[Letterhead of Genentech, Inc.]
December 18, 1997
Xx. Xxxxxxxxx Xxxxxx
Vice President, Corporate Development
and Chief Financial Officer
LeukoSite, Inc.
000 Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Dear Xxx:
With respect to the Loan Agreement between LeukoSite, Inc. ("LS") and
Genentech, Inc. ("GNE") dated December 18, 1997 (the "Loan Agreement"), LS
agrees to reasonably assist GNE in avoiding equity accounting in connection
with GNE's receipt of LS Common Stock or Preferred Stock under the Loan
Agreement. If at any time GNE expects its percentage stock ownership in LS
(assuming for the purposes of this letter agreement, the conversion of any LS
Preferred Stock held by GNE into Common Stock) to exceed 18%, as based on (i)
the outstanding balance of the Development Loans and/or Profit-Sharing Option
Loans (as defined under the Loan Agreement, collectively, the "Loans") on an
"as converted" to stock basis, (ii) GNE's then percentage stock ownership in
LS, (iii) any expected exercise of the Common Stock Purchase Warrant dated
December 18, 1997 and (iv) any additional amounts of LS Common Stock and/or
Preferred Stock expected to be received under the Loan Agreement within the
following eighteen (18) months with respect to draw downs under the Loans on an
"as converted" to stock basis, GNE shall give LS prompt written notice of its
expectation of greater than 18% ownership. Upon receipt of such notice, LS and
GNE shall reasonably cooperate so that GNE can sell shares of LS Common Stock
(assuming, for purposes of this letter agreement, the conversion of any LS
Preferred Stock held by GNE into LS Common Stock) to maintain its percentage
stock ownership in LS below 18%. If, following the sale of LS Common Stock
(assuming, for purposes of this letter agreement, the conversion of any LS
Preferred Stock held by GNE into LS Common Stock) owned by GNE, GNE shall give
LS prompt written notice that its expectation of greater than 18% stock
ownership in LS continues, then LS agrees to negotiate in good faith with GNE
to provide GNE with the right to convert all or a portion of the outstanding
balance under the Loans into LS Common Stock and/or Preferred Stock, with such
Common Stock and/or Preferred Stock to be considered Registrable Shares under
the Registration Rights Agreement between LS and GNE dated December 18, 1997,
so that GNE could sell such shares and maintain its ownership percentage below
18%. It is understood that, for purposes of this letter agreement, any shares
owned by Roche Finance Ltd. or its affiliates (other than GNE) shall not count
towards GNE's percentage ownership in LS.
Very truly yours,
Xxxxxxxx X. Xxxxx
Vice President, Business and
Corporate Development
Agreed to by:
LeukoSite, Inc.
By:_________________________________
Xxxxxxxxx Xxxxxx
Vice President, Corporate Development
and Chief Financial Officer
