<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 3, 1998
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
ABGENIX, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<S> <C> <C>
DELAWARE 2836 94-3248826
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
INCORPORATION OR
ORGANIZATION)
</TABLE>
ABGENIX, INC.
7601 DUMBARTON CIRCLE
FREMONT, CALIFORNIA 94555
(510) 608-6500
(ADDRESS AND TELEPHONE NUMBER OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
R. SCOTT GREER
PRESIDENT AND
CHIEF EXECUTIVE OFFICER
ABGENIX, INC.
7601 DUMBARTON CIRCLE
FREMONT, CALIFORNIA 94555
(510) 608-6500
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE OF PROCESS)
COPIES TO:
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<S> <C>
MARIO M. ROSATI, ESQ. ALAN C. MENDELSON, ESQ.
CHRIS F. FENNELL, ESQ. PATRICK A. POHLEN, ESQ.
WILSON SONSINI GOODRICH & ROSATI COOLEY GODWARD LLP
PROFESSIONAL CORPORATION FIVE PALO ALTO SQUARE
650 PAGE MILL ROAD 3000 EL CAMINO REAL
PALO ALTO, CA 94304 PALO ALTO, CA 94306
(650) 493-9300 (650) 843-5000
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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==============================================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED TO BE REGISTERED(1) PER SHARE(2) OFFERING PRICE(2) REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $0.0001 par value 3,450,000 $12.00 $41,400,000 $12,213
==============================================================================================================================
</TABLE>
(1) Includes 450,000 shares which the Underwriters have the option to purchase
to cover over-allotments, if any.
(2) Estimated solely for the purpose of computing the amount of the registration
fee pursuant to Rule 457(a) of the Securities Act of 1933, as amended.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED , 1998
[LOGO]
3,000,000 SHARES
COMMON STOCK
------------------------------
All of the 3,000,000 shares of Common Stock offered hereby are being sold
by Abgenix, Inc. ("Abgenix" or the "Company"). Prior to this offering, there has
been no public market for the Common Stock of the Company. It is currently
estimated that the initial public offering price will be between $10.00 and
$12.00 per share. See "Underwriting" for information relating to the method of
determining the initial public offering price. The Company has applied for
quotation of the Common Stock on the Nasdaq National Market under the symbol
"ABGX."
------------------------------
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 6.
------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
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==============================================================================================================
UNDERWRITING
PRICE DISCOUNTS AND PROCEEDS TO
TO PUBLIC COMMISSIONS(1) COMPANY(2)
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
Per Share.......................... $ $ $
- --------------------------------------------------------------------------------------------------------------
Total(3)........................... $ $ $
==============================================================================================================
</TABLE>
(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(2) Before deducting expenses payable by the Company, estimated at $750,000.
(3) The Company has granted to the Underwriters a 30-day option to purchase up
to an additional 450,000 shares of Common Stock, solely to cover
over-allotments, if any. See "Underwriting." If such option is exercised in
full, the total Price to Public, Underwriting Discounts and Commissions and
Proceeds to Company will be $ , $ and $ , respectively.
------------------------------
The Common Stock is offered by the Underwriters as stated herein, subject
to receipt and acceptance by them and subject to their right to reject any order
in whole or in part. It is expected that delivery of such shares will be made
through the offices of BancAmerica Robertson Stephens, San Francisco,
California, on or about , 1998.
BANCAMERICA ROBERTSON STEPHENS LEHMAN BROTHERS
THE DATE OF THIS PROSPECTUS IS , 1998
<PAGE> 3
[ARTWORK]
Antibody products with human protein sequences may be desirable for therapy
in humans since they tend to minimize undesirable side effects. Various
approaches have evolved to engineer mouse antibodies so that they contain
proportionately more human protein sequences and thus appear more human-like to
a patient's immune system. The Company's XenoMouse technology has been developed
to produce antibodies with 100% human protein sequences.
[ARTWORK]
Abgenix believes that its XenoMouse technology offers several significant
advantages over other approaches. These advantages include generating high
affinity antibodies in vivo without the need for further antibody engineering,
as well as allowing production of such antibodies for preclinical and clinical
trials without the need for recombinant cell line development. As a result, the
Company believes that its XenoMouse technology offers the potential to develop
antibody therapeutic product candidates over a shorter timeline.
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING STABILIZING BIDS, SYNDICATE COVERING TRANSACTIONS OR THE IMPOSITION OF
PENALTY BIDS. FOR A DISCUSSION OF THESE ACTIVITIES, SEE "UNDERWRITING."
2
<PAGE> 4
NO DEALER, SALES REPRESENTATIVE OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS
OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL, OR SOLICITATION OF AN OFFER TO BUY, ANY SECURITIES
OTHER THAN THE REGISTERED SECURITIES TO WHICH IT RELATES OR AN OFFER TO, OR
SOLICITATION OF, ANY PERSON IN ANY JURISDICTION WHERE SUCH AN OFFER OR
SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR
THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
THE DATE HEREOF.
UNTIL , 1998 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER
A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
------------------------
TABLE OF CONTENTS
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PAGE
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Summary..................................................... 4
Risk Factors................................................ 6
Special Note Regarding Forward-Looking Statements........... 19
Use of Proceeds............................................. 20
Dividend Policy............................................. 20
The Company................................................. 20
Capitalization.............................................. 21
Dilution.................................................... 22
Selected Financial Data..................................... 23
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 24
Business.................................................... 29
Management.................................................. 48
Certain Transactions........................................ 58
Principal Stockholders...................................... 61
Description of Capital Stock................................ 63
Shares Eligible for Future Sale............................. 66
Underwriting................................................ 68
Legal Matters............................................... 69
Experts..................................................... 69
Additional Information...................................... 70
Index to Financial Statements............................... F-1
</TABLE>
------------------------
Abgenix and the Abgenix logo are trademarks of the Company. XenoMouse is a
registered trademark of Xenotech, L.P. ("Xenotech"). All other trademarks or
service marks appearing in this Prospectus are the property of their respective
holders.
The Company intends to furnish its stockholders with annual reports
containing financial statements audited by an independent public accounting firm
and quarterly reports containing unaudited interim financial information for
each of the first three fiscal quarters of each fiscal year of the Company.
Abgenix has the right to use XenoMouse technology through Xenotech, its
joint venture equally owned with a subsidiary of Japan Tobacco Inc. ("Japan
Tobacco"). The Company's principal executive offices are located at 7601
Dumbarton Circle, Fremont, California 94555, and its telephone number is (510)
608-6500.
3
<PAGE> 5
SUMMARY
The following summary is qualified in its entirety by the more detailed
information, including "Risk Factors" and the Financial Statements and Notes
thereto, appearing elsewhere in this Prospectus. This Prospectus contains
forward-looking statements that involve risks and uncertainties. The Company's
actual results could differ materially from those anticipated in these
forward-looking statements as a result of certain factors, including those set
forth under "Risk Factors" and elsewhere in this Prospectus. Except as otherwise
indicated, all information in this Prospectus assumes no exercise of the
Underwriters' over-allotment option and gives effect to (i) the automatic
conversion of all outstanding shares of the Company's Redeemable Convertible
Preferred Stock ("Preferred Stock") into an aggregate of 7,844,352 shares of
Common Stock upon the closing of this offering and (ii) the filing, upon the
closing of this offering, of a Restated Certificate of Incorporation.
THE COMPANY
Abgenix, a biopharmaceutical company, develops and intends to commercialize
antibody therapeutic products for the prevention and treatment of a variety of
disease conditions, including transplant-related diseases, inflammatory and
autoimmune disorders, and cancer. The Company has developed a proprietary
technology which it believes enables it to quickly generate high affinity, fully
human antibody product candidates to essentially any disease target appropriate
for antibody therapy ("XenoMouse technology"). Abgenix intends to use its
XenoMouse technology to build and commercialize a large and diversified product
portfolio through the establishment of corporate collaborations and internal
product development programs. The Company has recently established collaborative
arrangements with Pfizer Inc. ("Pfizer") and Schering-Plough Research Institute
("Schering-Plough"). In addition, the Company currently has four proprietary
antibody product candidates that are under development internally, two of which
are in human clinical trials. In certain instances, the Company intends to
commercialize select products on its own in niche markets such as graft versus
host disease ("GVHD").
Abgenix believes that its XenoMouse technology offers the following
advantages: (i) producing antibodies with fully human protein sequences; (ii)
generating a diverse antibody response to essentially any disease target
appropriate for antibody therapy; (iii) generating high affinity antibodies
which do not require further engineering; (iv) enabling more efficient product
development; and (v) providing flexibility in choosing manufacturing processes.
The Company has established collaborative arrangements with Pfizer and
Schering-Plough in order to generate fully human antibodies to specific antigens
in the therapeutic areas of cancer and inflammatory diseases, respectively.
Pursuant to their respective collaborative arrangements, Pfizer and
Schering-Plough each paid the Company a fee upon signing and each may make
additional payments upon completion of certain research and other milestones. In
connection with its collaborative arrangement, Pfizer also made an equity
investment of approximately $1.3 million in the Company. Abgenix also has a
collaborative arrangement with Cell Genesys, Inc. ("Cell Genesys") based on
antibodies generated with XenoMouse technology in the field of gene therapy. In
addition, Abgenix intends to form proprietary product collaborations with
potential pharmaceutical partners involving antibodies generated against antigen
targets sourced by the Company.
The Company's lead product candidate, ABX-CBL, is a proprietary in-licensed
antibody currently in Phase II clinical trials. ABX-CBL targets the CBL antigen
which is selectively expressed on activated immune cells. Abgenix believes that
ABX-CBL has the ability to reverse unwanted immune responses by selectively
destroying activated immune cells without adversely affecting the entire immune
system. As of March 1, 1998, ABX-CBL had been tested in 90 patients in various
transplant-related conditions including GVHD and organ transplant rejection.
Based in part on data from these initial clinical trials, the Company commenced
a multi-center confirmatory Phase II clinical study in GVHD in January 1998 and
anticipates completion of this trial in 1998. In addition, the Company has
applied its XenoMouse technology to develop a fully human antibody, ABX-RB2,
targeting the CBL antigen for potential use in organ transplant rejection and
autoimmune disorders, indications where chronic drug administration may be
required. ABX-RB2 is currently in preclinical development.
In April 1998, Abgenix initiated Phase I clinical trials in psoriasis with
ABX-IL8, a fully human antibody product candidate generated with XenoMouse
technology that binds with high affinity to interleukin-8 ("IL-8"). A number of
preclinical studies suggest that excess IL-8 may be associated with certain
inflammatory disorders. Additionally, Abgenix is currently in preclinical
development with ABX-EGF, a fully human antibody product candidate that has been
shown in mouse models to eradicate certain human tumors.
4
<PAGE> 6
THE OFFERING
Common Stock to be Offered by the
Company............................. 3,000,000 shares
Common Stock Outstanding after the
Offering............................ 11,077,894 shares(1)
Use of Proceeds..................... For research and development, including
the performance of preclinical and
clinical trials, cross-license and
settlement payment, working capital and
other general corporate purposes. See
"Use of Proceeds."
Proposed Nasdaq National Market
Symbol.............................. ABGX
SUMMARY FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
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<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------
1993 1994 1995 1996 1997
------ ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA(2):
Total revenues(2)........................................... $6,600 $ 6,200 $ 6,200 $ 4,719 $ 1,954
Operating expenses:
Research and development.................................. 4,629 7,921 11,879 9,433 11,405
General and administrative................................ 1,019 1,955 2,603 2,565 3,525
Charge for cross-license and settlement(3)................ -- -- -- -- 22,500
------ ------- ------- ------- --------
Total operating expenses................................ 5,648 9,876 14,482 11,998 37,430
------ ------- ------- ------- --------
Operating income (loss)..................................... 952 (3,676) (8,282) (7,279) (35,476)
Interest income (expense), net.............................. -- -- -- 179 (404)
------ ------- ------- ------- --------
Net income (loss)........................................... $ 952 $(3,676) $(8,282) $(7,100) $(35,880)
====== ======= ======= ======= ========
Pro forma net loss per share(4)............................. $ (9.22)
========
Shares used in computing pro forma net loss per share(4).... 3,894
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1997
--------------------------------------
PRO PRO FORMA AS
ACTUAL FORMA(5) ADJUSTED(6)
-------- -------- --------------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash, cash equivalents and short-term investments........... $ 15,321 $19,338 $ 49,278
Working capital............................................. 6,637 10,654 40,594
Total assets................................................ 22,084 26,101 56,041
Long-term debt, less current portion........................ 3,979 3,979 3,979
Redeemable convertible preferred stock...................... 31,189 -- --
Accumulated deficit......................................... (52,474) (52,474) (52,474)
Total stockholders' equity (net capital deficiency)......... (22,318) 12,888 42,828
</TABLE>
- ---------------
(1) Based on the number of shares outstanding as of December 31, 1997. Also
includes the assumed issuance as of December 31, 1997 of 421,143 shares of
Preferred Stock issuable as of December 31, 1997 and the issuance in January
1998 of 160,000 shares of Preferred Stock. Excludes (i) 1,501,963 shares of
Common Stock issuable upon exercise of options outstanding as of December
31, 1997, with a weighted average exercise price of $1.22 per share, (ii)
121,667 shares of Preferred Stock issuable upon exercise of warrants
outstanding as of December 31, 1997, with an exercise price of $6.00 per
share, (iii) 25,000 shares of Common Stock issuable pursuant to the terms of
a license agreement and (iv) an aggregate of 1,655,745 shares of Common
Stock reserved for future issuance under the Company's 1996 Incentive Stock
Plan, 1998 Employee Stock Purchase Plan and 1998 Director Option Plan. See
"Capitalization," "Management -- Stock Plans," "Description of Capital
Stock" and Note 7 of Notes to the Company's Financial Statements.
(2) The statement of operations of the Company includes the revenues and
expenses of Abgenix as a business unit within Cell Genesys prior to July 15,
1996. During the years ended December 31, 1993, 1994, 1995 and 1996, the
Company's revenues were derived principally from Xenotech for the
development of XenoMouse technology, which was essentially completed in
1996.
(3) In the year ended December 31, 1997, the Company incurred a non-recurring
charge for cross-license and settlement of $22.5 million, $15.0 million of
which was a noncash allocation. See Note 6 of Notes to the Company's
Financial Statements.
(4) See Note 1 of Notes to the Company's Financial Statements for an explanation
of shares used in computing pro forma net loss per share.
(5) Pro forma information gives effect to (i) the assumed issuance as of
December 31, 1997 of 421,143 shares of Preferred Stock issuable as of
December 31, 1997, (ii) the issuance in January 1998 of 160,000 shares of
Preferred Stock and (iii) the conversion, upon the closing of this offering,
of all outstanding shares of Preferred Stock into an aggregate of 7,844,352
shares of Common Stock.
(6) Adjusted to give effect to the sale of the 3,000,000 shares of Common Stock
offered by the Company hereby at an assumed initial public offering price of
$11.00 per share (the midpoint of the range set forth on the front cover of
this Prospectus) and the application of the estimated net proceeds therefrom
after deducting estimated underwriting discounts and commissions and
offering expenses payable by the Company. See "Use of Proceeds" and
"Capitalization."
5
<PAGE> 7
RISK FACTORS
This Prospectus contains forward-looking statements based upon current
expectations that involve risks and uncertainties. When used in this Prospectus,
the words "anticipate," "believe," "estimate" and "expect" and similar
expressions as they relate to the Company or its management are intended to
identify such forward-looking statements. The Company's actual results could
differ materially from those anticipated in these forward-looking statements as
a result of certain factors, including those set forth in the following risk
factors and elsewhere in this Prospectus. An investment in the shares of Common
Stock offered in this Prospectus involves a high degree of risk. In addition to
the other information in this Prospectus, the following risk factors should be
considered carefully in evaluating the Company and its business before
purchasing shares of the Common Stock offered hereby.
UNCERTAINTY ASSOCIATED WITH XENOMOUSE TECHNOLOGY
The Company's XenoMouse technology is a new approach to the generation and
development of antibody therapeutic products. To date, the Company has not
commercialized any antibody products based on its XenoMouse technology. In
addition, the Company is not aware of any commercialized antibody therapeutic
product that has been generated or developed from any transgenic technologies.
Current antibody product candidates based on, utilizing or derived from
XenoMouse technology are at a very early stage of development. To date, the
Company has begun clinical trials with respect to only one such antibody product
candidate. While to date XenoMouse technology has been able to generate
antibodies against the antigens to which it had been exposed, there can be no
assurance that it will be able to do so with respect to all future antigens.
Failure of the Company's XenoMouse technology to generate antibody product
candidates that lead to the successful development and commercialization of
products would have a material adverse effect on the Company's business,
financial condition and results of operations. Although the Company believes
that its XenoMouse technology offers certain advantages, there can be no
assurance that these advantages will be realized or, if realized, that XenoMouse
technology will result in any meaningful benefits to current or potential
collaborative partners or patients. There can be no assurance that the Company's
XenoMouse technology will enable the Company or any of its collaborative
partners to identify, generate, develop or commercialize antibody therapeutic
products or product candidates in an efficient and timely manner, if at all. See
"Business -- The Abgenix Solution -- XenoMouse Technology."
EARLY STAGE OF DEVELOPMENT; HISTORY OF LOSSES AND UNCERTAINTY OF FUTURE
PROFITABILITY
The Company is at an early stage of development and must be evaluated in
light of the uncertainties and complexities present in an early stage
biopharmaceutical company. The product candidates under development by the
Company are in the research or preclinical development stage or are in the early
stage of clinical trials. Significant investment in additional research and
development, preclinical and clinical testing, regulatory and sales and
marketing activities will be necessary in order for the Company to commercialize
its current and any future product candidates. There can be no assurance that
the Company's product candidates under development will be successfully
developed or that such product candidates, if successfully developed, will
generate sufficient or sustainable revenues to enable the Company to be
profitable.
Since inception, the Company has funded its research and development
activities primarily through contributions from Cell Genesys, revenues from
collaborative arrangements, private placements of preferred stock, equipment
leaseline financings and loan facilities. The Company has incurred operating
losses in each of the last three years of operation, including net losses of
approximately $7.1 million and approximately $35.9 million in 1996 and 1997,
respectively, and as of December 31, 1997, had an accumulated deficit of
approximately $52.5 million. The Company's losses have resulted principally from
costs incurred in performing research and development to develop its XenoMouse
technology and subsequent antibody product candidates, from the non-recurring
cross-license and settlement charge and from general and administrative costs
associated with the Company's operations. The Company expects to incur
additional operating losses until at least the year 2000 as a result
6
<PAGE> 8
of increases in its expenditures for research and product development, including
costs associated with conducting preclinical testing and clinical trials. The
Company expects that the amount of such losses will fluctuate significantly from
quarter to quarter as a result of increases or decreases in the Company's
research and development efforts, the execution or termination of collaborative
arrangements, or the initiation, success or failure of clinical trials.
The Company expects that substantially all of its revenues for the
foreseeable future will result from payments under collaborative arrangements,
including fees upon signing, reimbursement for research and development and
milestone payments. To date, all of the Company's revenues have resulted
primarily from research and development funding and milestone payments and may
not be indicative of the Company's future performance or of the ability of the
Company to continue to achieve such milestones. The Company's ability to
generate revenue or achieve profitability depends in part on its ability to
enter into further collaborative or licensing arrangements, successfully
complete preclinical or clinical trials, obtain regulatory approval for its
product candidates and develop the capacity, either alone or through third
parties, to manufacture, market and sell its products. There can be no assurance
that the Company will enter into further collaborative arrangements,
successfully complete preclinical or clinical trials, obtain required regulatory
approvals, or successfully develop, manufacture and market product candidates.
Failure to do so will have a material adverse effect on the Company's business,
financial condition, and results of operations. There can be no assurance that
the Company will ever achieve product revenues or profitability. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business -- Product Development Programs."
NO ASSURANCE OF SUCCESSFUL PRODUCT DEVELOPMENT
All of the Company's product candidates are in the early stages of research
and development and only ABX-CBL and ABX-IL8 have been used in human clinical
trials. All of the Company's product candidates will require significant
additional preclinical or clinical testing prior to obtaining regulatory
approval for commercial use. In addition, the Company must file a product
approval application with the United States Food and Drug Administration (the
"FDA") prior to commercialization of any of the Company's products. The Company
currently does not expect to file a product approval application with the FDA or
corresponding regulatory filings in Europe for its product candidates at least
prior to 1999 and does not expect to have any products commercially available at
least prior to 2000, if at all.
In addition, the Company's strategy includes building a large and
diversified product portfolio, including a mix of out-licensed and internally
developed product candidates. There can be no assurance that the Company will be
able to implement this strategy or that current or future product candidates
will ever result in viable commercial products. In order to develop a single
product, the Company must develop and test multiple product candidates.
Development of the Company's current and any future product candidates are
subject to the risks of failure inherent in the development of new
pharmaceutical products and products based on new technologies. These risks
include the possibility that the Company will experience delays in development,
testing or marketing, that such development, testing or marketing will result in
unplanned expenditures or in expenditures above those anticipated by the
Company, that the Company's products will not be proven safe or effective, that
the Company's product candidates will not be easy to use or cost-effective, that
third parties will develop and market superior or equivalent products, that any
or all of the Company's product candidates will fail to receive any necessary
regulatory approvals, that such product candidates will be difficult or
uneconomical to manufacture on a commercial scale, that proprietary rights of
third parties will preclude the Company or its collaborative partners from
marketing such products and that the Company's products will not achieve market
acceptance. As a result of these risks, there can be no assurance that research
and development efforts conducted by the Company or its collaborative partners
will result in any commercially viable products. If a significant portion of the
Company's development programs are not successfully completed, required
regulatory approvals are not obtained, or any approved products are not
commercially successful, there will be a material adverse effect on
7
<PAGE> 9
Company's business, financial condition and results of operations. See
"Business -- Product Development Programs."
DEPENDENCE ON COLLABORATIVE ARRANGEMENTS
The Company's strategy for the development and commercialization of
antibody therapeutic products depends, in large part, upon the formation and
maintenance of collaborative and licensing arrangements with several corporate
partners. In order to successfully develop and commercialize new products and
product candidates, the Company must enter into such collaborations, including
collaborations with pharmaceutical and biotechnology companies, academic
institutions and other entities to access proprietary antigens, to fund and
complete its research and development activities, preclinical and clinical
testing and manufacturing, to seek and obtain regulatory approvals and to
achieve successful commercialization of existing and future product candidates.
The Company has recently entered into collaborative arrangements with Pfizer and
Schering-Plough to generate fully human antibodies to specific antigens in the
fields of cancer and inflammation, respectively. To date, only a limited number
of antibody product candidates have been generated pursuant to such
collaborations, and there can be no assurance that any such collaboration will
be successful. There can also be no assurance that the Company will be able to
establish additional collaborative or licensing arrangements, that any such
arrangements or licenses will be on terms favorable to the Company, that any
such collaborative arrangements or licenses will result in commercially
successful products or that the current or any future collaborative or licensing
arrangements will ultimately be successful. Failure of the Company to maintain
its significant collaborative arrangements or enter into additional
collaborative arrangements would have a material adverse effect on the Company's
business, financial condition and results of operations.
The Company's dependence on collaborative and licensing arrangements with
third parties subjects it to a number of risks. Agreements with collaborative
partners typically allow such partners significant discretion in electing
whether to pursue any of the planned activities. The Company cannot control the
amount and timing of resources its collaborative partners may devote to the
product candidates, and there can be no assurance that such partners will
perform their obligations as expected. Business combinations or significant
changes in a corporate partner's business strategy may adversely affect such
partners ability to complete its obligations under the arrangements. If any
collaborative partner were to terminate or breach its agreement with the
Company, or otherwise fail to complete its obligations in a timely manner, such
conduct could have a material adverse effect on the Company's business,
financial condition and results of operations. To the extent that the Company is
not able to establish further collaborative arrangements or that any or all of
the Company's existing collaborative arrangements are terminated, the Company
would be required to seek new collaborative arrangements or to undertake product
development and commercialization at its own expense, which could significantly
increase the Company's capital requirements, place additional strain on its
human resource requirements and limit the number of product candidates which the
Company would be able to develop and commercialize. In addition, there can be no
assurance that existing and future collaborative partners will not pursue
alternative technologies or develop alternative products either on their own or
in collaboration with others, including the Company's competitors. There can
also be no assurance that disputes will not arise in the future with respect to
the ownership of rights to any technology or products developed with any future
collaborative partner. Lengthy negotiations with potential new collaborative
partners or disagreements between established collaborative partners and the
Company could lead to delays or termination in the research, development or
commercialization of certain product candidates or result in litigation or
arbitration, which would be time consuming and expensive. Failure by any
collaborative partner to develop or commercialize successfully any product
candidate to which it has obtained rights from the Company or the decision by a
collaborative partner to pursue alternative technologies or develop alternative
products, either on their own or in collaboration with others, could have a
material adverse effect on the Company's business, financial condition and
results of operations. The Company has an option to obtain licenses from
Xenotech to commercialize antibody products generated by XenoMouse technology.
Such option is for a certain
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number of targets each year. There can be no assurance that in any year the
Company will exercise its rights for the full number of targets subject to such
option or that such option will not limit the Company's ability to fully realize
the commercial potential of its XenoMouse technology. In addition, disputes with
Japan Tobacco could result in the loss of the right to commercialize a product
candidate by either party. See "Business--Collaborative Arrangements."
UNCERTAINTIES RELATED TO CLINICAL TRIALS
Before obtaining regulatory approvals for the commercial sale of any
products, the Company must demonstrate through preclinical testing and clinical
trials that its product candidates are safe and effective for use in the target
disease indication. With the exception of the recently initiated multi-center
confirmatory Phase II trial in GVHD, clinical trials of the Company's ABX-CBL
product candidate were conducted by third parties prior to the Company obtaining
license rights to technologies related to this product candidate. As of March 1,
1998, ABX-CBL had only been administered to a total of 90 patients in GVHD and
organ transplant rejection indications, and Phase I clinical trials for ABX-IL8
in psoriasis commenced in April 1998. As a result, patient follow up has been
limited and clinical data obtained thus far have been insufficient to
demonstrate safety and efficacy under applicable FDA guidelines to support an
application for regulatory approval. In addition, the results from preclinical
testing and early clinical trials may not be predictive of results obtained in
later clinical trials. A number of new drugs and biologics have shown promising
results, even in later stage clinical trials, but subsequently failed to
establish sufficient safety and efficacy data to obtain necessary regulatory
approvals in advanced clinical trials. There can be no assurance that clinical
trials conducted by the Company or by third parties on behalf of the Company
will demonstrate sufficient safety and efficacy to obtain the requisite
regulatory approvals for ABX-CBL or ABX-IL8. In addition, the Company's other
two product candidates are still in preclinical development. The Company has not
submitted investigational new drug applications ("IND") nor begun clinical
trials for these two product candidates. No assurance can be given that any of
the Company's preclinical or clinical development programs will be successfully
completed, that any further IND will be filed or become effective, that
additional clinical trials will be allowed by the FDA or other regulatory
authorities, or that clinical trials will commence as planned.
The commencement and rate of completion of clinical trials conducted by the
Company may be delayed by many factors, including inability to manufacture
sufficient quantities of materials used for clinical trials, slower than
expected rate of patient recruitment, inability to adequately follow patients
after treatment, unforeseen safety issues or any other adverse event reported
during the clinical trials. The Company has limited experience in conducting or
managing clinical trials and relies, and will continue to rely, on third parties
to assist the Company in managing and monitoring clinical trials. Dependence on
such third parties may result in delays in completing, or failure to complete,
such trials if such third parties fail to perform under their agreements with
the Company. Completion of trials may take several years or more, and the length
of time generally varies substantially with the type, complexity, novelty and
intended use of the product candidate. Data obtained from preclinical and
clinical activities are susceptible to varying interpretations, which could
delay, limit or prevent regulatory approval. In addition, delays or rejections
by regulatory authorities may be encountered as a result of many factors,
including changes in regulatory policy during the period of product development.
There can be no assurance that the Company will be permitted by regulatory
authorities to undertake any additional clinical trials for its potential
products or, if such additional trials are conducted, that any of the Company's
product candidates will prove to be safe and efficacious or will receive
regulatory approvals. In addition, the Company's clinical trials are often
conducted with patients who have failed conventional treatments and, in the case
of GVHD, patients are often in the most advanced stages of the disease. During
the course of treatment, these patients can die or suffer adverse medical
effects for reasons that may not be related to the pharmaceutical agent being
tested but which can nevertheless adversely affect the interpretation of
clinical trial results. Failure of the Company's product candidates to
demonstrate safety and efficacy in clinical trials could result in delays in
developing other product candidates and conducting related preclinical testing
and clinical
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trials, as well as a potential need for additional financing, any or all of
which would have a material adverse effect on the Company's business, financial
condition and results of operations. Furthermore, any delays in, or termination
of, the Company's clinical trials would also have a material adverse effect on
the Company's business, financial condition and results of operations. There can
be no assurance that the Company will be permitted by regulatory authorities to
undertake any additional clinical trials for its product candidates or, if such
additional trials are conducted, that any of the Company's product candidates
will prove to be safe and efficacious or will receive regulatory approvals. See
"Business -- Product Development Programs" and "-- Government Regulation."
UNCERTAINTY OF PATENT POSITION AND DEPENDENCE ON PROPRIETARY RIGHTS
The Company's success depends in part on its ability to obtain patents,
protect trade secrets, operate without infringing upon the proprietary rights of
others and prevent others from infringing on the proprietary rights of the
Company. The Company's policy is to seek to protect its proprietary position by,
among other methods, filing United States and foreign patent applications
related to its proprietary technology, inventions and improvements that are
important to the development of its business. Proprietary rights relating to the
Company's technologies will be protected from unauthorized use by third parties
only to the extent that they are covered by valid and enforceable patents or are
effectively maintained as trade secrets. There can be no assurance that any
patents owned by, or licensed to, the Company will afford protection against
competitors or that any pending patent applications now or hereafter filed by,
or licensed to, the Company will result in patents being issued. In addition,
the laws of certain foreign countries do not protect the Company's intellectual
property rights to the same extent as do the laws of the United States. The
patent position of biopharmaceutical companies involves complex legal and
factual questions and, therefore, their enforceability cannot be predicted with
certainty. There can be no assurance that any of the Company's patents or patent
applications, if issued, will not be challenged, invalidated or circumvented, or
that the rights granted thereunder will provide proprietary protection or
competitive advantages to the Company against competitors with similar
technology. Furthermore, there can be no assurance that others will not
independently develop similar technologies or duplicate any technology developed
by the Company.
While the Company has multiple patent applications pending in the United
States, to date, the Company has no United States patents relating to XenoMouse
technology. One issued European Patent owned by the Company relating to
XenoMouse technology is currently undergoing opposition proceedings within the
European Patent Office, and no assurance can be given regarding the outcome of
this opposition. The Company intends to continue to file patent applications as
appropriate for patents covering both its product candidates and processes.
There can be no assurance that patents will issue from any of these
applications, that any patent will issue on technology arising from additional
research or that patents that may issue from such applications will be
sufficient to protect the Company's technologies.
Pursuant to the cross-license and settlement agreement with GenPharm
International, Inc., a subsidiary of Medarex, Inc., ("GenPharm"), the Company
entered into a cross-license agreement with Cell Genesys, Xenotech, Japan
Tobacco and GenPharm, whereby the Company has licensed certain patents, patent
applications, third party licenses, and inventions pertaining to the development
and use of certain transgenic rodents including mice that produce fully human
antibodies that are integral to the Company's products and business. Breach of
the cross-license agreement or the failure to obtain a license to technology
required to commercialize its product candidates would have a material adverse
effect on the Company's business, financial condition and results of operations.
Research has been conducted for many years in the antibody field. This has
resulted in a substantial number of issued patents and an even larger number of
patent applications. Patent applications in the United States are, in most
cases, maintained in secrecy until patents issue, and publication of discoveries
in the scientific or patent literature frequently occurs substantially later
than the date on which the underlying discoveries were made. The commercial
success of the Company depends significantly on its ability to operate without
infringing the patents and other proprietary
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rights of third parties. There can be no assurance that the Company's
technologies do not and will not infringe the patents or violate other
proprietary rights of third parties. In the event of such infringement or
violation, the Company and its corporate partners may be enjoined from pursuing
development or commercialization of their products. Such action would have a
material adverse affect on the Company's business, financial condition and
results of operations.
The biotechnology and pharmaceutical industries have been characterized by
extensive litigation regarding patents and other intellectual property rights,
and the Company recently settled litigation regarding certain patents and other
intellectual property rights. The defense and prosecution of intellectual
property suits, USPTO interference proceedings and related legal and
administrative proceedings in the United States and internationally involve
complex legal and factual questions. As a result, such proceedings are costly
and time-consuming to pursue and their outcome is uncertain. Litigation may be
necessary to enforce patents issued or licensed to the Company, to protect trade
secrets or know-how owned by or licensed by the Company or to determine the
enforceability, scope and validity of the proprietary rights of others. Any
litigation, interference or other administrative proceedings will result in
substantial expense to the Company and significant diversion of effort and
resources by the Company's technical and management personnel. An adverse
determination in such proceedings to which the Company may become a party could
subject the Company to significant liabilities to third parties or require the
Company to seek licenses which may not be available from third parties or
prevent the Company from selling its products in certain markets, if at all.
Although patent and intellectual property disputes are often settled through
licensing or similar arrangements, costs associated with such arrangements may
be substantial and could include ongoing royalties. Furthermore, there can be no
assurance that the necessary licenses would be available to the Company on
satisfactory terms, if at all. Adverse determinations in a judicial or
administrative proceeding or failure to obtain necessary licenses could restrict
or prevent the Company from manufacturing and selling its products, if any,
which would have a material adverse effect on the Company's business, financial
condition and results of operations.
In addition to patents, the Company relies on trade secrets and proprietary
know-how, which it seeks to protect, in part, through confidentiality and
proprietary information agreements. There can be no assurance that such
confidentiality or proprietary information agreements will provide meaningful
protection or adequate remedies for the Company's technology in the event of
unauthorized use or disclosure of such information, that the parties to such
agreements will not breach such agreements or that the Company's trade secrets
will not otherwise become known to or be independently developed by competitors.
See "Business -- Intellectual Property."
INTENSE COMPETITION; RAPID TECHNOLOGICAL CHANGE
The biotechnology and pharmaceutical industries are highly competitive and
subject to significant and rapid technological change. The Company is aware of
several pharmaceutical and biotechnology companies, which are actively engaged
in research and development in areas related to antibody therapy, that have
commenced clinical trials of antibody therapeutics products or have successfully
commercialized antibody products. Many of these companies are addressing
diseases and disease indications which are being targeted by the Company or its
collaborative partners. Certain of these competitors have specific expertise or
technology related to antibody development, such as Centocor, Inc., Protein
Design Labs, Inc., IDEC Pharmaceuticals Corporation, Cambridge Antibody
Technology Group, Inc. and GenPharm. Certain of the Company's competitors are
developing or testing product candidates that may be directly competitive with
the Company's product candidates. For example, the Company is aware that several
companies, including Genentech, Inc., have potential product candidates that may
inhibit the activity of IL-8. Furthermore, the Company is aware that ImClone
Systems, Inc. has a potential product candidate in clinical development that may
inhibit the activity of EGF. Many of these companies and institutions, either
alone or together with their corporate partners, have substantially greater
financial resources and larger research and development staffs than the Company.
In addition, many of these competitors, either alone or together with their
corporate partners, have
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significantly greater experience than the Company in developing products,
undertaking preclinical testing and human clinical trials, obtaining FDA and
other regulatory approvals of products and manufacturing and marketing products.
Accordingly, the Company's competitors may succeed in obtaining patent
protection, receiving FDA approval or commercializing products more rapidly than
the Company. If the Company commences commercial sales of products, it will be
competing against companies with greater marketing and manufacturing
capabilities, areas in which it has limited or no experience.
In addition to biotechnology and pharmaceutical companies, the Company
faces, and will continue to face, competition from academic institutions,
government agencies and research institutions. There are numerous competitors
working on products to treat each of the diseases for which the Company is
seeking to develop therapeutic products. In addition, any product candidate
successfully developed by the Company may compete with existing therapies that
have long histories of safe and effective use. Competition may also arise from
other drug development technologies and methods of preventing or reducing the
incidence of disease and new small molecule or other classes of therapeutic
agents. There can be no assurance that developments by others will not render
the Company's product candidates or technologies obsolete or noncompetitive. The
Company faces and will continue to face intense competition from other
companies, including Japan Tobacco, for collaborative arrangements with
pharmaceutical and biotechnology companies, for establishing relationships with
academic and research institutions, and for licenses to proprietary technology.
These competitors, either alone or with their corporate partners, may succeed in
developing technologies or products that are more effective than those of the
Company. The Company's collaborative partners may elect to develop other
antibody products which compete with the Company's products. See
"Business -- Competition."
SIGNIFICANT GOVERNMENT REGULATIONS; NO ASSURANCE OF REGULATORY APPROVALS
All new biopharmaceutical products, including the Company's product
candidates under development and anticipated future products, are subject to
extensive and rigorous regulation by the federal government, principally the FDA
under the Federal Food, Drug and Cosmetic Act (the "FD&C Act") and other laws
including the Public Health Service Act, and by state and local governments.
Such regulations govern, among other things, the development, testing,
manufacture, safety, efficacy, record keeping, labeling, storage, approval,
advertising, promotion, sale and distribution of such products. If
biopharmaceutical products are marketed abroad, they also are subject to
extensive regulation by foreign governments. To date, none of the Company's
product candidates has been approved for sale in the United States or any
foreign market. The regulatory review and approval process, which includes
preclinical studies and clinical trials of each product candidate, is lengthy,
expensive and uncertain. Securing FDA approvals requires the submission of
extensive preclinical and clinical data and supporting information to the FDA
for each indication to establish the product candidates' safety and efficacy.
The approval process takes many years, requires the expenditure of substantial
resources, involves post-marketing surveillance, and may involve ongoing
requirements for post-marketing studies. Delays in obtaining regulatory
approvals could adversely affect the successful commercialization of any drugs
developed by the Company or its collaborative partners, impose costly procedures
upon the Company's or its collaborative partners' activities, diminish any
competitive advantages that the Company or its collaborative partners may attain
and adversely affect the Company's receipt of revenues or royalties. There can
be no assurance that regulatory approval will be obtained for any therapeutic
product candidate developed by the Company or its collaborative partners.
Furthermore, regulatory approval may entail limitations on the indicated uses of
a drug. Product approvals, if granted, can be withdrawn for failure to comply
with ongoing regulatory requirements or upon the occurrence of unforeseen
problems following initial marketing.
Certain material changes to an approved product such as manufacturing
changes or additional labeling claims are subject to further FDA review and
approval. There can be no assurance that any approvals that are required, once
obtained, will not be withdrawn or that compliance with other regulatory
requirements can be maintained. Further, failure to comply with applicable FDA
and other
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regulatory requirements at any stage during the regulatory process can result in
sanctions being imposed on the Company or the manufacturers of its products,
including delays, warning letters, fines, product recalls or seizures,
injunctions, refusal of the FDA to review pending market approval applications
or supplements to approval applications, total or partial suspension of
production, civil penalties, withdrawals of previously approved marketing
applications and criminal prosecutions. The Company may rely on its
collaborative partners to file INDs and generally direct the regulatory approval
process. There can be no assurance that the Company's collaborative partners
will be able to conduct clinical testing or obtain necessary approvals from the
FDA or other regulatory authorities for any product candidates. Failure to
obtain required governmental approvals will delay or preclude the Company's
collaborative partners from marketing drugs or diagnostic products developed
through the Company's research or limit the commercial use of such product
candidates and could have a material adverse effect on the Company's business,
financial condition and results of operations.
Manufacturers of biopharmaceutical products also are required to comply
with the applicable FDA current good manufacturing practice ("cGMP")
regulations, which include requirements relating to quality control and quality
assurance as well as the corresponding maintenance of records and documentation.
Manufacturing facilities are subject to inspection by the FDA, including
unannounced inspection, and must be approved before they can be used in
commercial manufacturing of the Company's products. There can be no assurance
that the Company or its suppliers will be able to comply with the applicable
cGMP requirements and other FDA regulatory requirements. Such failure would have
a material adverse effect on the Company's business, financial condition and
results of operations. See "Business -- Government Regulation."
NO ASSURANCE OF MARKET ACCEPTANCE
There can be no assurance that the Company's product candidates will gain
any significant degree of market acceptance among physicians, patients,
healthcare payors and the medical community in general even if clinical trials
demonstrate safety and efficacy and necessary regulatory and reimbursement
approvals are obtained. The degree of market acceptance of any product
candidates developed by the Company will depend on a number of factors,
including the establishment and demonstration of the clinical efficacy and
safety as well as cost-effectiveness of the product candidates, their potential
advantage over alternative treatment methods and reimbursement policies of
government and third-party payors. Physicians will not recommend therapies using
the Company's products until such time, if at all, as clinical data or other
factors demonstrate the efficacy of such procedures as compared to conventional
drug and other treatments. Even if the clinical efficacy of therapies using the
Company's products were established, physicians may elect not to recommend the
therapies for any number of other reasons. The Company's product candidates, if
successfully developed, will compete with a number of alternative drugs and
therapies manufactured and marketed by major pharmaceutical and other
biotechnology companies, and possibly new products currently under development
by such companies and others. There can be no assurance that physicians,
patients, third-party payors or the medical community in general will accept and
utilize any product candidates that may be developed by the Company or its
collaborative partners. Failure of the Company's products to achieve significant
market acceptance would have a material adverse effect on the Company's
business, financial condition and results of operations. See
"Business -- Product Development Programs," "-- Competition," and
"-- Pharmaceutical Pricing and Reimbursement."
LIMITED MANUFACTURING EXPERIENCE
The Company currently has limited experience in manufacturing its product
candidates and lacks the resources or capability to manufacture any of its
products on a commercial scale. While the Company currently manufactures limited
quantities of antibody products for preclinical testing, the Company relies on
contract manufacturers to produce ABX-CBL and ABX-IL8. With respect to products
other than ABX-CBL and ABX-IL8, the Company will either be responsible for
manufacturing or contract out manufacturing to third parties.
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The Company's contract manufacturers have limited experience in
manufacturing ABX-CBL and ABX-IL8 in quantities sufficient for conducting
clinical trials. Contract manufacturers often encounter difficulties in scaling
up production, including problems involving production yields, quality control
and quality assurance and shortage of qualified personnel. Furthermore, there
are only a limited number of other third-party contract manufacturers who have
the ability and capacity to produce the Company's product candidates. Failure by
any contract manufacturer to deliver the required quantities of the Company's
products candidates for either clinical or commercial use on a timely basis and
at commercially reasonable prices and failure by the Company to find a
replacement manufacturer would have a material adverse affect on the Company's
business, financial condition and results of operations.
In addition, the Company and its third party manufacturers are required to
register their manufacturing facilities with the FDA and foreign regulatory
authorities. The facilities will then be subject to inspections confirming
compliance with cGMP established by the FDA or corresponding foreign
regulations. Failure to maintain compliance with the cGMP requirements would
materially adversely effect the Company's business, financial condition and
results of operations. See "Business -- Manufacturing."
NO MARKETING AND SALES EXPERIENCE
The Company has no experience in marketing or selling pharmaceutical
products and currently does not have a marketing, sales or distribution
capability. The Company intends to enter into arrangements with third parties to
market and sell most of its products. For select products, the Company may
establish an internal marketing and sales force. There can be no assurance that
the Company will be able to enter into marketing and sales arrangements with
others on acceptable terms, if at all. To the extent that the Company enters
into marketing and sales arrangements with other companies, any revenues to be
received by the Company will be dependent on the efforts of others. There can be
no assurance that such efforts will be successful. If the Company is unable to
enter into such third party arrangements, then the Company must develop a
marketing and sales force, which may be substantial in size, in order to achieve
commercial success for any product candidate approved by the FDA. There can be
no assurance that the Company will successfully develop such experience or have
sufficient resources to do so. If the Company develops its own marketing and
sales capabilities, it will compete with other companies that have experienced
and well-funded marketing and sales operations. The Company's failure to
establish successful marketing and sales capabilities or to enter into
successful marketing arrangements with third parties would have a material
adverse effect on the Company's business, financial condition and results of
operations.
