of and the intended method of disposition of shares by such holders), subject only to the following: (i) The Company shall not be required to effect a registration pursuant to this Section 2(c) unless the Holder or Holders requesting registration propose to dispose of shares of Registrable Securities having an aggregate price to the public (before deduction of underwriting discounts and expenses of sale) of more than $10,000,000; (ii) The Company shall not be required to effect a registration pursuant to this Section 2(c) within 180 days of the effective date of the most recent registration pursuant to this Section 2 in which securities held by the requesting Holder could have been included for sale or distribution; (iii) The Company shall not be required to effect a registration pursuant to this Section 2(c) after the Company has effected (A) two (2) registrations pursuant to Section 2(a) or (B) three (3) registrations pursuant to Section 2(a) or this Section 2(c), whichever occurs sooner, and such registrations have been declared or ordered effective; and (iv) The Company shall not be obligated to effect any registration pursuant to this Section 2(c) in any particular jurisdiction in which the Company would be required to qualify to do business as a foreign corporation or execute a general consent to service of process in effecting such registration, qualification or compliance, unless the Company is already subject to qualification to do business or service in such jurisdiction and except as may be required by the Securities Act or applicable rules or regulations thereunder. The Company shall give written notice to all Holders of the receipt of a request for registration pursuant to this Section 2(c) and shall provide a reasonable opportunity (not to exceed 20 days after the date of such notice) for other Holders to participate in the registration, provided that if the registration is for an underwritten offering, the terms of Section 2(a)(ii) shall apply to all participants in such offering. Subject to the foregoing, the Company will use its commercially reasonable efforts to effect promptly the registration of all shares of Registrable Securities on Form S-3 to the extent requested by the Holder or Holders thereof for purposes of disposition. In the event any Holder requests a registration pursuant to this Section 2(c) in connection with a distribution of Registrable Securities to its partners, the registration shall provide for the resale by such partners, if requested by such Holder if distributee partners are transferees under the last paragraph of Section 2(a)(i)(2). (d) Expenses of Registration. All Registration Expenses incurred in connection with any registration, qualification or compliance pursuant to this Section 2 shall be borne by the Company (unless at the request of the Holders, the registration statement is not filed or is withdrawn, in which case the Holders shall pay all of the Registration Expenses), and all Selling Expenses shall be borne by the Holders of the securities so registered pro rata on the basis of the number of their shares so registered. -7- (e) Registration Procedures. In the case of each registration effected by the Company pursuant to this Section 2, the Company will keep the Holders, as applicable, advised in writing as to the initiation of each registration and as to the completion thereof. At its expense, the Company will: (i) keep such registration effective for a period of ninety (90) days or until the Holders (or in the case of a distribution to the partners of such Holder, such partners), as applicable, have completed the distribution described in the registration statement relating thereto, whichever first occurs; provided, however, that in the case of any registration of Registrable Securities on Form S-3 which are intended to be offered on a continuous or delayed basis, such 90-day period shall be extended until all such Registrable Securities are sold (but in no event later than two years after the effective date of the registration statement); provided that Rule 415, or any successor rule under the Securities Act, permits an offering on a continuous or delayed basis, and provided further that applicable rules under the Securities Act governing the obligation to file a post-effective amendment permit, in lieu of filing a post-effective amendment which (y) includes any prospectus required by Section 10(a) of the Securities Act or (z) reflects facts or events representing a material or fundamental change in the information set forth in the registration statement, the incorporation by reference of information required to be included in (y) and (z) above to be contained in periodic reports filed pursuant to Section 12 or 15(d) of the Exchange Act in the registration statement (and the Company is eligible to incorporate by reference such information into the applicable registration statement); (ii) furnish such number of prospectuses and other documents incident thereto as each of the Holders, as applicable, from time to time may reasonably request; (iii) notify each Holder of Registrable Securities covered by such registration at any time when a prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing; and (iv) furnish, on the date that such Registrable Securities are delivered to the underwriters for sale, if such securities are being sold through underwriters or, if such securities are not being sold through underwriters, on the date that the registration statement with respect to such securities becomes effective, (1) an opinion, dated as of such date, of the counsel representing the Company for the purposes of such registration, in form and substance as is customarily given to underwriters in an