DEPENDENCE ON KEY PERSONNEL; NEED TO ATTRACT AND RETAIN KEY EMPLOYEES AND
CONSULTANTS
The Company is highly dependent on the principal members of its scientific
and management staff. The loss of any of these persons could have a material
adverse effect on the Company's business, financial condition and results of
operations. In order to pursue its product development, marketing and
commercialization plans, the Company will be required to hire additional
qualified scientific personnel to perform research and development, as well as
personnel with expertise in clinical testing, government regulation,
manufacturing and marketing. Attracting and retaining qualified personnel will
be critical to the Company's success. There can be no assurance that the Company
will be able to attract and retain personnel on acceptable terms given the
competition for such personnel among biotechnology, pharmaceutical and
healthcare companies, universities and non-profit research institutions. In
addition, the Company relies on members of its Scientific and Medical Advisory
Boards and other consultants to assist the Company in formulating its research
and development strategy. All of the Company's consultants and the members of
the Company's Scientific and Medical Advisory Boards are employed by entities
other than the Company, and may have commitments to, or advisory or consulting
agreements with, other entities that may limit their availability to the
Company. The loss of services of any of these personnel could impede the
achievement of the Company's development
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objectives and could have a material adverse effect on the Company's business,
financial condition and results of operations. See "Business -- Scientific and
Medical Advisory Boards."
SIGNIFICANT INFLUENCE BY CELL GENESYS, INC.
After the completion of this offering, Cell Genesys will beneficially own
40.5% of the outstanding capital stock. As a result, Cell Genesys will have
significant influence over all matters requiring the approval of the Company's
stockholders, including the election of the Company's Board of Directors and
changes in control of the Company. Cell Genesys and the Company have entered
into a governance agreement, as amended (the "Governance Agreement"), which
provides that so long as Cell Genesys or a group to which it belongs owns (i) a
majority of the outstanding voting stock of the Company, Cell Genesys or the
group shall have the right to nominate four out of the seven directors of the
Company, (ii) less than a majority but greater than 25% of the outstanding
voting stock of the Company, then Cell Genesys or such group shall have the
right to nominate three out of the seven directors of the Company, or (iii) less
than 25% but greater than 15% of the outstanding voting stock of the Company,
then Cell Genesys or such group shall have the right to nominate one out of the
seven directors of the Company. The Governance Agreement also provides that Cell
Genesys and each officer and director of the Company who owns voting stock shall
agree to vote for the persons nominated as set forth above. There can be no
assurance that the Company will not be adversely impacted by the significant
influence which Cell Genesys will have with respect to matters affecting the
Company. See "Certain Transactions" and "Management -- Board Composition."
CONTROL BY DIRECTORS, EXECUTIVE OFFICERS, PRINCIPAL STOCKHOLDERS AND AFFILIATED
ENTITIES
The Company's directors, executive officers, principal stockholders and
affiliated entities will, in the aggregate, beneficially own approximately 50.8%
of the Company's outstanding Common Stock following the completion of this
offering. These stockholders, if acting together, would be able to control
substantially all matters requiring approval by the stockholders of the Company,
including the election of directors and the approval of mergers or other
business combination transactions. There can be no assurance that the Company
will not be adversely impacted by the control which such stockholders will have
with respect to matters affecting the Company. See "Principal Stockholders."
FUTURE CAPITAL REQUIREMENTS
The Company plans to continue to expend substantial resources for the
expansion of research and development, including costs associated with
conducting preclinical testing and clinical trials. The Company may be required
to expend greater-than-anticipated funds if unforeseen difficulties arise in the
course of completing required additional development of product candidates,
performing preclinical testing and clinical trials of such product candidates,
obtaining necessary regulatory approvals or other aspects of the Company's
business. The Company's future liquidity and capital requirements will depend on
many factors, including continued scientific progress in its research and
development programs, the size and complexity of these programs, the scope and
results of preclinical testing and clinical trials, the time and expense
involved in obtaining regulatory approvals, if any, competing technological and
market developments, the establishment of further collaborative arrangements, if
any, the time and expense of filing and prosecuting patent applications and
enforcing patent claims, the cost of establishing manufacturing capabilities,
conducting commercialization activities and arrangements, product in-licensing
and other factors not within the Company's control. Although the Company
believes that the proceeds from this offering, together with the Company's
current cash balances, cash equivalents, short-term investments and cash
generated from collaborative arrangements will be sufficient to meet the
Company's operating and capital requirements for at least the next two years,
there can be no assurance that the Company will not require additional financing
within this timeframe. The Company may be required to raise additional funds
through public or private financing, collaborative relationships or other
arrangements. There can be no assurance that such additional funding, if needed,
will be available on terms attractive to the Company, if at all.
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Furthermore, any additional equity financing may be dilutive to stockholders,
and debt financing, if available, may involve restrictive covenants.
Collaborative arrangements, if necessary to raise additional funds, may require
the Company to relinquish its rights to certain of its technologies, products or
marketing territories. The failure of the Company to raise capital when needed
could have a material adverse effect on the Company's business, financial
condition and results of operations.
UNCERTAINTY RELATING TO REIMBURSEMENT; UNCERTAINTY RELATING TO HEALTHCARE REFORM
In both domestic and foreign markets, sales of the Company's potential
products will depend in part upon the availability of reimbursement from
third-party payors, such as government health administration authorities,
managed care providers, private health insurers and other organizations. These
third-party payors are increasingly challenging the price and examining the cost
effectiveness of medical products and services. In addition, significant
uncertainty exists as to the reimbursement status of newly approved healthcare
products. The Company may need to conduct post-marketing studies in order to
demonstrate the cost-effectiveness of its products. Such studies may require
significant amount of resources to be provided by the Company. There can be no
assurance that the Company's product candidates will be considered cost
effective or that adequate third-party reimbursement will be available to enable
the Company to maintain price levels sufficient to realize an appropriate return
on its investment in product development. Both federal and state governments in
the United States and foreign governments continue to propose and pass
legislation designed to reduce the cost of healthcare. Accordingly, legislation
and regulations affecting the pricing of pharmaceuticals may change before the
Company's proposed products are approved for marketing. Adoption of such
legislation could further limit reimbursement for pharmaceuticals. If adequate
coverage and reimbursement rates are not provided by the government and
third-party payors for the Company's potential products, the market acceptance
of these products could be adversely affected, which would have a material
adverse effect on the Company's business, financial condition and results of
operations. See "Business -- Pharmaceutical Pricing and Reimbursement."
POTENTIAL PRODUCT LIABILITY EXPOSURE AND LIMITED INSURANCE COVERAGE
The use of any of the Company's product candidates in clinical trials, and
the sale of any approved products, may expose the Company to liability claims
resulting from such use or sale of its products. These claims might be made
directly by consumers, healthcare providers or by pharmaceutical companies or
others selling such products. There can be no assurance that the Company will
not experience financial losses in the future due to product liability claims.
Abgenix has obtained limited product liability insurance coverage for its
clinical trials in the amount of $5.0 million per occurrence and $5.0 million in
the aggregate. The Company intends to expand its insurance coverage to include
the sale of commercial products if marketing approval is obtained for product
candidates in development. However, insurance coverage is becoming increasingly
expensive and no assurance can be given that the Company will be able to
maintain insurance coverage at a reasonable cost or in sufficient amounts to
protect the Company against losses. A successful product liability claim or
series of claims brought against the Company for uninsured liabilities or in
excess of insured liabilities could have a material adverse effect on its
business, financial condition and results of operations.
HAZARDOUS AND RADIOACTIVE MATERIALS; ENVIRONMENTAL MATTERS
The Company's research and development processes involve the controlled use
of hazardous and radioactive materials, chemicals and waste products. The
Company is subject to federal, state and local laws and regulations governing
the use, manufacture, storage, handling and disposal of such materials and waste
products. The risk of accidental contamination or injury from these materials
and waste products cannot be completely eliminated and the Company does not
expect to make material capital expenditures for environmental control
facilities in the near-term. There can be no assurance that the Company will not
be required to incur significant costs to comply with environmental laws and
regulations in the future, or that the operations, business or assets of the
Company will not be
16
<PAGE> 18
materially adversely affected by the costs of compliance with current or future
environmental laws or regulations.
NO PRIOR PUBLIC MARKET FOR COMMON STOCK
Prior to this offering, there has been no public market for the Company's
Common Stock, and there can be no assurance that a regular trading market will
develop and continue after this offering or that the market price of the Common
Stock will not decline below the initial public offering price. The initial
public offering price will be determined through negotiations between the
Company and the representatives of the Underwriters and may not be indicative of
the market price of the Common Stock following this offering. Among the factors
considered in such negotiations are prevailing market conditions, certain
financial information of the Company, market valuations of other companies that
the Company and the representatives of the Underwriters believe to be comparable
to the Company, estimates of the business potential of the Company, the present
state of the Company's development and other factors deemed relevant. See
"Underwriting."
VOLATILITY OF COMMON STOCK PRICE
The market prices for securities of biotechnology and pharmaceutical
companies have historically been highly volatile, and the market has from time
to time experienced significant price and volume fluctuations that are unrelated
to the operating performance of particular companies. Factors such as
fluctuations in the Company's operating results, announcements of technological
innovations or new therapeutic products by the Company or others, clinical trial
results, developments concerning strategic alliance agreements, government
regulation, developments in patent or other proprietary rights, public concern
as to the safety of products developed by the Company or others, future sales of
substantial amounts of Common Stock by existing stockholders, comments by
securities analysts and general market conditions can have an adverse effect on
the market price of the Common Stock. In addition, the realization of any of the
risks described in these "Risk Factors" could have a dramatic and adverse impact
on market price of the Company's Common Stock.
SHARES ELIGIBLE FOR FUTURE SALE
Sale of Common Stock (including shares issued upon the exercise of
outstanding options and warrants) in the public market after this offering could
materially adversely affect the market price of the Common Stock. Such sales
also might make it more difficult for the Company to sell equity securities or
equity-related securities in the future. Upon the completion of this offering,
based on the number of shares outstanding as of December 31, 1997, the Company
will have 11,077,894 shares of Common Stock outstanding assuming (i) the
issuance as of December 31, 1997 of 421,143 shares of Preferred Stock issuable
as of December 31, 1997, (ii) the issuance in January 1998 of 160,000 shares of
Preferred Stock, (iii) the issuance by the Company of shares of Common Stock
offered hereby, (iv) no exercise of outstanding options, warrants or other
obligations to issue shares after December 31, 1997, and (v) no exercise of the
Underwriter's over-allotment option to purchase 450,000 shares of Common Stock.
Of these shares, the 3,000,000 shares offered hereby will be freely tradable
(unless held by affiliates of the Company) and the remaining 8,077,894 shares
will be restricted securities within the meaning of the Securities Act of 1933,
as amended (the "Securities Act"). The Company's directors, executive officers
and certain stockholders and optionholders have entered into lock-up agreements
under which they have agreed not to sell, directly or indirectly, any shares
owned by them for a period of 180 days after the date of this Prospectus without
the prior written consent of BancAmerica Robertson Stephens. Upon expiration of
the 180-day lock-up agreements, 4,650,209 shares of Common Stock will become
eligible for public resale, subject to volume limitations imposed by Rule 144.
The remaining 3,427,685 shares held by existing stockholders will become
eligible for public resale at various times over a period of less than one year
following the completion of this offering, subject to volume limitations. After
the offering, the holders of 7,844,352 shares of Common Stock will be entitled
to certain demand and piggyback rights with respect to registration of such
shares under the Securities
17
<PAGE> 19
Act. If such holders, exercising the demand registration rights, causes a large
number of securities to be registered and sold in the public market, such shares
could have an adverse effect on the market price for the Company's Common Stock.
If the Company were to initiate a registration and include shares held by such
holders pursuant to the exercise of their piggyback registration rights, such
sales may have an adverse effect on the Company's ability to raise capital.
Additionally, 121,667 shares issuable pursuant to warrants and subject to the
180-day lock-up agreement will also be entitled to such registration rights. See
"Shares Eligible for Future Sale" and "Underwriting."
ANTI-TAKEOVER EFFECTS OF CERTAIN CHARTER AND BYLAW PROVISIONS AND DELAWARE LAW
Certain provisions of the Company's Certificate of Incorporation and Bylaws
may make it more difficult for a third party to acquire, or discourage a third
party from attempting to acquire, control of the Company. Such provisions could
limit the price that certain investors might be willing to pay in the future for
shares of the Company's Common Stock. Certain of these provisions allow the
Company to issue up to 5,000,000 shares of Preferred Stock without any vote or
further action by the stockholders, eliminate the right of stockholders to act
by written consent without a meeting, specify procedures for director
nominations by stockholders and submission of other proposals for consideration
at stockholder meetings. In addition, the Company is subject to certain
provisions of Delaware law, including Section 203, which prohibits a Delaware
corporation from engaging in any business combination with any interested
stockholder for a period of three years unless certain conditions are met. The
possible issuance of Preferred Stock, the elimination of the right of
stockholders to act by written consent without a meeting, the procedures
required for director nominations and stockholder proposals and Delaware law
could have the effect of delaying, deferring or preventing a change in control
of the Company, including without limitation, discouraging a proxy contest or
making more difficult the acquisition of a substantial block of the Company's
Common Stock. These provisions could also limit the price that investors might
be willing to pay in the future for shares of the Company's Common Stock. See
"Description of Capital Stock -- Preferred Stock" and "-- Certain Charter and
Bylaw Provisions and Delaware Law."
DILUTION; ABSENCE OF DIVIDENDS
The initial public offering price will be substantially higher than the
book value per share of Common Stock. Assuming an initial public offering price
of $11.00 per share, investors purchasing shares of Common Stock in this
offering will incur immediate, substantial dilution of $7.13 per share in the
net tangible book value of Common Stock. Additional dilution will occur upon the
exercise of outstanding options and warrants. See "Dilution." The Company has
never declared or paid any cash dividends and does not anticipate paying cash
dividends in the foreseeable future. See "Dividend Policy."
18
<PAGE> 20
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in this Prospectus including without
limitation, statements containing the words "believes," "anticipates," "expects"
and words of similar import, constitute "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform
Act"). Such forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of the Company, or industry results, to be materially different
from any future results, performance or achievements expressed or implied by
such forward-looking statements. Such factors include, among others: uncertainty
associated with XenoMouse technology; early stage of development; history of
losses and uncertainty of future profitability; no assurance of successful
product development; dependence on collaborative arrangements; uncertainties
related to clinical trials; uncertainty of patent position and dependence on
proprietary rights; intense competition and rapid technological change;
significant government regulations and no assurance of regulatory approvals; no
assurance of market acceptance; limited manufacturing experience; and other
factors referenced in this Prospectus. Certain of these factors are discussed in
more detail elsewhere in this Prospectus, including, without limitation, under
the captions "Summary," "Risk Factors," "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Business." Given these
uncertainties, prospective investors are cautioned not to place undue reliance
on such forward-looking statements. The Company disclaims any obligation to
update any such factors or to publicly announce the result of any revisions to
any of the forward-looking statements contained herein to reflect future events
or developments.
19
<PAGE> 21
USE OF PROCEEDS
The net proceeds to the Company from the sale of the 3,000,000 shares of
Common Stock offered by the Company hereby at an assumed initial public offering
price of $11.00 are estimated to be $29,940,000 ($34,543,500 if the
Underwriters' over-allotment option is exercised in full) after deducting
estimated underwriting discounts and commissions and offering expenses payable
by the Company.
Over the next 12 months, the Company intends to use approximately $15.0
million of the net proceeds of this offering for research and development,
including the performance of preclinical and clinical trials, and approximately
$3.8 million for the final cross-license and settlement payment. The balance of
the net proceeds will be used for working capital and for other general
corporate purposes over such 12 month period and thereafter. The Company may
also use a portion of the net proceeds to acquire or invest in businesses,
products or technologies that are complementary to those of the Company. The
amounts actually expended for each purpose and the timing of such expenditures
may vary significantly depending upon numerous factors, including the results of
clinical trials and preclinical testing, the achievement of milestones under
collaborative arrangements, the ability of the Company to maintain existing and
establish additional collaborative arrangements, the timing and outcome of
regulatory actions regarding the Company's potential products, the costs and
timing of expansion of marketing, sales and manufacturing activities, the costs
involved in preparing, filing, protecting, maintaining and enforcing patent
claims and other intellectual property rights and competing technological and
market developments. Pending the foregoing uses, the Company intends to invest
the net proceeds of this offering in short-term, interest-bearing, investment
grade securities.
DIVIDEND POLICY
The Company has never declared or paid cash dividends on its capital stock.
The Company currently expects to retain its future earnings, if any, for use in
the operation and expansion of its business and does not anticipate paying any
cash dividends in the foreseeable future. The Company's loan and security
agreement prohibits the payment of dividends without the consent of the lender.
THE COMPANY
The Company was incorporated on June 24, 1996 and subsequently on July 15,
1996 was organized pursuant to a Stock Purchase and Transfer Agreement between
the Company and Cell Genesys. The business and operations of Abgenix were
started in 1989 by Cell Genesys and prior to the organization of Abgenix were
conducted within Cell Genesys. In 1991, Cell Genesys and JT Immunotech USA,
Inc., the predecessor company to JT America, Inc. ("JT America") and a medical
subsidiary of Japan Tobacco, formed Xenotech, an equally owned joint venture, to
develop genetically modified strains of mice which can produce fully human
monoclonal antibodies (the "XenoMouse") and to commercialize products generated
from these mice. Upon the organization of Abgenix, Cell Genesys assigned
substantially all of its rights in Xenotech to Abgenix.
20
<PAGE> 22
CAPITALIZATION
The following table sets forth, as of December 31, 1997, (i) the actual
capitalization of the Company, (ii) the actual capitalization of the Company on
a pro forma basis to give effect to the assumed issuance as of December 31, 1997
of 421,143 shares of Preferred Stock issuable as of December 31, 1997 and the
issuance in January 1998 of 160,000 shares of Preferred Stock, the conversion of
all outstanding Preferred Stock into Common Stock and the authorization of
5,000,000 shares of undesignated Preferred Stock upon the closing of this
offering, and (iii) the pro forma capitalization as adjusted to give effect to
the sale of the 3,000,000 shares of Common Stock offered by the Company hereby
at an assumed initial public offering price of $11.00 per share and the
application of the estimated net proceeds therefrom after deducting estimated
underwriting discounts and commissions and offering expenses payable by the
Company. The capitalization information set forth below should be read in
conjunction with the Company's Financial Statements and Notes thereto included
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
DECEMBER 31, 1997
-------------------------------------
PRO FORMA AS
ACTUAL PRO FORMA ADJUSTED
-------- --------- ------------
(IN THOUSANDS)
<S> <C> <C> <C>
Short-term payable to related party................... $ 3,750 $ 3,750 $ --
======== ======== ============
Long-term debt, less current portion.................. $ 3,979 $ 3,979 $ 3,979
Redeemable convertible preferred stock, $0.0001 par
value; 20,000,000 shares authorized, 7,263,209
issued and outstanding actual; none authorized,
issued and outstanding pro forma and pro forma as
adjusted............................................ 31,189 -- --
Redeemable convertible preferred stock subscription
receivable.......................................... (2,737) -- --
Redeemable convertible preferred stock issuable....... 2,737 -- --
Stockholders' equity (net capital deficiency):
Preferred stock, $0.0001 par value; none authorized,
issued and outstanding actual; 5,000,000 shares
authorized, none issued and outstanding pro forma
and pro forma as adjusted........................... -- -- --
Common stock, $0.0001 par value; 50,000,000 shares
authorized, 233,542 shares issued and outstanding
actual; 8,077,894 shares issued and outstanding pro
forma; 11,077,894 shares issued and outstanding pro
forma as adjusted(1)................................ 351 35,557 65,497
Contributions from parent............................. 29,277 29,277 29,277
Additional paid-in capital............................ 1,776 1,776 1,776
Deferred compensation................................. (1,248) (1,248) (1,248)
Accumulated deficit................................... (52,474) (52,474) (52,474)
-------- -------- ------------
Total stockholders' equity (net capital
deficiency)...................................... (22,318) 12,888 42,828
-------- -------- ------------
Total capitalization........................ $ 12,850 $ 16,867 $ 46,807
======== ======== ============
</TABLE>
- ---------------
(1) Excludes (i) 1,501,963 shares of Common Stock issuable upon exercise of
options outstanding as of December 31, 1997, with a weighted average
exercise price of $1.22 per share, (ii) 121,667 shares of Preferred Stock
issuable upon exercise of warrants outstanding as of December 31, 1997, with
an exercise price of $6.00 per share, (iii) 25,000 shares of Common Stock
issuable pursuant to the terms of a license agreement and (iv) an aggregate
of 1,655,745 shares of Common Stock reserved for future issuance under the
Company's 1996 Incentive Stock Plan, 1998 Employee Stock Purchase Plan and
1998 Director Option Plan. See "Management -- Stock Plans," "Description of
Capital Stock" and Note 7 of Notes to the Company's Financial Statements.
21
<PAGE> 23
DILUTION
The net tangible book value of the Company as of December 31, 1997, on a
pro forma basis to reflect the assumed issuance as of December 31, 1997 of
421,143 shares of Preferred Stock issuable as of December 31, 1997 and the
issuance in January 1998 of 160,000 shares of Preferred Stock, was $12,888,000
or $1.60 per share of Common Stock. "Net tangible book value" per share
represents the amount of total tangible assets less total liabilities, divided
by the number of shares of Common Stock outstanding (assuming the conversion of
all then outstanding Preferred Stock into Common Stock). After giving effect to
the receipt of the net proceeds from the sale of the 3,000,000 shares of Common
Stock offered by the Company hereby (after deducting estimated underwriting
discounts and commissions and offering expenses payable by the Company) at an
assumed initial public offering price of $11.00 per share, the Company's net
tangible book value as of December 31, 1997 would have been $42,828,000 or $3.87
per share of Common Stock. This represents an immediate increase in net tangible
book value of $2.27 per share to existing stockholders and an immediate dilution
of $7.13 per share to new investors. The following table illustrates this per
share dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price....................... $11.00
Pro forma net tangible book value as of December 31,
1997................................................... $1.60
Increase in pro forma net tangible book value attributable
to new investors....................................... 2.27
-----
Pro forma net tangible book value after offering............ 3.87
------
Dilution to new investors................................... $ 7.13
======
</TABLE>
The following table sets forth, on a pro forma basis as of December 31,
1997 to reflect the assumed issuance as of December 31, 1997 of 421,143 shares
of Preferred Stock issuable as of December 31, 1997 and the issuance in January
1998 of 160,000 shares of Preferred Stock, the total consideration paid and the
average price per share paid by the existing stockholders and by new investors,
before deducting estimated underwriting discounts and commissions and offering
expenses payable by the Company at the assumed initial public offering price of
$11.00 per share.
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
--------------------- ---------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- ------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders........... 8,077,894 72.9% $37,020,000 52.9% $ 4.58
New investors................... 3,000,000 27.1 33,000,000 47.1 11.00
---------- ----- ----------- -----
Total...................... 11,077,894 100.0% $70,020,000 100.0%
========== ===== =========== =====
</TABLE>
The foregoing computations assume no exercise of stock options or warrants
after December 31, 1997. As of December 31, 1997, there were outstanding options
to purchase 1,501,963 shares of Common Stock, with a weighted average exercise
price of $1.22 per share, outstanding warrants to purchase 121,667 shares of
Preferred Stock, with an exercise price of $6.00 per share, and 25,000 shares of
Common Stock issuable pursuant to the terms of a license agreement. In addition,
1,655,745 shares of Common Stock are reserved for future issuance under the
Company's 1996 Incentive Stock Plan, 1998 Employee Stock Purchase Plan and 1998
Director Option Plan. To the extent that any shares available for issuance upon
exercise of outstanding options or warrants, or reserved for future issuance
under the terms of a license agreement or pursuant to the Company's stock plans
are issued, there will be further dilution to new public investors. See
"Management -- Stock Plans" and "Description of Capital Stock."
22
<PAGE> 24
SELECTED FINANCIAL DATA
The following selected financial data should be read in conjunction with
the Company's Financial Statements and the Notes thereto and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included elsewhere herein. The statement of operations data for the years ended
December 31, 1995, 1996 and 1997 and the balance sheet data as of December 31,
1996 and 1997 are derived from the Company's Financial Statements that have been
audited by Ernst & Young LLP, independent auditors, and are included elsewhere
in this Prospectus. The statement of operations data for the years ended
December 31, 1993 and 1994 are derived from the Company's Financial Statements
audited by Ernst & Young LLP that are not included herein.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------
1993 1994 1995 1996 1997
------ ------- ------- ------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA(1):
Revenues:
Revenue under collaborative agreements from
related parties............................. $6,600 $ 6,200 $ 6,200 $ 4,719 $ 1,343
Contract revenue............................... -- -- -- -- 611
------ ------- ------- ------- --------
Total revenues(1)...................... 6,600 6,200 6,200 4,719 1,954
Operating expenses:
Research and development....................... 4,629 7,921 11,879 9,433 11,405
General and administrative..................... 1,019 1,955 2,603 2,565 3,525
Charge for cross-license and settlement(2)..... -- -- -- -- 22,500
------ ------- ------- ------- --------
Total operating expenses............... 5,648 9,876 14,482 11,998 37,430
------ ------- ------- ------- --------
Operating income (loss).......................... 952 (3,676) (8,282) (7,279) (35,476)
Interest income (expense), net................... -- -- -- 179 (404)
------ ------- ------- ------- --------
Net income (loss)................................ $ 952 $(3,676) $(8,282) $(7,100) $(35,880)
====== ======= ======= ======= ========
Pro forma net loss per share(3).................. $ (9.22)
========
Shares used in computing pro forma net loss per
share(3)....................................... 3,894
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1996 1997
-------- --------
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Cash, cash equivalents and short-term investments........... $ 10,172 $ 15,321
Working capital............................................. 5,564 6,637
Total assets................................................ 14,357 22,084
Long-term debt, less current portion........................ 1,757 3,979
Redeemable convertible preferred stock...................... 10,150 31,189
Accumulated deficit......................................... (16,594) (52,474)
Total stockholders' equity (net capital deficiency)......... (2,316) (22,318)
</TABLE>
- ---------------
(1) The statement of operations of the Company include the revenues and expenses
of Abgenix as a business unit within Cell Genesys prior to July 15, 1996.
During the years ended December 31, 1993, 1994, 1995 and 1996, the Company's
revenues were derived principally from Xenotech for the development of
XenoMouse technology, which was essentially completed in 1996.
(2) In 1997, the Company incurred a non-recurring charge for cross-license and
settlement of $22.5 million, $15.0 million of which was a noncash
allocation. See Note 6 of Notes to the Company's Financial Statements.
(3) See Note 1 of Notes to the Company's Financial Statements for an explanation
of shares used in computing pro forma net loss per share.
23
<PAGE> 25
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following Management's Discussion and Analysis of Financial Condition
and Results of Operations contains forward-looking statements based upon current
expectations that involve risks and uncertainties. The Company's actual results
and the timing of certain events could differ materially from those anticipated
in these forward-looking statements as a result of certain factors, including
those set forth under "Risk Factors" and elsewhere in this Prospectus.
BASIS OF FINANCIAL STATEMENT PRESENTATION
The business and operations of Abgenix commenced in 1989 and were initially
conducted within Cell Genesys. On June 24, 1996, Abgenix was incorporated and
subsequently on July 15, 1996 was organized pursuant to a Stock Purchase and
Transfer Agreement between the Company and Cell Genesys. The agreement set forth
the terms and conditions for the transfer of the antibody business unit within
Cell Genesys to Abgenix. The accompanying financial statements include the
operations of Abgenix since July 15, 1996, and the revenues and expenses of the
Abgenix business unit within Cell Genesys prior to July 15, 1996. The balance
sheets and the statements of cash flows do not reflect the carve out balances
before July 15, 1996, as such information would not be meaningful. Prior to July
15, 1996, specifically identified revenues and expenses such as research and
development attributable to the antibody business unit were allocated to Abgenix
from Cell Genesys. General and administrative expenses were allocated based on
Abgenix research and development expense as a percentage of Cell Genesys' total
research and development expenses. From July 16, 1996 to July 31, 1997, Cell
Genesys performed certain general and administrative functions on behalf of
Abgenix.
OVERVIEW
Abgenix develops and intends to commercialize antibody therapeutic products
for the prevention and treatment of a variety of disease conditions, including
transplant-related diseases, inflammatory and autoimmune disorders, and cancer.
The Company has developed XenoMouse technology, a proprietary technology which
it believes enables it to quickly generate high affinity, fully human antibody
product candidates to essentially any disease target appropriate for antibody
therapy. Abgenix intends to use its XenoMouse technology to build and
commercialize a large and diversified product portfolio through the
establishment of corporate collaborations and internal product development
programs. The Company has recently established collaborative arrangements with
Pfizer and Schering-Plough. In addition, the Company currently has four
proprietary antibody product candidates that are under development internally,
two of which are in human clinical trials. In certain instances, the Company
intends to commercialize select products on its own in niche markets such as
GVHD.
In 1991, Cell Genesys and JT America formed Xenotech, an equally owned
joint venture, to develop genetically modified strains of mice which can produce
human monoclonal antibodies and to commercialize products generated from these
mice. Upon the organization of Abgenix, Cell Genesys assigned its rights in
Xenotech to Abgenix. Xenotech funds its research and development activities
through capital contributions from the Company and JT America and the Company is
obligated to fund 50% of all Xenotech expenses. Pursuant to contractual
arrangements, the Company performs research for the joint venture and receives
payments for such research. The Company accounts for its investment in Xenotech
under the equity method of accounting.
The Company expects that substantially all of its revenues for the
foreseeable future will result from payments under collaborative arrangements,
including fees upon signing, reimbursement for research and development and
milestone payments. To date, all of the Company's revenues have resulted
primarily from research and development funding and milestone payments and may
not be indicative of the Company's future performance or of the ability of the
Company to continue to achieve such milestones.
24
<PAGE> 26
Since inception, the Company has funded its research and development
activities primarily through contributions from Cell Genesys, revenues from
collaborative arrangements, private placements of preferred stock and equipment
leaseline financings and loan facilities. The Company has incurred operating
losses in each of the last three years of operation, including net losses of
approximately $7.1 million and approximately $35.9 million in 1996 and 1997,
respectively, and as of December 31, 1997, had an accumulated deficit of
approximately $52.5 million. The Company's losses have resulted principally from
costs incurred in performing research and development to develop its XenoMouse
technology and subsequent antibody product candidates, from the non-recurring
cross-license and settlement charge and from general and administrative costs
associated with the Company's operations. The Company expects to incur
additional operating losses until at least the year 2000 as a result of
increases in its expenditures for research and product development, including
costs associated with conducting preclinical testing and clinical trials. The
Company expects the amount of such losses will fluctuate significantly from
quarter to quarter as a result of increases or decreases in the Company's
research and development efforts, the execution or termination of collaborative
arrangements, or the initiation, success or failure of clinical trials.
On March 27, 1997, Cell Genesys announced, along with Abgenix, Xenotech and
Japan Tobacco, that it had signed a comprehensive patent cross-license and
settlement agreement with GenPharm that resolved all related litigation and
claims between the parties. As initial consideration for the cross-license and
settlement agreement, Cell Genesys issued a note to GenPharm due September 30,
1998 for $15.0 million payable by Cell Genesys and convertible into shares of
Cell Genesys common stock, currently at $8.62 per share. Of this note, $3.8
million satisfied certain of Xenotech's obligations under the agreement. Japan
Tobacco also made an initial payment. During 1997, two patent milestones were
achieved and Xenotech was obligated to pay $7.5 million for each milestone.
Xenotech paid $7.5 million to satisfy the first milestone and has recorded a
payable to GenPharm for the remaining $7.5 million. The Company has recorded a
liability of $3.8 million in its balance sheet representing its share of the
Xenotech obligation. The payable is due on or before November 1998. No
additional payments will accrue under this agreement. The Company has
recognized, as a non-recurring charge for cross-license and settlement, a total
of $22.5 million. See Note 6 of Notes to the Company's Financial Statements.
In connection with the grant of stock options since inception (July 15,
1996), the Company has recorded aggregate deferred compensation of approximately
$1.8 million through December 31, 1997, representing the difference between the
deemed fair value of the Common Stock for accounting purposes and the option
exercise price at the date of grant. In addition, the Company expects to record
additional deferred compensation aggregating approximately $520,000 in the three
months ended March 31, 1998. These amounts are presented as a reduction of
stockholders' equity and are amortized ratably over the vesting period of the
applicable options, generally four years. These valuations resulted in charges
to operations of $528,000 in 1997, and will result in aggregate charges of
roughly $1.8 million over the next 16 quarters.
RESULTS OF OPERATIONS
Years Ended December 31, 1995, 1996 and 1997
During 1995, 1996 and 1997, the Company derived revenues principally from
performing research for Xenotech. Revenues from the joint venture are recognized
when earned, net of the Company's cash contributions to Xenotech, under the
terms of the related agreements. Research and development funding received in
advance under these agreements is recorded as deferred revenue. Revenues from
the achievement of milestone events are recognized when the milestones have been
achieved. Revenues from Xenotech decreased from $6.2 million in 1995 to $4.7
million in 1996 and to $1.3 million in 1997. Revenues from Xenotech decreased
because Xenotech's research related to developing the genetically modified mice
was essentially completed during 1996. In addition, until July 1995, the Company
did not make capital contributions to the joint venture and, therefore, recorded
all proceeds
25
<PAGE> 27
received from Xenotech as revenue. Revenues in 1997 from Xenotech research
represent a reduced on-going research effort.
Contract revenues of $611,000 in 1997 consisted principally of a
nonrefundable signing fee paid in connection with the execution in December 1997
of a collaboration agreement.
Research and development expenses consist primarily of compensation and
other expenses related to research and development personnel, costs associated
with preclinical testing and planned clinical trials of the Company's product
candidates and facilities expenses. Research and development expenses include
costs associated with sponsored research and development. Research and
development expenses decreased from $11.9 million in 1995 to $9.4 million in
1996 and increased to $11.4 million in 1997. The decrease from 1995 to 1996
reflected the decrease in research activities related to developing the
genetically modified mice for Xenotech, partially offset by increases in costs
associated with preclinical development and testing of the Company's product
candidates. The increase in research and development expenses from 1996 to 1997
reflected increased expenses in connection with preparation for the initiation
of clinical trials of ABX-CBL and ABX-IL8. Most of the 1997 increase resulted
from increased payroll and other personnel expenses, related laboratory
supplies, equipment and facilities expansion. The Company anticipates that
research and development expenses will increase in future periods as it expands
research and development efforts and clinical trials.
General and administrative expenses include compensation and other expenses
related to finance and administrative personnel, professional services expenses
and facilities expenses. General and administrative expenses remained relatively
unchanged at $2.6 million from 1995 to 1996 and increased to $3.5 million in
1997. The increase in 1997 was primarily attributable to increased personnel
levels associated with the expansion of the Company's operations, increased
professional services expenses associated with negotiation of the Company's
collaborative arrangements and increased costs associated with moving to the
Company's current facilities. The Company anticipates that general and
administrative expenses will increase in the future as additional personnel are
added to support its operations.
The non-recurring charge for cross-license and settlement of $22.5 million
in 1997 resulted from the execution of the comprehensive patent cross-license
and settlement agreement with GenPharm. See "Overview" and Note 6 of Notes to
the Company's Financial Statements.
Other income and expenses consist of interest income from cash, cash
equivalents and short-term investments and interest expense incurred in
connection with equipment leaseline financing and loan facilities maintained by
the Company.
LIQUIDITY AND CAPITAL RESOURCES
Since formation, the Company has financed its operations primarily through
capital contributions by, and borrowings from Cell Genesys, revenue from
collaborative arrangements, private placements of Preferred Stock and equipment
leaseline financings and loan facilities. Through December 31, 1997, the Company
has received net cash of $51.6 million from financing activities, consisting
principally of approximately $14.3 million from contributions by Cell Genesys,
$27.0 million from private placements of Preferred Stock, $4.3 million from
construction financing, $2.0 million in lease financing and $4.0 million
borrowed from Cell Genesys and converted to Preferred Stock.
The Company's net cash used in operating activities was $2.2 million and
$10.2 million in 1996 and 1997, respectively. The cash used for operations was
primarily to fund research and development expenses and manufacturing costs
related to the development of new products.
As of December 31, 1997, the Company had cash, cash equivalents and
short-term investments of $15.3 million. The Company has an agreement with a
financing company under which the Company may finance purchases of up to $3.0
million of its laboratory and office equipment. The lease term is 48 months and
bears interest at rates ranging from 12.5% to 13.0%, which are based on the
change in the five year U.S. Treasury rate. As of December 31, 1997, the Company
had $1.0 million available under the equipment lease. The Company also has a
construction financing line with a bank in the
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amount of $4.3 million that was used to finance construction of leasehold
improvements at its current facility. The line matures in January 2001, bears
interest at a rate of prime plus one percent (9.5% at December 31, 1997) and,
until the closing of a public offering by the Company raising net proceeds of at
least $20.0 million, is, with certain exceptions, guaranteed by Cell Genesys. As
of December 31, 1997, no further borrowings were available under the
construction financing line.
The Company plans to continue to expend substantial resources for the
expansion of research and development, including costs associated with
conducting preclinical testing and clinical trials. The Company may be required
to expend greater-than-anticipated funds if unforeseen difficulties arise in the
course of completing required additional development of product candidates,
performing preclinical testing and clinical trials of such product candidates,
obtaining necessary regulatory approvals or other aspects of the Company's
business. The Company's future liquidity and capital requirements will depend on
many factors, including continued scientific progress in its research and
development programs, the size and complexity of these programs, the scope and
results of preclinical testing and clinical trials, the time and expense
involved in obtaining regulatory approvals, if any, competing technological and
market developments, the establishment of further collaborative arrangements, if
any, the time and expense of filing and prosecuting patent applications and
enforcing patent claims, the cost of establishing manufacturing capabilities,
conducting commercialization activities and arrangements, product in-licensing
and other factors not within the Company's control. Although the Company
believes that the proceeds from this offering, together with the Company's
current cash balances, cash equivalents, short-term investments and cash
generated from collaborative arrangements will be sufficient to meet the
Company's operating and capital requirements for at least the next two years,
there can be no assurance that the Company will not require additional financing
within this timeframe. The Company may be required to raise additional funds
through public or private financing, collaborative relationships or other
arrangements. There can be no assurance that such additional funding, if needed,
will be available on terms attractive to the Company, if at all. Furthermore,
any additional equity financing may be dilutive to stockholders, and debt
financing, if available, may involve restrictive covenants. Collaborative
arrangements, if necessary to raise additional funds, may require the Company to
relinquish its rights to certain of its technologies, products or marketing
territories. The failure of the Company to raise capital when needed could have
a material adverse effect on the Company's business, financial condition and
results of operations.
As of December 31, 1997, the Company had federal net operating loss
carryforwards of approximately $15.4 million. The Company's net operating loss
carryforwards exclude losses incurred prior to the formation of Abgenix in July
1996. Further, the amounts associated with the cross-license and settlement have
been expensed for financial statement accounting purposes and have been
capitalized and amortized over a period of approximately fifteen years for tax
purposes. The net operating loss and credit carryforwards will expire in the
years 2011 through 2012, if not utilized. Utilization of the net operating
losses and credits may be subject to a substantial annual limitation due to the
"change in ownership" provisions of the Internal Revenue Code of 1986 and
similar state provisions. The annual limitation may result in the expiration of
net operating losses and credits before utilization.
RECENT ACCOUNTING PRONOUNCEMENT
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income" ("SFAS
130"), and Statement of Financial Accounting Standards No. 131, "Disclosure
about Segments of an Enterprise and Related Information" ("SFAS 131"), which
require additional disclosures to be adopted beginning in the first quarter of
1998 and on December 31, 1998, respectively. Under SFAS 130, the Company is
required to display comprehensive income and its components as part of the
Company's financial statements. SFAS 131 requires that the Company report
financial and descriptive information about its reportable operating segments.
The adoption of SFAS 130 and SFAS 131 will not have a material effect on the
Company's results of operations or financial condition. The Company is
evaluating the impact, if any, of SFAS 130 and SFAS 131 on its future financial
statement disclosures.
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YEAR 2000
The Company relies on computers and computer software in the operation of
its business as do its vendors, suppliers and customers. These computers and
computer software may not be able to properly recognize the dates commencing in
the year 2000. To date, the Company has not found any material impact which may
result from the failure of its computers and computer software or that of its
vendors, suppliers and customers. The Company believes that its business,
financial condition and results of operations will not be materially impacted by
the year 2000 date recognition issue. However, the Company plans to further
assess this issue during 1998 and, if appropriate, develop an action plan to
correct it.
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BUSINESS
The following Business section contains certain forward-looking statements
which involve risks and uncertainties. Actual results and the timing of certain
events could differ materially from those projected in these forward-looking
statements due to a number of factors, including those set forth under "Risk
Factors" and elsewhere in this Prospectus.
OVERVIEW
Abgenix, a biopharmaceutical company, develops and intends to commercialize
antibody therapeutic products for the prevention and treatment of a variety of
disease conditions, including transplant-related diseases, inflammatory and
autoimmune disorders, and cancer. The Company has developed XenoMouse technology
which it believes enables it to quickly generate high affinity, fully human
antibody product candidates to essentially any disease target appropriate for
antibody therapy. Abgenix intends to use its XenoMouse technology to build a
large and diversified product portfolio through the establishment of a number of
corporate collaborations and internal product development. The Company has
recently established collaborative arrangements with Pfizer and Schering-Plough
in order to generate antibody product candidates in the therapeutic areas of
cancer and inflammatory disorders, respectively. The Company currently has four
antibody product candidates that are under development internally. Its lead
product candidate, ABX-CBL, is an in-licensed antibody currently in a
multi-center confirmatory Phase II clinical trial for GVHD. In addition, the
Company has initiated a Phase I clinical trial for ABX-IL8 in psoriasis. Abgenix
is currently in preclinical development with two other fully human antibody
product candidates, ABX-EGF and ABX-RB2, for use in the treatment and prevention
of cancer and chronic immunological disorders, respectively.
BACKGROUND
The Normal Antibody Response
The human immune system protects the body against a variety of infections
and other illnesses. Specialized cells, which include B cells and T cells, work
in concert with the other components of the immune system to recognize,
neutralize and eliminate from the body numerous foreign substances, infectious
organisms and malignant cells. In particular, B cells generally produce protein
molecules, known as antibodies, which are capable of recognizing substances
potentially harmful to the human body. Such substances are called antigens. Upon
being bound by an antibody, antigens can be neutralized and blocked from
interacting with and causing damage to normal cells. In order to effectively
neutralize or eliminate an antigen without harming normal cells, the immune
system must be able to generate antibodies that bind tightly (i.e., with high
affinity) to one specific antigen (i.e., with specificity).
All antibodies have a common core structure composed of four subunits, two
identical light (L) chains and two identical heavy (H) chains, named according
to their relative size. The heavy and light chains are assembled within the B
cell to form an antibody molecule which consists of a constant region and a
variable region. As shown in figure one, an antibody molecule may be represented
schematically in the form of a "Y" structure.
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[FIGURE ONE]
The base of the "Y", together with the part of each arm immediately next to
the base, is called the constant region because its structure tends to be very
similar across all antibodies. In contrast, the variable regions are at the end
of the two arms and are unique to each antibody with respect to their three
dimensional structures and protein sequences. Because variable regions define
the specific binding sites for a variety of antigens, there is a need for
significant structural diversity in this portion of the antibody molecule. Such
diversity is achieved in the body primarily through a unique mode of assembly
involving a complex series of recombination steps for various gene segments of
the variable region, including the V, D and J segments (see figure two shown
below).
[FIGURE TWO]
The human body is repeatedly exposed to a variety of different antigens.
Accordingly, the immune system must be able to generate a diverse repertoire of
antibodies that are capable of recognizing these multiple antigen structures
with a high degree of specificity. The immune system has evolved a two-step
mechanism in order to accomplish this objective. The first step, immune
surveillance, is achieved through the generation of diverse circulating B cells,
each of which assembles different antibody gene segments in a semi-random
fashion to produce and display on its surface a specific antibody. As a result,
a large number of distinct, albeit lower affinity, antibodies are generated in
the circulation so as to recognize essentially any foreign antigen that enters
the body. While capable of recognizing the antigens as foreign, these lower
affinity antibodies are generally incapable of effectively neutralizing them.
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This limitation of the immune surveillance process is generally overcome by
the normal immune system in a second step called affinity maturation. Triggered
by the initial binding to a specific antigen, the small fraction of B cells that
recognize this antigen is then primed by the immune system to progressively
generate antibodies with higher and higher affinity through a process of
repeated mutation and selection. As a result, the reactive antibodies develop
increasingly higher specificity and affinity with the latter being potentially a
hundred to a thousand times higher than those generated in the previous immune
surveillance process. These more specific, higher affinity antibodies have a
greater likelihood of effectively neutralizing or eliminating the antigen while
minimizing the potential of damaging healthy cells.
Antibodies as Products
Recent advances in the technologies for creating and producing antibody
products coupled with a better understanding of how antibodies and the immune
system function in key disease states have led to renewed interest in the
commercial development of antibodies as therapeutic products. According to a
recent survey by the Pharmaceutical Research and Manufacturers of America,
antibodies account for over 25% of all biopharmaceutical products in clinical
development. The Company estimates that there are up to nine antibody
therapeutic product candidates that are in or have completed Phase III clinical
trials in the United States. In addition, four products, namely, Orthoclone,
ReoPro, Rituxan and Zenapax, are currently being marketed for the treatment of
transplant rejection, cardiovascular disease and cancer.
The Company believes that as products, antibodies have several potential
clinical and commercial advantages over traditional therapies. These include:
- accelerating product development timelines;
- reducing unwanted side effects as a result of high specificity for
the disease target;
- achieving greater patient compliance and higher efficacy as a result
of favorable pharmacokinetics;
- delivering various payloads, including drugs, radiation and toxins,
to specific disease sites; and
- eliciting a desired immune response.
Limitations of Current Approaches to Development of Antibody Products
Despite the early recognition of antibodies as promising therapeutic
agents, most approaches thus far to develop them as products have been met with
a number of commercial and technical limitations. Initial efforts were aimed at
the development of hybridoma cells, which are immortalized mouse
antibody-secreting B cells. Such hybridoma cells are derived from normal mouse B
cells which have been genetically manipulated so that they are capable of
reproducing over an indefinite period of time. They are then cloned to produce a
homogeneous population of identical cells which produce one single type of mouse
antibody capable of recognizing one specific antigen ("monoclonal antibody").
While mouse monoclonal antibodies can be generated to bind to a number of
antigens, they contain mouse protein sequences and tend to be recognized as
foreign by the human immune system. As a result, they are quickly eliminated by
the human body and have to be administered frequently. When patients are
repeatedly treated with mouse antibodies, they will begin to produce antibodies
that effectively neutralize the mouse antibody, a reaction referred to as a
Human Anti-Mouse Antibody ("HAMA") response. In many cases, the HAMA response
prevents the mouse antibodies from having the desired therapeutic effect and may
cause the patient to have an allergic reaction. The potential use of mouse
antibodies is thus best suited to situations where the patient's immune system
is compromised or where only short-term therapy is required. In such settings,
the patient is often incapable of producing antibodies that neutralize the mouse
antibodies or has insufficient time to do so.
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Recognizing the limitations of mouse monoclonal antibodies, researchers
have developed a number of approaches to make them appear more human-like to a
patient's immune system. For example, improved forms of mouse antibodies,
referred to as "chimeric" and "humanized" antibodies, are genetically engineered
and assembled from portions of mouse and human antibody gene fragments. While
such chimeric and humanized antibodies are more human-like, they still retain a
varying amount of the mouse antibody protein sequence, and accordingly may
continue to trigger the HAMA response. Additionally, the humanization process
can be expensive and time consuming, requiring at least two months and sometimes
over a year of secondary manipulation after the initial generation of the mouse
antibody. Once the humanization process is complete, the remodeled antibody gene
must then be expressed in a recombinant cell line appropriate for antibody
manufacturing, adding additional time before the production of preclinical and
clinical material can be initiated. Altogether it may take up to two years from
the start of the humanization process to manufacture a sufficient amount of an
appropriate antibody to initiate clinical trials. In addition, the combination
of mouse and human antibody gene fragments can result in a final antibody
product which is sufficiently different in structure from the original mouse
antibody leading to a decrease in specificity or a loss of affinity.
[FIGURE THREE]
Human Antibodies
The HAMA response can potentially be avoided through the generation of
antibody products with fully human protein sequences. Such fully human
antibodies may increase the market acceptance and expand the use of antibody
therapeutics. Several antibody technologies have been developed to produce
antibodies with 100% human protein sequences (see the figure three shown above).
One approach to generating human antibodies, called phage display technology,
involves the cloning of human antibody genes into bacteriophage, viruses that
infect bacteria, in order to display antibody fragments on the surfaces of
bacteriophage particles. This approach attempts to mimic in vitro the immune
surveillance and affinity maturation processes that occur in the body. Because
phage display technology cannot take advantage of the naturally occurring in
vivo affinity maturation process, the antibody fragments initially isolated by
this approach are typically of moderate affinity. In addition, further genetic
engineering is required to convert the antibody fragments into fully assembled
antibodies and significant manipulation, taking from several months to a year,
may be required to increase their affinities to a level appropriate for human
therapy. Before preclinical or clinical material can be produced, the gene
encoding the antibody derived from phage display technology must, as with a
humanized antibody, be introduced into a recombinant cell line.
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Two additional approaches involving the isolation of human immune cells
have been developed to generate human antibodies. One such approach is the
utilization of immunodeficient mice which lack both B and T cells. Human B cells
and other immune tissue are transplanted into these mice which are then
subsequently immunized with target antigens to stimulate the production of human
antibodies. However, this process is generally limited to generating antibodies
only to nonhuman antigens or antigens to which the human B cell donor had
previously responded. Accordingly, this approach may not be suitable for
targeting many key diseases such as cancer, and inflammatory and autoimmune
disorders where antibodies to human antigens may be required for appropriate
therapy. The other approach involves collecting human B cells which have been
producing desired antibodies from patients exposed to a specific virus or
pathogen. As with the previous approach, this process may not be suitable for
targeting diseases where antibodies to human antigens are required, and
therefore is generally limited to infectious disease targets which will be
recognized as foreign by the human immune system.
THE ABGENIX SOLUTION -- XENOMOUSE TECHNOLOGY
The Company's approach to generating human antibodies with fully human
protein sequences is to use genetically engineered strains of mice in which
mouse antibody gene expression is suppressed and functionally replaced with
human antibody gene expression, while leaving intact the rest of the mouse
immune system. Rather than engineering each antibody product candidate, these
transgenic mice capitalize on the natural power of the mouse immune system in
surveillance and affinity maturation to produce a broad repertoire of high
affinity antibodies. By introducing human antibody genes into the mouse genome,
transgenic mice with such traits can be bred indefinitely. Importantly, these
transgenic mice are capable of generating human antibodies to human antigens
because the only human products expressed in the mice (and therefore recognized
as "self") are the antibodies themselves. Any other human tissue or protein is
thus recognized as a foreign antigen by the mouse and an immune response will be
mounted. Abnormal production of certain human proteins, such as cytokines and
growth factors or their receptors have been implicated in various human
diseases. Neutralization or elimination of these abnormally produced or
regulated human proteins with the use of human antibodies could ameliorate or
suppress the target disease. Therefore, the ability of these transgenic mice to
generate human antibodies against human antigens could offer an advantage to
drug developers compared with some of the other approaches described previously.
A challenge with this approach, however, has been to introduce enough of the
human antibody genes in appropriate configuration into the mouse genome to
ensure that these mice are capable of recognizing the broad diversity of
antigens relevant for human therapies.
To make its transgenic mice a robust tool capable of consistently
generating high affinity antibodies which can recognize a broad range of
antigens, the Company equipped its XenoMouse with approximately 80% of the human
heavy chain antibody genes and a significant amount of the human light chain
genes. The Company believes that the complex assembly of these genes together
with their semi-random pairing allows XenoMouse to recognize a diverse
repertoire of antigen structures. XenoMouse technology further capitalizes on
the natural in vivo affinity maturation process to generate high affinity, fully
human antibodies. In addition, the Company has developed multiple strains of
XenoMouse, each of which is capable of producing a different class of antibody
to perform different therapeutic functions. The Company believes that its
various XenoMouse strains will provide maximum flexibility for drug developers
in generating antibodies of the specific type best suited for a given disease
indication.
XENOMOUSE TECHNOLOGY ADVANTAGES
The Company believes that its XenoMouse technology offers the following
advantages:
Producing Antibodies With Fully Human Protein Sequences. The Company's
XenoMouse technology, unlike chimeric and humanization technologies, allows the
generation of antibodies with 100% human protein sequences. Antibodies created
using XenoMouse technology are not expected to cause a HAMA response even when
administered repeatedly to immunocompetent patients. For this reason,
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antibodies produced using XenoMouse technology are expected to offer a better
safety profile and to be eliminated less quickly from the human body, reducing
the frequency of dosing.
Generating a Diverse Antibody Response to Essentially Any Disease Target
Appropriate for Antibody Therapy. Because a substantial majority of human
antibody genes has been introduced into XenoMouse, the technology has the
potential to generate high affinity antibodies that recognize more antigen
structures than other transgenic technologies. In addition, through immune
surveillance, XenoMouse technology is expected to be capable of generating
antibodies to almost any medically relevant antigen, human or otherwise. For a
given antigen target, having multiple antibodies to choose from could be
important in selecting the optimal antibody product.
Generating High Affinity Antibodies Which Do Not Require Further
Engineering. XenoMouse technology uses the natural in vivo affinity maturation
process to generate antibody product candidates usually in two to four months.
These antibody product candidates may have affinities as much as a hundred to a
thousand times higher than those seen in phage display. In contrast to
antibodies generated using humanization and phage display technology, XenoMouse
antibodies are produced in one step without the need for any subsequent
engineering, a process which at times has proven to be challenging and time
consuming. By avoiding the need to further engineer antibodies, the Company
reduces the risk that an antibody's structure and therefore functionality will
be altered between the initial antibody selected and the final antibody placed
into production.
Enabling More Efficient Product Development. In contrast to humanization or
phage display, which require the cloning of an antibody gene and the generation
of a recombinant cell line, the B cells generated in XenoMouse can be turned
directly into hybridoma cell lines for human antibody production. Therefore, a
supply of monoclonal antibodies can be produced quickly to allow the timely
initiation of preclinical and clinical studies. Furthermore, since XenoMouse
technology can potentially produce multiple product candidates more quickly than
humanization and phage display technology, preclinical testing can be conducted
on several antibodies in parallel to identify the one optimal product candidate
which will be tested in clinical trials.
Providing Flexibility in Choosing Manufacturing Processes. Once an antibody
with the desired characteristics has been identified, preclinical material can
be produced either directly from hybridomas or from recombinant cell lines.
Humanized and phage display antibodies, having been engineered, cannot be
produced in hybridomas. In addition to potential time savings, production in
hybridomas avoids the need to license certain third party intellectual property
rights covering the production of antibodies in recombinant cell lines.
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ABGENIX STRATEGY
The Company's objective is to be a leader in the generation, development
and commercialization of novel antibody-based biopharmaceutical products. Key
elements of the Company's strategy include:
Building a Large and Diversified Product Portfolio. Utilizing its XenoMouse
technology, the Company intends to build a large and diversified product
portfolio, including a mix of out-licensed and internally developed product
candidates. This portfolio is expected to target serious medical conditions
including: transplant-related disorders, inflammation, autoimmune and
cardiovascular disease and cancer. Abgenix intends to collaborate with leading
academic researchers and companies involved in the identification and
development of novel antigens. The Company believes the speed and cost
advantages of its technology will enable it to make cost-effective use of
available human and capital resources. Abgenix can thus pursue multiple product
candidates in parallel through the preclinical and early clinical stages before
entering into a corporate collaboration. As a result, the Company believes it
can create, for itself or for marketing to potential corporate partners, a
package that includes antigen rights, human antibodies, and preclinical and
clinical data.
Establishing Multiple Corporate Collaborations. Abgenix intends to generate
short and long term revenues by entering into multiple collaborations with
pharmaceutical and biotechnology companies. For any given product candidate, the
terms of the collaboration arrangement are expected to reflect the value the
Company adds to the drug development process. The Company intends to form two
types of collaborations with corporate partners: technology collaborations and
proprietary product collaborations. In the former, including the Company's
existing collaborations with Pfizer, Schering-Plough, and Cell Genesys, Abgenix
plans to use its XenoMouse technology to make human antibodies to certain
antigen targets for each corporate partner. The terms of the Company's
technology collaborations could include license fees and milestone payments plus
royalties on future product sales. On the other hand, proprietary product
collaborations would involve antibodies made to antigen targets sourced by the
Company. Antibody candidates for proprietary product collaborations currently
include: ABX-IL8, ABX-EGF and ABX-RB2. The terms of the Company's proprietary
product collaborations could include license fees upon signing, milestone
payments, potential reimbursement for research and development activities
performed by the Company plus royalties on future product sales. The Company's
mix of technology collaborations and proprietary product collaborations could
result in a growing portfolio of product candidates for Abgenix with development
and marketing costs borne by the partner, while allowing Abgenix to share in the
revenues of successful products.
Commercializing Products in Niche Markets. The Company intends to complete
all stages of clinical development and commercialization for select products in
niche markets. For example, the Company intends to develop and commercialize
ABX-CBL on its own, at least in North America. ABX-CBL is an in-licensed
monoclonal antibody in Phase II clinical trials for GVHD. Because of the
seriousness of GVHD and the lack of alternative treatments, the clinical trials
for ABX-CBL are expected to involve a small number of patients to be followed
over a short time period. In addition, the GVHD market is largely concentrated
in leading bone marrow transplant centers and should, therefore, be adequately
addressed by a small direct sales force. Future antibody products with similar
market characteristics will also be considered candidates for development and
commercialization by the Company on its own.
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PRODUCT DEVELOPMENT PROGRAMS
Abgenix is currently developing antibody therapeutics for a variety of
indications. The table below sets forth the development status of the Company's
product candidates.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRODUCT COMMERCIAL
CANDIDATE INDICATION STATUS(1) RIGHTS(2)
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
ABX-CBL GVHD Phase II Abgenix
- ---------------------------------------------------------------------------------------
Organ Transplant Rejection Preclinical Abgenix
ABX-RB2 ------------------------------------------------------------------------
Autoimmune Disease Preclinical Abgenix
- ---------------------------------------------------------------------------------------
Psoriasis Phase I Abgenix
ABX-IL8 ------------------------------------------------------------------------
Other Inflammatory Diseases Preclinical Abgenix
- ---------------------------------------------------------------------------------------
ABX-EGF EGF Dependent Cancers Preclinical Abgenix
- ---------------------------------------------------------------------------------------
Undisclosed Cancer Preclinical Pfizer
- ---------------------------------------------------------------------------------------
Undisclosed Inflammation Preclinical Schering-Plough
</TABLE>
- --------------------------------------------------------------------------------
- ---------------
(1) "Phase II" indicates efficacy testing in a limited patient population.
"Phase I" indicates safety and efficacy testing in a limited patient
population and toxicology testing in animal models. "Preclinical" indicates
that the product candidate selected for development has met predetermined
criteria for potency, specificity, manufacturability and pharmacologic
activity in animal and in vitro models.
(2) Commercial rights are worldwide except for ABX-IL-8 where the Company has
obtained an exclusive license within the United States, its territories and
possessions, Canada and Mexico and a co-exclusive license with Japan Tobacco
in the rest of the world, excluding Japan, Taiwan and South Korea.
ABX-CBL and ABX-RB2
The CBL antigen is selectively expressed on activated immune cells
including T cells, B cells and natural killer cells. To accelerate its
commercialization plans, the Company obtained in February 1997 an exclusive
license to ABX-CBL, a proprietary mouse monoclonal antibody. The Company is
currently conducting a multi-center confirmatory Phase II clinical trial for
ABX-CBL in GVHD. A mouse antibody can be utilized to treat GVHD patients because
their immune system is either non-functioning or severely suppressed and,
therefore, no HAMA responses should be generated. In addition, the Company has
developed a fully human monoclonal antibody, ABX-RB2, using its XenoMouse
technology to target the same antigen for use in chronic inflammatory disorders.
The Company believes both products have the ability to destroy activated immune
cells without affecting the entire immune system.
Graft Versus Host Disease. The Company is developing ABX-CBL to reverse
unwanted immune responses such as occurs in GVHD. GVHD is a life threatening
complication that frequently occurs following an allogeneic bone marrow
transplant ("BMT"). BMTs are used in the treatment of patients with end stage
leukemia and certain other serious cancers and immune system disorders. An
allogeneic BMT procedure involves transferring marrow, the graft, from a healthy
person into an immunosuppressed patient, the host. The transplant is intended to
restore normal circulating immune cells to a patient whose own immune system is
either functionally deficient or has been damaged by the treatment of an
underlying disease such as cancer and therefore does not have the ability to
mount a sufficient immune response. Often a portion of the graft recognizes the
host's own cells as foreign, becomes activated and attacks them, resulting in
GVHD. GVHD is graded based on clinical symptoms from I, which is the mildest
form, to IV, which is the most severe form. It typically involves damage to
multiple organ systems, including the skin, liver and intestines. GVHD causes
extreme suffering and is the primary cause of death in allogeneic bone marrow
transplant patients. It is estimated that approximately 12,000 allogeneic BMTs
will be performed worldwide in 1998, and this number has been growing at about
15% per year. GVHD occurs in approximately 50% of allogeneic BMTs and the
treatment costs for GVHD in the United States are estimated to be about $80,000
per patient. Based on
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a published clinical study, it is estimated that roughly 50% of patients with
GVHD fail to respond to current treatments, which consist of steroid and other
drug treatments to suppress the grafted immune cells. Less than 15% of steroid
resistant GVHD sufferers survive for more than one year. The Company believes
that a safer and more effective treatment for GVHD could result in increased use
of BMTs.
In four separate clinical studies conducted prior to the Company obtaining
an exclusive license to ABX-CBL, a total of 25 patients with GVHD were treated
with the antibody. No safety concerns with ABX-CBL were identified in these
studies. One such trial, which has been published, was conducted at St. Jude
Hospital in Memphis, Tennessee. In this trial, ten patients with steroid
resistant, Grade III to IV GVHD were treated with daily doses of ABX-CBL for up
to six weeks. The publication reported that five of ten patients had a complete
remission of GVHD, while four of ten had at least a two grade improvement in
their GVHD score. Only one patient did not respond to the therapy. Another
patient who was treated at St. Jude Hospital after publication of the study
experienced a two grade improvement in the patient's GVHD score without adverse
side effects. Six additional patients with GVHD were treated at the University
of Wisconsin and Cook-Ft. Worth Hospital. The reports from these sites indicated
that these patients showed similar results to those described in the published
trial conducted at St. Jude Hospital, with four of the six patients showing at
least a two grade improvement in their GVHD score. In addition, eight other GVHD
patients received treatment at Stanford University and four of the patients were
noted to have some improvement in their GVHD score, despite using a dose of less
than one-tenth of that employed at the other sites.
Immune reaction to the mouse antibody was assessed in several patients and
no HAMA response was detected clinically. Furthermore, no adverse clinical
responses consistent with an antibody-induced allergic reaction were observed.
In addition, a number of patients were followed after the conclusion of the
study for as long as one year and no adverse ABX-CBL events were observed.
Based in part on the clinical data described above, the Company commenced a
multi-center confirmatory Phase II clinical trial in January 1998 with ABX-CBL
in GVHD. This dose escalation trial is expected to enroll a total of 48 patients
suffering from Grade III or IV GVHD and who have failed to respond to steroid
treatment. The Company believes that this trial will be concluded in 1998.
In certain immunological diseases where chronic administration of a drug
targeting the CBL antigen is desirable, it may be important to use a fully human
antibody to avoid the risk of a HAMA response. Such diseases include organ
transplant rejection, primarily kidney and corneal transplant rejection, as well
as autoimmune disorders.
Using its XenoMouse technology, the Company has generated ABX-RB2, a fully
human antibody which targets the CBL antigen, and is conducting preclinical
studies on this product candidate. While no human data is available on ABX-RB2,
several clinical trials have been performed using ABX-CBL, the first generation
mouse antibody to the CBL antigen, for the treatment of kidney and corneal
transplant rejection.
Organ Transplant Rejection. Three clinical trials had been conducted for
the treatment of kidney transplant rejection using ABX-CBL prior to the Company
obtaining an exclusive license to this antibody. In two trials conducted at
Sendai Shakai Hoken Hospital in Japan, ABX-CBL was administered intravenously
daily for nine days to 41 patients whose kidney transplant rejections were
resistant to steroid therapy. In the first trial, organ rejection was reversed
in 17 of 19 patients. In the second trial, organ rejection was reversed in a
dose dependent fashion in 18 of the 22 patients treated. A third clinical trial
was conducted at the University of California at Los Angeles. In this study, 13
of the 18 patients had cadaveric donor transplants. This more refractory
population responded to nine days of ABX-CBL treatment with an overall response
rate of 50%. Subset analysis indicated that of the patients treated prior to
severe renal failure, as many as 75% experienced reversal of the kidney
rejections. No serious treatment-related side effects were observed in any of
the patients in these three trials.
Each year there are approximately 11,000 kidney transplants in the United
States. Depending upon a variety of patient risk factors, many of these
procedures result in the patient's immune system
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rejecting the organ. Current therapy for kidney transplant rejection involves
administering steroids or other immune system modulators, which may differ from
suboptimal efficacy profiles or dose limiting toxicities.
In addition to the use of ABX-RB2 in kidney transplant rejection, the
Company is also exploring its potential use in corneal transplantation. In a
clinical trial conducted at the University of California at San Diego prior to
the Company obtaining an exclusive license to ABX-CBL, six patients were treated
with ABX-CBL after the onset of rejection and four showed graft preservation. No
serious adverse side effects related to the infusion of ABX-CBL or to an immune
response were observed in any of the six patients.
Although there can be no assurance that the data observed with ABX-RB2 in
these indications will demonstrate the same degree of efficacy as the data
observed with ABX-CBL, the Company believes these studies may assist in the
design of preclinical and clinical protocols for future development.
Autoimmune Disease. In autoimmune disease, a subset of the patient's immune
cells, often including both B and T cells, react abnormally to a natural
component of the patient's own tissue. Because these immune cells are constantly
exposed to the tissue component, they are in a perpetual state of activation.
Based on the presumed mechanism of action of ABX-RB2, the Company anticipates
that it may be effective in treating autoimmune disease. Before initiating
clinical trials, this concept will be tested in preclinical studies in a series
of animal models of autoimmune disease, including rheumatoid arthritis, lupus,
multiple sclerosis, and diabetes.
ABX-IL8
IL-8, an important inflammatory cytokine produced at sites of inflammation,
attracts and activates white blood cells that mediate the inflammation process.
A number of preclinical studies suggest that excess IL-8 may contribute to the
pathology and clinical symptoms associated with certain inflammatory disorders.
Clinical studies have demonstrated significantly increased levels of IL-8 in
plasma or other bodily fluids of patients with certain inflammatory diseases,
including psoriasis, rheumatoid arthritis and inflammatory bowel disease.
Antibodies to IL-8 have been shown to block immune cell infiltration and the
associated pathology in animal models of several of these diseases as well as in
reperfusion injury. Using its XenoMouse technology, the Company has generated
ABX-IL8, a proprietary human monoclonal antibody, that binds to IL-8 with high
affinity. Abgenix in-licensed ABX-IL8 from Xenotech in March 1996. In exchange
for a license fee and royalty payments on future product sales, the Company
received an exclusive license to ABX-IL8 within the United States, its
territories and possessions, Canada and Mexico and a co-exclusive license with
Japan Tobacco in the rest of the world, excluding Japan, Taiwan and South Korea.
Psoriasis. Psoriasis is a chronic disease that results in plaques, a
thickening and scaling of the skin accompanied by local inflammation. The
disease affects approximately four to five million patients in the United States
and can be debilitating in its most severe form. Approximately 500,000 psoriasis
patients suffer from a severe enough form of the disease to require systemic
therapy with immune suppressants and ultraviolet phototherapy. The risk of
serious adverse side effects associated with these therapies often requires the
patients to alternate these various therapeutic modalities as a precautionary
measure.
Scientific studies have shown that IL-8 concentrations can be elevated by a
factor of 150 in psoriatic plaques when compared to normal tissue. The Company
believes that IL-8 may promote psoriasis by contributing to three distinct
disease-associated processes. First, IL-8 is produced by a type of skin cell
called keratinocytes, and is a potent growth factor for these skin cells. It may
therefore contribute to the abnormal keratinocyte proliferation in psoriatic
plaques. Second, IL-8 attracts and activates immune cells which contribute to
the inflammation of the psoriatic plaque. Finally, IL-8 promotes angiogenesis
which augments the blood supply necessary for growth of the psoriatic plaque.
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The Company has conducted several studies with ABX-IL8 in animal models
relevant to psoriasis. The ability of the antibody to inhibit two processes
relevant to psoriasis in vivo were tested individually. In a rabbit model, it
was determined that systemic administration of ABX-IL8 inhibits the migration of
immune cells from the bloodstream to a site of skin inflammation. Furthermore,
the ability of ABX-IL8 to inhibit angiogenesis has been demonstrated both in a
rat corneal model as well as in a mouse tumor model. In addition,
pharmacokinetic studies in monkeys indicate that ABX-IL8 has a long serum
half-life, which should allow relatively infrequent dosing, potentially making
it a more attractive option for patients receiving chronic therapy. Finally, in
preliminary studies in a mouse model of psoriasis, ABX-IL8 was shown to block
the formation of psoriatic plaques.
Rheumatoid Arthritis. Elevated levels of IL-8 in the synovial fluid of
rheumatoid arthritis patients have been reported to correlate with the number of
infiltrating immune cells. Third party published studies have reported that the
injection of non-human antibodies to IL-8 into a rabbit model of rheumatoid
arthritis blocked immune cell infiltration and synovial membrane damage.
Inflammatory Bowel Disease. Elevated levels of IL-8 have been found in the
colon of patients with inflammatory bowel disease and the extent of elevation
has been shown to correlate with the degree of inflammation. Third party
published studies have reported that injection of non-human antibodies to IL-8
in a rabbit model of colitis reduced colon inflammation.
The Company has initiated a Phase I clinical trial in psoriasis for ABX-IL8
and intends to follow this with an expansion to a number of other inflammatory
indications in Phase II trials. Because of the many common features in the
pathogenesis of psoriasis, rheumatoid arthritis and inflammatory bowel disease,
data collected in a Phase I trial in psoriasis could support initiation of Phase
II trials in the other indications.
ABX-EGF
Tumor cells that overexpress epidermal growth factor receptors ("EGFr") on
their surface often depend on EGFr's activation for growth. EGFr is
overexpressed in a variety of cancers including lung, breast, ovarian, bladder,
prostate, colorectal, kidney and head and neck. This activation is triggered by
the binding to EGFr by EGF or Transforming Growth Factor alpha ("TGF(LOGO)"),
both of which are expressed by the tumor or by neighboring cells. The Company
believes that blocking the ability of EGF and TGF(LOGO) to bind with EGFr may
offer a treatment for certain cancers. ABX-EGF, a fully human monoclonal
antibody generated using XenoMouse technology, binds to EGFr with high affinity
and has been shown to inhibit tumor cell proliferation in vivo and cause
eradication of EGF dependent human tumors established in mouse models. Abgenix
in-licensed ABX-EGF from Xenotech in November 1997. In exchange for a license
fee and royalty payments on future product sales, the Company received an
exclusive worldwide license to ABX-EGF. The Company is currently conducting
preclinical studies and assessing which tumor types to pursue as possible
targets for treatment with ABX-EGF. Studies have shown that ABX-EGF can inhibit
growth of EGF-dependent human tumors cells in mouse models. ABX-EGF has also
demonstrated the ability to reverse cancer cell growth and cause eradication of
established tumors in mice even when administered after significant tumor growth
has occurred. Furthermore, in these models where tumors were eradicated, no
relapse of the tumor was observed after discontinuation of the antibody
treatment.
COLLABORATIVE ARRANGEMENTS
Research Collaboration and License Option Agreement with Pfizer
In December 1997, Abgenix, established a research collaboration with Pfizer
to develop antibody products for up to three undisclosed antigens, the first of
which is in the field of cancer. Under the research collaboration agreement,
Abgenix is using its XenoMouse technology to generate fully human monoclonal
antibodies to the first antigen target designated by Pfizer. In connection with
the execution of the agreement, Pfizer paid the Company a fee upon signing and
may make additional payments to Abgenix upon completion of certain research
milestones. Additionally, Pfizer has an
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option to expand the research collaboration to include up to two more
undisclosed antigen targets. The agreement expires in December 1999.
Concurrent with the execution of the research collaboration agreement,
Pfizer and Abgenix entered into a license and royalty agreement that grants
Pfizer the option to acquire an exclusive, worldwide license to develop, make,
use and sell antibody products derived from the research collaboration. If
Pfizer chooses to exercise its option for additional antigen targets, Abgenix
could receive potential license fees and milestone payments of up to
approximately $8.0 million per antigen target upon the completion of certain
milestones, including preclinical and clinical trials and receipt of regulatory
approval. Additionally, if a product receives marketing approval from the FDA or
an equivalent foreign agency the Company is entitled to receive royalties on
future product sales by Pfizer. Pfizer will be responsible for manufacturing,
product development and marketing of any product developed through this
collaboration. In connection with the execution of the research collaboration
agreement and the license and royalty agreement, Pfizer purchased 160,000 Shares
of the Company's Series C Preferred Stock for approximately $1.3 million. Such
shares convert into 160,000 shares of Common Stock upon this offering.
Research Collaboration with Schering-Plough
In January 1998, Abgenix established a research collaboration with
Schering-Plough to develop antibody products for an undisclosed antigen in the
field of inflammation. Under the agreement, Abgenix is using its XenoMouse
technology to generate fully human monoclonal antibodies to an antigen target
designated by Schering-Plough. In connection with the execution of the
agreement, Schering-Plough paid the Company a fee upon signing and will be
obligated to make additional payments to Abgenix upon completion of the
research.
In addition, the agreement provides Schering-Plough with an option, for a
limited time, to enter into a research and license agreement that provides
Schering-Plough with an exclusive worldwide license to develop, make, use and
sell antibody products derived from the research collaboration. If the option is
exercised, the research and license agreement may provide Abgenix with up to
approximately $8.0 million in additional research fees and milestone payments
upon the completion of certain milestones, including preclinical and clinical
trials and receipt of regulatory approval. Additionally, if a product receives
marketing approval from the FDA or an equivalent foreign agency, the Company is
entitled to receive royalties on future product sales by Schering-Plough.
Gene Therapy Rights Agreement with Cell Genesys
In November 1997, the Company and Cell Genesys entered into the Gene
Therapy Rights Agreement (the "GTRA"). The GTRA provides Cell Genesys, a gene
therapy company, with certain rights to commercialize products based on
antibodies generated with XenoMouse technology in the field of gene therapy.
Under the GTRA, Cell Genesys has certain rights to direct the Company to make
antibodies to two antigens per year. In addition, Cell Genesys has an option to
enter into a license to commercialize antibodies binding to such antigens in the
field of gene therapy. Cell Genesys is obligated to make certain payments to the
Company for these rights including royalties on future product sales. The GTRA
also prohibits the Company from granting any third party licenses for antibody
products based on antigens nominated by the Company for its own purposes where
the primary field of use is gene therapy. In the case of third party licenses
granted by the Company where gene therapy is a secondary field, the Company is
obligated to share with Cell Genesys a portion of the cash milestone payments
and royalties resulting from any products in the field of gene therapy.
JOINT VENTURE WITH JAPAN TOBACCO
Xenotech
In June 1991, Cell Genesys entered into several agreements with JT America
for the purpose of forming an equally owned limited partnership, named Xenotech.
In connection with the formation of
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Xenotech, both Cell Genesys and JT America contributed cash and Cell Genesys
contributed the exclusive right to certain of its technology for the research
and development of genetically modified strains of mice that can produce fully
human antibodies. Cell Genesys assigned its rights in Xenotech to the Company in
connection with the formation of the Company. As part of the Xenotech
relationship, the Company provides research and development on behalf of
Xenotech in exchange for cash payments. As of December 31, 1997, approximately
$41.2 million in funding for research related to the development of XenoMouse
technology has been provided to the Company, with research and development
funding for identified projects committed through 1998.
Product Rights
Under the Master Research, License and Option Agreement among the Company,
Japan Tobacco and Xenotech (the "MRLOA"), the Company and Japan Tobacco have
been provided with colonies of transgenic mice that have been developed for
Xenotech pursuant to the Company's research and development efforts on behalf of
Xenotech. Under the MRLOA, the Company and Japan Tobacco have the right to use
the transgenic mice for research purposes. The right to commercialize medical
products that incorporate antibodies derived through the use of the transgenic
mice can be licensed from Xenotech by the Company and/or Japan Tobacco pursuant
to a nomination process by which the Company and Japan Tobacco have the right to
select a certain number of antigens per year and receive an option to the
commercial rights in antibodies that bind to the selected antigens. Both the
Company and Japan Tobacco are obligated to make royalty payments to Xenotech on
revenues derived from the sale of such antibody products. All of such payments
to Xenotech are then equally shared by the Company and JT America.
Under the nomination process, if either the Company or Japan Tobacco (but
not both) selects an antigen, the selecting party receives an option to an
exclusive worldwide license. If both the Company and Japan Tobacco select the
same antigen at the same time, each party has an option to an exclusive license
in its home territory and a co-exclusive license in the rest of the world. The
MRLOA defines the home territory of Japan Tobacco as Japan, Korea and Taiwan and
the home territory of the Company as North America. In the former case where one
party selects an antigen, the nonselecting party has the opportunity to obtain
an option to an exclusive license to the selected antigen in the nonselecting
party's home territory by exercising its buy-in right within the allotted time.
Each party has a limited number of buy-in rights, and they cannot be exercised
by the nonselecting party if the antigen selected is subject to proprietary
rights of a third party and the third party is unwilling to license its rights
to the antigen to the nonselecting party.
INTELLECTUAL PROPERTY
The Company's patent position, like that of other biotechnology and
pharmaceutical companies, is highly uncertain and involves complex legal and
factual questions. Claims made under patent applications may be denied or
significantly narrowed. There can be no assurance that any patents which may be
issued as a result of the Company's licensed United States and international
patent applications will provide any competitive advantage to the Company or
that they will not be successfully challenged, invalidated or circumvented in
the future. In addition, there can be no assurance that competitors, many of
which have substantial resources and have made significant investments in
competing technologies, will not seek to apply for and obtain patents that will
prevent, limit or interfere with the Company's ability to make, use and sell its
potential products either in the United States or in international markets.
The Company's success depends in part on its ability to obtain patents,
protect trade secrets, operate without infringing the proprietary rights of
others and prevent others from infringing on the proprietary rights of the
Company. The Company's policy is to seek to protect its proprietary position by,
among other methods, filing United States and foreign patent applications
related to its proprietary technology, inventions and improvements that are
important to the development of its business. Proprietary rights relating to the
Company's technologies will be protected from unauthorized use by
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third parties only to the extent that they are covered by valid and enforceable
patents or are effectively maintained as trade secrets. There can be no
assurance that any patents owned by, or licensed to, the Company will afford
protection against competitors or that any pending patent applications now or
hereafter filed by, or licensed to, the Company will result in patents being
issued. In addition, the laws of certain foreign countries do not protect the
Company's intellectual property rights to the same extent as do the laws of the
United States. The patent position of biopharmaceutical companies involves
complex legal and factual questions and, therefore, their enforceability cannot
be predicted with certainty. There can be no assurance that any of the Company's
patents or patent applications, if issued, will not be challenged, invalidated
or circumvented, or that the rights granted thereunder will provide proprietary
protection or competitive advantages to the Company against competitors with
similar technology. Furthermore, there can be no assurance that others will not
independently develop similar technologies or duplicate any technology developed
by the Company.
While the Company has multiple patent applications pending in the United
States, to date, the Company has no United States patents relating to XenoMouse
technology. One issued European Patent owned by the Company relating to
XenoMouse technology is currently undergoing opposition proceedings within the
European Patent Office, and no assurance can be given regarding the outcome of
this opposition. The Company intends to continue to file patent applications as
appropriate for patents covering both its product candidates and processes.
There can be no assurance that patents will issue from any of these
applications, that any patent will issue on technology arising from additional
research or that patents that may issue from such applications will be
sufficient to protect the Company's technologies.
Research has been conducted for many years in the antibody field. This has
resulted in a substantial number of issued patents and an even larger number of
patent applications. Patent applications in the United States are, in most
cases, maintained in secrecy until patents issue, and publication of discoveries
in the scientific or patent literature frequently occurs substantially later
than the date on which the underlying discoveries were made. The commercial
success of the Company depends significantly on its ability to operate without
infringing the patents and other proprietary rights of third parties. There can
be no assurance that the Company's technologies do not and will not infringe the
patents or violate other proprietary rights of third parties. In the event of
such infringement or violation, the Company and its corporate partners may be
enjoined from pursuing research, development or commercialization of their
products. Such action would have a material adverse effect on the Company's
business, financial condition and results of operations.
The biotechnology and pharmaceutical industries have been characterized by
extensive litigation regarding patents and other intellectual property rights,
and the Company recently settled ongoing litigation regarding certain patents
and other intellectual property rights. The defense and prosecution of
intellectual property suits, USPTO interference proceedings and related legal
and administrative proceedings in the United States and internationally involve
complex legal and factual questions. As a result, such proceedings are costly
and time-consuming to pursue and their outcome is uncertain. Litigation may be
necessary to enforce patents issued or licensed to the Company, to protect trade
secrets or know-how owned or licensed by the Company or to determine the
enforceability, scope and validity of the proprietary rights of others. Any
litigation, interference or other administrative proceedings will result in
substantial expense to the Company and significant diversion of effort and
resources by the Company's technical and management personnel. An adverse
determination such proceedings to which the Company may become a party could
subject the Company to significant liabilities to third parties or require the
Company to seek licenses which may not be available from third parties or
prevent the Company from selling its products in certain markets, if at all.
Although patent and intellectual property disputes are often settled through
licensing or similar arrangements, costs associated with such arrangements may
be substantial and could include ongoing royalties. Furthermore, there can be no
assurance that the necessary licenses would be available to the Company on
satisfactory terms, if at all. Adverse determinations in a judicial or
administrative proceeding or failure to obtain necessary licenses could restrict
or prevent the Company from manufacturing and
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selling its products, if any, which would have a material adverse effect on the
Company's business, financial condition and results of operations.
In addition to patents, the Company relies on trade secrets and proprietary
know-how, which it seeks to protect, in part, through confidentiality and
proprietary information agreements. There can be no assurance that such
confidentiality or proprietary information agreements will provide meaningful
protection or adequate remedies for the Company's technology in the event of
unauthorized use or disclosure of such information, that the parties to such
agreements will not breach such agreements or that the Company's trade secrets
will not otherwise become known to or be independently developed by competitors.
Patent Cross-License and Settlement Agreement with GenPharm
On March 27, 1997, Cell Genesys announced, along with Abgenix, Xenotech and
Japan Tobacco, that it had signed a comprehensive patent cross-license and
settlement agreement with GenPharm that resolved all related litigation and
claims between the parties. As initial consideration for the cross-license and
settlement agreement, Cell Genesys issued a note to GenPharm due September 30,
1998 for $15.0 million payable by Cell Genesys and convertible into shares of
Cell Genesys common stock, currently at $8.62 per share. Of this note, $3.8
million satisfied certain of Xenotech's obligations under the agreement. Japan
Tobacco also made an initial payment. During 1997, two patent milestones were
achieved and Xenotech was obligated to pay $7.5 million for each milestone.
Xenotech paid $7.5 million to satisfy the first milestone and has recorded a
payable to GenPharm for the remaining $7.5 million. The Company has recorded a
liability of $3.8 million in its balance sheet representing its share of the
Xenotech obligation. The payable is due on or before November 1998. No
additional payments will accrue under this agreement. The Company has recognized
as a non-recurring charge for cross-license and settlement, a total of $22.5
million. See Note 6 of Notes to the Company's Financial Statements.
GOVERNMENT REGULATION
All new biopharmaceutical products, including the Company's product
candidates under development and anticipated future products, are subject to
extensive and rigorous regulation by the federal government, principally the FDA
under the FD&C Act and other laws including the Public Health Services Act, and
by state and local governments. Such regulations govern or influence, among
other things, the testing, manufacture, safety, efficacy, labeling, storage,
record keeping, approval, advertising and promotion of such products.
Non-compliance with applicable requirements can result in fines, warning
letters, recall or seizure of products, clinical study holds, total or partial
suspension of production, refusal of the government to grant approvals,
withdrawal of approval and civil and criminal penalties.
The Company believes its monoclonal antibody products will be classified by
the FDA as "biologic products" as opposed to "drug products." The steps
ordinarily required before a biological product may be marketed in the United
States include (a) preclinical testing; (b) the submission to the FDA of an IND
application, which must become effective before clinical trials may commence;
(c) adequate and well-controlled clinical trials to establish the safety and
efficacy of the biologic; (d) the submission to the FDA of a Biologics License
Application ("BLA"); (e) FDA approval of the application, including approval of
all product labeling.
Preclinical testing includes laboratory evaluation of product chemistry,
formulation and stability, as well as animal studies to assess the potential
safety and efficacy of each product. Preclinical safety tests must be conducted
by laboratories that comply with FDA regulations regarding Good Laboratory
Practices ("GLPs"). The results of the preclinical tests together with
manufacturing information and analytical data are submitted to the FDA as part
of the IND and are reviewed by the FDA before the commencement of clinical
trials. Unless the FDA objects to an IND, the IND will become effective 30 days
following its receipt by the FDA. There can be no assurance that submission of
an IND will
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result in FDA authorization to commence clinical trials, that the lack of an
objection means that the FDA will ultimately approve an application for
marketing approval, or that the Company will not encounter problems in clinical
trials that cause it or the FDA to delay, suspend or terminate such trials.
Clinical trials involve the administration of the investigational product
to humans under the supervision of a qualified principal investigator. Clinical
trials must be conducted in accordance with Good Clinical Practices ("GCP")
under protocols submitted to the FDA as part of the IND. In addition, each
clinical trial must be approved and conducted under the auspices of an
Institutional Review Board ("IRB") and with patient informed consent. The IRB
will consider, among other things, ethical factors, the safety of human subjects
and the possibility of liability of the institution conducting the trial.
Clinical trials are conducted in three sequential phases but the phases may
overlap. Phase I clinical trials may be performed in healthy human subjects or,
depending on the disease, in patients. The goal of a Phase I clinical trial is
to establish initial data about safety and tolerance of the biologic agent in
humans. In Phase II clinical trials, evidence is sought about the desired
therapeutic efficacy of a biologic agent in limited studies of patients with the
target disease. Efforts are made to evaluate the effects of various dosages and
to establish an optimal dosage level and dosage schedule. Additional safety data
are also gathered from these studies. The Phase III clinical trial program
consists of expanded, large-scale, multi-center studies of persons who are
susceptible to or have developed the disease. The goal of these studies is to
obtain definitive statistical evidence of the efficacy and safety of the
proposed product and dosage regimen.
As of March 1, 1998, ABX-CBL had only been administered to a total of 90
patients in GVHD and organ transplant rejection indications, and Phase I
clinical trials for ABX-IL8 in psoriasis commenced in April 1998. As a result,
patient follow up has been limited and clinical data obtained thus far are very
preliminary. In addition, the results of early clinical trials may not be
predictive of results obtained in later clinical trials, and there can be no
assurance that clinical trials conducted by the Company will demonstrate
sufficient safety and efficacy to obtain the requisite regulatory approvals or
will result in marketable products. If the Company's product candidates are not
shown to be safe and effective in clinical trials, the resulting delays in
developing other products and conducting related preclinical testing and
clinical trials, as well as the potential need for additional financing, would
have a material adverse effect on the Company's business, financial condition
and results of operations.
All data obtained from this comprehensive development program are submitted
in a BLA to the FDA for review and approval of the manufacture, marketing and
commercial shipment of the product. FDA approval of the BLA is required before
marketing may begin in the United States. All product candidates of the Company
will be subject to demanding and time consuming regulatory procedures in the
countries where the Company intends to market its products.
The process of obtaining approvals from the FDA can be costly, time
consuming and subject to unanticipated delays. The FDA may refuse to approve an
application if it believes that applicable regulatory criteria are not
satisfied. The FDA may also require additional testing for safety and efficiency
of the biopharmaceutical product. Moreover, if regulatory approval of a
biopharmaceutical product is granted, the approval will be limited to specific
indications. There can be no assurance that approvals of the Company's product
candidates, processes or facilities will be granted on a timely basis, if at
all. Any failure to obtain or delay in obtaining such approvals would have a
material adverse effect on the Company's business, financial condition and
results of operation.
Even if regulatory approvals for the Company's product candidates are
obtained, the Company, its products and the facilities manufacturing the
products are subject to continual review and periodic inspection. Domestic
manufacturing establishments are subject to preapproval and biennial inspections
by the FDA and must comply with the FDA's cGMP regulations. To supply
biopharmaceutical products for use in the United States, foreign manufacturing
establishments must comply with the FDA's cGMP regulations and are subject to
periodic inspection by the FDA or by regulatory authorities in those countries.
In complying with cGMP regulations, manufacturers must spend funds,
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time and effort in the area of production and quality control to ensure full
technical compliance. The FDA stringently applies regulatory standards for
manufacturing.
For clinical investigation and marketing outside the United States, the
Company may be subject to the regulatory requirements of other countries, which
vary from country to country. The regulatory approval process in other countries
includes requirements similar to those associated with FDA approval set forth
above.