underwritten public offering and reasonably satisfactory to a majority in interest of the Holders participating in such registration, addressed to the underwriters, if any, and to the Holders participating in such registration and (2) a letter, dated as of such date, from the independent certified public accountants of the Company, in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering and reasonably satisfactory to a majority in interest of the Holders participating -8- in such registration, addressed to the underwriters, if any, and if permitted by applicable accounting standards, to the Holders participating in such registration. (f) Limitations on Registration Rights. (i) Notwithstanding the provisions of this section 2, the Company may by written notice to the Holders (x) delay filing a Registration Statement requested by a Holder (a "Delayed Registration Statement") or (y) require that the Holders immediately cease sales of shares under any effective Registration Statement ("Suspended Registration Statement"), in any period during which the Company is engaged in (i) a registered public offering of the Company, or (ii) any activity or transaction or preparations or negotiations for any activity or transaction ("Company Activity") that the Company desires to keep confidential for business reasons, if the Company determines in good faith that the public disclosure requirements imposed on the Company under the Securities Act in connection with any such Registration Statement would require disclosure of the Company Activity; provided, that, (i) in the aggregate, all such delays of filing Delayed Registration Statements and/or cessations of sales under Suspended Registration Statements shall not exceed 90 days in any 12-month period and (ii) the Company shall cause any Suspended Registration Statement to remain effective for one additional day for each day, or any portion of a day, that the Holders were required to cease sales of shares thereunder; and (ii) If the Company requires the Holders to cease sales of shares pursuant to Section 2f(i) above, the Company shall, as promptly as practicable following the termination of the circumstance which entitled the Company to do so, give prompt written notice to the Holders that such circumstance has terminated and that they may resume sales pursuant to the Suspended Registration Statement. If the prospectus included in such Suspended Registration Statement has been amended to comply with the requirements of the Securities Act, the Company shall enclose such revised prospectus with the notice to Holders given pursuant to this section 2f(ii) and the Holders shall make no offers or sales of shares pursuant to such Suspended Registration Statement other than by means of such revised prospectus. (g) Indemnification. (i) The Company will indemnify each of the Holders, as applicable, each of its officers, directors and partners, and each person controlling each of the Holders, with respect to each registration which has been effected pursuant to this Section 2, and each underwriter, if any, and each person who controls any underwriter, against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any prospectus, offering circular or other document (including any related registration statement, notification or the like) incident to any such registration, qualification or compliance, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or any violation by the Company of the Securities Act or the Exchange Act or any rule or regulation thereunder applicable to the Company and relating to action or -9- inaction required of the Company in connection with any such registration, qualification or compliance, and will reimburse each of the Holders, each of its officers, directors and partners, and each person controlling each of the Holders, each such underwriter and each person who controls any such underwriter, for any legal and any other expenses reasonably incurred in connection with investigating and defending any such claim, loss, damage, liability or action, provided that the Company will not be liable in any such case to the extent that any such claim, loss, damage, liability or expense arises out of or is based on any untrue statement or omission based upon written information furnished to the Company by the Holders or underwriter and stated to be specifically for use therein. (ii) Each of the Holders will, if Registrable Securities held by it are included in the securities as to which such registration, qualification or compliance is being effected, indemnify the Company, each of its directors and officers and each underwriter, if any, of the Company's securities covered by such a registration statement, each person who controls the Company or such underwriter, each Other Stockholder and each of their officers, directors, and partners, and each person controlling such Other Stockholder against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any such registration statement, prospectus, offering circular or other document made by such Holder, or any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements by such Holder therein not misleading, and will reimburse the Company and such Other Stockholders, directors, officers, partners, persons, underwriters or control persons for any legal or any other expenses reasonably incurred in connection with investigating or defending any such claim, loss, damage, liability or action, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement, prospectus, offering circular or other document in reliance upon and in conformity with written information furnished to the Company by such Holder and stated to be specifically for use therein; provided, however, that the obligations