COMPETITION
The biotechnology and pharmaceutical industries are highly competitive and
subject to significant and rapid technological change. The Company is aware of
several pharmaceutical and biotechnology companies, which are actively engaged
in research and development in areas related to antibody therapy, that have
commenced clinical trials of antibody therapeutics products or have successfully
commercialized antibody products. Many of these companies are addressing
diseases and disease indications which are being targeted by the Company or its
collaborative partners. Certain of these competitors have specific expertise or
technology related to antibody development, such as Centocor, Inc., Protein
Design Labs, Inc., IDEC Pharmaceuticals Corporation, Cambridge Antibody
Technology Group, Inc. and GenPharm. Certain of the Company's competitors are
developing or testing product candidates that may be directly competitive with
the Company's product candidates. For example, the Company is aware that several
companies, including Genentech, Inc., have potential product candidates that may
inhibit the activity of IL-8. Furthermore, the Company is aware that ImClone
Systems, Inc. has a potential product candidate in clinical development that may
inhibit the activity of EGF. Many of these companies and institutions, either
alone or together with their corporate partners, have substantially greater
financial resources and larger research and development staffs than the Company.
In addition, many of these competitors, either alone or together with their
corporate partners, have significantly greater experience than the Company in
developing products, undertaking preclinical testing and human clinical trials,
obtaining FDA and other regulatory approvals of products and manufacturing and
marketing products. Accordingly, the Company's competitors may succeed in
obtaining patent protection, receiving FDA approval or commercializing products
more rapidly than the Company. If the Company commences commercial sales of
products, it will be competing against companies with greater marketing and
manufacturing capabilities, areas in which it has limited or no experience.
In addition to biotechnology and pharmaceutical companies, the Company
faces, and will continue to face, competition from academic institutions,
government agencies and research institutions. There are numerous competitors
working on products to treat each of the diseases for which the Company is
seeking to develop therapeutic products. In addition, any product candidate
successfully developed by the Company may compete with existing therapies that
have long histories of safe and effective use. Competition may also arise from
other drug development technologies and methods of preventing or reducing the
incidence of disease and new small molecule or other classes of therapeutic
agents. There can be no assurance that developments by others will not render
the Company's product candidates or technologies obsolete or noncompetitive. The
Company faces and will continue to face intense competition from other
companies, including Japan Tobacco, for collaborative arrangements with
pharmaceutical and biotechnology companies, for establishing relationships with
academic and research institutions, and for licenses to proprietary technology.
These competitors, either alone or with their corporate partners, may succeed in
developing technologies or products that are more effective than those of the
Company. The Company's collaborative partners may elect to develop other
antibody products which compete with the Company's products.
PHARMACEUTICAL PRICING AND REIMBURSEMENT
In both domestic and foreign markets, sales of the Company's potential
products will depend in part upon the availability of reimbursement from
third-party payors, such as government health administration authorities,
managed care providers, private health insurers and other organizations.
45
<PAGE> 47
These third-party payors are increasingly challenging the price and examining
the cost effectiveness of medical products and services. In addition,
significant uncertainty exists as to the reimbursement status of newly approved
healthcare products. There can be no assurance that the Company's product
candidates will be considered cost effective or that adequate third-party
reimbursement will be available to enable the Company to maintain price levels
sufficient to realize an appropriate return on its investment in product
development. Both federal and state governments in the United States and foreign
governments continue to propose and pass legislation designed to reduce the cost
of healthcare. Accordingly, legislation and regulations affecting the pricing of
pharmaceuticals may change before the Company's proposed products are approved
for marketing. Adoption of such legislation could further limit reimbursement
for pharmaceuticals. If adequate coverage and reimbursement rates are not
provided by the government and third-party payors for the Company's potential
products, the market acceptance of these products could be adversely affected,
which would have a material adverse effect on the Company's business, financial
condition and results of operations.
MANUFACTURING
The Company currently has limited experience in manufacturing its product
candidates and lacks the resources or capability to manufacture any of its
products on a commercial scale. While the Company currently manufactures limited
quantities of antibody products for preclinical testing, the Company relies on
contract manufacturers to produce ABX-CBL and ABX-IL8. With respect to products
other than ABX-CBL and ABX-IL8, the Company will either be responsible for
manufacturing or contract out manufacturing to third parties.
The Company's contract manufacturers have limited experience in
manufacturing ABX-CBL and ABX-IL8 in quantities sufficient for conducting
clinical trials. Contract manufacturers often encounter difficulties in scaling
up production, including problems involving production yields, quality control
and quality assurance and shortage of qualified personnel. Furthermore, there
are only a limited number of other third-party contract manufacturers who have
the ability and capacity to produce the Company's product candidates. Failure by
any contract manufacturer to deliver the required quantities of the Company's
product candidates for either clinical or commercial use on a timely basis and
at commercially reasonable prices and failure by the Company to find a
replacement manufacturer would have a material adverse affect on the Company's
business, financial condition and results of operations.
In addition, the Company and its third party manufacturers are required to
register their manufacturing facilities with the FDA and foreign regulatory
authorities. The facilities will then be subject to inspections confirming
compliance with cGMP established by the FDA or corresponding foreign
regulations. Failure to maintain compliance with the cGMP requirements would
materially adversely effect the Company's business, financial condition and
results of operations.
EMPLOYEES
As of December 31, 1997, Abgenix employed 57 persons, of whom 17 hold Ph.D.
or M.D. degrees and 8 hold other advanced degrees. Approximately 42 employees
are engaged in research and development, and 15 support business development,
intellectual property, finance and other administrative functions.
The Company's success will depend in large part upon its ability to attract
and retain employees. Abgenix faces competition in this regard from other
companies, research and academic institutions, government entities and other
organizations. The Company believes that it maintains good relations with its
employees.
FACILITIES
Abgenix is currently leasing 52,400 square feet of office and laboratory
facilities in Fremont, California. During 1997, the Company built out
approximately 42,000 square feet of laboratory and office space at the Fremont
site. The Company believes this facility, with potential additional build-
46
<PAGE> 48
outs, will meet its space requirements for research and development and
administration for the next several years. The Company's lease expires in the
year 2007 with options to extend.
SCIENTIFIC AND MEDICAL ADVISORY BOARDS
Abgenix has established Scientific and Medical Advisory Boards to provide
specific expertise in areas of research and development relevant to the
Company's business. The Scientific and Medical Advisory Boards meet periodically
with the Company's scientific and development personnel and management to
discuss the Company's present and long-term research and development activities.
Scientific and Medical Advisory Board members include:
<TABLE>
<S> <C>
James Patrick Allison, Ph.D.............. Professor, Immunology, University of
California, Berkeley
Frederick Applebaum, M.D................. Director, Clinical Research Division,
Fred Hutchinson Cancer Research Center
Benedict Cosimi, M.D..................... Professor of Surgery, Harvard Medical
School and Chief of Transplant Unit,
Massachusetts General Hospital
Anthony DeFranco, M.D., Ph.D............. Professor, Biochemistry and Biophysics,
University of California, San Francisco
John Gallin, M.D......................... Director, Warren Grant Magnusen Clinical
Center, NIH
Raju S. Kucherlapati, Ph.D............... Professor and Chair, Molecular Genetics,
Albert Einstein College of Medicine
Michele Nussenswieg, M.D., Ph.D.......... Professor, Molecular Immunology
The Rockefeller University
Matthew Scharff, M.D..................... Professor of Medicine, Albert Einstein
College of Medicine
Lee Simon, M.D........................... Professor of Medicine, Harvard Medical
School
David Yocum, M.D......................... Professor of Medicine, University of
Arizona
</TABLE>
47
<PAGE> 49
MANAGEMENT
EXECUTIVE OFFICERS, DIRECTORS, AND KEY EMPLOYEES
The following table sets forth, as of December 31, 1997, certain
information concerning the Company's executive officers, directors and key
employees as of the date of this Prospectus:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Executive Officers and Directors
R. Scott Greer.......................... 39 President, Chief Executive Officer and
Director
C. Geoffrey Davis, Ph.D................. 46 Vice President, Research
Kurt W. Leutzinger...................... 46 Vice President, Finance and Chief Financial
Officer
John A. Lipani, M.D..................... 57 Vice President, Clinical Development
Raymond M. Withy, Ph.D.................. 42 Vice President, Corporate Development
Stephen A. Sherwin, M.D.(1)(2).......... 49 Chairman of the Board
M. Kathleen Behrens, Ph.D.(1)(2)........ 45 Director
Raju S. Kucherlapati, Ph.D.............. 55 Director
Mark B. Logan(1)(2)..................... 59 Director
Joseph E. Maroun........................ 68 Director
Key Employees
Aya Jakobovits, Ph.D.................... 45 Principal Scientist and Director of Discovery
Research
Catherine Maynard....................... 33 Director of Operations
Rivka Sherman-Gold, Ph.D................ 49 Director of Business Development
John Ward............................... 38 Director of MIS
</TABLE>
- ---------------
(1) Member of the Compensation Committee
(2) Member of the Audit Committee
R. Scott Greer has served as President and Chief Executive Officer of
Abgenix since June 1996. He also serves as a director of Xenotech. From July
1994 to July 1996, Mr. Greer was Senior Vice President of Corporate Development
at Cell Genesys. From April 1991 to July 1994, Mr. Greer was Vice President of
Corporate Development and from April 1991 to September 1993 was also Chief
Financial Officer of Cell Genesys. From 1986 to 1991, Mr. Greer held various
positions at Genetics Institute, Inc., a biotechnology company, including
Director, Corporate Development. Mr. Greer received a B.A. in economics from
Whitman College and an M.B.A. from Harvard University and is a certified public
accountant.
C. Geoffrey Davis, Ph.D., has served as Vice President, Research of Abgenix
since June 1996. From January 1995 to June 1996, Dr. Davis was Director of
Immunology at the Xenotech Division of Cell Genesys. From November 1991 to
December 1994, he served at Repligen Corporation, a biotechnology company, first
as Principal Investigator and then as Director of Immunology. Dr. Davis received
a B.A. from Swarthmore College and a Ph.D. in immunology from the University of
California, San Francisco.
Kurt W. Leutzinger has served as Vice President, Finance and Chief
Financial Officer of Abgenix since July 1997. From June 1987 to July 1997, Mr.
Leutzinger was a Vice President of General Electric Investments and a portfolio
manager of the $27 billion General Electric Pension Fund responsible for private
equity investments with a focus on medical technology. He also serves as a
director of C3, Inc. Mr. Leutzinger received a B.A. in economics from Fairleigh
Dickenson University and an M.B.A. in finance from New York University and is a
certified public accountant.
John A. Lipani, M.D., has served as Vice President, Clinical Development of
Abgenix since April 1997. From 1992 to April 1997, Dr. Lipani was Group Director
of Inflammation and Tissue Repair
48
<PAGE> 50
at SmithKline Beecham Corporation, a pharmaceutical company. From 1989 to 1992,
Dr. Lipani held clinical development positions at various biopharmaceutical
companies, including Immunex Corporation, Norwich Eaton Pharmaceuticals, Inc.
and Centocor, Inc. He received a B.A. from Villanova University and an M.D. from
Tulane Medical School.
Raymond M. Withy, Ph.D., has served as Vice President, Corporate
Development of Abgenix since June 1996. He also serves as a director of
Xenotech. From May 1993 to June 1996, Dr. Withy served in various positions at
Cell Genesys, most recently as Director of Business Development. From 1991 to
May 1993, Dr. Withy was a private consultant to the biotechnology industry in
areas of strategic planning, business development and licensing. From 1984 to
1991, Dr. Withy was an Associate Director and Senior Scientist at Genzyme
Corporation, a biotechnology company. Dr. Withy received a B.Sc. in chemistry
and biochemistry and a Ph.D. in biochemistry, both from the University of
Nottingham.
Stephen A. Sherwin, M.D., has served as Chairman of the Board of Abgenix
since June 1996. Since March 1990, Dr. Sherwin has served as President, Chief
Executive Officer and as a director of Cell Genesys. Since March 1994, he has
served as Chairman of the Board of Cell Genesys. From 1983 to 1990, Dr. Sherwin
held various positions at Genentech, Inc., a biotechnology company, most
recently as Vice President, Clinical Research. Dr. Sherwin currently serves as a
Director of the California Healthcare Institute. Dr. Sherwin received a B.A. in
biology from Yale University and an M.D. from Harvard Medical School.
M. Kathleen Behrens, Ph.D., has served as a director of Abgenix since
December 1997. Dr. Behrens joined Robertson Stephens Investment Management Co.
in 1983 and became a general partner in 1986 and a managing director in 1993. In
1988, Dr. Behrens joined the venture capital group of Robertson Stephens
Investment Management Co. and has helped in the founding of three biotechnology
companies: Mercator Genetics, Inc., Protein Design Laboratories, Inc. and COR
Therapeutics, Inc. Dr. Behrens is currently president-elect and a director of
the National Venture Capital Association. Dr. Behrens received a Ph.D. in
microbiology from the University of California, Davis, where she performed
genetic research for six years.
Raju S. Kucherlapati, Ph.D., has served as a director of Abgenix since June
1996. Dr. Kucherlapati was a founder of Cell Genesys and has served as a
director of Cell Genesys since 1988. Since July 1989, he has been the Saul and
Lola Kramer Professor and the Chairman of the Department of Molecular Genetics
at the Albert Einstein College of Medicine. Dr. Kucherlapati also serves as a
director of Megabios Corp. and Millennium Pharmaceuticals, Inc. Dr. Kucherlapati
received a B.S. in biology from Andhra University in India and a Ph.D. in
genetics from the University of Illinois, Urbana.
Mark B. Logan has served as a director of Abgenix since August 1997. Mr.
Logan has served as Chairman of the Board, President and Chief Executive Officer
of VISX, Incorporated, a medical device company, since November 1994. From
January 1992 to October 1994, he was Chairman of the Board and Chief Executive
Officer of INSMED Pharmaceuticals, Inc., a pharmaceutical company. Previously,
Mr. Logan held several senior management positions at Bausch & Lomb, Inc., a
medical products company, including Senior Vice President, Healthcare and
Consumer Group and also served as a member of its Board of Directors. Mr. Logan
received a B.A. from Hiram College and a PMD from Harvard Business School.
Joseph E. Maroun has served as a director of Abgenix since July 1996 and
has served as a director of Cell Genesys since June 1995. Mr. Maroun spent 30
years with Bristol-Myers Squibb, a pharmaceuticals company, serving until his
retirement in 1990, at which time he was President of the International Group,
Senior Vice President of the corporation, and a member of its Policy Committee.
He also headed the U.S.-Japan Pharmaceutical Advisory Group. Mr. Maroun received
a B.A. from the University of Witwaterrand, Johannesburg.
Aya Jakobovits, Ph.D., has served as Principal Scientist and Director of
Discovery Research of Abgenix since June 1996. From January 1994 to June 1996,
Dr. Jakobovits was Director of Molecular Immunology at Cell Genesys. From
October 1989 to January 1994, Dr. Jakobovits served as Scientist
49
<PAGE> 51
and then as Senior Scientist at Cell Genesys. Dr. Jakobovits received a B.Sc.
from the Hebrew University of Jerusalem, Israel, a M.Sc. in chemistry and a
Ph.D. in life sciences, both from the Weizmann Institute of Science, Israel.
Catherine Maynard has served as Director of Operations of Abgenix since
January 1998. From June 1996 to January 1998, Ms. Maynard was Associate
Director, Animal Research Services and Microembryology at the Company. From 1992
to June 1996, Ms. Maynard worked at Cell Genesys in various positions, most
recently as Associate Director, Animal Research Services and Microembryology.
From 1988 to 1992, Ms. Maynard was Manager of the Core Transgenic Services at
Imperial Cancer Research Fund. Ms. Maynard received a B.Sc. from the University
of Manchester, U.K.
Rivka Sherman-Gold, Ph.D., has served as Director of Business Development
of Abgenix since October 1996. From September 1993 to October 1996, Dr.
Sherman-Gold was Associate Director of Business Development at Athena
Neurosciences, Inc., a biotechnology company. Dr. Sherman-Gold received a B.Sc.
in chemistry and an M.Sc. in biophysics and physiology, both from the Technion,
Israel Institute of Technology, a Ph.D. in life sciences from the Weizmann
Institute of Science, Israel and an M.B.A. from California State University in
San Jose.
John Ward has served as Director of MIS of Abgenix since November 1996.
From January 1996 to November 1996, Mr. Ward was Department Manager, Distributed
Computing Department at Bechtel Nevada, a construction and engineering firm.
From July 1988 to December 1995, he held various MIS positions at EG&G Energy
Measurements, an engineering and management company. Mr. Ward received a B.S. in
computer information systems from Arizona State University.
COMMITTEES OF THE BOARD OF DIRECTORS
The Compensation Committee consists of Dr. Sherwin, Mr. Logan and Dr.
Behrens. The Compensation Committee makes recommendations regarding the
Company's various incentive compensation and benefit plans and determines
salaries for the executive officers and incentive compensation for employees and
consultants of the Company.
The Audit Committee consists of Dr. Sherwin, Mr. Logan and Dr. Behrens. The
Audit Committee makes recommendations to the Board of Directors regarding the
selection of independent auditors, reviews the results and scope of the audit
and other services provided by the Company's independent auditors and reviews
and evaluates the Company's control functions.
BOARD COMPOSITION
The Company's Bylaws provide that the number of members of the Company's
Board of Directors shall be determined by the Board of Directors. The number of
directors is currently set at seven. All members of the Company's Board of
Directors hold office until the next annual meeting of stockholders or until
their successors are duly elected and qualified. There are no family
relationships among any of the directors, officers or key employees of the
Company.
Cell Genesys and the Company have entered into the Governance Agreement
which provides that so long as Cell Genesys or a group to which it belongs owns
(i) a majority of the outstanding voting stock of the Company, Cell Genesys or
the group shall have the right to nominate four out of the seven directors of
the Company, (ii) less than a majority but greater than 25% of the outstanding
voting stock of the Company, then Cell Genesys or such group shall have the
right to nominate three out of the seven directors of the Company, or (iii) less
than 25% but greater than 15% of the outstanding voting stock of the Company,
then Cell Genesys or such group shall have the right to nominate one out of the
seven directors of the Company. The Governance Agreement also provides that Cell
Genesys and each officer and director of the Company who owns voting stock shall
agree to vote for the persons nominated by Cell Genesys or the group to which it
belongs as set forth above. See "Risk Factors -- Significant Influence by Cell
Genesys, Inc."
50
<PAGE> 52
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of the Compensation Committee was, at any time since
the formation of the Company, an officer or employee of the Company. No
executive officer of the Company serves as a member of the board of directors or
compensation committee of any entity that has one or more executive officers
serving as a member of the Company's Board of Directors or Compensation
Committee. See "Certain Transactions" for a description of transactions between
the Company and entities affiliated with members of the Compensation Committee.
DIRECTOR COMPENSATION
Directors do not currently receive any cash compensation from the Company
for their service as members of the Board of Directors, although they are
reimbursed for certain expenses in connection with attendance at Board and
Committee meetings. The Company does not provide additional compensation for
Committee participation or special assignments of the Board of Directors. From
time to time, certain directors of the Company have received grants of options
to purchase shares of the Company's Common Stock pursuant to the 1996 Incentive
Stock Plan. On June 4, 1997, R. Scott Greer, Stephen A. Sherwin, Raju S.
Kucherlapati and Joseph E. Maroun received options to purchase 67,500, 10,000,
7,500, and 7,500 shares of the Company's Common Stock, respectively, at a per
share exercise price of $2.50. On August 8, 1997, Mark B. Logan received an
option to purchase 30,000 shares of the Company's Common Stock at a per share
exercise price of $4.00. On December 11, 1997, Raju S. Kucherlapati received an
option to purchase 20,000 shares of the Company's Common Stock at a per share
exercise price of $5.00. There were no other director option grants in 1997.
Beginning after the date of this offering, nonemployee directors of the Company
will be eligible to receive nondiscretionary, automatic grants of options to
purchase shares of the Company's Common Stock pursuant to the 1998 Director
Option Plan. See "-- Stock Plans -- 1998 Director Option Plan" and "Certain
Transactions."
51
<PAGE> 53
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid by the Company during
the year ended December 31, 1997 to the President and Chief Executive Officer
and to the Company's four other most highly compensated executive officers, each
of whose aggregate compensation during the Company's last fiscal year exceeded
$100,000 (the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION SECURITIES
-------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION SALARY BONUS OPTIONS COMPENSATION
--------------------------- -------- -------- ------------ ------------
<S> <C> <C> <C> <C>
R. Scott Greer............................ $252,000 $ 55,200 67,500 $ 4,112(1)
President and Chief Executive Officer
C. Geoffrey Davis, Ph.D................... 152,250 21,750 25,500 1,974(2)
Vice President, Research
Kurt W. Leutzinger(3)..................... 81,555 -- 100,000 127,059(4)
Vice President, Finance and Chief
Financial Officer
John A. Lipani, M.D.(5)................... 131,250 -- 100,000 64,585(6)
Vice President, Clinical Development
Raymond M. Withy, Ph.D.................... 152,250 21,750 25,500 --
Vice President, Corporate Development
</TABLE>
- ---------------
(1) Consists of imputed interest income on a loan from the Company to Mr. Greer.
(2) Consists of imputed interest income on a loan from the Company to Dr. Davis.
(3) Mr. Leutzinger has been the Company's Vice President, Finance and Chief
Financial Officer since July 1997. His 1997 annualized salary is $175,000.
(4) Consists of $126,568 for reimbursement of relocation expenses and $491 for
imputed interest income on a loan from the Company to Mr. Leutzinger.
(5) Dr. Lipani has been the Company's Vice President, Clinical Development since
April 1997. His 1997 annualized salary is $175,000.
(6) Consists of $63,232 for reimbursement of relocation expenses and $1,353 for
imputed interest income on a loan from the Company to Dr. Lipani.
52
<PAGE> 54
STOCK OPTION GRANTS
The following table provides information relating to stock options awarded
to each of the Named Executive Officers during the year ended December 31, 1997.
All such options were awarded under the Company's 1996 Incentive Stock Plan.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
-------------------------------------------------- VALUE AT ASSUMED
NUMBER OF PERCENT OF ANNUAL RATES OF STOCK
SECURITIES TOTAL OPTIONS PRICE APPRECIATION
UNDERLYING GRANTED FOR OPTIONS TERM(4)
OPTIONS IN FISCAL EXERCISE EXPIRATION -----------------------
NAME GRANTED(1) 1997(2) PRICE(3) DATE 5% 10%
- ---- ---------- ------------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
R. Scott Greer................ 67,500 10.0% $2.50 6/1/07 $1,040,704 $1,757,104
C. Geoffrey Davis, Ph.D....... 25,500 3.8 2.50 6/1/07 393,155 663,795
Kurt W. Leutzinger............ 100,000 14.8 2.50 6/26/07 1,541,784 2,603,117
John A. Lipani, M.D........... 100,000 14.8 0.60 2/12/07 1,731,784 2,793,117
Raymond M. Withy, Ph.D........ 25,500 3.8 2.50 6/1/07 393,155 663,795
</TABLE>
- ---------------
(1) The options granted to Mr. Greer and Drs. Davis and Withy became exercisable
as to 1/48th of the option shares on the date of grant and an additional
1/48th of the option shares become exercisable on the first day of each
calendar month thereafter, with full vesting occurring four years after the
date of grant. The options granted to Mr. Leutzinger and Dr. Lipani become
exercisable as to 25% of the option shares one year from the date of grant
and 1/48th of the option shares become exercisable on the first day of each
calendar month thereafter, with full vesting occurring four years after the
date of grant. In each case, vesting is subject to the optionee's continued
relationship with the Company. Such options expire ten years from the date
of grant, or earlier upon termination of employment. See "Stock Plans."
(2) Based on an aggregate of 676,644 options granted by the Company in the year
ended December 31, 1997 to employees, non-employee directors of and
consultants to the Company, including the Named Executive Officers.
(3) Options were granted at an exercise price equal to the fair market value of
the Company's Common Stock, as determined by the Board of Directors on the
date of grant.
(4) The 5% and 10% assumed annual rates of compounded stock price appreciation
are mandated by rules of the Securities and Exchange Commission. There can
be no assurance provided to any executive officer or any other holder of the
Company's securities that the actual stock price appreciation over the
option term will be at the assumed 5% and 10% levels or at any other defined
level. Unless the market price of the Common Stock appreciates over the
option term, no value will be realized from the option grants made to the
executive officers. The potential realizable value is calculated by assuming
that the assumed initial public offering price of $11.00 per share
appreciates at the indicated rate for the entire term of the option and that
the option is exercised at the exercise price and sold on the last day of
its term at the appreciated price. The potential realizable value
computation is net of the applicable exercise price, but does not take into
account applicable federal or state income tax consequences and other
expenses of option exercises or sales of appreciated stock.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
The following table sets forth for each of the Named Executive Officers the
number of shares of Common Stock acquired and the dollar value realized upon
exercise of options during the year ended
53
<PAGE> 55
December 31, 1997 and the number and value of securities underlying unexercised
options held at December 31, 1997:
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES DECEMBER 31, 1997 DECEMBER 31, 1997(1)
ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
R. Scott Greer............ 107,240 $1,096,592 -- 235,260 -- $2,337,158
C. Geoffrey Davis,
Ph.D. .................. -- -- 39,136 86,364 $399,948 856,802
Kurt W. Leutzinger........ -- -- -- 100,000 -- 850,000
John A. Lipani, M.D. ..... -- -- -- 100,000 -- 1,040,000
Raymond M. Withy, Ph.D. .. 10,000 104,000 29,136 86,364 295,948 856,802
</TABLE>
- ---------------
(1) Value realized and value of unexercised in-the-money options are based on a
value of $11.00 per share, the assumed initial public offering price.
Amounts reflected are based on the value per share, minus the per share
exercise price, multiplied by the number of shares acquired on exercise or
underlying the option.
STOCK PLANS
1996 Incentive Stock Plan. As of December 31, 1997, a total of 2,391,250
shares of Common Stock have been reserved for issuance under the Company's 1996
Incentive Stock Plan (the "1996 Plan"). Under the 1996 Plan, as of December 31,
1997, options to purchase an aggregate of 1,501,963 shares were outstanding,
233,542 shares of Common Stock had been purchased pursuant to exercises of stock
options and stock purchase rights and 655,745 shares were available for future
grant. In March 1998, the Board of Directors approved certain amendments to the
1996 Plan, including an increase in the number of shares reserved thereunder by
500,000, from 2,391,250 to 2,891,250 shares.
The 1996 Plan provides for the grant of incentive stock options within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), nonqualified stock options and stock purchase rights to employees,
consultants and nonemployee directors of the Company. Incentive stock options
may be granted only to employees. The 1996 Plan is administered by the Board of
Directors or a committee appointed by the Board of Directors, which determines
the terms of awards granted, including the exercise price and the number of
shares subject to the award and the exercisability thereof. The exercise price
of incentive stock options granted under the 1996 Plan must be at least equal to
the fair market value of the Company's Common Stock on the date of grant.
However, for any employee holding more than 10% of the voting power of all
classes of the Company's stock, the exercise price will be no less than 110% of
the fair market value. The exercise price of nonqualified stock options is set
by the administrator of the 1996 Plan. However, for any person holding more than
10% of the voting power of all classes of the Company's stock, the exercise
price will be no less than 110% of the fair market value. The maximum term of
options granted under the 1996 Plan is ten years.
An optionee whose relationship with the Company or any related corporation
ceases for any reason (other than by death or total and permanent disability)
may exercise options in the three-month period following such cessation, or such
other period of time as determined by the administrator, unless such options
terminate or expire sooner (or for nonstatutory stock options, later), by their
terms. The three-month period is extended to twelve months for terminations due
to death or total and permanent disability. In the event of a merger of the
Company with or into another corporation, any outstanding options may either by
assumed or an equivalent option may be substituted by the surviving entity or,
if such options are not assumed or substituted, such options shall become
exercisable as to all of the shares subject to the options, including shares as
to which they would not otherwise be exercisable. In the event that options
become exercisable in lieu of assumption or substitution, the Board of Directors
shall notify optionees that all options shall be fully exercisable for a period
of 30 days, after which such options shall terminate.
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<PAGE> 56
No employee may be granted, in any fiscal year of the Company, options to
purchase more than 750,000 shares (or 1,500,000 shares in the case of a new
employee's initial employment with the Company). The 1996 Plan will terminate in
June 2006, unless sooner terminated by the Board of Directors.
The Board of Directors may also grant stock purchase rights to employees
and consultants under the 1996 Plan. Such grants are made pursuant to a
restricted stock purchase agreement with the price to be paid for the shares
granted thereunder being determined by the administrator. The Company is
generally granted a repurchase option exercisable on the voluntary or
involuntary termination of the purchaser's employment with the Company for any
reason (including death or disability). The repurchase price shall be the
original purchase price paid by the purchaser. The repurchase option shall lapse
at a rate determined by the administrator. Once the stock purchase right has
been exercised, the purchaser shall have the rights equivalent to those of a
stockholder.
1998 Employee Stock Purchase Plan. The Company has adopted a 1998 Employee
Stock Purchase Plan (the "Purchase Plan"), and has reserved a total of 250,000
shares of Common Stock for issuance thereunder. The Purchase Plan also provides
for an annual increase, commencing in 1999, in the number of shares reserved for
issuance under the Purchase Plan equal to the lesser of 250,000, 1% of the
Company's outstanding capitalization or a lesser amount determined by the Board
(such that the maximum number of shares which could be reserved under the
Purchase Plan over its term would be 2,500,000 shares). No shares have been
issued under the Purchase Plan to date. The Purchase Plan, which is intended to
qualify under Section 423 of the Code will be administered by the Board of
Directors of the Company or by a committee appointed by the Board of Directors.
Under the Purchase Plan, the Company will withhold a specified percentage (not
to exceed 15%) of each salary payment to participating employees over certain
offering periods. Any employee who is currently employed for at least 20 hours
per week and for at least five consecutive months in a calendar year, either by
the Company or by a majority-owned subsidiary of the Company, will be eligible
to participate in the Purchase Plan. Unless the Board of Directors or the
committee determines otherwise, each offering period will run for 24 months and
will be divided into consecutive purchase periods of approximately six months.
The first offering period and the first purchase period will commence on the
date of this Prospectus. Thereafter, new 24 month offering periods will commence
every six months on each November 1 and May 1. In the event of a change in
control of the Company, including a merger of the Company with or into another
corporation, or the sale of all or substantially all of the assets of the
Company, the offering and purchase periods then in progress will be shortened.
The price of Common Stock purchased under the Purchase Plan will be equal to 85%
of the fair market value of the Common Stock on the first day of the applicable
offering period or the last day of the applicable purchase period, whichever is
lower. Employees may end their participation in the offering at any time during
the offering period, and participation ends automatically on termination of
employment with the Company. The maximum number of shares that a participant may
purchase on the last day of any offering period is determined by dividing the
payroll deductions accumulated during the purchase period by the purchase price.
However, no person may purchase shares under the Purchase Plan to the extent
such person would own 5% or more of the total combined value or voting power of
all classes of the capital stock of the Company or of any of its subsidiaries,
or to the extent that such person's rights to purchase stock under all employee
stock purchase plans would exceed $25,000 for any calendar year. The Board of
Directors may amend the Purchase Plan at any time. The Purchase Plan will
terminate in March 2008, unless terminated earlier in accordance with the
provisions of the Purchase Plan.
1998 Director Option Plan. The Company has adopted a 1998 Director Option
Plan (the "Director Plan"), and has reserved a total of 250,000 shares of Common
Stock for issuance thereunder. Each nonemployee director who becomes a director
of the Company after the date of this offering will be automatically granted a
nonstatutory option to purchase 30,000 shares of Common Stock on the date on
which such person first becomes a director (the "Initial Grant"). At each annual
stockholders meeting beginning with the 1999 Annual Stockholders Meeting, each
nonemployee director will
55
<PAGE> 57
automatically be granted a nonstatutory option to purchase 7,500 shares of
Common Stock (10,000 shares for the Chairman of the Board if a nonemployee
director) (the "Subsequent Grant"). The exercise price of options under the
Director Plan will be equal to the fair market value of the Common Stock on the
date of grant. The maximum term of the options granted under the Director Plan
is ten years. Each Initial Grant under the Director Plan will vest as to 25% of
the shares subject to the option one year after the date of grant and at a rate
of 1/48th of the shares each month thereafter. Each Subsequent Grant will vest
as to 1/48th of the shares subject to the option one month after the date of
grant and at a rate of 1/48th of the shares on the last day of each month
thereafter. In the event of a merger of the Company with or into another
corporation, all outstanding options may either by assumed or an equivalent
option may be substituted by the surviving entity or, if such options are not
assumed or substituted, such options shall become exercisable as to all of the
shares subject to the options, including shares as to which they would not
otherwise be exercisable. In the event that options become exercisable in lieu
of assumption or substitution, the Board of Directors shall notify optionees
that all options shall be fully exercisable for a period of 30 days, after which
such options shall terminate. In the event that a nonemployee-director is
involuntarily terminated following option assumption, such option becomes fully
vested and exercisable. The Director Plan will terminate in March 2008, unless
terminated earlier in accordance with the provisions of the Director Plan.
401(k) PLAN
The Company's employees who are located in the United States and have been
employed by the Company for three months or more are covered by Cell Genesys'
Retirement Savings and Investment Plan (the "401(k) Plan"). The 401(k) Plan will
cover the Company's eligible employees so long as Cell Genesys owns 50% or more
of the Company's outstanding Common Stock. Pursuant to the 401(k) Plan,
employees may elect to reduce their current compensation by up to the lesser of
15% of their annual compensation or the statutorily prescribed annual limit
allowable under Internal Revenue Service Regulations and to have the amount of
such reduction contributed to the 401(k) Plan. The 401(k) Plan permits, but does
not require, additional matching contributions by the Company on behalf of all
participants in the 401(k) Plan. The Company has not made any contributions to
the 401(k) Plan. The 401(k) Plan is intended to qualify under Section 401(k) of
the Code so that contributions to the 401(k) Plan by employees or by the
Company, and the investment earnings thereon, are not taxable to employees until
withdrawn from the 401(k) Plan, and that contributions by the Company, if any,
will be deductible by the Company when made. At such time as Cell Genesys'
equity ownership in the Company drops below 50%, the Company's employees will
not be eligible to participate in Cell Genesys' 401(k) Plan and the Company
intends to implement its own retirement savings and investment plan.
CHANGE IN CONTROL ARRANGEMENTS
The Company's Board of Directors has approved a plan which provides that in
the event of a change in control of the Company, the options of each employee of
the Company whose employment is terminated without cause within 24 months of the
change in control shall be exercisable in full. For this purpose, a change in
control includes: (i) a person becoming the beneficial owner of 50% or more of
the Company's outstanding voting securities, (ii) certain changes in the
composition of the Board of Directors occurring within a two year period or
(iii) a merger or consolidation of the Company in which the stockholders of the
Company immediately before the transaction own immediately after the transaction
less than a majority of the outstanding voting securities of the surviving
entity (or its parent).
LIMITATIONS OF LIABILITY AND INDEMNIFICATION MATTERS
The Company's Certificate of Incorporation limits the liability of
directors to the maximum extent permitted by Delaware law. Delaware law provides
that directors of a corporation will not be personally liable for monetary
damages for breach of their fiduciary duties as directors, except liability
56
<PAGE> 58
for (i) any breach of their duty of loyalty to the corporation or its
stockholders, (ii) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) unlawful payments of
dividends or unlawful stock repurchases or redemptions, or (iv) any transaction
from which the director derived an improper personal benefit. Such limitation of
liability does not apply to liabilities arising under the federal securities
laws and does not affect the availability of equitable remedies such as
injunctive relief or rescission.
The Company's Bylaws provide that the Company shall indemnify its directors
and executive officers and may indemnify its other officers and employees and
other agents to the fullest extent permitted by law. The Company believes that
indemnification under its Bylaws covers at least negligence and gross negligence
on the part of indemnified parties. The Company's Bylaws also permit it to
secure insurance on behalf of any officer, director, employee or other agent for
any liability arising out of his or her actions in such capacity, regardless of
whether the Bylaws would permit indemnification.
The Company has entered into agreements to indemnify its directors and
executive officers, in addition to indemnification provided for in the Company's
Bylaws. These agreements, among other things, indemnify the Company's directors
and executive officers for certain expenses (including attorneys' fees),
judgments, fines and settlement amounts incurred by any such person in any
action or proceeding, including any action by or in the right of the Company
arising out of such person's services as a director or executive officer of the
Company, any subsidiary of the Company or any other company or enterprise to
which the person provides services at the request of the Company. The Company
believes that these provisions and agreements are necessary to attract and
retain qualified persons as directors and executive officers.
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<PAGE> 59
CERTAIN TRANSACTIONS
Incorporation and Organization of Abgenix. Pursuant to the terms of the
Stock Purchase and Transfer Agreement (the "Agreement") between Abgenix and Cell
Genesys, Abgenix issued 1,691,667 shares of Series A Senior Convertible
Preferred Stock to Cell Genesys in exchange for $10 million, and 2,058,333
shares of Series 1 Subordinated Convertible Preferred Stock to Cell Genesys, and
in exchange, Cell Genesys contributed research, development and manufacturing
technology, patents and other intellectual property specific to the antibody
therapy programs to be pursued by Abgenix, including Cell Genesys' interest in
Xenotech, and certain equipment, furniture and fixtures leased by Cell Genesys.
Abgenix is responsible for the remaining lease obligations for such capital
equipment which total approximately $38,000 per month. Cell Genesys also
assigned to the Company two notes receivable totaling $150,000.
On July 15, 1996, the Registrant, in exchange for a loan in the principal
amount of up to $4,000,000, issued a Convertible Promissory Note to Cell Genesys
that subsequently was converted into 666,667 shares of Series A Preferred Stock
at a conversion price of $6.00 upon the closing of the Series B Preferred Stock
Financing in December 1997 (see "Preferred Stock Financings").
Simultaneously with the execution of the Agreement, Abgenix and Cell
Genesys entered into a Governance Agreement, Tax Sharing Agreement, Services
Agreement and Patent Assignment Agreement. In addition, Abgenix and Cell Genesys
entered into an Immunization Services Agreement, Gene Therapy Agreement and
Voting Agreement. The Immunization Services Agreement, Gene Therapy Agreement
and Voting Agreement were superseded by the Gene Therapy Rights Agreement. See
"Business -- Corporate Arrangements."
The Governance Agreement provides that so long as Cell Genesys or a group
to which it belongs owns (i) a majority of the outstanding voting stock of
Abgenix, Cell Genesys or the group shall have the right to nominate four out of
the seven directors of the Company, (ii) less than a majority but greater than
25% of the outstanding voting stock of Abgenix, then Cell Genesys or such group
shall have the right to nominate three out of the seven directors of the
Company, or (iii) less than 25% but greater than 15% of the outstanding voting
stock of Abgenix, then Cell Genesys or such group shall have the right to
nominate one out of the seven directors of the Company. The Governance Agreement
also provides that Cell Genesys and each officer and director of Abgenix who
owns voting stock shall agree to vote for the persons nominated as set forth
above.
The Tax Sharing Agreement (the "Tax Agreement") provides for the allocation
of federal and state tax liabilities between Abgenix and Cell Genesys. Pursuant
to the terms of the Tax Agreement, Abgenix will pay to Cell Genesys the federal
and state income and franchise tax liability that Abgenix would have owed if it
had filed separate returns. If Abgenix realizes a loss or credit that reduces
the consolidated tax liability of Cell Genesys, then Cell Genesys shall pay
Abgenix the amount of the reduction. The Tax Agreement shall remain in effect
with respect to any taxable year for which consolidated or combined returns are
filed by Cell Genesys as a common parent corporation and such party is an
includable party in such consolidated return.
Pursuant to the terms of the Services Agreement, Cell Genesys provided
certain administrative services for a quarterly fee. In fiscal 1997, these fees
totaled $60,000.
Pursuant to the terms of the Patent Assignment Agreement, Cell Genesys
assigned to Abgenix all of its rights in and to certain patents and patent
applications related to antibody development.
Other Transactions with Cell Genesys. On January 23, 1997 and March 27,
1997, the Company issued two warrants to purchase an aggregate of 121,667 shares
of Series A Preferred Stock (convertible into 121,667 shares of Common Stock) to
Cell Genesys at the exercise price per share of $6.00 in return for providing
guarantees for the Loan and Security Agreement with Silicon Valley Bank and the
Master Lease Agreement with Transamerica Business Credit Corporation.
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<PAGE> 60
In October 1997, Cell Genesys extended a short-term, convertible line of
credit facility (the "LOC") to Abgenix. The LOC terminated in accordance with
its terms, without Abgenix drawing upon the LOC, upon the closing of the Series
B Preferred Stock financing in December 1997.
BancAmerica Robertson Stephens Relationship. M. Kathleen Behrens, Ph.D. a
director of the Company, is also a managing director of Robertson Stephens
Investment Management Co. BancAmerica Robertson Stephens acted as one of the
Company's placement agents in the Series B Preferred Stock financing in December
1997. BancAmerica Robertson Stephens received approximately $759,000 in fees for
services provided in the private placement. Also, persons and entities
affiliated with BancAmerica Robertson Stephens purchased, in the aggregate,
784,616 shares of the Series B Preferred Stock for an aggregate purchase price
of approximately $5.1 million. BancAmerica Robertson Stephens is also serving as
one of the underwriters in this offering.
Preferred Stock Financings. The holders of Preferred Stock include, among
others, the following directors and holders of more than 5% of the Company's
outstanding stock:
<TABLE>
<CAPTION>
PREFERRED STOCK
---------------------
PREFERRED STOCKHOLDER SERIES A SERIES B
--------------------- --------- --------
<S> <C> <C>
Cell Genesys, Inc.(1)....................................... 4,538,334 --
Robertson Stephens Investment Management Co. Entities(2).... -- 769,231
S-E Banken Entities(3)...................................... -- 461,532
Stephen A. Sherwin, M.D.(4)................................. 4,538,334 --
M. Kathleen Behrens, Ph.D.(5)............................... -- 784,616
Raju Kucherlapati, Ph.D.(6)................................. 4,538,334 10,000
Joseph E. Maroun(7)......................................... 4,538,334 153,846
</TABLE>
- ---------------
(1) Includes 121,667 shares issuable pursuant to outstanding warrants to
purchase Series A Preferred Stock.
(2) Includes 56,280 shares held by Bayview Investors, LTD, 224,145 shares held
by Crossover Fund II, L.P., 67,663 shares held by Crossover Fund IIA, L.P.,
334,079 shares held by Omega Ventures II, L.P. issued by the Company in
January 1998, 87,064 shares held by Omega Ventures II Cayman, L.P. issued by
the Company in January 1998 (collectively, the "Robertson Stephens
Investment Management Co. Shares"). Each of the above entities is affiliated
with Robertson Stephens Investment Management Co.
(3) Includes 392,305 shares held by S-E Banken -- Lakemedelsfond and 69,227
shares held by S-E Banken -- Luxembourg S.A.
(4) Includes 4,416,667 shares held by Cell Genesys and 121,667 shares issuable
pursuant to outstanding warrants to purchase Series A Preferred Stock
(collectively, the "Cell Genesys Owned Shares"). Dr. Sherwin is an officer,
director and beneficial stockholder of Cell Genesys, Inc. As such, he may be
deemed to have voting and dispositive power over the Cell Genesys Owned
Shares. However, Dr. Sherwin disclaims beneficial ownership of the Cell
Genesys Owned Shares except to the extent of his pro rata pecuniary interest
therein.
(5) Includes the Robertson Stephens Investment Management Co. Shares. Dr.
Behrens, a managing director of BancAmerica Robertson Stephens, disclaims
beneficial ownership of the shares of the Company held by the Robertson
Stephens Investment Management Co. Entities except to the extent of her pro
rata pecuniary interest therein.
(6) Includes the Cell Genesys Owned Shares. Dr. Kucherlapati is a director and
beneficial stockholder of Cell Genesys. As such, he may be deemed to have
voting power over the Cell Genesys Owned Shares. However, Dr. Kucherlapati
disclaims beneficial ownership of the Cell Genesys Owned Shares except to
the extent of his pecuniary interest therein.
(7) Includes the Cell Genesys Owned Shares. Mr. Maroun is a director and
beneficial stockholder of Cell Genesys. As such, he may be deemed to have
voting and dispositive power over the Cell
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<PAGE> 61
Genesys Owned Shares. However, Mr. Maroun disclaims beneficial ownership of
the Cell Genesys Owned Shares except to the extent of his pro rata pecuniary
interest therein.