of each of the Holders hereunder shall be limited to an amount equal to the net proceeds to such Holder of securities sold as contemplated herein. (iii) Each party entitled to indemnification under this Section 2(f) (the "Indemnified Party") shall give notice to the party required to provide indemnification (the "Indemnifying Party") promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom; provided that counsel for the Indemnifying Party, who shall conduct the defense of such claim or any litigation resulting therefrom, shall be approved by the Indemnified Party (whose approval shall not unreasonably be withheld) and the Indemnified Party may participate in such defense at such party's expense (unless the Indemnified Party shall have reasonably concluded that there may be a conflict of interest between the Indemnifying Party and the Indemnified Party in such action, in which case the fees and expenses of counsel shall be at the expense of the Indemnifying Party), and provided further that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Section 2 unless the -10- Indemnifying Party is materially prejudiced thereby. No Indemnifying Party, in the defense of any such claim or litigation shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation. No Indemnified Party may settle or agree to settle any claim or litigation as to which indemnification may be sought hereunder without the prior written consent of the Indemnifying Party. Each Indemnified Party shall furnish such information regarding itself or the claim in question as an Indemnifying Party may reasonably request in writing and as shall be reasonably required in connection with the defense of such claim and litigation resulting therefrom. (iv) If the indemnification provided for in this Section 2(f) is held by a court of competent jurisdiction to be unavailable to an Indemnified Party with respect to any loss, liability, claim, damage or expense referred to herein, then the Indemnifying Party, in lieu of indemnifying such Indemnified Party hereunder, shall contribute to the amount paid or payable by such Indemnified Party as a result of such loss, liability, claim, damage or expense in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party on the one hand and of the Indemnified Party on the other in connection with the statements or omissions which resulted in such loss, liability, claim, damage or expense, as well as any other relevant equitable considerations. The relative fault of the Indemnifying Party and of the Indemnified Party shall be determined by reference to, among other things, whether the untrue (or alleged untrue) statement of a material fact or the omission (or alleged omission) to state a material fact relates to information supplied by the Indemnifying Party or by the Indemnified Party and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. (v) Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with any underwritten public offering contemplated by this Agreement are in conflict with the foregoing provisions, the provisions in such underwriting agreement shall be controlling. (vi) The foregoing indemnity agreement of the Company and Holders is subject to the condition that, insofar as they relate to any loss, claim, liability or damage arising out of a statement made in or omitted from a preliminary prospectus but eliminated or remedied in the amended prospectus on file with the Commission at the time the registration statement in question becomes effective or the amended prospectus filed with the Commission pursuant to Commission Rule 424(b) (the "Final Prospectus"), such indemnity or contribution agreement shall not inure to the benefit of any underwriter or Holder if a copy of the Final Prospectus was furnished to the underwriter or Holder and was not furnished to the person asserting the loss, liability, claim or damage at or prior to the time such action is required by the Securities Act. -11- (h) Information by the Holders. (i) Each of the Holders holding securities included in any registration shall furnish to the Company such information regarding such Holder and the distribution proposed by such Holder as the Company may reasonably request in writing and as shall be reasonably required in connection with any registration, qualification or compliance referred to in this Section 2. (ii) In the event that, either immediately prior to or subsequent to the effectiveness of any registration statement, any Holder shall distribute Registrable Securities to its partners, such Holder shall so advise the Company and provide such information as shall be necessary to permit an amendment to such registration statement to provide information with respect to such partners, as selling securityholders. Promptly following receipt of such information, the Company shall file an appropriate amendment to such registration statement reflecting the information so provided. Any incremental expense to the Company resulting from such amendment shall be borne by such Holder. Any Holder who shall have effected such a distribution shall indemnify the Company in accordance with Section 2(g) with respect to the information so provided to the Company. (i) Rule 144 Reporting. With a view to making available the benefits of certain rules and regulations of the Commission which may permit the sale of restricted securities to the public without registration, the Company agrees to: (i) make and keep public information available as those terms are understood and defined in Rule 144 under the Securities Act ("Rule 144"), at all times; (ii) use its best efforts to file with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and (iii) so long as the Holder owns any Registrable Securities, furnish