In connection with, and contemporaneous to, the Series B Preferred Stock
financing the shares of Series A Senior Convertible Preferred Stock, the shares
of Series 1 Subordinated Convertible Preferred Stock and the Convertible
Promissory Note issued to Cell Genesys in July 1996 (see above) were all
converted into an aggregate 4,416,667 shares of Series A Preferred Stock.
Holders of Preferred Stock are entitled to certain registration rights with
respect to the Common Stock issued or issuable upon conversion thereof. See
"Description of Capital Stock -- Registration Rights."
After the completion of this offering, Cell Genesys will beneficially own
approximately 40.5% of the outstanding capital stock. As a result, Cell Genesys
will have significant influence over all matters requiring the approval of the
Company's stockholders, including the election of the Company's Board of
Directors. See "Risk Factors -- Significant Influence by Cell Genesys, Inc."
Three of the Company's directors, Stephen A. Sherwin, M.D., Raju S.
Kucherlapati, Ph.D. and Joseph E. Maroun are also directors of Cell Genesys. Dr.
Sherwin is also the Chairman of the Board and Chief Executive Officer of Cell
Genesys. See above for a description of transactions with Cell Genesys.
Transactions with Employees. On May 27, 1997, John A. Lipani, M.D. the
Company's Vice President, Clinical Development, and Abgenix entered into a
Relocation Loan Agreement pursuant to which Abgenix loaned $100,000 to Dr.
Lipani in exchange for a promissory note secured by a deed of trust. No interest
accrues on the loan until May 27, 2002. The outstanding principal balance as of
December 31, 1997 was $100,000. In addition, Dr. Lipani received a $35,000 loan
from Abgenix to assist with relocation expenses. The $35,000 loan, which is
evidenced by a promissory note, will be forgiven in full once Dr. Lipani
completes 12 months of employment.
On December 2, 1992, R. Scott Greer, the Company's President and Chief
Executive Officer, and Cell Genesys entered into a Relocation Loan Agreement
pursuant to which Cell Genesys loaned $100,000 to Mr. Greer in exchange for an
interest free promissory note secured by shares of Cell Genesys' Common Stock
owned by Mr. Greer. In June 1996, Cell Genesys assigned its rights under the
promissory note to the Company. Mr. Greer repaid the entire loan to the Company
in September 1997.
On April 21, 1995, C. Geoffrey Davis, M.D. the Company's Vice President,
Research, and Cell Genesys entered into a Relocation Loan Agreement pursuant to
which Cell Genesys loaned $30,000 to Dr. Davis in exchange for a promissory note
secured by a deed of trust. No interest accrues on the loan until January 1,
2000. In June 1996, Cell Genesys assigned its rights under the promissory note
to the Company. As of December 31, 1997, the outstanding principal balance was
$30,000.
On August 26, 1997, Mr. Leutzinger received a $25,000 loan from Abgenix to
assist with relocation expenses. The $25,000 loan, which is evidenced by a full
recourse promissory note, will be forgiven in full once Mr. Leutzinger completes
12 months of employment. On February 27, 1998, Mr. Leutzinger and Abgenix
entered into a Relocation Loan Agreement pursuant to which Abgenix loaned
$100,000 to Mr. Leutzinger in exchange for a promissory note secured by a deed
of trust. No interest accrues on the loan until June 30, 2003.
The Company has entered into indemnification agreements with each of its
directors and executive officers. See "Management -- Limitation of Liability and
Indemnification Matters."
All future transactions, including any loans from Abgenix to its officers,
directors, principal stockholders or affiliates, will be approved by a majority
of the Board of Directors, including a majority of the independent and
disinterested members of the Board of Directors or, if required by law, a
majority of disinterested stockholders, and will be on terms no less favorable
to Abgenix than could be obtained from unaffiliated third parties.
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<PAGE> 62
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information with respect to the
beneficial ownership of the Common Stock as of December 31, 1997, and as
adjusted to reflect the sale of the Common Stock offered hereby for: (i) each
person or entity who is known by the Company to own beneficially more than 5% of
the Common Stock, (ii) each of the Company's directors, (iii) each Named
Executive Officer and (iv) all directors and executive officers as a group.
<TABLE>
<CAPTION>
PERCENTAGE OF SHARES
BENEFICIALLY
OWNED(1)
SHARES --------------------
BENEFICIALLY PRIOR TO AFTER
BENEFICIAL OWNER OWNED OFFERING OFFERING
---------------- ------------ -------- --------
<S> <C> <C> <C>
Cell Genesys, Inc.(2)....................................... 4,538,334 55.4% 40.5%
342 Lakeside Drive
Foster City, CA 94404
Robertson Stephens Investment Management Co. Entities(3).... 769,231 9.5 6.9
555 California Street, Suite 2600
San Francisco, CA 94104
S-E Banken Entities(4)...................................... 461,532 5.7 4.2
ST-R2, S-106 40
Stockholm, Sweden
Joseph E. Maroun(5)......................................... 4,705,461 57.3 42.0
Stephen A. Sherwin, M.D.(6)................................. 4,579,792 55.6 40.7
Raju S. Kucherlapati, Ph.D.(7).............................. 4,562,865 55.6 40.7
M. Kathleen Behrens, Ph.D.(3)............................... 784,616 9.7 7.1
R. Scott Greer(8)........................................... 122,917 1.5 1.1
C. Geoffrey Davis, Ph.D.(9)................................. 44,896 * *
Raymond M. Withy, Ph.D.(10)................................. 44,896 * *
Kurt W. Leutzinger.......................................... 0 * *
John A. Lipani, M.D......................................... 0 * *
Mark B. Logan............................................... 0 * *
All directors and executive officers as a group (10
persons)(11).............................................. 5,768,775 69.0% 50.8%
</TABLE>
- ---------------
* Represents beneficial ownership of less than one percent of the Common
Stock.
(1) Beneficial ownership is determined in accordance with the rules of
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Except as indicated by
footnote, and subject to community property laws where applicable, the
stockholders named in the table above has sole voting and investment power
with respect to all shares of Common Stock shown as beneficially owned by
them. Percentage of beneficial ownership is based on 8,077,894 shares of
Common Stock outstanding as of December 31, 1997 (including the issuance as
of December 31, 1997 of 421,143 shares of Preferred Stock issuable as of
December 31, 1997 and the issuance in January 1998 of 160,000 shares of
Preferred Stock) and 11,077,894 shares of Common Stock outstanding after
completion of this offering.
(2) Includes 121,667 shares issuable pursuant to warrants exercisable within 60
days of December 31, 1997.
(3) Includes 56,280 shares held by Bayview Investors, LTD, 224,145 shares held
by Crossover Fund II, L.P., 67,663 shares held by Crossover Fund IIA, L.P.,
334,079 shares held by Omega Ventures II, L.P. and 87,064 shares held by
Omega Ventures II Cayman, L.P. Each of the above entities is affiliated
with Robertson Stephens Investment Management Co. Payment for the aggregate
421,143 shares purchased by Omega Ventures II, L.P. and Omega Ventures II
Cayman, L.P. in December 1997 was received by the Company in January 1998.
Dr. Behrens, a managing director of Robertson Stephens Investment
Management Co., disclaims beneficial ownership of
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<PAGE> 63
the shares of the Company held by the Robertson Stephens Investment
Management Co. Entities except to the extent of her pro rata pecuniary
interests therein.
(4) Includes 392,305 shares held by S-E Banken -- Lakemedelsfond and 69,227
shares held by S-E Banken -- Luxembourg S.A.
(5) Includes the Cell Genesys Owned Shares. Also includes 13,281 shares
issuable upon exercise of options exercisable within 60 days of December
31, 1997. Mr. Maroun is a director and beneficial stockholder of Cell
Genesys. As such, he may be deemed to have voting and dispositive power
over the Cell Genesys Owned Shares. However, Mr. Maroun disclaims
beneficial ownership of the Cell Genesys Owned Shares except to the extent
of his pro rata pecuniary interest therein based upon his beneficial
ownership of the capital stock of Cell Genesys.
(6) Includes the Cell Genesys Owned Shares. Also includes, 41,458 shares
issuable upon exercise of options exercisable within 60 days of December
31, 1997. Dr. Sherwin is an officer, director and beneficial stockholder of
Cell Genesys. As such, he may be deemed to have voting and dispositive
power over the Cell Genesys Owned Shares. However, Dr. Sherwin disclaims
beneficial ownership of the Cell Genesys Owned Shares except to the extent
of his pro rata pecuniary interest therein based upon his beneficial
ownership of the capital stock of Cell Genesys.
(7) Includes the Cell Genesys Owned Shares. Also includes, 14,531 shares
issuable upon exercise of options exercisable within 60 days of December
31, 1997. Dr. Kucherlapati is a director and beneficial stockholder of Cell
Genesys. As such, he may be deemed to have voting and dispositive power
over the Cell Genesys Owned Shares. However, Dr. Kucherlapati disclaims
beneficial ownership of the shares of the Cell Genesys Owned Shares except
to the extent of his pro rata pecuniary interest therein based upon his
beneficial ownership of the capital stock of Cell Genesys.
(8) Includes 15,667 shares issuable upon exercise of options exercisable within
60 days of December 31, 1997.
(9) Includes 44,896 shares issuable upon exercise of options exercisable within
60 days of December 31, 1997.
(10) Includes 34,896 shares issuable upon exercise of options exercisable within
60 days of December 31, 1997.
(11) Includes 164,739 shares issuable upon exercise of options exercisable
within 60 days of December 31, 1997 and 121,667 shares subject to warrants.
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<PAGE> 64
DESCRIPTION OF CAPITAL STOCK
GENERAL
The Company's Restated Certificate of Incorporation, which will become
effective upon the closing of this offering, authorizes the issuance of up to
50,000,000 shares of Common Stock, $0.0001 par value per share and authorizes
the issuance of 5,000,000 shares of Preferred Stock, $0.0001 par value per
share, the rights and preferences of which may be established from time to time
by the Company's Board of Directors. As of December 31, 1997, 233,542 shares of
Common Stock were issued and outstanding and held by 55 stockholders, 7,263,209
shares of Preferred Stock were issued and outstanding and held by 30
stockholders.
COMMON STOCK
Each holder of Common Stock is entitled to one vote for each share held on
all matters to be voted upon by the stockholders and there are no cumulative
voting rights. Subject to preferences that may be applicable to any outstanding
Preferred Stock, holders of Common Stock are entitled to receive ratably such
dividends as may be declared by the Board of Directors out of funds legally
available therefor. See "Dividend Policy." In the event of a liquidation,
dissolution or winding up of the Company, holders of Common Stock would be
entitled to share in the Company's assets remaining after the payment of
liabilities and the satisfaction of any liquidation preference granted to the
holders of any outstanding shares of Preferred Stock. Holders of Common Stock
have no preemptive or conversion rights or other subscription rights. There are
no redemption or sinking fund provisions applicable to the Common Stock. All
outstanding shares of Common Stock are, and the shares of Common Stock offered
by the Company in this offering, when issued and paid for, will be, fully paid
and nonassessable. The rights, preferences and privileges of the holders of
Common Stock are subject to, and may be adversely affected by the rights of the
holders of shares of any series of Preferred Stock which the Company may
designate in the future.
PREFERRED STOCK
Upon the closing of this offering, the Board of Directors will be
authorized, without any further action by the stockholders, subject to any
limitations prescribed by law, without stockholder approval, from time to time
to issue up to an aggregate of 5,000,000 shares of Preferred Stock, $0.0001 par
value per share, in one or more series, each of such series to have such rights
and preferences, including voting rights, dividend rights, conversion rights,
redemption privileges and liquidation preferences, as shall be determined by the
Board of Directors. The rights of the holders of Common Stock will be subject
to, and may be adversely affected by, the rights of holders of any Preferred
Stock that may be issued in the future. Issuance of Preferred Stock, while
providing desirable flexibility in connection with possible acquisitions and
other corporate purposes, could have the effect of making it more difficult for
a third party to acquire, or of discouraging a third party from attempting to
acquire, a majority of the outstanding voting stock of the Company. The Company
has no present plans to issue any shares of Preferred Stock.
WARRANTS AND OTHER OBLIGATIONS TO ISSUE CAPITAL STOCK
As of December 31, 1997, the Company has two outstanding warrants to
purchase an aggregate of 121,667 shares of Series A Preferred Stock at an
exercise price of $6.00 per share. These warrants are currently exercisable. One
warrant will expire on January 23, 2000 and the other warrant will expire on
March 27, 2000. Also, as of December 31, 1997, the Company is obligated to issue
25,000 shares of the Common Stock upon the occurrence of certain milestones
pursuant to the terms of a license agreement.
63
<PAGE> 65
REGISTRATION RIGHTS OF CERTAIN HOLDERS
After the offering, the holders of 7,844,352 shares (the "Registrable
Securities") or their transferees are entitled to certain rights with respect to
the registration of such shares under the Securities Act. These rights are
provided under the terms of an agreement (the "Amended and Restated Stockholder
Rights Agreement") between the Company and the holders of the Registrable
Securities. The holders of at least 50% of the Registrable Securities may
require, subject to the lock-up agreements described under "Underwriting" and
certain limitations in the Amended and Restated Stockholder Rights Agreement, on
two occasions, that the Company use its best efforts to register the Registrable
Securities for public resale. If the Company registers any of its Common Stock
either for its own account or for the account of other security holders, other
than in connection with the registration of the shares offered hereby and
certain other exceptions, the holders of Registrable Securities are entitled to
include their shares of Common Stock in the registration. A holder's right to
include shares in an underwritten registration statement is subject to the right
of the underwriters to limit the number of shares included in the offering,
subject to certain limitations. The holders of Registrable Securities may also
require the Company on no more than two occasions during any 12-month period to
register all or a portion of their Registrable Securities on Form S-3 when use
of such form becomes available to the Company, provided, among other
limitations, that the proposed aggregate selling price, net of underwriting
discounts and commissions, is at least $500,000. All registration expenses will
be borne by the Company (subject to certain limitations) and all selling
expenses relating to Registrable Securities must be borne by the holders of the
securities being requested. If such holders, by exercising their demand
registration rights, cause a large number of securities to be registered and
sold in the public market, such sales could have an adverse effect on the market
price for the Company's Common Stock. If the Company were to initiate a
registration and include Registrable Securities pursuant to the exercise of
piggyback registration rights, the sale of such Registrable Securities may have
an adverse effect on the Company's ability to raise capital.
CERTAIN CHARTER AND BYLAW PROVISIONS AND DELAWARE LAW
Certain provisions of the Company's Restated Certificate of Incorporation
and Bylaws may have the effect of making it more difficult for a third party to
acquire, or of discouraging a third party from attempting to acquire, control of
the Company. Such provisions could limit the price that certain investors might
be willing to pay in the future for shares of the Company's Common Stock.
Certain of these provisions allow the Company to issue Preferred Stock without
any vote or further action by the stockholders, eliminate the right of
stockholders to act by written consent without a meeting and eliminate
cumulative voting in the election of directors. These provisions may make it
more difficult for stockholders to take certain corporate actions an could have
the effect of delaying or preventing a change in control of the Company. In
addition, the Company is subject to Section 203 of the Delaware General
Corporation Law which, subject to certain exceptions, prohibits a Delaware
corporation from engaging in any business combination with any interested
stockholder, unless: (i) prior to such date, the Board of Directors of the
corporation approved either the business combination or the transaction which
resulted in the stockholder becoming an interested stockholder; (ii) upon
consummation of the transaction which resulted in the stockholder becoming an
interested stockholder; the interested stockholder owned at least 85% of the
voting stock of the corporation outstanding at the time the transaction
commenced, excluding for purposes of determining the number of shares
outstanding those shares owned by persons who are directors and also officers
and by employee stock plans in which employee participants do not have the right
to determine confidentially whether shares held subject to the plan will be
tendered in a tender or exchange offer; of (iii) on or subsequent to such date,
the business combination is approved by the Board of Directors and authorized at
an annual or special meeting of stockholders, and not by written consent, by the
affirmative vote of at least 66 2/3% of the outstanding voting stock which is
not owned by the interested stockholder.
The Company's Amended and Restated Certificate of Incorporation eliminates
the right of stockholders to call special meetings of stockholders to act by
written consent without a meeting. The
64
<PAGE> 66
Amended and Restated Certificate of Incorporation and Bylaws do not provide for
cumulative voting in the election of directors. The authorization of
undesignated Preferred Stock makes it possible for the board of directors to
issue Preferred Stock with voting or other rights or preferences that could
impede the success of any attempt to change control of the Company. These and
other provisions may have the effect of deferring hostile takeovers or delaying
changes in control or management of the Company. The amendment of any of these
provisions would require approval by holders of at least 66 2/3% of the
outstanding Common Stock.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Common Stock is Chase Mellon
Shareholder Services.
65
<PAGE> 67
SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has been no market for the Common Stock of
the Company. Future sales of substantial amounts of Common Stock in the public
market could adversely affect market prices prevailing from time to time. Sales
of substantial amounts of Common Stock of the Company in the public market after
the restrictions lapse could adversely affect the prevailing market price and
the ability of the Company to raise equity capital in the future.
Upon the completion of this offering, based on the number of shares
outstanding as of December 31, 1997, the Company will have 11,077,894 shares of
Common Stock outstanding, assuming (i) the issuance as of December 31, 1997 of
421,143 shares of Preferred Stock issuable as of December 31, 1997, (ii) the
issuance in January 1998 of 160,000 shares of Preferred Stock, (iii) the
issuance by the Company of shares of Common Stock offered hereby, (iv) no
exercise of options, warrants or other obligations to issue shares after
December 31, 1997 and (v) no exercise of the Underwriters' over-allotment option
to purchase 450,000 shares of Common Stock, except as otherwise noted. Of these
shares, the 3,000,000 shares sold in this offering will be freely tradable
without restriction under the Securities Act, unless held by "affiliates" of the
Company, as that term is defined in Rule 144 under the Securities Act. The
remaining 8,077,894 shares of Common Stock held by existing stockholders were
issued and sold by the Company in reliance on exemptions from the registration
requirements of the Securities Act. These shares may be sold in the public
market only if registered, or pursuant to an exemption from registration such as
Rule 144, 144(k) or 701 under the Securities Act. The Company's directors,
executive officers, certain stockholders and all option holders, who in the
aggregate hold all of the shares of Common Stock or securities convertible into
Common Stock of the Company outstanding immediately prior to the completion of
this offering, have entered into lock-up agreements under which they have agreed
not to offer, sell, contract to sell, grant any option to purchase or otherwise
dispose of, or agree to dispose of, directly or indirectly, any shares of Common
Stock, options or warrants to acquire shares of Common Stock or securities
exchangeable for or convertible into Common Stock owned by them for a period of
180 days after the date of this Prospectus, without the prior written consent of
BancAmerica Robertson Stephens. The Company has entered into a similar
agreement, except that the Company may grant options and issue stock under its
current stock option and stock purchase plans and pursuant to other currently
outstanding options, warrants or other obligations to issues shares.
Upon expiration of the 180-day lock-up agreement, approximately 4,650,209
shares of Common Stock will become eligible for immediate public resale, subject
to volume limitations pursuant to Rule 144. The remaining approximately
3,427,685 shares held by existing stockholders will become eligible for public
resale at various times over a period of less than one year following the
completion of this offering, subject to volume limitations. After the offering,
the holders of approximately 7,844,352 shares of Common Stock will be entitled
to certain demand and piggyback rights with respect to registration of such
shares under the Securities Act. If such holders, exercising the demand
registration rights, causes a large number of securities to be registered and
sold in the public market, such shares could have an adverse effect on the
market price for the Company's Common Stock. If the Company were to initiate a
registration and include shares held by such holders pursuant to the exercise of
their piggyback registration rights, such sales may have an adverse effect on
the Company's ability to raise capital. Additionally, 121,667 shares issuable
pursuant to warrants and subject to the 180-day lock-up agreement, will also be
entitled to such registration rights. The number of shares sold in the public
market could increase if such registration rights are exercised.
As of December 31, 1997, 1,501,963 shares were subject to outstanding
options. Substantially all of these shares are subject to the 180-day lock-up
agreement described above. After this offering, the Company intends to file a
Registration Statement on Form S-8 covering shares issuable under the Company's
1996 Plan (including shares subject to then outstanding options under such
plans), Director Plan and Purchase Plan, thus permitting the resale of such
shares in the public market without restriction under the Securities Act after
expiration of the applicable lock-up agreements. Also
66
<PAGE> 68
as of December 31, 1997, the Company is obligated to issue 25,000 shares of
Common Stock upon the occurrence of certain milestones pursuant to the terms of
a license agreement.
In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) who has beneficially owned shares for at least one
year (including the holding period of any prior owner, except an affiliate) is
entitled to sell in "broker's transactions" or to market makers, within any
three-month period commencing 180 days after the date of this Prospectus, a
number of shares that does not exceed the greater of (i) one percent of the
number of shares of Common Stock then outstanding (approximately 110,779 shares
immediately after this offering) or (ii) the average weekly trading volume of
the Common Stock during the four calendar weeks preceding the required filing of
a Form 144 with respect to such sale. Sales under Rule 144 are generally subject
to certain manner of sale provisions and notice requirements and to the
availability of current public information about the Company. Under Rule 144(k),
a person who is not deemed to have been an affiliate of the Company at any time
during the 90 days preceding a sale, and who has beneficially owned the shares
proposed to be sold for at least two years, is entitled to sell such shares
without having to comply with the manner of sale, public information, volume
limitation or notice provisions of Rule 144. Under Rule 701 under the Securities
Act, persons who purchase shares upon exercise of options granted prior to the
effective date of this offering are entitled to sell such shares 180 days after
the effective date of this offering in reliance on Rule 144, without having to
comply with the holding period requirements of Rule 144 and, in the case of
non-affiliates, without having to comply with the public information, volume
limitation or notice provisions of Rule 144.
67
<PAGE> 69
UNDERWRITING
The underwriters named below, acting through their representatives,
BancAmerica Robertson Stephens and Lehman Brothers Inc. (the "Representatives"),
have severally agreed with the Company, subject to the terms and conditions of
the Underwriting Agreement, to purchase the number of shares of Common Stock set
forth opposite their respective names below. The Underwriters are committed to
purchase and pay for all such shares if any are purchased.
<TABLE>
<CAPTION>
NUMBER
UNDERWRITER OF SHARES
----------- ---------
<S> <C>
BancAmerica Robertson Stephens..............................
Lehman Brothers Inc.........................................
---------
Total............................................. 3,000,000
=========
</TABLE>
The Representatives have advised the Company that the Underwriters propose
to offer the shares of Common Stock to the public at the initial public offering
price set forth on the cover page of this Prospectus and to certain dealers at
such price less a concession of not in excess of $ per share, of which
$ may be reallowed to other dealers. After the initial public offering,
the public offering price, concession and reallowance to dealers may be reduced
by the Representatives. No such reduction shall change the amount of proceeds to
be received by the Company as set forth on the cover page of this Prospectus.
The Company has granted to the Underwriters an option, exercisable during
the 30-Day period after the date of this Prospectus, to purchase up to 450,000
additional shares of Common Stock at the same price per share as the Company
will receive for the 3,000,000 shares that the Underwriters have agreed to
purchase. To the extent that the Underwriters exercise such option, each of the
Underwriters will have a firm commitment to purchase approximately the same
percentage of such additional shares that the number of shares of Common Stock
to be purchased by it shown in the above table represents as a percentage of the
3,000,000 shares offered hereby. If purchased, such additional shares will be
sold by the Underwriters on the same terms as those on which the 3,000,000
shares are being sold.
The Underwriting Agreement contains covenants of indemnity among the
Underwriters and the Company against certain civil liabilities, including
liabilities under the Securities Act and liabilities arising from breaches of
representations and warranties contained in the Underwriting Agreement.
Each officer, director and certain other stockholders of the Company
together holding or having dispositive power over substantially all of the
shares of the Company's Common Stock and Redeemable Preferred Stock have agreed
with the Representatives for a period of 180 days after the effective date of
this Prospectus (the "180-Day Lock-Up Period") subject to certain exceptions,
not to offer to sell, contract to sell, or otherwise sell, dispose of, loan,
pledge or grant any rights with respect to any shares of Common Stock, any
options or warrants to purchase any shares of Common Stock, or any securities
convertible into or exchangeable for shares of Common Stock owned as of the date
of this Prospectus or thereafter acquired directly by such holders or with
respect to which they have or hereafter acquire the power of disposition,
without the prior written consent of BancAmerica Robertson Stephens. However,
BancAmerica Robertson Stephens may, in its sole discretion and at any time
without notice, release all or any portion of the securities subject to lock-up
agreements. Approximately 4,650,209 of such shares will be eligible for
immediate public sale following expiration of the 180-Day Lock-Up Period,
subject to the provisions of Rule 144. In addition, the Company has
68
<PAGE> 70
agreed that during the 180-Day Lock-Up Period, the Company will not, without the
prior written consent of BancAmerica Robertson Stephens, subject to certain
exceptions, issue, sell, contract to sell, or otherwise dispose of, any shares
of Common Stock, any options or warrants to purchase any shares of Common Stock
or any securities convertible into, exercisable for or exchangeable for shares
of Common Stock other than the Company's sale of shares in this offering, the
issuance of Common Stock upon the exercise of outstanding options and the
Company's issuance of options and shares under existing employee stock option
and stock purchase plans. See "Shares Eligible For Future Sale."
The Underwriters do not intend to confirm sales to any accounts over which
they exercise discretionary authority in excess of 5% of the number of shares of
Common Stock offered hereby.
In December 1997, certain entities and persons affiliated with BancAmerica
Robertson Stephens purchased an aggregate of 784,616 shares of the Company's
Preferred Stock at a purchase price of $6.50 per share, for an aggregate amount
of approximately $5,100,000. Such shares convert into 784,616 shares of Common
Stock on the closing of this offering. In addition, M. Kathleen Behrens, Ph.D.,
a director of the Company, is a managing director of Robertson Stephens
Investment Management Co.
Prior to this offering, there has been no public market for the Common
Stock of the Company. Consequently, the initial public offering price for the
Common Stock offered hereby was determined through negotiations among the
Company and the Representatives. Among the factors considered in such
negotiations were prevailing market conditions, certain financial information of
the Company, market valuations of other companies that the Company and the
Representatives believe to be comparable to the Company, estimates of the
business potential of the Company, the present state of the Company's
development and other factors deemed relevant.
The Representatives have advised the Company that, pursuant to Regulation M
under the Securities Act, certain persons participating in the offering may
engage in transactions, including stabilizing bids, syndicate covering
transactions or the imposition of penalty bids, which may have the effect of
stabilizing or maintaining the market price of the Common Stock at a level above
that which might otherwise prevail in the open market. A "stabilizing bid" is a
bid for or the purchase of the Common Stock on behalf of the Underwriters for
the purpose of fixing or maintaining the price of the Common Stock. A "syndicate
covering transaction" is the bid for or the purchase of the Common Stock on
behalf of the Underwriters to reduce a short position incurred by the
Underwriters in connection with the offering. A "penalty bid" is an arrangement
permitting the Representatives to reclaim the selling concession otherwise
accruing to an Underwriter or syndicate member in connection with the offering
if the Common Stock originally sold by such Underwriter or syndicate member is
purchased by the Representatives in a syndicate covering transaction and has
therefore not been effectively placed by such Underwriter or syndicate member.
The Representatives have advised the Company that such transactions may be
effected on the Nasdaq National Market or otherwise and, if commenced, may be
discontinued at any time.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for the
Company by Wilson Sonsini Goodrich & Rosati, Professional Corporation, Palo
Alto, California. Certain legal matters in connection with this offering will be
passed upon for the Underwriters by Cooley Godward LLP, Palo Alto, California.
As of December 31, 1997, a certain investment partnership and members of Wilson
Sonsini Goodrich & Rosati, Professional Corporation, beneficially owned an
aggregate of 16,250 shares of Common Stock of the Company.
EXPERTS
The financial statements of Abgenix, Inc. at December 31, 1996 and 1997,
and for each of the three years in the period ended December 31, 1997 appearing
in this Prospectus and Registration Statement have been audited by Ernst & Young
LLP, independent auditors, as set forth in their report thereon
69
<PAGE> 71
appearing elsewhere herein, and are included in reliance upon such report given
upon the authority of such firm as experts in accounting and auditing.
The financial statements of Xerotech, L.P. at December 31, 1996 and 1997
and for each of the three years in the period ended December 31, 1997 and for
the period from Inception (June 12, 1991) to December 31, 1997, appearing in
this Prospectus and Registration Statement have been audited by Ernst & Young
LLP, independent auditors, as set forth in their report thereon appearing
elsewhere herein, and are included in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-1 under the Securities Act,
with respect to the Common Stock offered hereby. This Prospectus does not
contain all of the information set forth in the Registration Statement and the
exhibits and schedules thereto. For further information with respect to the
Company and such Common Stock, reference is made to the Registration Statement
and the exhibits and schedules filed as a part thereof. Statements contained in
this Prospectus as to the contents of any contract or any other document
referred to are not necessarily complete. In each instance, reference is made to
the copy of such contract or document filed as an exhibit to the Registration
Statement, and each such statement is qualified in all respects by such
reference. Copies of the Registration Statement, including exhibits and
schedules thereto, may be inspected without charge at the Commission's principal
office in Washington, D.C., or obtained at prescribed rates from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549. The Commission maintains a World Wide Web site that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the Commission. The address of the site is
http://www.sec.gov.
70
<PAGE> 72
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Abgenix, Inc., Audited Financial Statements
Report of Ernst & Young LLP, Independent Auditors......... F-2
Balance Sheets............................................ F-3
Statements of Operations.................................. F-4
Statement of Changes in Redeemable Convertible Preferred
Stock and
Stockholders' Equity (Net Capital Deficiency).......... F-5
Statements of Cash Flows.................................. F-6
Notes to Financial Statements............................. F-7
Xenotech, L.P., Audited Financial Statements
Report of Ernst & Young LLP, Independent Auditors......... F-20
Balance Sheets............................................ F-21
Statements of Operations.................................. F-22
Statement of Partners' Capital............................ F-23
Statements of Cash Flows.................................. F-24
Notes to Financial Statements............................. F-25
</TABLE>
F-1
<PAGE> 73
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Abgenix, Inc.
We have audited the accompanying balance sheets of Abgenix, Inc. as of
December 31, 1996 and 1997, and the related statements of operations, changes in
redeemable convertible preferred stock and stockholders' equity (net capital
deficiency), and cash flows for each of the three years in the period ended
December 31, 1997. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Abgenix, Inc. at December
31, 1996 and 1997, and the results of its operations and its cash flows for each
of the three years in the period ended December 31, 1997, in conformity with
generally accepted accounting principles.
ERNST & YOUNG LLP
Palo Alto, California
January 23, 1998
F-2
<PAGE> 74
ABGENIX, INC.
BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA
STOCKHOLDERS'
DECEMBER 31, EQUITY AT
-------------------- DECEMBER 31,
1996 1997 1997 (NOTE 10)
-------- -------- --------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents........................... $ 7,190 $ 4,617
Short-term investments.............................. 2,982 10,704
Prepaid expenses and other current assets........... 158 550
-------- --------
Total current assets.................................. 10,330 15,871
Property and equipment, at cost....................... 3,648 5,776
Deposits and other assets............................. 379 437
-------- --------
$ 14,357 $ 22,084
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY (NET CAPITAL DEFICIENCY)
Current liabilities:
Short-term payable to parent........................ $ 2,429 $ 212
Short-term payable to related party................. -- 3,750
Accounts payable.................................... -- 426
Deferred revenue from related party................. 376 --
Accrued stock issuance costs........................ -- 1,200
Other accrued liabilities........................... 1,961 2,000
Current portion of long-term debt................... -- 1,646
-------- --------
Total current liabilities............................. 4,766 9,234
Long-term note payable to parent...................... 1,757 --
Long-term debt........................................ -- 3,979
Commitments
Redeemable convertible preferred stock, $0.0001 par
value; 20,000,000 shares authorized, 3,750,000 and
7,263,209 shares issued and outstanding at December
31, 1996 and 1997, respectively; (no shares pro
forma), at amount paid in; aggregate redemption and
liquidation value of approximately $45,003 at
December 31, 1997................................... 10,150 31,189 $ --
Redeemable convertible preferred stock subscription
receivable.......................................... -- (2,737) (2,737)
Redeemable convertible preferred stock issuable....... -- 2,737 2,737
Stockholders' equity (net capital deficiency):
Common stock, $0.0001 par value; 50,000,000 shares
authorized, 1,192 and 233,542 shares issued and
outstanding at December 31, 1996 and 1997,
respectively; (7,496,751 shares pro forma), at
amount paid in................................... 1 351 31,540
Contributions from parent........................... 14,277 29,277 29,277
Additional paid-in capital.......................... -- 1,776 1,776
Deferred compensation............................... -- (1,248) (1,248)
Accumulated deficit................................. (16,594) (52,474) (52,474)
-------- -------- --------
Total stockholders' equity (net capital deficiency)... (2,316) (22,318) $ 8,871
-------- -------- ========
$ 14,357 $ 22,084
======== ========
</TABLE>
See accompanying notes.
F-3
<PAGE> 75
ABGENIX, INC.
STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1995 1996 1997
------- ------- --------
<S> <C> <C> <C>
Revenues:
Revenue under collaborative agreements from related
parties (net of equity in losses of Xenotech of
$1,702, $3,866 and $897 in 1995, 1996 and 1997,
respectively)......................................... $ 6,200 $ 4,719 $ 1,343
Contract revenue......................................... -- -- 611
------- ------- --------
Total revenues............................................. 6,200 4,719 1,954
Operating expenses:
Research and development................................. 11,879 9,433 11,405
General and administrative............................... 2,603 2,565 3,525
Charge for cross-license and settlement (includes $11,250
allocated from parent and $11,250 recorded as the
Company's share of equity in losses of Xenotech)...... -- -- 22,500
------- ------- --------
Total operating expenses................................... 14,482 11,998 37,430
------- ------- --------
Operating loss............................................. (8,282) (7,279) (35,476)
Other income and expenses:
Interest income.......................................... -- 203 307
Interest expense......................................... -- (24) (711)
------- ------- --------
Net loss................................................... $(8,282) $(7,100) $(35,880)
======= ======= ========
Pro forma net loss per share............................... $ (9.22)
========
Shares used in computing pro forma net loss per share...... 3,894
========
</TABLE>
See accompanying notes.
F-4
<PAGE> 76
ABGENIX, INC.
STATEMENT OF CHANGES IN REDEEMABLE CONVERTIBLE PREFERRED STOCK AND
STOCKHOLDERS' EQUITY (NET CAPITAL DEFICIENCY)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
REDEEMABLE
CONVERTIBLE
PREFERRED REDEEMABLE
REDEEMABLE STOCK CONVERTIBLE
CONVERTIBLE SUBSCRIPTION PREFERRED STOCK
PREFERRED STOCK RECEIVABLE ISSUABLE
--------------- ------------ ---------------
<S> <C> <C> <C>
Balance at December 31, 1994... $ -- $ -- $ --
Contributions from parent..... -- -- --
Net loss...................... -- -- --
------- ------- ------
Balance at December 31, 1995... -- -- --
Contributions from parent..... -- -- --
Issuance of 3,750,000 shares
of Series A redeemable
convertible preferred stock
to parent for $10,000 cash
and assignment of employee
notes totalling $150 in July
1996........................ 10,150 -- --
Issuance of 1,192 shares of
common stock upon exercise
of stock options............ -- -- --
Net loss...................... -- -- --
------- ------- ------
Balance at December 31, 1996... 10,150 -- --
Contributions from parent..... -- -- --
Issuance of 2,846,542 shares
of Series B redeemable
convertible preferred stock
in December 1997 for cash at
$6.50 per share, net of
issuance costs of $1,463.... 17,039 -- --
Conversion of note payable to
parent into 666,667 shares
of Series A redeemable
convertible preferred stock
in December 1997............ 4,000 -- --
Stock subscription to purchase
421,143 shares of Series B
redeemable convertible
preferred stock at $6.50 per
share in December 1997...... -- (2,737) 2,737
Issuance of 176,756 shares of
common stock upon exercise
of stock options............ -- -- --
Issuance of 55,594 shares of
common stock upon the
exercise of stock purchase
rights...................... -- -- --
Deferred compensation for
stock options issued below
deemed fair value........... -- -- --
Amortization of deferred
compensation................ -- -- --
Net loss...................... -- -- --
------- ------- ------
Balance at December 31, 1997... $31,189 $(2,737) $2,737
======= ======= ======
<CAPTION>
STOCKHOLDERS' EQUITY (NET CAPITAL DEFICIENCY)
--------------------------------------------------------------------------------
TOTAL
STOCKHOLDERS'
CONTRIBUTIONS ADDITIONAL EQUITY (NET
COMMON FROM PAID-IN DEFERRED ACCUMULATED CAPITAL
STOCK PARENT CAPITAL COMPENSATION DEFICIT DEFICIENCY)
------ ------------- ---------- ------------ ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1994... $ -- $ 1,212 $ -- $ -- $ (1,212) $ --
Contributions from parent..... -- 8,282 -- -- -- 8,282
Net loss...................... -- -- -- -- (8,282) (8,282)
---- ------- ------ ------- -------- --------
Balance at December 31, 1995... -- 9,494 -- -- (9,494) --
Contributions from parent..... -- 4,783 -- -- -- 4,783
Issuance of 3,750,000 shares
of Series A redeemable
convertible preferred stock
to parent for $10,000 cash
and assignment of employee
notes totalling $150 in July
1996........................ -- -- -- -- -- --
Issuance of 1,192 shares of
common stock upon exercise
of stock options............ 1 -- -- -- -- 1
Net loss...................... -- -- -- -- (7,100) (7,100)
---- ------- ------ ------- -------- --------
Balance at December 31, 1996... 1 14,277 -- -- (16,594) (2,316)
Contributions from parent..... -- 15,000 -- -- -- 15,000
Issuance of 2,846,542 shares
of Series B redeemable
convertible preferred stock
in December 1997 for cash at
$6.50 per share, net of
issuance costs of $1,463.... -- -- -- -- -- --
Conversion of note payable to
parent into 666,667 shares
of Series A redeemable
convertible preferred stock
in December 1997............ -- -- -- -- -- --
Stock subscription to purchase
421,143 shares of Series B
redeemable convertible
preferred stock at $6.50 per
share in December 1997...... -- -- -- -- -- --
Issuance of 176,756 shares of
common stock upon exercise
of stock options............ 128 -- -- -- -- 128
Issuance of 55,594 shares of
common stock upon the
exercise of stock purchase
rights...................... 222 -- -- -- -- 222
Deferred compensation for
stock options issued below
deemed fair value........... -- -- 1,776 (1,776) -- --
Amortization of deferred
compensation................ -- -- -- 528 -- 528
Net loss...................... -- -- -- -- (35,880) (35,880)
---- ------- ------ ------- -------- --------
Balance at December 31, 1997... $351 $29,277 $1,776 $(1,248) $(52,474) $(22,318)
==== ======= ====== ======= ======== ========
</TABLE>
See accompanying notes.
F-5
<PAGE> 77
ABGENIX, INC.
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1995 1996 1997
------- -------- --------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net loss.................................................... $(8,282) $ (7,100) $(35,880)
Adjustments to reconcile net loss to net cash used by
operating activities:
Equity in losses of Xenotech.............................. -- 3,866 897
Depreciation and amortization............................. -- 8 1,489
Charge for cross-license and settlement................... -- -- 22,500
Changes in certain assets and liabilities:
Prepaid expenses and other current assets.............. -- (58) (392)
Deposits and other assets.............................. -- (337) (78)
Short-term payable to parent........................... -- 730 --
Accounts payable....................................... -- -- 426
Deferred revenue from related parties.................. -- 376 (376)
Accrued stock issuance costs........................... -- -- 1,200
Other accrued liabilities.............................. -- 345 39
------- -------- --------
Net cash used in operating activities....................... (8,282) (2,170) (10,175)
------- -------- --------
INVESTING ACTIVITIES
Purchases of short-term investments......................... -- (2,982) (15,505)
Sales of short-term investments at maturity................. -- -- 7,783
Capital expenditures........................................ -- (334) (1,075)
Contributions to Xenotech................................... -- (3,864) (4,647)
------- -------- --------
Net cash used in investing activities....................... -- (7,180) (13,444)
------- -------- --------
FINANCING ACTIVITIES
Proceeds from issuances of redeemable preferred stock....... -- 10,000 17,039
Proceeds from issuance of note payable to parent............ -- 1,757 --
Proceeds from long-term debt................................ -- -- 4,300
Contributions from parent................................... 8,282 4,783 --
Payments under long-term debt............................... -- -- (643)
Proceeds from issuance of common stock...................... -- -- 350
------- -------- --------
Net cash provided by financing activities................... 8,282 16,540 21,046
------- -------- --------
Net increase (decrease) in cash and cash equivalents........ -- 7,190 (2,573)
Cash and cash equivalents at the beginning of the year...... -- -- 7,190
------- -------- --------
Cash and cash equivalents at the end of the year............ $ -- $ 7,190 $ 4,617
======= ======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for interest...................... $ -- $ 10 $ 632
======= ======== ========
NONCASH INVESTING AND FINANCING ACTIVITIES
Allocation of charges related to the cross-license and
settlement from parent and Xenotech....................... $ -- $ -- $ 15,000
======= ======== ========
Financed property and equipment acquisitions................ -- 3,314 --
======= ======== ========
Assignment of note receivable from Xenotech................. -- 30 --
======= ======== ========
Assignment of note receivable from parent................... -- 150 --
======= ======== ========
Furniture and equipment acquired under capital lease
financing................................................. -- -- 1,968
======= ======== ========
Deferred compensation related to grant of certain stock
options................................................... -- -- 1,776
======= ======== ========
</TABLE>
See accompanying notes.
F-6
<PAGE> 78
ABGENIX, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Basis of Presentation
Abgenix, Inc., a Delaware corporation ("Abgenix" or the "Company"), a
subsidiary of Cell Genesys, Inc., ("Cell Genesys" or the "Parent") develops and
intends to commercialize antibody therapeutic products for the prevention and
treatment of a variety of disease conditions, including transplant-related
diseases, inflammatory and autoimmune disorders and cancer. The Company has
developed a proprietary technology which it believes enables it to quickly
generate high affinity, fully human antibody product candidates to essentially
any disease target appropriate for antibody therapy. The business and operations
of Abgenix commenced in 1989 and were initially conducted within Cell Genesys.
On June 24, 1996, Abgenix was incorporated and subsequently on July 15, 1996 it
was organized pursuant to a Stock Purchase and Transfer Agreement between the
Company and Cell Genesys. The agreement sets forth the terms and conditions for
the transfer of the antibody business and operations within Cell Genesys to
Abgenix.
The accompanying financial statements include the operations of Abgenix
since July 15, 1996, and the revenues and expenses of Abgenix as a business unit
within Cell Genesys prior to July 15, 1996. Neither the balance sheets nor the
statements of cash flows reflect the carve out balances before July 15, 1996, as
it would not be meaningful.
Prior to July 15, 1996, specifically identified revenues and costs such as
research and development were allocated to Abgenix from Cell Genesys. General
and administrative expenses were allocated based on Abgenix research and
development expense as a percentage of Cell Genesys' total research and
development expenses. From July 16, 1996 to July 31, 1997, Cell Genesys
performed certain general and administrative functions on behalf of Abgenix. The
Company estimates that the general and administrative costs would have been
$500,000 to $1,000,000 higher (unaudited) for each year of operation on a
stand-alone basis. The Company believes the allocation methodology used was
reasonable.
In 1997, the Company incurred a non-recurring charge for cross-license and
settlement of $22.5 million which represents an allocation of $11.3 million from
Cell Genesys and an entry to record the equity in the losses of an equally owned
joint venture with JT America, Inc., a medical subsidiary of Japan Tobacco and
the Company ("Xenotech") of $11.3 million (see Note 6).
Revenue Recognition
Revenues, principally payments under collaborative arrangement, including
research funding from Xenotech, are recorded when earned as defined under the
terms of the related agreements. Research and development funding received in
advance is recorded as deferred revenue. Revenues from the achievement of
milestone events are recognized when the milestones have been achieved. Revenues
from Xenotech are recognized net of the Company's related contributions to the
joint venture. Contract revenues, which include non-refundable license fees, are
recorded when earned and when no further obligation under the arrangement
exists.
Research and Development
Research and development expenses, including direct and allocated expenses,
consist of independent research and development costs and costs associated with
sponsored research and development.
F-7
<PAGE> 79
ABGENIX, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1997
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
Net Loss Per Share
In 1997, the Company adopted Financial Accounting Standards Board issued
Statement of Financial Accounting Standard No. 128, "Earnings Per Share" ("SFAS
128"). SFAS 128 replaced the calculation of primary and fully diluted earnings
per share with basic and diluted earnings per share. Unlike primary earnings per
share, basic earnings per share is computed using the weighted average number of
common shares outstanding and excludes any dilutive effects of options, warrants
and convertible securities. Diluted earnings per share is very similar to the
previously reported fully diluted earnings per share. Potentially dilutive
securities have been excluded from the computation as their effect is
antidilutive.
Pro forma net loss per share for 1997 has been computed to give effect to
the automatic conversion of redeemable convertible preferred stock into
7,263,209 shares of common stock upon completion of the Company's initial public
offering (using the as-if-converted method) from the original date of issuance.
A reconciliation of shares used in calculation of basic and diluted and pro
forma net loss per share follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
---------------------------
1996 1997
----------- ------------
<S> <C> <C>
Net loss....................................... $(7,100,000) $(35,880,000)
=========== ============
Basic and diluted:
Weighted-average shares of common stock
outstanding used in computing basic and
diluted net loss per share................ 152 34,744
=========== ============
Basic and diluted net loss per share........... $(46,710.53) $ (1,032.69)
=========== ============
Pro forma:
Shares used in computing basic and diluted
net loss per share (from above)........... 152 34,744
Adjusted to reflect the effect of the assumed
conversion of preferred stock from the
date of issuance.......................... 3,750,000 3,858,843
----------- ------------
Weighted-average shares used in computing pro
forma net loss per share.................. 3,750,152 3,893,587
=========== ============
Pro forma net loss per share................... $ (1.89) $ (9.22)
=========== ============
</TABLE>
Had the Company been in a net income position, diluted earnings per share
would have included the shares used in the computation of pro forma net loss per
share as well as an additional 1,168,883 and 1,623,630 shares related to
outstanding options and warrants not included above (determined using the
treasury stock method at the estimated average fair value) for 1996 and 1997,
respectively.
Net loss per share has not been presented prior to the Company's
organization on July 15, 1996, as there were no outstanding equity securities
prior to that period.
F-8
<PAGE> 80
ABGENIX, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1997
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
Cash Equivalents and Short-Term Investments
The Company considers all highly-liquid investments purchased with a
maturity from the date of purchase of three months or less to be cash
equivalents; investments with maturities in excess of three months are
considered to be short-term investments.
The Company's investment securities are classified as available-for-sale
and carried at fair value. The Company determines the appropriate classification
of securities at the time of purchase and reevaluates such designation as of
each balance sheet date.
Depreciation and Amortization
The Company records property and equipment at cost and provides
depreciation using the straight-line method over the estimated useful lives of
the assets, generally five years. Furniture and equipment leased under capital
leases is amortized over the shorter of the useful lives or the lease term.
Amortization of leased assets is included in depreciation and amortization
expense and is combined with accumulated depreciation and amortization of the
Company's owned assets.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Other Recent Accounting Pronouncements
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income" ("SFAS
130"), and Statement of Financial Accounting Standards No. 131, "Disclosures
about Segments of an Enterprise and Related Information" ("SFAS 131"), which
require additional disclosures to be adopted beginning in the first quarter of
1998 and on December 31, 1998, respectively. Under SFAS 130, the Company will be
required to display comprehensive income and its components as part of the
Company's full set of financial statements. SFAS 131 requires that the Company
report financial and descriptive information about its reportable operating
segments. The Company is evaluating the impact, if any, of SFAS 130 and SFAS 131
on its future financial statement disclosures.
2. COLLABORATION AGREEMENT WITH XENOTECH
Xenotech
In 1991, Cell Genesys and JT America formed Xenotech to develop genetically
modified strains of mice which can produce human monoclonal antibodies and to
commercialize products generated from these mice. Upon the creation of Abgenix,
Cell Genesys' rights in the joint venture were assigned to the Company. Xenotech
funds its research, which is generally conducted by Abgenix, through capital
contributions from the partners. The Company paid and expensed as research and
development $350,000 and $172,500 related to licensing the rights to this
technology from Xenotech for the years ended December 31, 1996 and 1997.
F-9
<PAGE> 81
ABGENIX, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1997
2. COLLABORATION AGREEMENT WITH XENOTECH -- (CONTINUED)
The Company is obligated to 50% of all Xenotech funding requirements. The
Company accounts for its investment in Xenotech under the equity method; 50% of
Xenotech's research and development expense up to the Company's investment
amount. Details are as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------
1995 1996 1997
------ ------ --------
(IN THOUSANDS)
<S> <C> <C> <C>
Abgenix's share of Xenotech losses........... $2,315 $3,306 $ 12,347
Losses associated with cross-license and
settlement................................. -- -- (11,250)
Difference due to timing and change in
deferred revenue........................... (613) 560 (200)
------ ------ --------
Equity in losses of Xenotech................. $1,702 $3,866 $ 897
====== ====== ========
</TABLE>
The Company recognized revenue of $6,200,000, $4,719,000 and $1,343,000 for
the years ended 1995, 1996 and 1997, respectively, net of its own payments to
the joint venture related to this revenue.
Summary financial information for Xenotech is as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1995 1996 1997
-------- ------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Total assets.............................. $ 1,357 $ 492 $ 7,569
Total liabilities......................... 601 59 7,556
Total revenues............................ 4,747 1,912 272
Total operating expenses (principally
research and development expense)....... (11,926) (8,547) (24,964)
Net loss.................................. $ (7,129) $(6,614) $(24,680)
</TABLE>
3. COLLABORATION AND LICENSE AGREEMENTS
Research Collaboration and License Option Agreement with Pfizer Inc.
In December 1997, Abgenix established a research collaboration with Pfizer
Inc. ("Pfizer"). In connection with the execution of the agreement, Pfizer paid
the Company a fee upon signing and may make additional payments to Abgenix upon
completion of certain research milestones. Additionally, Pfizer has an option to
expand the research collaboration. The agreement expires in December 1999.
Concurrent with the execution of the research collaboration agreement,
Pfizer and Abgenix entered into a license and royalty agreement that grants
Pfizer the option to acquire an exclusive, worldwide license to develop, make,
use and sell antibody products derived from the research collaboration. If
Pfizer chooses to exercise its option to expand the research collaboration,
Abgenix could receive potential license fees and milestone payments of up to
approximately $8.0 million per antigen upon the completion of certain
milestones, including preclinical and clinical trials and receipt of regulatory
approval. Additionally, if a product receives marketing approval from the FDA or
an equivalent foreign agency, the Company is entitled to receive royalties on
future product sales by Pfizer. Pfizer will be responsible for manufacturing,
product development and marketing of any products developed through this
collaboration.
F-10
<PAGE> 82
ABGENIX, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1997
3. COLLABORATION AND LICENSE AGREEMENTS -- (CONTINUED)
In January 1998, the Company also entered into a stock purchase agreement
with Pfizer to purchase 160,000 shares of the Company's Series C redeemable
convertible preferred stock at $8.00 per share. The holder of each share of
Series C redeemable convertible preferred stock is entitled to voting rights
equivalent to the number of shares of common stock for which each share can be
converted into and is convertible, at the option of the holder, into one share
of common stock, subject to certain antidilution adjustments. Conversion is
automatic upon the closing of a firm commitment underwritten public offering
pursuant to an effective registration statement under the Securities Act of 1933
at a per share price of $11.00 and an aggregate offering price of not less than
$15,000,000. The holders of Series A and Series B preferred stock have priority
over the holders of Series C preferred stock in any dividends declared and in
liquidation preferences in the event of a winding up of the Company. The
liquidation preference for Series C preferred stock is $8.00 per share.
Noncumulative dividends on Series C preferred stock are payable at a rate of
$0.64 per share per annum out of available earnings if and when declared by the
board of directors.
CBL License Agreement
On February 1, 1997, the Company entered into a license agreement for
exclusive worldwide rights to commercialize ABX-CBL. The Company paid an initial
license fee and is further obligated to pay annual fees and royalties on
potential product sales. The Company is also obligated to issue 25,000 shares of
its common stock upon the submission of a Product License Application for the
first indication of the product.
4. AVAILABLE-FOR-SALE SECURITIES
All of the Company's available-for-sale securities consist of commercial
paper and U.S. government obligations and are classified as short-term
investments. All investments mature within one year. These investments are
carried at market, which approximates cost. There were no significant unrealized
gains or losses related to these investments.
The following is a summary of available-for-sale securities at fair value,
which approximates amortized cost:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1996 1997
------- -------
(IN THOUSANDS)
<S> <C> <C>
Commercial paper....................................... $10,093 $12,038
U.S. government obligations............................ -- 2,881
------- -------
Total.................................................. $10,093 $14,919
======= =======
</TABLE>
Included in cash and cash equivalents at December 31, 1996 and 1997 are
available-for-sale securities of $7,111,000 and $4,215,000, respectively.
Included in short-term investments at December 31, 1996 and 1997 are
available-for-sale securities of $2,982,000 and $10,704,000, respectively. At
December 31, 1997, the average remaining maturity of the portfolio is less than
12 months.
F-11
<PAGE> 83
ABGENIX, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1997
5. PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1996 1997
------- -------
(IN THOUSANDS)
<S> <C> <C>
Furniture, machinery and equipment..................... $ 611 $ 2,188
Leasehold improvements................................. 3,037 4,503
------- -------
3,648 6,691
Less accumulated depreciation and amortization......... -- (915)
------- -------
$ 3,648 $ 5,776
======= =======
</TABLE>
The Company did not record any depreciation on assets in 1996 as such
assets were all purchased in the last month of the year. Property and equipment
financed under capital leases was $1,968,000 at December 31, 1997. Accumulated
amortization related to this equipment totaled $383,000 at December 31, 1997.
6. COMMITMENTS
Long-Term Note Payable to Cell Genesys
In July 1996, the Company issued a $4,000,000 Convertible Promissory Note
(the "Note") to Cell Genesys which the Company could draw against in order to
pay for services provided by Cell Genesys. As of December 31, 1996, the Company
had drawn $1,757,000 against the Note. Interest accrued at the rate of 6.82% per
annum on the outstanding principal until July 15, 1997, whereupon the accrued
interest was added to the outstanding principal of the Note. The entire
principal and accrued interest amount was due on or before July 14, 2000. In
December 1997, Cell Genesys exercised its option to convert the Note into
666,667 shares of Series A convertible preferred stock at a conversion price of
$6.00 per share.
Short-Term Payable to Cell Genesys
Until June 30, 1997, the Company reimbursed Cell Genesys for payments made
to third parties on behalf of the Company. At December 31, 1997, the Company
owed $212,000 to Cell Genesys for this reimbursement, which has been reflected
in the accompanying balance sheet as a current liability ($2,429,000 at December
31, 1996).
Loan
On January 24, 1997, the Company secured a loan with a bank in the amount
of $4,300,000 in order to finance tenant improvements on its facility in
Fremont, California. The loan matures in January 2001 and bears an annual
interest rate of prime plus 1.0% (9.5% for the year ended December 31, 1997).
The loan is guaranteed by Cell Genesys until the Company completes an initial
public offering of its common stock which raises net proceeds of at least
$20,000,000, and the loan is secured by substantially all tangible and
intangible assets of the Company.
F-12
<PAGE> 84
ABGENIX, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1997
6. COMMITMENTS -- (CONTINUED)
Capital Lease
On March 28, 1997, the Company entered into a lease agreement with a
financing company under which the Company may finance up to $3,000,000 of its
laboratory and office equipment. The lease term is 48 months and is guaranteed
by Cell Genesys until the Company completes its initial public offering of its
common stock which raises net proceeds of at least $20,000,000.
Future principal payments under the loan and minimum payments under the
capital lease are as follows (in thousands):
<TABLE>
<CAPTION>
CAPITAL TOTAL
LOAN LEASE PAYMENTS
--------- ------- --------
<S> <C> <C> <C>
Year ending December 31,
1998.................................... $1,259 $ 594 $1,853
1999.................................... 1,259 594 1,853
2000.................................... 1,258 594 1,852
2001.................................... 105 432 537
------ ------ ------
Total..................................... 3,881 2,214 6,095
Less amount representing interest......... -- (470) (470)
------ ------ ------
Present value of future payments.......... 3,881 1,744 5,625
Less current portion...................... (1,259) (387) (1,646)
------ ------ ------
Noncurrent portion........................ $2,622 $1,357 $3,979
====== ====== ======
</TABLE>
The carrying value of the loan approximates fair value at December 31,
1997. The fair value of the loan was estimated using discounted cash flow
analysis, based on the incremental borrowing rates currently available to the
Company for borrowings with similar terms and maturity.
Facility Lease
In October 1996, the Company signed an operating lease commencing February
1, 1997, for its facilities in Fremont, California. The lease expires in January
2007, however, the Company has the option to extend the term through 2016.
Future minimum payments under the noncancelable operating lease at December 31,
1997 are (in thousands):
<TABLE>
<S> <C>
Year ending December 31,
1998...................................... $ 862
1999...................................... 891
2000...................................... 923
2001...................................... 955
2002...................................... 987
Thereafter................................ 4,360
------
Total lease payments........................ $8,978
======
</TABLE>
Rent expense was approximately $567,000 for the year ended December 31,
1997.
F-13
<PAGE> 85
ABGENIX, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1997
6. COMMITMENTS -- (CONTINUED)
Charge for Cross-License and Settlement
On March 27, 1997, Cell Genesys announced, along with Abgenix, Xenotech and
Japan Tobacco, that it had signed a comprehensive patent cross-license and
settlement agreement with GenPharm that resolved all related litigation and
claims between the parties. As initial consideration for the cross-license and
settlement agreement, Cell Genesys issued a note to GenPharm due September 30,
1998 for $15.0 million payable by Cell Genesys and convertible into shares of
Cell Genesys common stock, currently at $8.62 per share. Of this note, $3.8
million satisfied certain of Xenotech's obligations under the agreement. Japan
Tobacco also made an initial payment. During 1997, two patent milestones were
achieved and Xenotech was obligated to pay $7.5 million for each milestone.
Xenotech paid $7.5 million to satisfy the first milestone and has recorded a
payable to GenPharm for the remaining $7.5 million. The Company has recorded a
liability of $3.8 million in its balance sheet representing its share of the
Xenotech obligation. The payable is due on or before November 1998. No
additional payments will accrue under this agreement. The Company has recognized
as a non-recurring charge for cross-license and settlement, a total of $22.5
million.
Pursuant to Staff Accounting Bulletin 55, Cell Genesys allocated its
portion of the settlement obligation, $11,250,000, to Abgenix since the related
technology was contributed upon formation of Abgenix. The $15,000,000 note
issued by Cell Genesys was recorded as a capital contribution by Abgenix. In
accordance with the joint venture agreement, Abgenix has also recorded an
expense of $11,250,000 representing 50% of the Xenotech expense. Thus, Abgenix
has recognized a non-recurring charge for cross-license and settlement of
$22,500,000.
7. STOCKHOLDERS' EQUITY
Redeemable Convertible Preferred Stock
In December 1997, the Company created a new series of preferred stock,
designated as Series A redeemable convertible preferred stock and converted each
outstanding share of Series A senior and Series 1 subordinated convertible
preferred stock, par value of $0.0001 per share, into one share of Series A
redeemable convertible preferred stock, par value of $0.0001 per share. The
financial statements as presented reflect only the Series A redeemable
convertible preferred stock as if converted at the date of original issuance.
The following table describes information with respect to the various
series of redeemable convertible preferred stock as of December 31, 1997:
<TABLE>
<CAPTION>
LIQUIDATION
SHARES ISSUANCE PREFERENCES AND DIVIDEND
SHARES ISSUED AND PRICE REDEMPTION PRICE RATE
DESIGNATED OUTSTANDING PER SHARE PER SHARE PER SHARE
---------- ----------- ----------- ---------------- ---------
<S> <C> <C> <C> <C> <C>
Series A...................... 5,396,667 4,416,667 $2.71-$6.00 $6.00 $0.48
Series B...................... 3,385,000 2,846,542 $6.50 $6.50 $0.52
Series C...................... 160,000 -- -- $8.00 $0.64
--------- ---------
8,941,667 7,263,209
========= =========
</TABLE>
Each share of preferred stock is entitled to voting rights equivalent to
the number of shares of common stock for which each share can be converted into
and is convertible, at the option of the holder, into one share of common stock,
subject to certain antidilution adjustments. Conversion is
F-14
<PAGE> 86
ABGENIX, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1997
7. STOCKHOLDERS' EQUITY -- (CONTINUED)
automatic upon the closing of a firm commitment underwritten public offering
pursuant to an effective registration statement under the Securities Act of 1933
at a per share price of not less than $11.00 and an aggregate offering price of
not less than $15,000,000.
Preferred stockholders have certain rights of first refusal which allow
them to participate ratably in any future issuances of stock to maintain their
original ownership percentages. This right terminates upon a public offering.
Noncumulative dividends on the preferred stock are payable at the above stated
rates per share out of available earnings if and when declared by the board of
directors.
The holders of Series B preferred stock shall have priority over the
holders of Series A preferred stock and Series A preferred stock over Series C
preferred stock in liquidation preferences in the event of a winding up of the
Company.
After the fourth anniversary of the first sale of Series B preferred stock,
the preferred stockholders have the right to redeem all or part of their
preferred shares if, and only if, at least a majority of the preferred
stockholders agree in writing. The redemption price is initially set at the
liquidation preference per share and is adjusted upon the occurrence of certain
events.
Warrants
In connection with the loan guaranteed by Cell Genesys in January 1997, the
Company issued a warrant to purchase 71,667 shares of Series A redeemable
convertible preferred stock at an exercise price of $6.00 per share to Cell
Genesys. The warrants are exercisable immediately and expire three years from
issuance. Should all of the Company's preferred stock be redeemed or converted
into common stock, then the warrant becomes exercisable for the number of shares
of common stock as if the warrant had been exercised in full for preferred
stock.
In connection with the loan guaranteed by Cell Genesys in March 1997, the
Company issued a second warrant to purchase 50,000 shares of convertible
preferred stock at an exercise price of $6.00 per share to Cell Genesys. The
terms for exercise and expiration are the same as the January 1997 warrants.
The fair value of the above warrants was insignificant for accounting
purposes.
1996 Incentive Stock Plan
The Company has elected to follow Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees" ("APB 25") and related
interpretations in accounting for its employee stock options because, as
discussed below, the alternative fair value accounting provided for under
Financial Accounting Standards Board Statement No. 123, "Accounting for
Stock-Based Compensation," ("SFAS 123") requires use of option valuation models
that were not developed for use in valuing employee stock options. Under APB 25,
because the exercise price of the Company's employee stock option equals the
market price of the underlying stock on the date of grant, no compensation
expense is recognized.
The Incentive Stock Plan (the "Plan") provides for the granting of options
to purchase common stock to employees, outside directors and consultants of the
Company. Stock purchase rights are granted only to employees or consultants. The
Company's option to repurchase shares issued through the exercise of stock
purchase rights lapses ratably over five years from the date the shares were
issued. The Company grants shares of common stock for issuance under the Plan at
no less than the fair value of the stock (85% of fair value for nonqualified
options and stock purchase rights). Options granted
F-15
<PAGE> 87
ABGENIX, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1997
7. STOCKHOLDERS' EQUITY -- (CONTINUED)
under the Plan generally have a term of ten years and vest over four years at
the rate of 25% one year from the grant date and 1/48 monthly thereafter.
Information with respect to the Plan activity is as follows:
<TABLE>
<CAPTION>
WEIGHTED-
SHARES NUMBER OF AVERAGE
AVAILABLE SHARES EXERCISE PRICE
---------- --------- --------------
<S> <C> <C> <C>
Authorized at inception............. 1,600,000 -- --
Options granted below fair
value.......................... (1,185,100) 1,185,100 $0.60
Options exercised................. -- (1,192) $0.60
Options canceled.................. 15,025 (15,025) $0.60
---------- --------- -----
Balances December 31, 1996.......... 429,925 1,168,883 $0.60
Authorized........................ 791,250 -- --
Options granted below fair
value.......................... (676,644) 676,644 $2.36
Options exercised................. -- (232,350) $1.51
Options canceled.................. 111,214 (111,214) $1.14
---------- --------- -----
Balances December 31, 1997.......... 655,745 1,501,963 $1.22
========== ========= =====
</TABLE>
At December 31, 1996 and 1997, options to purchase 1,168,883 and 1,501,963
common shares under the Plan were outstanding with a weighted-average exercise
price of $0.60 and $1.22 per share, respectively. Of these, 110,194 and 251,706
shares were exercisable for an aggregate price of $66,116 and $203,566.
Exercise prices for options outstanding as of December 31, 1997 ranged from
$0.60 to $5.00. The following table summarizes information about options
outstanding at December 31, 1997:
<TABLE>
<CAPTION>
OUTSTANDING OPTIONS
-------------------------------------------
NUMBER
REMAINING OF
EXERCISE NUMBER OF CONTRACTUAL OPTIONS
PRICES OPTIONS LIFE, IN YEARS EXERCISABLE
-------- --------- --------------- -----------
<S> <C> <C> <C>
$0.60...................... 1,083,147 8.64 228,578
$1.00...................... 3,800 9.32 --
$2.50...................... 315,416 9.34 17,395
$4.00...................... 74,800 9.65 5,733
$5.00...................... 24,800 9.95 --
--------- -------
1,501,963 251,706
========= =======
</TABLE>
From inception to December 31, 1997, options to purchase a total of
1,861,744 shares of common stock were granted at prices ranging from $0.60 to
$5.00 per share. Deferred compensation of $1,776,000 was recorded for these
option grants based on the deemed fair value of common stock (ranging from $1.20
to $6.50 per share). The Company amortized $528,000 of this balance during the
year ended December 31, 1997. In the first quarter of 1998, the Company granted
options to purchase 260,175 shares of common stock at $6.00 per share for which
deferred compensation of approximately
F-16
<PAGE> 88
ABGENIX, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1997
7. STOCKHOLDERS' EQUITY -- (CONTINUED)
$520,000 is expected to be recorded based on the deemed fair value of common
stock of $8.00 per share.
Pro Forma Information
Pro forma information regarding net loss and net loss per share is required
by SFAS 123, and has been determined as if the Company had accounted for its
employee stock options under the fair value method of that Statement. The fair
value for these options was estimated at the date of grant using a Black-Scholes
option pricing model with the following assumptions for 1996 and 1997,
respectively: risk-free interest rate of 6.65% and 6.46%; no dividend yield in
1996 or 1997; volatility factor of 0.68 and 0.67; and an expected life of the
option of five years in 1996 and 1997.
The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions, including the expected stock price
volatility. Because the Company's employee stock options have characteristics
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially affect the fair value estimate, in
management's opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its employee stock options.
The weighted-average fair value of options granted during the years ended
December 31, 1996 and 1997 were $0.87 and $3.00 per share (all options were
granted at exercise prices below the deemed fair value of the underlying common
stock). The following table illustrates what net loss would have been had the
Company accounted for its stock-based awards under the provisions of SFAS 123.
Pro forma amounts may not be representative of future years.
<TABLE>
<CAPTION>
1996 1997
------- --------
(IN THOUSANDS,
EXCEPT PER SHARE
AMOUNTS)
<S> <C> <C>
Net loss:
As reported......................................... $(7,100) $(35,880)
------- --------
Pro forma........................................... $(7,190) $(36,103)
------- --------
Net loss per share:
As reported......................................... $ (1.89) $ (9.22)
------- --------
Pro forma........................................... $ (1.92) $ (9.27)
------- --------
</TABLE>
8. INCOME TAXES
As of December 31, 1997, the Company had federal net operating loss
carryforwards of approximately $15,400,000. The Company also had federal
research and development tax credit carryforwards of approximately $220,000 as
of December 31, 1997. The Company's net operating loss carryforwards exclude
losses incurred prior to the formation of Abgenix in July 1996. Further, the
amounts associated with the cross-license and settlement have been expensed for
financial statement accounting purposes and have been capitalized and will be
amortized over a period of approximately fifteen years for tax purposes. The net
operating loss and credit carryforwards will expire in the years 2011 through
2012, if not utilized.
F-17
<PAGE> 89
ABGENIX, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1997
8. INCOME TAXES (CONTINUED)
Utilization of the net operating losses and credits may be subject to a
substantial annual limitation due to the "change in ownership" provisions of the
Internal Revenue Code of 1986 and similar state provisions. The annual
limitation may result in the expiration of net operating losses and credits
before utilization.
Significant components of the Company's deferred tax assets for federal and
state income taxes are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1996 1997
--------- ------------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards.............. $ 700,000 $ 5,400,000
Research credit carryforwards................. 100,000 400,000
Capitalized research and development.......... 100,000 200,000
Capitalized cross-license and settlement...... -- 8,000,000
Other, net.................................... -- 400,000
--------- ------------
Net deferred tax assets......................... 900,000 14,400,000
Valuation allowance............................. (900,000) (14,400,000)
--------- ------------
Total................................. $ -- $ --
========= ============
</TABLE>
The net valuation allowance increased by $900,000 during the year ended
December 31, 1996. Deferred tax assets relate primarily to net operating loss
carryforwards and to the capitalization of the cross-license and settlement
agreement.
9. OTHER RELATED PARTY TRANSACTIONS
Through July 31, 1997, pursuant to the terms of the Service Agreement with
Cell Genesys, Cell Genesys provided Abgenix certain administrative services. In
addition, beginning July 15, 1996, the Company leased equipment from Cell
Genesys on a month-to-month basis pursuant to the Stock Purchase and Transfer
Agreement. Total fees incurred under the Services Agreement and the Stock
Purchase and Transfer Agreement were approximately $1,816,000 and $825,000 in
1996 and 1997, respectively. The Company chose to draw down on its Promissory
Note with Cell Genesys in order to pay for these fees. In December 1997, the
entire amount of the Note and the unpaid interest was converted into preferred
stock.
In addition, the Company had an agreement with Cell Genesys under which the
Company provided immunization services as requested by Cell Genesys. Under this
agreement, the Company recognized $100,375 and $111,000 in 1996 and 1997,
respectively.
On December 31, 1996, the Company purchased Xenotech's remaining laboratory
equipment. The Company paid $154,360, which approximated net book value at the
time of purchase.
In July 1996, the Company assumed from Cell Genesys a $100,000 loan issued
to a Director and officer. The loan did not bear interest and was evidenced by a
promissory note secured by the common stock of Cell Genesys owned by the
Director and officer. The note was repaid in September 1997.
In May 1997, the Company granted a 10-year loan for $100,000 to an officer
of the Company. Interest is accrued per annum at 6.6% beginning May 2002. The
loan is payable in five equal installments beginning June 2003.
F-18
<PAGE> 90
ABGENIX, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1997
10. EVENTS SUBSEQUENT TO DATE OF REPORT OF INDEPENDENT AUDITORS (UNAUDITED)
Initial Public Offering
In March 1998, the board of directors authorized the filing of a
registration statement with the Securities and Exchange Commission permitting
Abgenix to sell shares of its common stock to the public. If the offering is
consummated under the terms presently anticipated, all of the currently
outstanding preferred stock will automatically convert into 7,263,209 shares of
common stock. Unaudited pro forma stockholders' equity, as adjusted for the
conversion of the preferred stock is set forth in the accompanying balance
sheets.
Research Collaboration with Schering-Plough
In January 1998, Abgenix established a research collaboration with
Schering-Plough Research Institute ("Schering-Plough"). In connection with the
execution of the agreement, Schering-Plough paid the Company a fee upon signing
and will be obligated to make additional payments to Abgenix upon completion of
the research.
In addition, the agreement provides Schering-Plough with an option, for a
limited time, to enter into a research and license agreement that provides
Schering-Plough with an exclusive worldwide license to develop, make, use and
sell antibody products derived from the research collaboration. If the option is
exercised, the research and license agreement may provide Abgenix with up to
approximately $8.0 million in additional research fees and milestone payments
upon the completion of certain milestones, including preclinical and clinical
trials and receipt of regulatory approval. Additionally, if a product receives
marketing approval from the FDA or an equivalent foreign agency, the Company is
entitled to receive royalties on future product sales by Schering-Plough.
Note Receivable to Officer
On February 27, 1998, Mr. Leutzinger and Abgenix entered into a Relocation
Loan Agreement pursuant to which Abengix loaned $100,000 to Mr. Leutzinger in
exchange for a promissory note secured by a deed of trust. No interest accrues
on the loan until June 30, 2003.
Stock Plans
In March 1998, the board of directors adopted the 1998 Employee Stock
Purchase Plan, the 1998 Director Option Plan and approved the amended and
restated 1996 Incentive Stock Plan, subject to stockholder approval. An
additional 1,000,000 shares of common stock have been reserved for issuance
thereunder.
F-19
<PAGE> 91
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Board of Directors
Xenotech, L.P.
We have audited the accompanying balance sheets of Xenotech, L.P. (a
development stage enterprise) as of December 31, 1996 and 1997, and the related
statements of operations, partners' capital and cash flows for each of the three
years in the period ended December 31, 1997 and for the period from inception
(June 12, 1991) to December 31, 1997. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Xenotech, L.P. (a
development stage enterprise) at December 31, 1996 and 1997 and the results of
its operations and its cash flows for each of the three years ended December 31,
1997 and for the period from inception (June 12, 1991) to December 31, 1997, in
conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Palo Alto, California
January 23, 1998
F-20
<PAGE> 92
XENOTECH, L.P.
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1997
-------- --------
<S> <C> <C>
ASSETS
Cash........................................................ $ 292 $ 58
Short-term investments...................................... -- 3,750
Prepaid expenses and other current assets................... 200 11
Receivable from partner..................................... -- 3,750
-------- --------
Total current assets........................................ $ 492 $ 7,569
======== ========
LIABILITIES AND PARTNERS' CAPITAL
Accrued liabilities......................................... $ 59 $ 56
Payable related to cross-license and settlement agreement... -- 7,500
-------- --------
Total current liabilities................................... 59 7,556
Partners' capital:
Paid-in capital........................................... 36,486 60,746
Deficit accumulated during the development stage.......... (36,053) (60,733)
-------- --------
Total partners' capital..................................... 433 13
-------- --------
Total liabilities and partners' capital..................... $ 492 $ 7,569
======== ========
</TABLE>
See accompanying notes.
F-21
<PAGE> 93
XENOTECH, L.P.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION
(JUNE 12, 1991)
YEAR ENDED DECEMBER 31, TO DECEMBER
---------------------------- 31,
1995 1996 1997 1997
------- ------- -------- ---------------
<S> <C> <C> <C> <C>
Research and license revenues from partners......... $ 4,747 $ 1,912 $ 272 $ 10,304
Expenses:
Research and development.......................... 11,270 8,240 2,396 69,579
General and administrative........................ 656 307 98 1,639
Cross-license and settlement expense.............. -- -- 22,470 --
------- ------- -------- --------
Total expenses...................................... 11,926 8,547 24,964 71,218
Interest income..................................... 50 21 12 181
------- ------- -------- --------
Net loss............................................ $(7,129) $(6,614) $(24,680) $(60,733)
======= ======= ======== ========
</TABLE>
See accompanying notes.
F-22
<PAGE> 94
XENOTECH, L.P.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF PARTNERS' CAPITAL
<TABLE>
<CAPTION>
LIMITED PARTNERS TOTAL
GENERAL ---------------------------------- PARTNERS'
PARTNER JAPAN TOBACCO INC. CELL GENESYS CAPITAL
------- ------------------ ------------ ---------
<S> <C> <C> <C> <C>
Capital contributed at inception....... $ 60 $ 4,750 $ -- $ 4,810
Capital distribution of interest
income.............................. -- -- (34) (34)
Net loss............................... (47) (4,705) 32 (4,720)
----- -------- -------- --------
Balance at December 31, 1991............. 13 45 (2) 56
Capital contribution................... 130 5,500 -- 5,630
Capital distribution of interest
income.............................. -- -- (1) (1)
Net loss............................... (55) (5,481) 4 (5,532)
----- -------- -------- --------
Balance at December 31, 1992............. 88 64 1 153
Capital contribution................... 12 6,800 700 7,512
Net loss............................... (75) (6,770) (607) (7,452)
----- -------- -------- --------
Balance at December 31, 1993............. 25 94 94 213
Capital contribution................... 40 5,000 -- 5,040
Net loss............................... (47) (4,780) 220 (4,607)
----- -------- -------- --------
Balance at December 31, 1994............. 18 314 314 646
Capital contribution................... 72 4,833 2,333 7,238
Net loss............................... (71) (4,779) (2,279) (7,129)
----- -------- -------- --------
Balance at December 31, 1995............. 19 368 368 755
Capital contribution................... 63 3,115 3,115 6,293
Net loss............................... (66) (3,274) (3,274) (6,614)
----- -------- -------- --------
Balance at December 31, 1996............. 16 209 209 434
Capital contribution................... 230 12,014 12,015 24,259
Net loss............................... (246) (12,217) (12,217) (24,680)
----- -------- -------- --------
Balance at December 31, 1997............. $ -- $ 6 $ 7 $ 13
===== ======== ======== ========
</TABLE>
See accompanying notes.
F-23
<PAGE> 95
XENOTECH, L.P.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION
YEAR ENDED DECEMBER 31, (JUNE 12, 1991)
------------------------------- TO DECEMBER 31,
1995 1996 1997 1997
-------- ------- -------- ---------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss.................................. $ (7,129) $(6,614) $(24,680) $(60,733)
Adjustments to reconcile net loss to net
cash used by operating activities:
Charge for cross-license and
settlement........................... -- -- 3,735 3,735
Depreciation expense.................... 71 74 -- 170
Changes in certain assets and liabilities:
Decrease (increase) in prepaid and other
current assets....................... (109) 108 189 144
Decrease (increase) in note
receivable........................... (30) 30 -- --
Increase (decrease) in accrued
liabilities.......................... 292 (298) (3) 56
Increase (decrease) in deferred
revenue.............................. (1,650) (250) -- --
Increase in payable for cross-license
and settlement....................... -- -- 7,500 7,500
-------- ------- -------- --------
Net cash used in operating activities..... (8,555) (6,950) (13,259) (49,128)
-------- ------- -------- --------
CASH USED BY INVESTING ACTIVITIES
Capital expenditures...................... (62) -- -- (325)
Purchases of short-term investments....... -- -- (3,750) (3,750)
-------- ------- -------- --------
Net cash used by investing activities..... (62) -- (3,750) (4,075)
CASH FLOWS FROM FINANCING ACTIVITIES
Capital contributions..................... 7,237 6,292 16,775 53,261
-------- ------- -------- --------
NET INCREASE (DECREASE) IN CASH........... (1,380) (658) (234) 58
CASH AT BEGINNING OF PERIOD............... 2,330 950 292 --
-------- ------- -------- --------
CASH AT END OF PERIOD..................... $ 950 $ 292 $ 58 $ 58
======== ======= ======== ========
</TABLE>
See accompanying notes.
F-24
<PAGE> 96
XENOTECH, L.P.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
1. ORGANIZATION AND BUSINESS
Xenotech, L.P., a California limited partnership and a development stage
enterprise (the "Partnership"), was organized on June 12, 1991 pursuant to a
Limited Partnership Agreement between Xenotech, Inc. (the "General Partner"),
Cell Genesys, Inc. ("Cell Genesys") and JT Immunotech USA, Inc., the predecessor
company of JT America, Inc. and a medical subsidiary of Japan Tobacco, Inc. ("JT
America"), (the "Limited Partners"), to develop genetically modified strains of
mice which can produce human monoclonal antibodies, and to commercialize
products generated therefrom. On July 15, 1996, Cell Genesys transferred its
partnership interest to its subsidiary, Abgenix Inc. ("Abgenix").
The General Partner must make cash contributions as necessary to maintain a
minimum capital balance of 1% of the total positive capital account balances for
the Partnership. Since July 1995, net losses are allocated 49.5% to Abgenix,
49.5% to JT America and 1% to the General Partner. Prior to July 1995, operating
expenses were allocated 99% to JT America and 1% to the General Partner until JT
America had been allocated, on a cumulative basis, partnership losses and
deductions in an amount equal to the sum of JT America's total research support
capital contributions and 50% of JT America's initial capital contribution.
Since 1992, interest income has been allocated 49.5% to Abgenix, 49.5% to JT
America and 1% to the General Partner. No allocation of expenses and losses
shall create a deficit in the Limited Partners' capital accounts. Such item, to
the extent it would increase or create such a deficit, shall be allocated 100%
to the General Partner. Cash distributions are generally to be made in
accordance with the percentage interests.
See related discussion in Note 3 -- Related Party Transactions.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition
Research revenues from partners or their affiliates are recorded when
earned as defined under the terms of the respective collaboration agreements.
Payments received in advance under these agreements are recorded as deferred
revenue until earned (see Notes 3 and 4).
Depreciation
The Partnership depreciates equipment using the straight-line method over
the estimated useful lives of the assets, generally four years.
Income Taxes
The financial statements include no provision for income taxes as
Partnership income or loss is reported in the Partners' separate income tax
returns.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
F-25
<PAGE> 97
XENOTECH, L.P.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1997
3. RELATED PARTY TRANSACTIONS
Abgenix provides contract research and development services to the
Partnership to develop genetically modified strains of mice which can produce
human monoclonal antibodies pursuant to a collaboration agreement under which
Abgenix receives certain minimum payments. During 1995, 1996 and 1997, the
Partnership paid Abgenix $5,300,000, $1,200,000 and $2,300,000, respectively
($25,700,000 for the period from inception to December 31, 1997) to perform
research.
In January 1994, the Partnership, Abgenix and JT America executed an
agreement creating the Xenotech Division within Abgenix to conduct ongoing
preclinical research of human monoclonal antibodies derived from the genetically
modified strains of mice. Abgenix and Japan Tobacco Inc. ("JT"), the indirect
parent company of JT America, are providing significant funding to the
Partnership for research funding and in consideration of the Partnership
granting marketing rights for specified products in certain territories to
Abgenix and JT (see Note 4). The Partnership reimbursed Abgenix for the costs of
the operation of the Xenotech Division. During 1995 and 1996, the Partnership
recognized expenses of $5,500,000 and $5,500,000, respectively ($13,300,000 for
the period from inception to December 31, 1997) which were paid to Abgenix for
the costs of operating the Xenotech Division.
Pursuant to an agreement dated June 28, 1996, the Xenotech Division was
terminated as of December 31, 1996. In conjunction with this agreement, Xenotech
paid Abgenix $1,200,000 to satisfy Xenotech's obligations under the Xenotech
Division Research Agreement. In addition, Abgenix purchased Xenotech's capital
equipment at net book value, and was assigned Xenotech's note receivable, which
was reflected as a reduction of capital contributions.
4. RESEARCH REVENUES
The Partnership recorded research and license revenues of $4,700,000,
$1,900,000 and $272,000 for the years ended December 31, 1995, 1996 and 1997,
respectively. The research revenues were derived from research payments made by
JT and Abgenix. Of research payments made by JT and Abgenix, $250,000 was
deferred revenue at December 31, 1995.
5. CROSS-LICENSE AND SETTLEMENT AGREEMENT
On March 27, 1997, Cell Genesys announced, along with Abgenix, Xenotech and
Japan Tobacco, that it had signed a comprehensive patent cross-license and
settlement agreement with GenPharm, International, Inc., a subsidiary of
Medarex, Inc. ("GenPharm") that resolved all related litigation and claims
between the parties. As initial consideration for the cross-license and
settlement agreement, Cell Genesys issued a note to GenPharm due September 30,
1998 for $15.0 million payable by Cell Genesys and convertible into shares of
Cell Genesys common stock, currently at $8.62 per share. Of this note, $3.8
million satisfied certain of Xenotech's obligations under the agreement. Japan
Tobacco also made an initial payment. During 1997, two patent milestones were
achieved and Xenotech was obligated to pay $7.5 million for each milestone.
Xenotech paid $7.5 million to satisfy the first milestone and has recorded a
payable to GenPharm for the remaining $7.5 million. The payable is due on or
before November 1998. No additional payments will accrue under this agreement.
Xenotech has recognized as a non-recurring charge for cross-license and
settlement, a total of $22.5 million.
F-26
<PAGE> 98
APPENDIX
DESCRIPTION OF GRAPHICS
INSIDE FRONT COVER:
HEADER "XenoMouse Technology"
SUBHEADER 1: "XenoMouse has reached the goal of eliminating mouse protein from
antibody therapeutics"
This diagram depicts four Y-shaped figures, extending horizontally
across the page, which represent antibodies produced by four alternate methods.
From left to right, the figures are labeled "Ordinary Mouse," "Chimeric,"
"Humanized" and "XenoMouse," with arrows connecting the labels. A legend
indicates that the color green represents mouse protein, while the color yellow
represents human protein. The left-most Y-shaped figure is entirely green and is
labeled "100% Mouse Protein." The next figure from the left is yellow with a
thick green stripe on each upper arm of the "Y" and is labeled "34% mouse
protein." The following figure from the left is yellow with three small green
stripes on each upper arm of the "Y" and is labeled "10% mouse protein." The
right-most figure is completely yellow and is labeled "Human."
SUBHEADER 2: "XenoMouse Enables Faster Product Development"
This diagram contains three horizontal, segmented arrows that present
comparative timelines of the stages preceeding clinical trials of three
approaches to antibody production. A legend below the timelines indicates that
the color red represents the "Antibody Generation" period, green represents the
"Antibody Engineering" period, blue represents the "Cell Line Development"
period, and purple represents the "Manufacturing Scale-up" period.
From top to bottom, the three timelines are:
1. The "XenoMouse" timeline has a 3-month red segment followed by a
12-month purple segment;
2. The "Humanization" timeline has a 3-month red segment, a 6-month
green segment, a 6-month blue segment and a 12-month purple
segment; and
3. The "Phage Display" timeline has a 1-month red period, a 12-month
green period, a 6-month blue period and a 12-month purple period.
A column on the right side of the timelines labeled "Approximate Time to
Clinical Trials" indicates that the total XenoMouse period is 15 months, the
total Humanization period is 27 months, and the total Phage Display period is 31
months.
PAGE 29:
HEADER: "Structure of an Antibody"
<PAGE> 99
This illustration shows a Y-shaped antibody structure composed of two
"Heavy Chains" and two "Light Chains." The heavy chains form the base and
branches of the "Y," while the shorter light chains only run parallel to the
arms of the "Y." A legend indicates that shaded areas represent "Constant
Domain," and unshaded areas represent "Variable Domain." The top halves of the
light chains are unshaded, while the remainder is shaded. The upper tips of the
heavy chains are unshaded, while the remainer is shaded.
PAGE 29:
HEADER: "Source of Antibody Diversity"
Four gene segments, represented by numerically labeled squares within
rectangles, are labeled "DNA before recombination (heavy chain)." One arrow from
a particular section of each of the four segments points toward a combined
segment and demonstrates how recombination produces an antibody gene. The
"Antibody gene produced by recombination" is represented by a rectangle
containing four numerically labeled squares. An arrow leads from this antibody
gene to a Y-shaped antibody, labeled "Antibody produced by gene."
PAGE 31:
This diagram depicts four Y-shaped figures, extending horizontally
across the page, which represent antibodies produced by four alternate methods.
From left to right, the figures are labeled "Ordinary Mouse," "Chimeric,"
"Humanized" and "XenoMouse," with arrows connecting the labels. A legend
indicates that shaded areas represent mouse protein while unshaded areas
represent human protein. The left-most Y-shaped figure is entirely shaded and
below is labeled "100% Mouse Protein." The next figure from the left is unshaded
with a thick shaded stripe on each upper arm of the "Y" and below is labeled
"34% mouse protein." The following figure from the left is unshaded with three
small shaded stripes on each upper arm of the "Y" and below is labeled "10%
mouse protein." The right-most figure is completely unshaded and below is
labeled "Human."
INSIDE BACK COVER:
SUBHEADER 1: "Grafted Immune Cells Attack the Patient (Host)"
A cell labeled "Activated Graft T-Cell" is shown attaching itself to a
cell labeled "Host Cell," resulting in a damaged Host Cell. Nearby, a cell
labeled "Non-Activated Graft T-Cell" is shown interacting with nothing.
SUBHEADER 2: "ABX-CBL Selectively Destroys Immune Cells Involved in GVHD"
Antibodies, represented by Y-shaped figures, are shown attacking a cell
in a process labeled "Activated Graft T-Cell Killed." In the diagram, the
antibodies do not attack another cell, which is next to the caption
"Nonactivated Graft T-Cell Not Killed." Nearby, a cell labeled "Host Cell" is
shown undamaged.
<PAGE> 100
(LOGO)
<PAGE> 101
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth all fees and expenses, other than
underwriting discounts and commissions, payable by the Registrant in connection
with the issuance and sales of the Common Stock being registered. All of the
amounts shown are estimates except for the SEC registration fee, the NASD filing
fee and the Nasdaq National Market Listing fee.