to the Holder upon request, a written statement by the Company as to its compliance with the reporting requirements of Rule 144, and of the Securities Act and the Exchange Act, a copy of the most recent annual or quarterly report of the Company, and such other reports and documents so filed as the Holder may reasonably request in availing itself of any rule or regulation of the Commission allowing the Holder to sell any such securities without registration. (j) Termination. The registration rights set forth in this Section 2 shall not be available to any Holder if, (i) in the opinion of counsel to the Company, all of the Registrable Securities then owned by such Holder could be sold in any 90-day period pursuant to Rule 144 -12- or (ii) all of the Registrable Securities held by such Holder have been sold in a registration pursuant to the Securities Act or pursuant to Rule 144. SECTION 3. MISCELLANEOUS (a) Directly or Indirectly. Where any provision in this Agreement refers to action to be taken by any Person, or which such Person is prohibited from taking, such provision shall be applicable whether such action is taken directly or indirectly by such Person. (b) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware applicable to contracts made and to be performed entirely within such State. (c) Section Headings. The headings of the sections and subsections of this Agreement are inserted for convenience only and shall not be deemed to constitute a part thereof. (d) Notices. (i) All communications under this Agreement shall be in writing and shall be delivered by hand or facsimile or mailed by overnight courier or by registered or certified mail, postage prepaid, return receipt requested: (1) if to the Company, to Daniel E. Geffken, Vice President-Finance and Chief Financial Officer, Transkaryotic Therapies, Inc., 195 Albany Street, Cambridge, MA 02139 (facsimile: (617) 491-7903) or at such other address as it may have furnished in writing to the Holders with a copy to David E. Redlick, Esq., Hale and Dorr LLP, 60 State Street, Boston, Ma 02109 (facsimile: (617) 526-5000); (2) if to the Holders, at the address or facsimile number listed on Schedule I hereto, or at such other address or facsimile number as may have been furnished the Company in writing. (ii) Any notice so addressed shall be deemed to be given: if delivered by hand or facsimile, on the date of such delivery; if sent by overnight courier, on the first business day following the date of such sending; and if mailed by registered or certified mail, on the third business day after the date of such mailing. (e) Reproduction of Documents. This Agreement and all documents relating thereto, including, without limitation, any consents, waivers and modifications which may hereafter be executed may be reproduced by the Holders by any photographic, photostatic, microfilm, microcard, miniature photographic or other similar process and the Holders may destroy any original document so reproduced. The parties hereto agree and stipulate that any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made by the Holders in the regular course of business) and that any -13- enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence. (f) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties. (g) Entire Agreement; Amendment and Waiver. This Agreement constitutes the entire understanding of the parties hereto and supersedes all prior understanding among such parties. This Agreement may be amended, and the observance of any term of this Agreement may be waived, with (and only with) the written consent of the Company and the Holders holding a majority of the then outstanding Registrable Securities. (h) Severability. In the event that any part or parts of this Agreement shall be held illegal or unenforceable by any court or administrative body of competent jurisdiction, such determination shall not affect the remaining provisions of this Agreement which shall remain in full force and effect. (i) Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which together shall be considered one and the same agreement. -14- IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first set forth above. TRANSKARYOTIC THERAPIES, INC. By: /s/ DANIEL E. GEFFKEN ------------------------------ Name: Daniel E. Geffken Title: VP Finance; Chief Financial Officer WARBURG, PINCUS EQUITY PARTNERS, L.P. By: WARBURG, PINCUS & CO., General Partner By: /s/ JONATHAN LEFF ------------------------------ Name: Jonathan Leff Title: Partner WARBURG, PINCUS NETHERLANDS EQUITY PARTNERS I, C.V. By: WARBURG, PINCUS & CO., General Partner By: /s/ JONATHAN LEFF ------------------------------ Name: Jonathan Leff Title: Partner WARBURG, PINCUS NETHERLANDS EQUITY PARTNERS II, C.V. By: WARBURG, PINCUS & CO., General Partner By: /s/ JONATHAN LEFF ------------------------------ Name: Jonathan Leff Title: Partner WARBURG, PINCUS NETHERLANDS EQUITY PARTNERS III, C.V. By: WARBURG, PINCUS & CO., General Partner By: /s/ JONATHAN LEFF ------------------------------ Name: Jonathan Leff Title: Partner -15- Schedule I ---------- Investors --------- Investor Name and Address Warburg, Pincus Equity Partners, L.P. 466 Lexington Avenue New York, NY 10017 Facsimile: (212) 878-9351 Attention: Jonathan Leff Warburg, Pincus Netherlands Equity Partners I, C.V. 466 Lexington Avenue New York, NY 10017 Facsimile: (212) 878-9351 Attention: Jonathan Leff Warburg, Pincus Netherlands Equity Partners II, C.V. 466 Lexington Avenue New York, NY 10017 Facsimile: (212) 878-9351 Attention: Jonathan Leff Warburg, Pincus Netherlands Equity Partners III, C.V. 466 Lexington Avenue New York, NY 10017 Facsimile: (212) 878-9351 Attention: Jonathan Leff -----END PRIVACY-ENHANCED MESSAGE-----