<TABLE>
<CAPTION>
AMOUNT
TO BE PAID
----------
<S> <C>
SEC Registration Fee........................................ $ 12,213
NASD Filing Fee............................................. 4,640
The Nasdaq National Market Listing Fee...................... 82,000
Blue Sky Qualification Fees and Expenses.................... 10,000
Printing and Engraving Expenses............................. 130,000
Legal Fees and Expenses..................................... 350,000
Accounting Fees and Expenses................................ 150,000
Transfer Agent and Registrar Fees and Expenses.............. 10,000
Miscellaneous Expenses...................................... 1,147
--------
TOTAL.................................................. $750,000
========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law allows for the
indemnification of officers, directors and any corporate agents in terms
sufficiently broad to indemnify such persons under certain circumstances for
liabilities (including reimbursement for expenses incurred) arising under the
Securities Act of 1933, as amended (the "Act"). The Registrant's Amended and
Restated Certificate of Incorporation to be filed upon the closing of the
offering to which this Registration Statement relates (Exhibit 3.3 hereto) and
the Registrant's Bylaws (Exhibit 3.4 hereto) provides for indemnification of the
Registrant's directors, officers, employees and other agents to the extent and
under the circumstances permitted by the Delaware General Corporation Law. The
Registrant also intends to enter into agreements with its directors and
executive officers that will require the Registrant among other things to
indemnify them against certain liabilities that may arise by reason of their
status or service as directors and executive officers to the fullest extent not
prohibited by Delaware law. The Company has also purchased directors and
officers liability insurance, which provides coverage against certain
liabilities including liabilities under the Act.
The Underwriting Agreement provides for indemnification by the Underwriters
of the Registrant, and its directors and officers for certain liabilities,
including liabilities arising under the Act, and affords certain rights of
contribution with respect thereto.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
(a) Since the Company's inception (June 24, 1996), the Registrant has
issued and sold the following unregistered securities:
(1) On July 15, 1996, the Registrant issued 1,691,667 shares of Series
A Senior Convertible Preferred Stock to Cell Genesys in exchange for $10
million.
(2) On July 15, 1996, the Registrant issued 2,058,333 shares of Series
1 Subordinated Convertible Preferred Stock to Cell Genesys, and in
exchange, Cell Genesys contributed research, development and manufacturing
technology, as well as patents and other intellectual property
II-1
<PAGE> 102
specific to the antibody therapy programs to be pursued by the Company,
including Cell Genesys's interest in its joint venture with Japan Tobacco
Inc.
(3) On July 15, 1996, the Registrant, in exchange for a loan in the
principal amount of up to $4,000,000, issued a Convertible Promissory Note
to Cell Genesys convertible at an exercise price per share of $6.00 into up
to 666,667 shares of Series B Convertible Preferred Stock.
(4) From July 15, 1996 to December 31, 1997, the Registrant has
granted options to purchase 1,861,744 shares of Common Stock to employees,
directors and consultants under the 1996 Plan at exercise prices ranging
from $0.60 to $5.00 per share. Of the 1,861,744 shares granted, 1,501,963
remain outstanding, 233,542 shares of Common Stock have been purchased
pursuant to exercises of stock options or stock purchase rights under the
1996 Plan and 126,239 shares have been canceled and returned to the 1996
Plan.
(5) On January 23, 1997 and March 27, 1997, the Registrant issued two
warrants to purchase an aggregate of 121,667 shares of Series A Senior
Convertible Preferred Stock (convertible into 121,667 shares of Common
Stock) to Cell Genesys with a weighted average exercise price per share of
$6.00.
(6) On December 23, 1997, the Registrant issued 3,267,685 shares of
Series B Preferred Stock to 29 accredited or institutional purchasers at a
purchase price per share of $6.50. In connection with and contemporaneous
to, this transaction the 1,691,667 shares of Series A Senior Convertible
Preferred Stock, the 2,058,333 shares of Series 1 Subordinated Convertible
Preferred Stock and the $4,000,000 Convertible Promissory Note issued to
Cell Genesys, described above were all converted into an aggregate
4,416,667 shares of Series A Preferred Stock.
(7) On January 12, 1998, the Registrant issued 160,000 shares of
Series C Preferred Stock to Pfizer at a per share purchase price of $8.00.
This issuance was in connection with a collaborative arrangement entered
into between the Registrant and Pfizer.
The sales and issuances of securities in the transactions described above
were deemed to be exempt from registration under the Securities Act in reliance
upon Section 4(2) of the Securities Act, Regulation D promulgated thereunder, or
Rule 701 promulgated under Section 3(b) of the Securities Act, as transactions
by an issuer not involving any public offering or transactions pursuant to
compensatory benefit plans and contracts relating to compensation as provided
under Rule 701. The recipients of securities in each such transaction
represented their intentions to acquire the securities for investment only and
not with a view to or for sale in connection with any distribution thereof and
appropriate legends were affixed to the securities issued in such transactions.
All recipients had adequate access, through their relationship with the Company,
to information about the Registrant.
(b) There were no underwritten offerings employed in connection with any of
the transactions set forth in Item 15(a).
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<C> <S>
+1.1 Form of Underwriting Agreement.
3.1 Certificate of Incorporation of the Registrant, as currently
in effect.
3.2 Certificate of Designations of Series A Preferred Stock,
Series B Preferred Stock and Series C Preferred Stock.
3.3 Form Amended and Restated Certificate of Incorporation of
the Registrant, to be filed immediately following the
closing of the offering made under this Registration
Statement.
3.4 Bylaws of the Registrant, as currently in effect
</TABLE>
II-2
<PAGE> 103
<TABLE>
<C> <S>
3.5 Form of Amended and Restated Bylaws of the Registrant, to be
adopted immediately following the closing of the offering
made under this Registration Statement.
+4.1 Specimen Common Stock Certificate.
+5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation.
10.1 Form of Indemnification Agreement between the Registrant and
each of its directors and officers.
10.2 1996 Incentive Stock Plan and form of agreement thereunder.
10.3 1998 Employee Stock Purchase Plan and form of agreement
thereunder.
10.4 1998 Director Option Plan and form of agreement thereunder.
10.5 Warrant dated January 23, 1997 exercisable for shares of
Series A Preferred Stock.
10.6 Warrant dated March 27, 1997 exercisable for shares of
Series A Preferred Stock.
10.7(1) Joint Venture Agreement dated June 12, 1991 between Cell
Genesys and JT Immunotech USA Inc.
10.7A(4) Amendment No. 1 dated January 1, 1994 to Joint Venture
Agreement.
10.7B(7) Amendment No. 2 dated June 28, 1996 to Joint Venture
Agreement.
10.8(1) Collaboration Agreement dated June 12, 1991 among Cell
Genesys, Xenotech, Inc. and JT Immunotech USA Inc.
10.8A(3) Amendment No. 1 dated June 30, 1993 to Collaboration
Agreement.
10.8B(4) Amendment No. 2 dated January 1, 1994 to Collaboration
Agreement.
10.8C(5) Amendment No. 3 dated July 1, 1995 to Collaboration
Agreement.
10.8D(7) Amendment No. 4 dated June 28, 1996 to Collaboration
Agreement.
+10.8E Amendment No. 5 dated November 1997 to Collaboration
Agreement.
10.9(1) Limited Partnership Agreement dated June 12, 1991 among Cell
Genesys, Xenotech, Inc. and JT Immunotech USA Inc.
10.9A(4) Amendment No. 2 dated January 1, 1994 to Limited Partnership
Agreement.
10.9B(6) Amendment No. 3 dated July 1, 1995 to Limited Partnership
Agreement.
10.9C(8) Amendment No. 4 dated June 28, 1996 to Limited Partnership
Agreement.
10.10(2) Field License dated June 12, 1991 among Cell Genesys, JT
Immunotech USA Inc. and Xenotech, L.P.
10.10A(8) Amendment No. 1 dated March 22, 1996 to Field License.
10.10B(8) Amendment No. 2 dated June 28, 1996 to Field License.
10.11(1) Expanded Field License dated June 12, 1991 among Cell
Genesys, JT Immunotech USA Inc. and Xenotech, L.P.
10.11A(8) Amendment No. 1 dated June 28, 1996 to Expanded Field
License.
+10.12 Amended and Restated Anti-IL-8 License Agreement dated March
19, 1996 among Xenotech, L.P., Cell Genesys and Japan
Tobacco Inc.
10.13(7) Master Research License and Option Agreement dated June 28,
1996 among Cell Genesys, Japan Tobacco Inc. and Xenotech,
L.P.
+10.13A Amendment No. 1 dated November 1997 to the Master Research
License and Option Agreement.
+10.14 Stock Purchase and Transfer Agreement dated July 15, 1996 by
and between Cell Genesys and the Registrant.
10.15 Governance Agreement dated July 15, 1996 between Cell
Genesys and the Registrant.
10.15A Amendment No. 1 dated October 13, 1997 to the Governance
Agreement.
10.15B Amendment No. 2 dated December 22, 1997 to the Governance
Agreement.
10.16 Tax Sharing Agreement dated July 15, 1996 between Cell
Genesys and the Registrant.
+10.17 Gene Therapy Rights Agreement effective as of November 1,
1997 between the Registrant and Cell Genesys.
</TABLE>
II-3
<PAGE> 104
<TABLE>
<C> <S>
+10.18 Patent Assignment Agreement dated July 15, 1996 by Cell
Genesys in favor of the Registrant.
10.19(9) Lease Agreement dated July 31, 1996 between John Arrillaga,
Trustee, or his Successor Trustee, UTA dated 7/20/77
(Arrillaga Family Trust) as amended, and Richard T. Peery,
Trustee, or his Successor Trustee, UTA dated 7/20/77
(Richard T. Peery Separate Property Trust) as amended, and
the Registrant.
10.20 Loan and Security Agreement dated January 23, 1997 between
Silicon Valley Bank and the Registrant.
10.21 Master Lease Agreement dated March 27, 1997 between
Transamerica Business Credit Corporation and the Registrant.
+10.22 License Agreement dated February 1, 1997 between Ronald J.
Billing, Ph.D. and the Registrant.
10.23(10) Release and Settlement Agreement dated March 26, 1997 among
Cell Genesys, the Registrant, Xenotech, L.P., Japan Tobacco
Inc. and GenPharm International, Inc.
10.24(10) Cross License Agreement effective as of March 26, 1997,
among Cell Genesys, the Registrant, Xenotech, L.P., Japan
Tobacco Inc. and GenPharm International, Inc.
10.25(10) Interference Settlement Procedure Agreement, effective as of
March 26, 1997, among Cell Genesys, the Registrant,
Xenotech, L.P., Japan Tobacco Inc. and GenPharm
International, Inc.
+10.26 Agreement dated March 26, 1997 among Xenotech, L.P.,
Xenotech, Inc., Cell Genesys, the Registrant, Japan Tobacco
Inc. and JT Immunotech USA Inc.
+10.27 Collaborative Research Agreement dated December 22, 1997
between Pfizer, Inc. and the Registrant.
10.28 Amended and Restated Stockholder Rights Agreement dated
January 12, 1998 among the Registrant and certain holders of
the Registrant's capital stock.
+10.29 Collaborative Research Agreement effective as of January 28,
1998 between Schering-Plough Research Institute and the
Registrant.
10.30 Excerpts from the Minutes of a Meeting of the Board of
Directors of the Registrant, dated October 23, 1996.
10.31 Excerpts from the Minutes of a Meeting of the Board of
Directors of the Registrant, dated October 22, 1997.
+10.32 Exclusive Worldwide Product License dated November 1997
between Xenotech, L.P. and the Registrant.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Counsel (included in Exhibit 5.1).
24.1 Power of Attorney (see page II-6).
27.1 Financial Data Schedule.
</TABLE>
- ---------------
+ To be supplied by amendment.
+ Confidential treatment requested for portions of these exhibits. Omitted
portions have been filed separately with the Commission.
(1) Incorporated by reference to the same exhibit filed with Cell Genesys's
Registration Statement on Form S-1 (File No. 33-46452), portions of which
have been granted confidential treatment.
(2) Incorporated by reference to the same exhibit filed with Cell Genesys's
Registration Statement on Form S-1 (File No. 33-46452).
(3) Incorporated by reference to the same exhibit filed with Cell Genesys's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1993, portions
of which have been granted confidential treatment.
(4) Incorporated by reference to the same exhibit filed with Cell Genesys's
Annual Report on Form 10-K for the year ended December 31, 1993, portions
of which have been granted confidential treatment.
II-4
<PAGE> 105
(5) Incorporated by reference to the same exhibit filed with Cell Genesys's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1995, portions
of which have been granted confidential treatment.
(6) Incorporated by reference to the same exhibit filed with Cell Genesys's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1995.
(7) Incorporated by reference to the same exhibit filed with Cell Genesys's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1996, portions
of which have been granted confidential treatment.
(8) Incorporated by reference to the same exhibit filed with Cell Genesys's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1996.
(9) Incorporated by reference to the same exhibit filed with Cell Genesys's
Quarterly report on Form 10-Q for the quarter ended September 30, 1996.
(10)Incorporated by reference to the same exhibit filed with Cell Genesys's
Annual Report on Form 10-K for the year ended December 31, 1996, as
amended, portions of which have been granted confidential treatment.
(b) Financial Statement Schedules:
All schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable, and therefore have been omitted.
ITEM 17. UNDERTAKINGS
Insofar as indemnification by the Registrant for liabilities arising under
the Act may be permitted to directors, officers and controlling persons of the
Registrant, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(a) It will provide to the Underwriters at the closing as specified in the
Underwriting Agreement certificates in such denominations and registered in such
names as required by the Underwriters to permit prompt delivery to each
purchaser.
(b) For purposes of determining any liability under the Act, the
information omitted from the form of prospectus filed as part of a registration
statement in reliance upon Rule 430A and contained in the form of prospectus
filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Act shall be deemed to be part of the registration statement as of the time it
was declared effective.
(c) For the purpose of determining any liability under the Act, each
post-effective amendment that contains a form of prospectus shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
II-5
<PAGE> 106
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-1 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Fremont, State of California, on the 3rd day of April, 1998.
ABGENIX, INC.
By: /s/ R. SCOTT GREER
------------------------------------
R. Scott Greer
President and Chief Executive
Officer
POWER OF ATTORNEY AND SIGNATURES
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints R. Scott Greer and Kurt
Leutzinger, and each one of them, acting individually and without the other, as
his or her attorney-in-fact, each with full power of substitution, for him or
her in any and all capacities, to sign any and all amendments to this
Registration Statement (including post-effective amendments), and to sign any
registration statement for the same offering covered by this Registration
Statement that is to be effective upon filing pursuant to Rule 462(b)
promulgated under the Securities Act of 1933, as amended, and all post-effective
amendments thereto, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
hereby ratifying and confirming all that each of said attorneys-in-fact, or his
substitute or substitutes may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ R. SCOTT GREER President, Chief Executive Officer and April 3, 1998
- --------------------------------------------- Director (Principal Executive Officer)
R. Scott Greer
/s/ KURT W. LEUTZINGER Vice President, Finance and Chief April 3, 1998
- --------------------------------------------- Financial Officer (Principal Financial
Kurt W. Leutzinger and
Accounting Officer)
/s/ STEPHEN A. SHERWIN, M.D. Chairman of the Board April 3, 1998
- ---------------------------------------------
Stephen A. Sherwin, M.D.
/s/ M. KATHLEEN BEHRENS, PH.D. Director April 3, 1998
- ---------------------------------------------
M. Kathleen Behrens, Ph.D.
/s/ RAJU S. KUCHERLAPATI, PH.D. Director April 3, 1998
- ---------------------------------------------
Raju S. Kucherlapati, Ph.D.
/s/ MARK B. LOGAN Director April 3, 1998
- ---------------------------------------------
Mark B. Logan
/s/ JOSEPH E. MAROUN Director April 3, 1998
- ---------------------------------------------
Joseph E. Maroun
</TABLE>
II-6
<PAGE> 107
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF DOCUMENT PAGE
---------- ------------------------------------------------------------ ------------
<C> <S> <C>
+1.1 Form of Underwriting Agreement.
3.1 Certificate of Incorporation of the Registrant, as currently
in effect.
3.2 Certificate of Designations of Series A Preferred Stock,
Series B Preferred Stock and Series C Preferred Stock.
3.3 Form Restated Certificate of Incorporation of the
Registrant, to be filed immediately following the closing of
the offering made under this Registration Statement.
3.4 Bylaws of the Registrant, as currently in effect
3.5 Form of Amended and Restated Bylaws of the Registrant, to be
adopted immediately following the closing of the offering
made under this Registration Statement.
+4.1 Specimen Common Stock Certificate.
+5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation.
10.1 Form of Indemnification Agreement between the Registrant and
each of its directors and officers.
10.2 1996 Incentive Stock Plan and form of agreement thereunder.
10.3 1998 Employee Stock Purchase Plan and form of agreement
thereunder.
10.4 1998 Director Option Plan and form of agreement thereunder.
10.5 Warrant dated January 23, 1997 exercisable for shares of
Series A Preferred Stock.
10.6 Warrant dated March 27, 1997 exercisable for shares of
Series A Preferred Stock.
10.7(1) Joint Venture Agreement dated June 12, 1991 between Cell
Genesys and JT Immunotech USA Inc.
10.7A(4) Amendment No. 1 dated January 1, 1994 to Joint Venture
Agreement.
10.7B(7) Amendment No. 2 dated June 28, 1996 to Joint Venture
Agreement.
10.8(1) Collaboration Agreement dated June 12, 1991 among Cell
Genesys, Xenotech, Inc. and JT Immunotech USA Inc.
10.8A(3) Amendment No. 1 dated June 30, 1993 to Collaboration
Agreement.
10.8B(4) Amendment No. 2 dated January 1, 1994 to Collaboration
Agreement.
10.8C(5) Amendment No. 3 dated July 1, 1995 to Collaboration
Agreement.
10.8D(7) Amendment No. 4 dated June 28, 1996 to Collaboration
Agreement.
+10.8E Amendment No. 5 dated November 1997 to Collaboration
Agreement.
10.9(1) Limited Partnership Agreement dated June 12, 1991 among Cell
Genesys, Xenotech, Inc. and JT Immunotech USA Inc.
10.9A(4) Amendment No. 2 dated January 1, 1994 to Limited Partnership
Agreement.
</TABLE>
<PAGE> 108
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF DOCUMENT PAGE
---------- ------------------------------------------------------------ ------------
<C> <S> <C>
10.9B(6) Amendment No. 3 dated July 1, 1995 to Limited Partnership
Agreement.
10.9C(8) Amendment No. 4 dated June 28, 1996 to Limited Partnership
Agreement.
10.10(2) Field License dated June 12, 1991 among Cell Genesys, JT
Immunotech USA Inc. and Xenotech, L.P.
10.10A(8) Amendment No. 1 dated March 22, 1996 to Field License.
10.10B(8) Amendment No. 2 dated June 28, 1996 to Field License.
10.11(1) Expanded Field License dated June 12, 1991 among Cell
Genesys, JT Immunotech USA Inc. and Xenotech, L.P.
10.11A(8) Amendment No. 1 dated June 28, 1996 to Expanded Field
License.
+10.12 Amended and Restated Anti-IL-8 License Agreement dated March
19, 1996 among Xenotech, L.P., Cell Genesys and Japan
Tobacco Inc.
10.13(7) Master Research License and Option Agreement dated June 28,
1996 among Cell Genesys, Japan Tobacco Inc. and Xenotech,
L.P.
+10.13A Amendment No. 1 dated November 1997 to the Master Research
License and Option Agreement.
+10.14 Stock Purchase and Transfer Agreement dated July 15, 1996 by
and between Cell Genesys and the Registrant.
10.15 Governance Agreement dated July 15, 1996 between Cell
Genesys and the Registrant.
10.15A Amendment No. 1 dated October 13, 1997 to the Governance
Agreement.
10.15B Amendment No. 2 dated December 19, 1997 to the Governance
Agreement.
10.16 Tax Sharing Agreement dated July 15, 1996 between Cell
Genesys and the Registrant.
+10.17 Gene Therapy Rights Agreement effective as of November 1,
1997 between the Registrant and Cell Genesys.
+10.18 Patent Assignment Agreement dated July 15, 1996 by Cell
Genesys in favor of the Registrant.
10.19(9) Lease Agreement dated July 31, 1996 between John Arrillaga,
Trustee, or his Successor Trustee, UTA dated 7/20/77
(Arrillaga Family Trust) as amended, and Richard T. Peery,
Trustee, or his Successor Trustee, UTA dated 7/20/77
(Richard T. Peery Separate Property Trust) as amended, and
the Registrant.
10.20 Loan and Security Agreement dated January 23, 1997 between
Silicon Valley Bank and the Registrant.
10.21 Master Lease Agreement dated March 27, 1997 between
Transamerica Business Credit Corporation and the Registrant.
+10.22 License Agreement dated February 1, 1997 between Ronald J.
Billing, Ph.D. and the Registrant.
</TABLE>
<PAGE> 109
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF DOCUMENT PAGE
---------- ------------------------------------------------------------ ------------
<C> <S> <C>
10.23(10) Release and Settlement Agreement dated March 26, 1997 among
Cell Genesys, the Registrant, Xenotech, L.P., Japan Tobacco
Inc. and GenPharm International, Inc.
10.24(10) Cross License Agreement effective as of March 26, 1997,
among Cell Genesys, the Registrant, Xenotech, L.P., Japan
Tobacco Inc. and GenPharm International, Inc.
10.25(10) Interference Settlement Procedure Agreement, effective as of
March 26, 1997, among Cell Genesys, the Registrant,
Xenotech, L.P., Japan Tobacco Inc. and GenPharm
International, Inc.
+10.26 Agreement dated March 26, 1997 among Xenotech, L.P.,
Xenotech, Inc., Cell Genesys, the Registrant, Japan Tobacco
Inc. and JT Immunotech USA Inc.
+10.27 Collaborative Research Agreement dated December 22, 1997
between Pfizer, Inc. and the Registrant.
10.28 Amended and Restated Stockholder Rights Agreement dated
January 12, 1998 among the Registrant and certain holders of
the Registrant's capital stock.
+10.29 Collaborative Research Agreement effective as of January 28,
1998 between Schering-Plough Research Institute and the
Registrant.
10.30 Excerpts from the Minutes of a Meeting of the Board of
Directors of the Registrant, dated October 23, 1996.
10.31 Excerpts from the Minutes of a Meeting of the Board of
Directors of the Registrant, dated October 22, 1997.
+10.32 Exclusive Worldwide Product License dated November 1997
between Xenotech, L.P. and the Registrant.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Counsel (included in Exhibit 5.1).
24.1 Power of Attorney (see page II-6).
27.1 Financial Data Schedule.
</TABLE>
- ---------------
+ To be supplied by amendment.
+ Confidential treatment requested for portions of these exhibits. Omitted
portions have been filed separately with the Commission.
(1) Incorporated by reference to the same exhibit filed with Cell Genesys's
Registration Statement on Form S-1 (File No. 33-46452), portions of which
have been granted confidential treatment.
(2) Incorporated by reference to the same exhibit filed with Cell Genesys's
Registration Statement on Form S-1 (File No. 33-46452).
(3) Incorporated by reference to the same exhibit filed with Cell Genesys's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1993, portions
of which have been granted confidential treatment.
(4) Incorporated by reference to the same exhibit filed with Cell Genesys's
Annual Report on Form 10-K for the year ended December 31, 1993, portions
of which have been granted confidential treatment.
<PAGE> 1
EXHIBIT 3.1
State of Delaware
PAGE 1
Office of the Secretary of State
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
INCORPORATION OF "ABGENIX, INC.". FILED IN THIS OFFICE ON THE TWENTY-FOURTH DAY
OF JUNE, A.D. 1996, AT 3 O'CLOCK P.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE KENT COUNTY
RECORDER OF DEEDS FOR RECORDING.
[SEAL OMITTED]
/s/ Edward J. Freel
Edward J. Freel, Secretary of State
AUTHENTICATION:
2636868 8100 8000297
DATE
960184786 06-24-96
<PAGE> 2
CERTIFICATE OF INCORPORATION
OF
ABGENIX, INC.
FIRST. The name of the corporation is Abgenix, Inc.
SECOND. The address of its registered office in the state of Delaware is 9
E. Loockerman Street, Dover, Delaware 19901. The name of its registered agent at
such address is National Corporate Research, Ltd.
THIRD. The nature of the business or purposes to be conducted or promoted
is to engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of the State of Delaware.
FOURTH. The total number of shares of all classes of capital stock which
the corporation shall have authority to issue is Seventy Million (70,000,000)
shares, comprised of Fifty Million (50,000,000) shares of Common Stock with a
par value of one One- Hundredth of One Cent ($.0001) per share (the "Common
Stock") and Twenty Million (20,000,000) shares of Preferred Stock with a par
value of One One-Hundredth of One Cent ($.0001) per share (the "Preferred
Stock").
A description of the respective classes of stock and a statement of the
designations, preferences, voting powers (or no voting powers), relative,
participating, optional or other special rights and privileges and the
qualifications, limitations and restrictions of the Preferred Stock and Common
Stock are as follows:
A. PREFERRED STOCK
The Preferred stock may be issued in one or more series at such time or
times and for such consideration or considerations as the board of directors may
determine. Each series shall be so designated as to distinguish the shares
thereof from the shares of all other series and classes. Except as may be
expressly provided in this Certificate of Incorporation, including any
certificate of designations for a series of Preferred Stock, different series of
Preferred Stock shall not be construed to constitute different classes of shares
for the purpose of voting by classes.
The board of directors is expressly authorized, subject to the limitations
prescribed by law and the Provisions of this Certificate of Incorporation, to
provide for the issuance of all or any shares of the Preferred Stock in one or
more series, each
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with such designations, preferences, voting powers (or no voting powers),
relative, participating, optional or other special rights and privileges and
such qualifications, limitations or restrictions thereof as shall be stated in
the resolution or resolutions adopted by the board of directors to create such
series, and a certificate of designations setting forth a copy of said
resolution or resolutions shall be filed in accordance with the General
Corporation Law of the State of Delaware. The authority of the board Of
directors with respect to each such series shall include without limitation of
the foregoing the right to specify the number of shares of each such series and
to authorize an increase or decrease in such number of shares and the right to
provide that the shares of each such series may be: (i) subject to redemption at
such time or times and at such price or prices; (ii) entitled to receive
dividends (which may be cumulative or non-cumulative) at such rates, on such
conditions, and at such times, and payable in preference to or in such relation
to the dividends payable on any other class or classes or any other series;
(iii) entitled to such rights upon the dissolution of, or upon any distribution
of the assets of, the corporation; (iv) convertible into, or exchangeable for,
shares of any other class or classes of stock, or of any other series of the
same or any other class or classes of stock of the corporation at such price or
prices or at such rates of exchange, and with such adjustments, if any; (v)
entitled to the benefit of such limitations, if any, on the issuance of
additional shares of such series or shares of any other series of Preferred
Stock; or (vi) entitled to such other preferences, powers, qualifications,
rights and privileges, all as the board of directors may deem advisable and as
are not inconsistent with law and the provisions of this Certificate of
Incorporation,
B. COMMON STOCK
1. Relative Rights of Preferred Stock and Common Stock. All
preferences, voting powers, relative, participating, optional or other special
rights and privileges, and qualifications, limitations, or restrictions of the
Common Stock are expressly made subject and subordinate to those that may be
fixed with respect to any shares of the Preferred Stock.
2. Voting Rights. Except as otherwise required by law or this
Certificate of Incorporation, including any certificate of designations for a
series of Preferred Stock, each holder of Common Stock shall have one vote in
respect of each share of stock held by him of record on the books of the
corporation for the election of directors and on all matters submitted to a vote
of stockholders of the corporation.
3. Dividends. Subject to the preferential rights of the Preferred
Stock, the holders of shares of Common Stock shall
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be entitled to receive, when and if declared by the board of directors, out of
the assets of the corporation which are by law available therefor, dividends
payable either in cash, in property or in shares of capital stock.
4. Dissolution, Liquidation or Winding Up. In the event of any
dissolution, liquidation or winding up of the affairs of the corporation, after
distribution in full of the preferential amounts, if any, to be distributed to
the holders of shares of the Preferred Stock, holders of Common Stock shall be
entitled, unless otherwise provided by law or this Certificate of Incorporation,
including any certificate of designations for a series of Preferred Stock, to
receive all of the remaining assets of the corporation of whatever kind
available for distribution to stockholders ratably in proportion to the number
of shares of Common Stock held by them respectively.
FIFTH. The name and mailing address of the sole incorporator in as
follows:
Name Mailing Address
Stephen C. Ferruolo Heller, Ehrman, White & McAuliffe
525 University Avenue, Suite 1100
Palo Alto, California 94301
SIXTH. The corporation is to have perpetual existence.
SEVENTH. In furtherance and not in limitation of the powers conferred by
the laws of the State Of Delaware:
A. The board of directors of the corporation is expressly
authorized:
(i) To make, alter or repeal the by-laws of the corporation.
(ii) To authorize and cause to be executed mortgages and
liens upon the real and personal property of the corporation.
(iii) To set apart out of any of the funds of the corporation
available for dividends a reserve or reserves for any proper purpose and to
abolish any such reserve in the manner in which it was created.
(iv) By a majority of the whole board, to designate one or
more committees, each committee to consist of one or more of the directors of
the corporation. The board may designate one or more directors as alternate
members of any
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committee, who may replace any absent or disqualified member of any committee.
The by-laws may provide that in the absence or disqualification of a member of a
committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the board of directors to act at the
meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the board of directors,
or in the by-laws of the corporation, shall have and may exercise all the powers
and authority of the board of directors in the management of the business and
affairs of the corporation, and may authorize the seal of the corporation to be
affixed to all papers which may require it; but no such committee shall have the
power or authority in reference to amending the Certificate of Incorporation
(except that a committee may, to the extent authorized in the resolution or
resolutions providing for the issuance of shares of stock adopted by the board
of directors as provided in section 151(a) of the General Corporation Law of the
State of Delaware, fix any of the preferences or rights of such shares relating
to dividends, redemption, dissolution, any distribution of assets of the
corporation or the conversion into, or the exchange of such shares for, shares
of any other class or classes or any other series of the same or any other class
or classes of stock of the corporation), adopting an agreement of merger or
consolidation under Sections 251 or 252 of the General Corporation Law of the
State of Delaware, recommending to the stockholders the sale, lease or exchange,
of all or substantially all of the corporation's property and assets,
recommending to the stockholders a dissolution of the corporation or a
revocation of a dissolution, or amending the by-laws of the corporation; and,
unless the resolution or by-laws expressly so provide, no such committee shall
have the power or authority to declare a dividend, to authorize the issuance of
stock, or to adopt a certificate of ownership and merger pursuant to Section 253
of the General Corporation Law of the State of Delaware.
(v) Men and as authorized by the stockholders in accordance
with statute, to sell, lease or exchange all or substantially all of the
property and assets of the corporation, including its good will and its
corporate franchises, upon; such terms and conditions and for such
consideration, which may consist in whole or in part of money or property
including shares of stock in, and/or other securities of, any other corporation
or corporations, an its board of directors shall deem expedient and for the best
interests of the corporation.
B. Elections of directors need not be by written ballot
unless the by-laws of the corporation shall so provide.
C. The books of the corporation may be kept at such place
within or without the State of Delaware as the by-laws of
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the corporation may provide or as may be designated from time to time by the
board of directors of the corporation.
EIGHT. Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this corporation or of any credit or or stockholder thereof or on the
application of any receiver or receivers appointed for this corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this corporation under the provisions of Section 279 of Title 8 of the
Delaware Code, order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, it sanctioned by the court to which the said application has been made be
binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this corporation, ad the case may be,
and also on this corporation.
NINTH. A director of the corporation shall not be personally liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which the director derived any improper
personal benefit. If the Delaware General Corporation Law is amended hereafter
to authorize corporate action further eliminating or limiting the personal
liability of the directors, then the liability of a director of the corporation
shall be eliminated or limited to the fullest extent permitted by the Delaware
General Corporation Law, as so amended.
Any repeal or modification of the foregoing paragraph by the stockholders
of the corporation shall not adversely affect any right or protections of a
director of the corporation existing or modifications.
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TENTH
A. RIGHT TO INDEMNIFICATION
Each person who was or is made a party or is threatened to be made a
party to or is involved in any action, suit or proceeding, whether civil,
criminal, or investigative ("proceeding" ), by reason of the fact that he or she
or a person of whom he or she is the legal representative, is or was a director
or officer, employee or agent of the Corporation or is or was serving at the
request of the Corporation as a director or officer, employee or agent of
another corporation, or of a partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans, whether
the basis of such proceeding is alleged action in an official capacity as a
director, officer, employee or agent or in any other capacity while serving as a
director, officer, employee or agent, shall be indemnified and held harmless by
the Corporation to the fullest extent authorized by the Delaware General
Corporation Law, as the same exists or may hereafter be amended, (but, in the
case of any such amendment, only to the extent that such amendment permits the
Corporation to provide broader indemnification rights than said Law permitted
the Corporation to provide prior to such amendment) against all expenses
liability and loss including attorneys' fees, judgments, fines, ERISA excise
taxes or penalties and amounts paid or to be paid in settlement) reasonably
incurred or suffered by such person in connection therewith and such
indemnification shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of his or her heirs,
executors and administrators; provided, however, that the Corporation shall
indemnify any such person seeking indemnity in connection with an action, suit
or proceeding (or part thereof) initiated by such person, suit or proceeding (or
part therof) was authorized by the board of directors of the Corporation. Such
right shall be a contract right and shall include the right to be paid by the
Corporation expenses incurred in defending any such proceeding in advance of its
final disposition, provided, however, that the payment of such expenses incurred
by a director or officer (and not in any other capacity in which service was or
is rendered by such person while a director or officer, including, without
limitations, service to an employee benefit plan) in advance of the final
disposition of such proceeding, shall be made only upon delivery to the
Corporation of an undertaking, by or on behalf of such director or officer, to
repay all amounts so advanced if it should be determined ultimately that such
director or officer is not entitled to be indemnified under this Section or
otherwise.
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B. RIGHT OF CLAIMANT TO BRING SUIT
If a claim under Paragraph A of Article TENTH in not paid in full by
the Corporation within ninety (90) days after a written claim has been received
by the Corporation, the claimant may at any time thereafter bring suit against
the Corporation to recover the unpaid amount of the claim and if successful in
whole or in part, the claimant shall be entitled to be paid also the expense of
prosecuting such claim. It shall be a defense to any such action (other than an
action brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition where the required undertaking,
if any, has been tendered to this Corporation) that the claimant has not met the
standards of conduct which make it permissible under the Delaware General
Corporation Law for the Corporation to indemnify the claimant for the amount
claimed, but the burden of proving such defense shall be on the Corporation.
Neither the failure of the Corporation (including its Board of Directors,
independent legal counsel, or its stockholders) to have made a determination
prior, to the commencement of such action that indemnification of the claimant
is proper in the circumstances because be or she has met the applicable standard
of conduct set forth in the Delaware General Corporation Law, nor an actual
determination by the Corporation (including its Board of Directors, independent
legal counsel, or its stockholders) that the claimant has not met such
applicable standard of conduct, shall be a defense to the action or create a
presumption that claimant has not met the applicable standard of conduct.
C. NON-EXCLUSIVITY OF RIGHTS
The rights conferred an any person by Paragraphs A and B of Article
TENTH shall not be exclusive of any other right which such persons may have or
hereafter acquire under any statute, provision of the Certificate-of
incorporation, by-law, agreement, vote of stockholders or disinterested
directors or otherwise.
D. INSURANCE
The corporation may maintain insurance at its expense, to protect
itself and any such director officer, employee or agent of the Corporation car
another corporation, partnership, joint Venture, trust or other enterprise
against any such expense, liability or loss, whether or not the corporation
would have the power to indemnify such person against such expense, liability or
loan under the Delaware General Corporation Laws.
ELEVENTH. The corporation reserves the right to amend or repeal any
contained in this Certificate of Incorporation, in the manner now or hereafter
Prescribed by
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statute, and all rights conferred upon a stockholder herein are granted subject
to this
I, THE UNDERSIGNED, being the sole incorporator hereinabove named, for the
purpose of forming a corporation pursuant to the General Corporation Law of the
State Of Delaware, do make this certificate, hereby declaring and certifying
that this is my act and dead and the facts herein are true, and accordingly have
hereunto set my hand this 21st day of June, 1996.
/s/ Stephen C. Ferruolo
Stephen C. Ferruolo
Sole Incorporator
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EXHIBIT 3.2
State of Delaware
Office of the Secretary of State
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
DESIGNATION OF "ABGENIX, INC.", FILED IN THIS OFFICE ON THE TWENTY-THIRD DAY OF
DECEMBER, A.D. 1997, AT 4:30 O'CLOCK P.M.
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CERTIFICATE OF DESIGNATIONS OF
SERIES A PREFERRED STOCK,
SERIES B PREFERRED STOCK AND
SERIES C PREFERRED STOCK
OF ABGENIX, INC.
Abgenix, Inc., a Delaware corporation (the "Corporation"), pursuant to
the provisions of Section 151 of the Delaware General Corporation Law, does
hereby make this Certificate of Designations and does hereby state and certify
that, pursuant to the authority expressly vested in the Board of Directors by
the Certificate of Incorporation of the Corporation, the Board of Directors has
duly adopted the following resolutions:
RESOLVED, that pursuant to Article FOURTH of the Certificate of
Incorporation, which authorizes 20,000,000 shares of Preferred Stock,
$0.0001 par value (the "Preferred Stock"), the Board of Directors hereby
fixes the powers, designations, preferences and relative, participating,
optional and other rights, and the qualifications, limitations and
restrictions, of the several series of Preferred Stock.
RESOLVED FURTHER, that each share of each such series of Preferred Stock
shall be subject to the following provisions:
1. Number and Designation. 5,396,667 shares of the Preferred Stock shall
be designated as Series A Preferred Stock ("Series A"), 3,385,000 shares of the
Preferred Stock shall be designated as Series B Preferred Stock ("Series B") and
160,000 shares of the Preferred Stock shall be designated as Series C Preferred
Stock ("Series C").
2. Rights, Preferences, Privileges and Restrictions. The rights,
preferences, privileges and restrictions of the Series A, the Series B and the
Series C are as follows:
2.1 Dividend Provisions. The holders of the Corporation's shares
of Series A, Series B and Series C shall be entitled to receive, on an equal
basis, dividends, out of any assets legally available therefor, prior and in
preference to any declaration or payment of any dividend (payable other than in
Common Stock or other securities and rights convertible into or entitling the
holder thereof to receive, directly or indirectly, additional shares of Common
Stock of this corporation) on the Common Stock of this corporation, at the rate
of $0.48, $0.52 and $0.64 per share per annum, respectively, or, if greater (as
determined on a per annum basis and on an as converted basis for the Preferred
Stock), an amount equal to that paid on any other outstanding shares of the
Corporation. Such dividends shall be payable when, as and if declared by the
Corporation's Board of Directors, and shall not be cumulative, and no right
shall accrue to holders of Common Stock or Preferred Stock by reason of the fact
that divi dends on said shares are not declared in any prior period. In the
event that the Board of Directors of the Corporation declares a dividend, the
amount of which is insufficient to permit payment of the full
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aforesaid dividends, such dividends will be paid ratably to each holder in
proportion to the dividend amounts to which each holder of Series A, Series B
and Series C is entitled.
2.2 Liquidation Preference. In the event of any liquidation,
dissolution or winding up of the Corporation, either voluntary or involuntary,
distributions to the shareholders of the corporation shall be made in the
following manner:
(a) Series B Preference. The holders of Series B shall be
entitled to receive, prior and in preference to any distribution of any of the
assets of the Corporation to the holders of Series C, Series A and Common Stock
by reason of their ownership thereof, an amount equal to $6.50 per share, plus
an additional amount equal to any declared but unpaid dividends on such share up
to the date fixed for distribution (the "Series B Preference"). If, upon the
occurrence of such event, the assets and funds distributed are insufficient to
permit the payment of the Series B Preference, the entire assets and funds
legally available for distribution shall be distributed ratably among the
holders of the Series B.
(b) Series A Preference. The holders of Series A shall be
entitled to receive, prior and in preference to any distribution of any of the
assets of the Corporation to the holders of Series C and Common Stock by reason
of their ownership thereof, an amount equal to $6.00 per share, plus an
additional amount equal to any declared but unpaid dividends on such share up to
the date fixed for distribution (the "Series A Preference"). If, upon the
occurrence of such event, the assets and funds dis tributed are insufficient to
permit the payment of the Series A Preference, the entire assets and funds
legally available for distribution shall be distributed ratably among the
holders of the Series A.
(c) Series C Preference. The holders of Series C shall be
entitled to receive, prior and in preference to any distribution of any of the
assets of the Corporation to the holders of Common Stock by reason of their
ownership thereof, an amount equal to $8.00 per share, plus an additional amount
equal to any declared but unpaid dividends on such share up to the date fixed
for distribution (the "Series C Preference"). If, upon the occurrence of such
event, the assets and funds dis tributed are insufficient to permit the payment
of the Series C Preference, the entire assets and funds legally available for
distribution shall be distributed ratably among the holders of the Series C.
(d) Remaining Assets. After payment or setting apart of
payment of the Series A, Series B and Series C Preferences, the holders of
Series A, Series B and Common Stock shall be entitled to receive the remaining
assets of the corporation pro rata based upon the number of shares of Common
Stock and Common Stock into which the shares of Series A and Series B could be
converted at the time the remaining assets are distributed.
(e) Mergers.
(i) A merger, reorganization, or sale of all or
substantially all of the assets of the Corporation in which the stockholders of
the Corporation immediately prior to the trans action possess less than 50% of
the voting power of the surviving entity (or its parent) immediately after the
transaction shall be deemed to be a liquidation, dissolution or winding up
within the meaning of this
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Section 2.2; provided that the holders of Preferred Stock and Common Stock shall
be paid in cash or in securities received or in a combination thereof (which
combination shall be in the same proportions as the consideration received in
the transaction).
(ii) Any securities to be delivered to the holders of
the Preferred Stock and Common Stock upon merger, reorganization or sale of
substantially all the assets of the Corporation shall be valued as follows:
(A) Securities which are not subject to
investment letter or other similar restrictions on free marketability covered by
(B) below:
(1) if traded on a securities exchange or
through NASDAQ-NMS, the value shall be deemed to be the average of the closing
prices of the securities on such exchange over the 30-day period ending three
(3) business days prior to the closing;
(2) if actively traded over-the-counter, the
value shall be deemed to be the average of the closing bid prices (or closing
sales prices, whichever is applicable) over the 30-day period ending three (3)
business days prior to the closing; and
(3) if there is no active public market, the
value shall be the fair market value thereof as mutually determined by the
Corporation and the holders of not less than a majority of the outstanding
shares of Preferred Stock, provided that if the Corporation and the holders of a
majority of the outstanding shares of Preferred Stock are unable to reach
agreement, then by independent appraisal by an investment banker hired and paid
by the Corporation, but acceptable to the holders of a majority of the
outstanding shares of Preferred Stock.
(B) The method of valuation of securities
subject to investment letter or other restrictions on free marketability (other
than restrictions arising solely by virtue of a stock holder's status as an
affiliate or former affiliate) shall be to make an appropriate discount from the
market value determined as above in (A) (1), (2) or (3) to reflect the
approximate fair market value thereof, as mutually determined by the corporation
and the holders of at least a majority of the voting power of all then
outstanding shares of such Preferred Stock.
(iii) In the event the requirements of this Section
2.2(e) are not complied with, this corporation shall forthwith either:
(A) cause such closing to be postponed until
such time as the requirements of this Section 2.2(e) have been complied with; or
(B) cancel such transaction, in which event the
rights, preferences and privileges of the holders of the Preferred Stock shall
revert to and be the same as such rights, preferences and privileges existing
immediately prior to the date of the first notice referred to in Section
2.2(e)(iv) hereof.
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(iv) The Corporation shall give each holder of record
of Preferred Stock written notice of such impending transaction not later than
twenty (20) days prior to the stockholders' meeting called to approve such
transaction, or twenty (20) days prior to the closing of such transaction,
whichever is earlier, and shall also notify such holders in writing of the final
approval of such transaction. The first of such notices shall describe the
material terms and conditions of the impending transaction and the provisions of
this Section 2.2, and the Corporation shall thereafter give such holders prompt
notice of any material changes. The transaction shall in no event take place
sooner than twenty (20) days after the Corporation has given the first notice
provided for herein or sooner than ten (10) days after the Corporation has given
notice of any material changes provided for herein; provided, however, that such
periods may be shortened upon the written consent of the holders of Preferred
Stock that are entitled to such notice rights or similar notice rights and that
represent at least a majority of the voting power of all then outstanding shares
of such Preferred Stock.
(v) The provisions of this Section 2.2(e) are in
addition to the protective provisions of Section 2.5 hereof.
2.3 Conversion. The holders of Preferred Stock shall have
conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert. Each share of Preferred Stock shall
be convertible into share(s) of Common Stock without the payment of any
additional consideration by the holder thereof and, at the option of the holder
thereof, at any time after the date of issuance of such share, at the office of
the Corporation or any transfer agent for the Preferred Stock. Each share of
Preferred Stock shall be convertible into the number of fully paid and
nonassessable shares of Common Stock which results from dividing the Conversion
Price (as hereinafter defined) per share in effect for such series of Preferred
Stock at the time of conversion into the per share Conversion Value (as
hereinafter defined) of such series. The initial Conversion Price per share of
Series A, Series B and Series C shall be $6.00, $6.50 and $8.00, respectively,
and the Conversion Value per share of the Series A, Series B and Series C shall
be $6.00, $6.50 and $8.00, respectively. The initial Conversion Price of Series
A, Series B and Series C shall be subject to adjustment from time to time as
provided below. The number of shares of Common Stock into which a share of
Series A, Series B and Series C is convertible is hereinafter referred to as the
"Conversion Rate" of such series.
(b) Automatic Conversion. Each share of Preferred Stock
shall automatically be converted into shares of Common Stock at its then
effective Conversion Rate (i) immediately upon the closing of a bona fide, firm
commitment underwritten public offering pursuant to an effective registration
statement under the Securities Act of 1933, as amended, covering the offer and
sale of Common Stock where the public offering price equals or exceeds $11.00
per share (adjusted to reflect subsequent stock dividends, stock splits or
recapitalization) and the aggregate gross proceeds raised equals or exceeds
$15,000,000, (ii) in the case of the Series A, the date upon which the
Corporation obtains the consent of the holders of a majority of the shares of
Series A then outstanding, voting as a class, (iii) in the case of the Series B,
the date upon which the Corporation obtains the consent of the holders of a
majority of the shares of Series B then outstanding, voting as a class or (iv)
in the case of the Series C,
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the date upon which the Corporation obtains the consent of the holders of a
majority of the shares of Preferred Stock then outstanding.
(c) Mechanics of Conversion. Before any holder of
Preferred Stock shall be entitled to convert the same into shares of Common
Stock, the holder shall surrender the certificate(s) therefor, duly endorsed, at
the office of the Corporation or of any transfer agent for the Preferred Stock
and shall give written notice to the Corporation at such office that such holder
elects to convert the same (except that no such written notice of election to
convert shall be necessary in the event of an automatic conversion pursuant to
Section 2.3(b) hereof). The Corporation shall, as soon as practicable
thereafter, issue and deliver at such office to such holder of Preferred Stock
certificate(s) for the number of shares of Common Stock to which such holder
shall be entitled as aforesaid. Such conversion shall be deemed to have been
made immediately prior to the close of business on the date of such surrender of
the shares of Preferred Stock to be converted (except that in the case of an
automatic conversion pursuant to Section 2.3(b) hereof such conversion shall be
deemed to have been made immediately prior to the clos ing of the offering
referred to in Section 2.3(b)) and the person or persons entitled to receive the
shares of Common Stock issuable upon such conversion shall be treated for all
purposes as the record holder or holders of such shares of Common Stock on such
date.
(d) Fractional Shares. In lieu of any fractional shares to
which the holder of Preferred Stock would otherwise be entitled, the Corporation
shall pay cash equal to such fraction multiplied by the fair market value of
one share of such series of Preferred Stock as determined by the Board of
Directors of the Corporation. Whether or not fractional shares are issuable upon
such conversion shall be determined on the basis of the total number of shares
of Preferred Stock of each holder to be converted at such time into Common
Stock and the number of shares of Common Stock issuable upon such aggregate
conversion.
(e) Adjustment of Conversion Price. The Conversion Prices
of each series of Preferred Stock, as applicable, shall be subject to adjustment
from time to time as follows:
(i) If the Corporation shall issue any Common Stock
other than "Excluded Stock," as defined below, for a consideration per share
less than the Conversion Price of a series of Preferred Stock in effect
immediately prior to the issuance of such Common Stock (excluding stock
dividends, subdivisions, split-ups, combinations, dividends or recapitalizations
which are covered by Section 2.3(e)(iii), (iv), (v) and (vi)), the Conversion
Price of such series of Preferred Stock in effect immediately after each such
issuance shall forthwith (except as provided in this Section 2.3(e)) be adjusted
to a price equal to the quotient obtained by dividing:
(A) an amount equal to the sum of
(x) the total number of shares of Common
Stock outstanding (including any shares of Common Stock issuable upon conversion
of the Preferred Stock, or deemed to have been issued pursuant to subdivision
(3) of this clause (i) and to clause (ii) below)
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<PAGE> 7
immediately prior to such issuance multiplied by the Conversion Price of the
relevant series of Preferred Stock in effect immediately prior to such issuance,
plus
(y) the consideration received by the
Corporation upon such issuance, by
(B) the total number of shares of Common Stock
outstanding (including any shares of Common Stock issuable upon conversion of
the Preferred Stock or deemed to have been issued pursuant to subdivision (3) of
this clause (i) and to clause (ii) below) immediately prior to such issuance
plus the additional shares of Common Stock issued in such issuance (not
including any additional shares of Common Stock deemed to be issued as a result
of any adjustment in the Conversion Price resulting from such issuance).
For purposes of any adjustment of the Conversion Price of the relevant
series of Preferred Stock pursuant to this clause (i), the following provisions
shall be applicable:
(1) In the case of the issuance of Common
Stock for cash, the consideration shall be deemed to be the amount of cash paid
therefor after deducting any discounts or commissions paid or incurred by the
Corporation in connection with the issuance and sale thereof.
(2) In the case of the issuance of Common
Stock for a consideration in whole or in part other than cash, the consideration
other than cash shall be deemed to be the fair market value thereof as
determined by the Board of Directors of the Corporation, in accordance with
generally accepted accounting treatment; provided, however, that if, at the time
of such deter mination, the Corporation's Common Stock is traded in the
over-the-counter market or on a national or regional securities exchange, such
fair market value as determined by the Board of Directors of the Corporation
shall not exceed the aggregate "Current Market Price" (as defined below) of the
shares of Common Stock being issued.
(3) In the case of the issuance of (i)
options to purchase or rights to subscribe for Common Stock (other than Excluded
Stock), (ii) securities by their terms con vertible into or exchangeable for
Common Stock (other than Excluded Stock), or (iii) options to purchase or
rights to subscribe for such convertible or exchangeable securities:
(A) the aggregate maximum number of shares of
Common Stock deliverable upon exercise of such options to purchase or rights to
subscribe for Common Stock shall be deemed to have been issued at the time such
options or rights were issued and for a consideration equal to the consideration
(determined in the manner provided in subdivisions (1) and (2) above), if any,
received by the Corporation upon the issuance of such options or rights plus the
minimum purchase price provided in such options or rights for the Common Stock
covered thereby;
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<PAGE> 8
(B) the aggregate maximum number of shares of
Common Stock deliverable upon conversion of or in exchange for any such
convertible or exchangeable securities or upon the exercise of options to
purchase or rights to subscribe for such con vertible or exchangeable securities
and subsequent conversion or exchange thereof, shall be deemed to have been
issued at the time such securities were issued or such options or rights were
issued and for a consideration equal to the consideration received by the
Corporation for any such securities and related options or rights (excluding any
cash received on account of accrued interest or accrued dividends), plus the
minimum additional consideration, if any, to be received by the Corporation upon
the conversion or exchange of such securities or the exercise of any related
options or rights (the consideration in each case to be determined in the manner
provided in subdivisions (1) and (2) above);
(C) on any change in the number of shares of
Common Stock deliverable upon exercise of any such options or rights or
conversion of or exchange for such convertible or exchangeable securities, or on
any change in the minimum purchase price of such options, rights or securities,
other than a change resulting from the antidilution provisions of such options,
rights or securities, the Conversion Price shall forthwith be readjusted to such
Conversion Price as would have obtained had the adjustment made upon (x) the
issuance of such options, rights or securities not exercised, converted or
exchanged prior to such change, as the case may be, been made upon the basis of
such change or (y) the options or rights related to such securities not
converted or exchanged prior to such change, as the case may be, been made upon
the basis of such change; and
(D) on the expiration of any such options or
rights, the termination of any such rights to convert or exchange or the
expiration of any options or rights related to such convertible or exchangeable
securities, the Conversion Price shall forthwith be readjusted to such
Conversion Price as would have obtained had the adjustment made upon the
issuance of such options, rights, convertible or exchangeable securities or
options or rights related to such convertible or exchangeable securities, as the
case may be, been made upon the basis of the issuance of only the number of
shares of Common Stock actually issued upon the exercise of such options or
rights, upon the con version or exchange of such convertible or exchangeable
securities or upon the exercise of the options or rights related to such
convertible or exchangeable securities, as the case may be.
(ii) "Excluded Stock" shall mean:
(A) all shares of Common Stock issued and
outstanding on the date this document is filed with the Delaware Secretary of
State;
(B) all shares of Series A, Series B and Series
C (including warrants exercisable for shares of Series A and notes convertible
into Series A) and the Common Stock into which such shares of Series A, Series B
and Series C (including warrants exercisable for shares of Series A and notes
convertible into Series A) are convertible;
(C) up to 2,219,633 shares of Common Stock (net
of any expirations or cancellations), warrants or options to purchase Common
Stock or other securities issued
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<PAGE> 9
to officers, directors, consultants or employees of the Corporation pursuant to
any plan or arrangement approved by the Board of Directors of the Corporation;
(D) all shares of Common Stock, warrants or
options to purchase Common Stock or other securities issued, upon the approval
of the Board of Directors of the Corporation, pursuant to agreements to license
technology; and
(E) up to 25,000 shares of Common Stock issuable
by the Corporation pursuant to the License Agreement between the Corporation and
Ronald J. Billing, M.D. dated February 1, 1997.
All outstanding shares of Excluded Stock (including any shares issuable
upon conversion of the Preferred Stock) shall be deemed to be outstanding for
all purposes of the computations of Section 2.3(e)(i) above.
(iii) If the number of shares of Common Stock
outstanding at any time after the date hereof is increased by a stock dividend
payable in shares of Common Stock or by a subdivision or split-up of shares of
Common Stock, then, on the date such payment is made or such change is
effective, the Conversion Price of each series of Preferred Stock shall be
appropriately decreased so that the number of shares of Common Stock issuable on
conversion of any shares of such series of Preferred Stock shall be increased in
proportion to such increase of outstanding shares.
(iv) If the number of shares of Common Stock
outstanding at any time after the date hereof is decreased by a combination of
the outstanding shares of Common Stock, then, on the effective date of such
combination, the Conversion Price of each series of Preferred Stock shall be
appropriately increased so that the number of shares of Common Stock issuable on
conversion of any shares of such series of Preferred Stock shall be decreased in
proportion to such decrease in outstanding shares.
(v) In case the Corporation shall declare a cash
dividend upon its Common Stock payable otherwise than out of retained earnings
or shall distribute to holders of its Common Stock shares of its capital stock
(other than Common Stock), stock or other securities of other persons, evidences
of indebtedness issued by the Corporation or other persons, assets (excluding
cash dividends) or options or rights (excluding options to purchase and rights
to subscribe for Common Stock or other securities of the Corporation convertible
into or exchangeable for Common Stock), then, in each such case, the holders of
shares of Preferred Stock shall, concurrent with the distribution to holders of
Common Stock, receive a like distribution based upon the number of shares of
Common Stock into which each series of Preferred Stock is convertible.
(vi) In case, at any time after the date hereof, of
any capital reorganization, or any reclassification of the stock of the
Corporation (other than as a result of a stock dividend or subdivision, split-up
or combination of shares), or the consolidation or merger of the Corporation
with or into another person (other than a consolidation or merger in which the
Corporation
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<PAGE> 10
is the continuing entity and which does not result in any change in the Common
Stock), or of the sale or other disposition of all or substantially all the
properties and assets of the Corporation, the shares of Preferred Stock shall,
after such reorganization, reclassification, consolidation, merger, sale or
other disposition, be convertible into the kind and number of shares of stock
or other securities or property of the Corporation or otherwise to which such
holder would have been entitled if immediately prior to such reorganization,
reclassification, consolidation, merger, sale or other disposition the holder
had converted the holder's shares of Preferred Stock into Common Stock. The
provisions of this clause (vi) shall similarly apply to successive
reorganizations, reclassifications, consolidations, mergers, sales or other
dispositions.
(vii) All calculations under this Section 2.3 shall
be made to the nearest cent or to the nearest one hundredth (1/100) of a share,
as the case may be.
(viii)For the purpose of any computation pursuant to
this Section 2.3(e), the "Current Market Price" at any date of one share of
Common Stock, shall be deemed to be the average of the highest reported bid and
the lowest reported offer prices on the preceding business day as furnished by
the National Quotation Bureau, Incorporated (or equivalent recognized source of
quotations); provided, however, that if the Common Stock is not traded in such
manner that the quotations referred to in this clause (viii) are available for
the period required hereunder, Current Market Price shall be determined in good
faith by the Board of Directors of the Corporation, but if challenged by the
holders of more than 50% of the outstanding Preferred Stock, then as determined
by an independent appraiser selected by the Board of Directors of the
Corporation, the cost of such appraisal to be borne by the challenging parties.
(f) Minimal Adjustments. No adjustment in the Conversion
Price need be made if such adjustment would result in a change in the Conversion
Price of less than $0.01. Any adjustment of less than $0.01 which is not made
shall be carried forward and shall be made at the time of and together with any
subsequent adjustment which, on a cumulative basis, amounts to an adjustment of
$0.01 or more in the Conversion Price.
(g) No Impairment. With the consent of the majority of the
outstanding shares of Preferred Stock, the Corporation will not through any
reorganization, recapitalization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms to be observed
or performed here under by the Corporation, but will at all times in good faith
assist in the carrying out of all the provisions of this Section 2.3 and in the
taking of all such action as may be necessary or appropriate in order to protect
the Conversion Rights of the holders of Preferred Stock against impairment.
(h) Certificate as to Adjustments. Upon the occurrence of
each adjustment or readjustment of the Conversion Rate pursuant to this Section
2.3, the Corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and prepare and furnish to each
holder of Preferred Stock a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The Corporation shall,
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<PAGE> 11
upon written request at any time of any holder of Preferred Stock, furnish or
cause to be furnished to such holder a like certificate setting forth (i) such
adjustments and readjustments, (ii) the Conversion Rate of such series at the
time in effect, and (iii) the number of shares of Common Stock and the amount,
if any, of other property which at the time would be received upon the
conversions of such holder's shares of Preferred Stock.
(i) Notices of Record Date. In the event of any taking by
the Corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution, any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property or to receive any other right, the Corporation
shall mail to each holder of Preferred Stock at least ten (10) days prior to
such record date, a notice specifying the date on which any such record is to be
taken for the purpose of such dividend or distribution or right, and the amount
and character of such dividend, distribution or right.
(j) Reservation of Stock Issuable Upon Conversion. The
Corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock solely for the purpose of effecting the
conversion of the shares of Preferred Stock such number of its shares of Common
Stock as shall from time to time be sufficient to effect the conversion of all
outstanding shares of Preferred Stock; and if at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to effect
the conversion of all then outstanding shares of Preferred Stock, the
Corporation will take such corporate action as may, in the opinion of its
counsel, be necessary to increase its authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient for such purpose.
(k) Notices. Any notice required by the provisions of this
Section 2.3 to be given to the holder of shares of Preferred Stock shall be
deemed given if deposited in the United States mail, postage prepaid, and
addressed to each holder of record at his address appearing on the books of the
corporation.
(l) Reissuance of Converted Shares. No shares of Preferred
Stock which have been converted into Common Stock after the original issuance
thereof shall ever again be reissued and all such shares so converted shall upon
such conversion cease to be a part of the authorized shares of the Corporation.
2.4 Voting Rights.
(a) Except as otherwise required by law, the holder of each share
of Preferred Stock shall be entitled to the number of votes equal to the number
of shares of Common Stock into which each share of Preferred Stock could be
converted on the record date for the vote or consent of stock holders written
consent and shall have voting rights and powers equal to the voting rights and
powers of the Common Stock. The holder of each share of Preferred Stock shall be
entitled to notice of any stock holders' meeting in accordance with the bylaws
of the Corporation and upon any other matter submitted
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<PAGE> 12
to a vote of stockholders, except those matters required by law to be submitted
to a class vote. Fractional votes shall not, however, be permitted and any
fractional voting rights resulting from the above formula (after aggregating all
shares of Common Stock into which shares of Preferred Stock held by each holder
could be converted) shall be rounded to the nearest whole number (with one-half
rounded upward to one).
(b) For so long as at least 250,000 shares of Series B remain
outstanding (subject to adjustment for any stock split, reverse stock split or
similar event affecting the Series B), the holders of Series B, voting as a
separate class, shall be entitled to elect one (1) member of the Company's Board
of Directors at each meeting or pursuant to each consent of the Company's
stockholders for the election of directors, and to remove from office such
director and to fill any vacancy caused by the resignation, death or removal of
such director. The holders of Common Stock and Preferred Stock, voting together
as a class, shall be entitled to elect all remaining members of the Board of
Directors.
2.5 Series A and Series B Protective Provisions. In addition to any
other class vote that may be required by law, so long as at least 250,000 shares
of Preferred Stock are outstanding, the Corporation shall not without first
obtaining the approval (by vote or written consent, as provided by law) of the
holders of at least a majority of the then outstanding shares of Series A and
Series B, each voting as a separate class:
(i) change the rights, preferences, privileges or
restrictions of the Preferred Stock;
(ii) create a new class or series of shares having rights,
preferences or privileges, or increase the number of authorized shares of any
class or series having rights, preferences or privileges senior to or on parity
with the Preferred Stock; or
(iii) amend or repeal any provision of, or add any
provision to, the Corporation's Certificate of Incorporation, any Certificates
of Designations or Bylaws if such action would adversely alter or change the
preferences, rights, privileges or powers of, or the restrictions provided for
the benefit of, any Preferred Stock.
(iv) increase or decrease the authorized number of shares
of Common Stock or Preferred Stock;
(v) sell, convey or otherwise dispose of all or a
substantially all of its property or business, or merge into or effect a
reorganization with any other corporation or effect any transfer or series of
related transfers (other than a wholly owned subsidiary corporation) in which
the stockholders of the Corporation immediately prior to the transaction possess
less than 50% of the voting power of the surviving entity (or its parent)
immediately after the transaction;
(vi) redeem any shares of Common Stock (other than
pursuant to stock purchase agreements between the Corporation and any of its
service providers giving the Corporation the right to repurchase shares upon the
termination of services); or
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(vii) pay or declare any dividend on any shares of Common
Stock or Preferred Stock.
2.6 Series C Protective Provisions. In addition to any other class vote
that may be required by law, so long as at least 100,000 shares of Series C
Preferred Stock are outstanding, the Corporation shall not without first
obtaining the approval (by vote or written consent, as provided by law) of the
holders of at least a majority of the then outstanding shares of Series C:
(i) change the rights, preferences, privileges or
restrictions of the Series C Preferred Stock;
2.7 Redemption.
(a) Restriction on Redemption. The Corporation shall not have the
right to redeem or otherwise acquire for value any or all of the Preferred
Stock.
(b) Redemption on Demand. In the event that holders of at least a
majority of the then outstanding shares of Preferred Stock give written notice
to the Corporation of a demand for redemption of their shares of Preferred Stock
at any time after the four year anniversary of the date on which the first share
of Series B was issued by the Corporation, the Corporation will, on the date 60
days after such notice is given (a "Redemption Date"), to the extent legally
permitted, repurchase all shares of Preferred Stock by payment of the Redemption
Price (as defined below) in three equal annual installments.
(c) Redemption Price. The Redemption Price for the Series A,
Series B and Series C shall be a per share amount equal to the Series A
Preference, the Series B Preference and the Series C Preference, respectively.
(d) Partial Redemption. In the event of any redemption of only a
part of the then outstanding shares of Preferred Stock, the Corporation shall
effect such redemption pro rata among each holder of Preferred Stock according
to the aggregate number of outstanding shares of Preferred Stock held by each
holder thereof.
(e) Redemption Procedure. At least 20 days prior to the
Redemption Date, written notice (the "Redemption Notice") shall be mailed,
postage prepaid, to each holder of record (at the close of business on the
business day next preceding the day on which notice is given) of the Preferred
Stock, at the address last shown on the records of the Corporation for such
holder or given by the holder to the Corporation for the purpose of notice or if
no such address appears or is given, at the place where the principal executive
office of the Corporation is located, notifying such holder of the redemption to
be effected, specifying the number of shares to be redeemed, the Redemption
Price, the place at which payment may be obtained and calling upon such holder
to surrender to the corporation, in the manner and at the place designated, its
certificate or certificates representing the shares to be
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redeemed. Except as provided in Section 2.7(f), on or after the Redemption Date,
each holder of Preferred Stock to be redeemed shall surrender to the Corporation
the certificate or certificates representing such shares, in the manner and at
the place designated in the Redemption Notice, and thereupon, subject to the
provisions of Section 2.7(d), the aggregate 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 cancelled. In the event less than all the shares
represented by any such certificate are redeemed, a new certificate shall be
issued representing the unredeemed shares.
(f) Effect of Redemption. 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 such shares as holders of Preferred Stock (except the
right to receive their respective 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. If the
funds of the Corporation legally available for redemption of shares of Preferred
Stock on any Redemption Date are insufficient to redeem the total number of
shares of Preferred Stock to be redeemed on such date, those funds which are
legally available will be used to redeem the maximum possible number of such
shares pro rata as described in Section 2.7(d). The shares of Preferred Stock
not redeemed shall remain outstanding and be entitled to all the rights and
preferences provided herein. At any time thereafter when additional funds of the
Corporation are legally available for the redemption of shares of Preferred
Stock, such funds will immediately be set aside for the redemption of the
balance of the shares which the Corporation has become obligated to redeem on
any Redemption Date but which it has not redeemed; provided that the holders of
such Preferred Stock shall receive at least 10 days notice of such redemption.
(g) Redemption Funding. On or prior to the Redemption Date, the
Corporation shall deposit the Redemption Price of all shares of Preferred Stock
designated for redemption in the Redemption Notice, with a bank or trust company
located in the State of California having aggregate capital and surplus in
excess of $100,000,000 as a trust fund for the benefit of the respective holders
of the shares designated for redemption and not yet redeemed. Simultaneously,
the Corporation shall deposit irrevocable instructions and authority to such
bank or trust company to pay, on and after the date fixed for redemption or
prior thereto, the Redemption Price of the Preferred Stock to the holders
thereof, respectively, upon surrender of their certificates. Any money or notes
deposited by the Corporation pursuant to this Section 2.7(g) for the redemption
of shares which are thereafter converted into shares of Common Stock no later
than the close of business on the last business day prior to the Redemption Date
shall be returned to the Corporation forthwith upon such conversion. The balance
of any money or notes deposited by the Corporation pursuant to this subsection
remaining unclaimed at the expiration of six months following the Redemption
Date shall thereafter be returned to the Corporation, provided that the
stockholder to which such money would be payable hereunder shall be entitled,
upon proof of its ownership of the Preferred Stock and payment of any bond
requested by the Corporation, to receive such monies but without interest from
the Redemption Date.
2.8 Repurchase of Shares. In connection with repurchases by this
Corporation of its Common Stock pursuant to its agreements with certain of the
holders thereof, sections of the Delaware
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General Corporation Law in respect of redemptions shall not apply in whole or in
part with respect to such repurchases.
RESOLVED FURTHER: that the President and the Assistant Secretary be, and
hereby are, authorized and directed to take all necessary and
appropriate actions to execute, acknowledge, file and record a
Certificate of Designations in accordance with the foregoing
resolutions and the provisions of Delaware law and to take such other
actions, in the name of and on behalf of the Corporation, as may be
necessary to carry out the purposes of the foregoing resolutions.
3. That the authorized number of shares of Series A, Series B and Series
C of the Corporation (that is the series created by this Certificate and the
resolution set forth above) is 5,396,667, 3,385,000 and 160,000, respectively.
4. That the foregoing Certificate of Designations has been duly approved
by the required vote of the stockholders. The total number of outstanding shares
entitled to vote with respect to the amendment is 4,416,667 shares of Series A,
3,267,685 shares of Series B and no shares of Series C. The number of shares
voting in favor of this Certificate of Designations equaled or exceeded the vote
required. The percentage vote required was a majority of the outstanding shares
of Series A and a majority of the outstanding shares of Series B, each voting as
a separate class.
The undersigned further declare under penalty of perjury under the laws
of the State of Delaware, that the matters set forth in this Certificate of
Designations are true of their own knowledge. Executed at Fremont, California on
December ___, 1997.
/s/ R. SCOTT GREER
--------------------------------------------
R. Scott Greer, President
/s/ RAYMOND M. WITHY
--------------------------------------------
Raymond M. Withy, Ph.D., Assistant Secretary
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<PAGE> 1
EXHIBIT 3.3
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
ABGENIX, INC.
Abgenix, Inc., a corporation organized and existing under the laws of the
State of Delaware, hereby certifies as follows:
A. The name of the Corporation is Abgenix, Inc. The Corporation was
originally incorporated under the same name and the original Certificate of
Incorporation of the Corporation was filed with the Delaware Secretary of State
on June 24, 1996.
B. Pursuant to Sections 242 and 245 of the General Corporation Law of
the State of Delaware, this Amended and Restated Certificate of Incorporation
restates and amends the provisions of the Certificate of Incorporation of this
Corporation.
C. The text of the Certificate of Incorporation is hereby amended and
restated in its entirety to read as follows:
ARTICLE I
The name of the corporation is Abgenix, Inc. (the "Corporation").
ARTICLE II
The address of the Corporation's registered office in the State of
Delaware is 1209 Orange Street, City of Wilmington, County of New Castle,
Delaware 19801. The name of its registered agent at such address is The
Corporation Trust Company.
ARTICLE III
The purpose of the Corporation is to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of
Delaware.
ARTICLE IV
The Corporation is authorized to issue two classes of shares of stock to
be designated, respectively, Common Stock, $0.0001 par value, and Preferred
Stock, $0.0001 par value. The total number of shares that the Corporation is
authorized to issue is 55,000,000 shares. The number of shares of Common Stock
authorized is 50,000,000. The number of shares of Preferred Stock authorized is
5,000,000.
<PAGE> 2
The Preferred Stock may be issued from time to time in one or more series
pursuant to a resolution or resolutions providing for such issue duly adopted by
the Board of Directors (authority to do so being hereby expressly vested in the
board). The Board of Directors is further authorized to determine or alter the
rights, preferences, privileges and restrictions granted to or imposed upon any
wholly unissued series of Preferred Stock and to fix the number of shares of any
series of Preferred Stock and the designation of any such series of Preferred
Stock. The Board of Directors, within the limits and restrictions stated in any
resolution or resolutions of the Board of Directors originally fixing the number
of shares constituting any series, may increase or decrease (but not below the
number of shares in any such series then outstanding) the number of shares of
any series subsequent to the issue of shares of that series.
The authority of the Board of Directors with respect to each such class or
series shall include, without limitation of the foregoing, the right to
determine and fix:
(a) the distinctive designation of such class or series and the
number of shares to constitute such class or series;
(b) the rate at which dividends on the shares of such class or
series shall be declared and paid, or set aside for payment, whether dividends
at the rate so determined shall be cumulative or accruing, and whether the
shares of such class or series shall be entitled to any participating or other
dividends in addition to dividends at the rate so determined, and if so, on what
terms;
(c) the right or obligation, if any, of the corporation to redeem
shares of the particular class or series of Preferred Stock and, if redeemable,
the price, terms and manner of such redemption;
(d) the special and relative rights and preferences, if any, and
the amount or amounts per share, which the shares of such class or series of
Preferred Stock shall be entitled to receive upon any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation;
(e) the terms and conditions, if any, upon which shares of such
class or series shall be convertible into, or exchangeable for, shares of
capital stock of any other class or series, including the price or prices or the
rate or rates of conversion or exchange and the terms of adjustment, if any;
(f) the obligation, if any, of the corporation to retire, redeem
or purchase shares of such class or series pursuant to a sinking fund or fund of
a similar nature or otherwise, and the terms and conditions of such obligation;
(g) voting rights, if any, on the issuance of additional shares of
such class or series or any shares of any other class or series of Preferred
Stock;
(h) limitations, if any, on the issuance of additional shares of
such class or series or any shares of any other class or series of Preferred
Stock; and
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<PAGE> 3
(i) such other preferences, powers, qualifications, special or
relative rights and privileges thereof as the Board of Directors of the
corporation, acting in accordance with this Restated Certificate of
Incorporation, may deem advisable and are not inconsistent with law and the
provisions of this Restated Certificate of Incorporation.
ARTICLE V
The Corporation reserves the right to amend, alter, change, or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred upon the stockholders
herein are granted subject to this right.
ARTICLE VI
The Corporation is to have perpetual existence.
ARTICLE VII
1. Limitation of Liability. To the fullest extent permitted by the
General Corporation Law of the State of Delaware as the same exists or as may
hereafter be amended, a director of the Corporation shall not be personally
liable to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director.
2. Indemnification. The Corporation may indemnify to the fullest extent
permitted by law any person made or threatened to be made a party to an action
or proceeding, whether criminal, civil, administrative or investigative, by
reason of the fact that such person or his or her testator or intestate is or
was a director, officer or employee of the Corporation, or any predecessor of
the Corporation, or serves or served at any other enterprise as a director,
officer or employee at the request of the Corporation or any predecessor to the
Corporation.
3. Amendments. Neither any amendment nor repeal of this Article VII,
nor the adoption of any provision of the Corporation's Certificate of
Incorporation inconsistent with this Article VII, shall eliminate or reduce the
effect of this Article VII, in respect of any matter occurring, or any action or
proceeding accruing or arising or that, but for this Article VII, would accrue
or arise, prior to such amendment, repeal, or adoption of an inconsistent
provision.
ARTICLE VIII
In the event any shares of Preferred Stock shall be redeemed or converted
pursuant to the terms hereof, the shares so converted or redeemed shall not
revert to the status of authorized but unissued shares, but instead shall be
canceled and shall not be re-issuable by the Corporation.
-3-
<PAGE> 4
ARTICLE IX
Holders of stock of any class or series of this corporation shall not be
entitled to cumulate their votes for the election of directors or any other
matter submitted to a vote of the stockholders.
ARTICLE X
1. Number of Directors. The number of directors which constitutes the
whole Board of Directors of the corporation shall be designated in the Amended
and Restated Bylaws of the corporation.
2. Election of Directors. Elections of directors need not be by written
ballot unless the Amended and Restated Bylaws of the corporation shall so
provide.
ARTICLE XI
In furtherance and not in limitation of the powers conferred by statute,
the Board of Directors is expressly authorized to make, alter, amend or repeal
the Amended and Restated Bylaws of the corporation.
ARTICLE XII
No action shall be taken by the stockholders of the corporation except at
an annual or special meeting of the stockholders called in accordance with the
Amended and Restated Bylaws and no action shall be taken by the stockholders by
written consent. The affirmative vote of sixty-six and two-thirds percent (66
2/3%) of the then outstanding voting securities of the corporation, voting
together as a single class, shall be required for the amendment, repeal or
modification of the provisions of Article IX, Article X or Article XII of this
Amended and Restated Certificate of Incorporation or Sections 2.3 (Special
Meeting), 2.5 (Advance Notice of Stockholder Nominees and Stockholder Business),
2.9 (Voting) or 2.10 (Stockholder Action by Written Consent Without a Meeting)
of the Corporation's Amended and Restated Bylaws.
ARTICLE XIII
Meetings of stockholders may be held within or without the State of
Delaware, as the Amended and Restated Bylaws may provide. The books of the
Corporation may be kept (subject to any provision contained in the statutes)
outside of the State of Delaware at such place or places as may be designated
from time to time by the Board of Directors or in the Amended and Restated
Bylaws of the Corporation.
In witness whereof, the Corporation has caused this Certificate to be
signed by R. Scott Greer, its President and Chief Executive Officer, as of
_________________, 1998.
----------------------------------------
R. Scott Greer, President and
Chief Executive Officer
-4-
<PAGE> 1
EXHIBIT 3.4
BYLAWS
OF
ABGENIX, INC.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
ARTICLE I
Stockholders
<S> <C> <C>
Section 1.1. Annual Meetings 1
Section 1.2. Special Meetings 1
Section 1.3. Notice of Meetings 1
Section 1.4. Adjournments 1
Section 1.5. Quorum 2
Section 1.6. Organization 2
Section 1.7. Voting; Proxies 2
Section 1.8. Fixing Date for Determination of
Stockholders of Record 3
Section 1.9. List of Stockholders Entitled to Vote. 3
Section 1.10 Action by Written Consent of Shareholders 3
ARTICLE II
Board of Directors
Section 2.1. Number; Qualifications 4
Section 2.2. Election; Resignation; Removal; Vacancies 4
Section 2.3. Regular Meetings 4
Section 2.4. Special Meetings 4
Section 2.5. Telephonic Meetings Permitted 4
Section 2.6. Quorum; Vote Required for Action 4
Section 2.7. Organization 5
Section 2.8. Action by Written Consent of Directors 5
ARTICLE III
Committees
Section 3.1. Committees 5
Section 3.2 Committee Rules 6
ARTICLE IV
Officers
Section 4.1. Executive Officers; Election;
Qualifications; Term of Office; Resignation;
Removal; Vacancies 6
Section 4.2. Powers and Duties of Executive Officers 6
ARTICLE V
Stock
Section 5.1. Certificates 7
Section 5.2. Lost, Stolen or Destroyed Stock
Certificates; Issuance of New Certificates 7
</TABLE>
i
<PAGE> 3
TABLE OF CONTENTS
-----------------
(continued)
<TABLE>
<CAPTION>
Page
----
ARTICLE VI
Miscellaneous
<S> <C> <C>
Section 6.1. Fiscal Year 7
Section 6.2. Seal 7
Section 6.3. Waiver of Notice of Meetings of
Stockholders, Directors and Committees 7
Section 6.4. Indemnification of Directors, Officers,
Employees and Other Agents 8
Section 6.4.1.Third Party Actions 8
Section 6.4.2.Actions By Or In The Right Of The
Corporation 8
Section 6.4.3.Successful Defense 8
Section 6.4.4.Determination Of Conduct 9
Section 6.4.5.Payment Of Expenses In Advance 9
Section 6.4.6.Indemnity Not Exclusive 9
Section 6.4.7.Insurance Indemnification 9
Section 6.4.8.The Corporation 9
Section 6.4.9.Employee Benefit Plans 10
Section 6.4.10. Indemnity-fund 10
Section 6.4.11. Indemnification of Other Persons 10
Section 6.4.12. Savings Clause 10
Section 6.4.13. Continuation of Indemnification
And Advancement of Expenses 11
Section 6.5. Interested Directors; Quorum 11
Section 6.6. Records and Reports 11
Section 6.6.1.Form of Records 11
Section 6.6.2.Maintenance And Inspection Of
Records 11
Section 6.6.3 Inspection By Directors 12
Section 6.6.4.Annual Statement To Stockholders 12
Section 6.7. Amendment of Bylaws 12
ARTICLE VII
Application of California Corporations Code
Section 7.1. Cumulative Voting 13
Section 7.2. Election and Term of Directors 13
Section 7.3. Removal of Directors 13
Section 7.4. Indemnification of Directors, Officers,
Employees and Other Agents 13
Section 7.4.1.Indemnification of Directors and
Officers 14
Section 7.4.2.Indemnification of Others 14
Section 7.4.3.Payment of Expenses in Advance 14
Section 7.4.4.Indemnity not Exclusive 14
Section 7.4.5.Insurance Indemnification 14
Section 7.4.6.Conflicts 15
Section 7.5. Records and Reports 15
</TABLE>
ii
<PAGE> 4
TABLE OF CONTENTS
-----------------
(continued)
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 7.5.1.Maintenance and Inspection of Share
Register 15
Section 7.5.2.Maintenance and Inspection of
Bylaws 16
Section 7.5.3.Maintenance and Inspection of Other
Corporate Records 16
Section 7.5.4.Inspection by Directors 16
Section 7.5.5.Annual Report to Stockholders;
Waiver 16
Section 7.5.6.Financial Statements 17
</TABLE>
iii
<PAGE> 5
BYLAWS
OF
ABGENIX, INC.
ARTICLE I
Stockholders
------------
Section 1.1. Annual Meetings. An annual meeting of stockholders shall be
held for the election of directors at such date, time and place, either within
or without the State of Delaware, as may be designated by resolution of the
Board of Directors from time to time. Any other proper business may be
transacted at the annual meeting.
Section 1.2. Special meetings. Special meetings of stockholders for any
purpose or purposes may be called at any time by the Board of Directors, the
Chairman of the Board or the President or any other director or officer who has
been duly designated by the Board of Directors, and whose powers and authority,
as expressly provided in a resolution of the Board of Directors, include the
power to call such meetings, or by one or more shareholders holding shares in
the aggregate entitled to cast not less than ten percent (10%) of the votes at
that meeting. Such special meetings may not be called by any other person or
persons.
Section 1.3. Notice of Meetings. Whenever stockholders are required or
permitted to take any action at a meeting, a written notice of the meeting shall
be given which shall state the place, date and hour of the meeting, and, in the
case of a special meeting, the purpose or purposes for which the meeting is
called. Unless otherwise provided by law, the written notice of any meeting
shall be given not less than ten (10) nor more than sixty (60) days before the
date of the meeting to each stockholder entitled to vote at such meeting. If
mailed, such notice shall be deemed to be given when deposited in the mail,
postage prepaid, directed to the stockholder at his address as it appears on the
records of the corporation.
Section 1.4. Adjournments. Any meeting of stockholders, annual or
special, may adjourn from time to time to reconvene at the same or some other
place, and notice need not be given of any such adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting the corporation may transact any business which
might have been transacted at the original meeting. If the adjournment is for
more than thirty (30) days, or if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.
<PAGE> 6
Section 1.5 Quorum. At each meeting of stockholders, except where
otherwise provided by law or the certificate of incorporation or these bylaws,
the holders of a majority of the outstanding shares of stock entitled to vote at
the meeting, present in person or by proxy, shall constitute a quorum. In the
absence of a quorum, the stockholders so present may, by majority vote, adjourn
the meeting from time to time in the manner provided in Section 1.4 of these
bylaws until a quorum shall attend. Shares of its own stock belonging to the
corporation or to another corporation, if a majority of the shares entitled to
vote in the election of directors of such other corporation is held, directly or
indirectly, by the corporation, shall neither be entitled to vote nor be counted
for quorum purposes; provided, however, that the foregoing shall not limit the
right of any corporation to vote stock, including but not limited to its own
stock, held by it in a fiduciary capacity.
Section 1.6. Organization. Meetings of stockholders shall be presided
over by the Chairman of the Board, if any, or in his absence by the Vice
Chairman of the Board, if any, or in his absence by the President, or in his
absence by a Vice President, or in the absence of the foregoing persons by a
chairman designated by the Board of Directors, or in the absence of such
designation by a chairman chosen at the meeting. The Secretary shall act as
secretary of the meeting, but in his absence the chairman of the meeting may
appoint any person to act as secretary of the meeting.
Section 1.7. Voting; Proxies. Each stockholder entitled to vote at any
meeting of stockholders shall be entitled to one vote for each share of stock
held by him which has voting power upon the matter in question. Each stockholder
entitled to vote at a meeting of stockholders may authorize another person or
persons to act for him by proxy, but no such proxy shall be voted or acted upon
after three (3) years from its date, unless the proxy provides for a longer
period. A duly executed proxy shall be irrevocable if it states that it is
irrevocable and if, and only as long as, it is coupled with an interest
sufficient in law to support an irrevocable power. A stockholder may revoke any
proxy which is not irrevocable by attending the meeting and voting in person or
by filing an instrument in writing revoking the proxy or another duly executed
proxy bearing a later date with the Secretary of the corporation. Voting at
meetings of stockholders need not be by written ballot and need not be conducted
by inspectors unless the holders of a majority of the outstanding shares of all
classes of stock entitled to vote thereon present in person or by proxy at such
meeting shall so determine. At all meetings of stockholders for the election of
directors a plurality of the votes cast shall be sufficient to elect. All other
elections and questions shall, unless otherwise provided by law or by the
certificate of incorporation or these bylaws, be decided by the vote of the
holders of a majority of the outstanding shares of stock entitled to vote
thereon present in person or by proxy at the meeting, provided that (except as
otherwise required by law or by the certificate of incorporation)
2
<PAGE> 7
the Board of Directors may require a larger vote upon any election or question.
Section 1.8. Fixing Date for Determination of Stockholders of Record. In
order that the corporation may determine the stockholders entitled to notice of
or to vote at any meeting of stockholders or any adjournment thereof, or to
express consent to corporate action in writing without a meeting, or entitled to
receive payment of any dividend or other distribution or allotment of any
rights, or entitled to exercise any rights in respect of any change, conversion
or exchange of stock or for the purpose of any other lawful action, the Board of
Directors may fix, in advance, a record date, which shall not be more than sixty
(60) nor less than ten (10) days before the date of such meeting, nor more than
sixty days prior to any other action. If no record date is fixed: (1) the record
date for determining stockholders entitled to notice of or to vote at a meeting
of stockholders shall be at the close of business on the day next preceding the
day on which notice is given, or, if notice is waived, at the close of business
on the day next preceding the day on which the meeting is held; and (2) the
record date for determining stockholders for any other purpose shall be at the
close of business on the day on which the Board of Directors adopts the
resolution relating thereto. A determination of stockholders of record entitled
to notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board of Directors may
fix a new record date for the adjourned meeting.
Section 1.9. List of Stockholders Entitled to Vote. The Secretary shall
prepare and make, at least ten (10) days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior to
the meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof and may be inspected by any stockholder who is present. The stock ledger
shall be the only evidence as to who are the stockholders entitled to examine
the stock ledger, the list of stockholders or the books of the corporation, or
to vote in person or by proxy At any meeting of stockholders.
Section 1.10. Action by Written Consent of Stockholders. Unless otherwise
restricted by the certificate of incorporation, any action required or permitted
to be taken at any annual or special meeting of the stockholders may be taken
without a meeting, without prior notice and without a vote, if a consent in
writing, getting forth the action so taken, shall be signed by
3
<PAGE> 8
the holders of outstanding stock having not less than the minimum number of
votes that would be necessary to authorize to take such action at a meeting at
which all shares entitled to vote thereon were present and voted. Prompt notice
of the taking of the corporate action without a meeting by less than unanimous
written consent shall be given to those stockholders who have not consented in
writing.
ARTICLE II
Board of Directors
---------------
Section 2.1. Number; Qualifications. The number of the members of the
Board of Directors shall be not less than four (4) nor more than eight (8), the
actual number to be determined from time to time by resolution of the Board of
Directors. Directors need not be stockholders.
Section 2.2. Election; Resignation; Removal; Vacancies. At each annual
meeting, the stockholders shall elect directors to replace those directors whose
terms then expire. Any director may resign at any time upon written notice to
the corporation. Stockholders may remove directors with or without cause. Any
vacancy occurring in the Board of Directors with or without cause may be filled
by a majority of the remaining members of the Board of Directors, although such
majority is less than a quorum, or by a plurality of the votes cast at a meeting
of stockholders, and each director so elected shall hold office until the
expiration of the term of office of the Director whom he has replaced.
Section 2.3. Regular Meetings. Regular meetings of the Board of
Directors may be held at such places within or without the State of Delaware and
at such times as the Board of Directors may from time to time determine, and is
so determined notices thereof need not be given.
Section 2.4. Special meetings. Special meetings of the Board of
Directors may be held at any time or place within or without the State of
Delaware whenever called by the President, any Vice President, the Secretary, or
by any member of the Board of Directors. Reasonable notice thereof shall be
given by the person or persons calling the meeting, not later than the second
day before the date of the special meeting.
Section 2.5. Telephonic Meetings Permitted. Members of the Board of
Directors, or any committee designated by the Board, may participate in a
meeting of such Board or committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting pursuant to this
bylaw shall constitute presence in person at such meeting.
Section 2.6. Quorum; Vote Required for Action. At all meetings of the
Board of Directors a majority of the whole Board
4
<PAGE> 9
shall constitute a quorum for the transaction of business. Except in cases in
which the certificate of incorporation or these bylaws otherwise provide, the
vote of a majority of the directors present at a meeting at which a quorum is
present shall be the act of the Board of Directors.
Section 2.7. Organization. Meetings of the Board of Directors shall be
presided over by the Chairman of the Board, if any, or in his absence by the
Vice Chairman of the Board, if any, or in his absence by the President, or in
their absence by a chairman chosen at the meeting. The Secretary shall act as
secretary of the meeting, but in his absence the chairman of the meeting may
appoint any person to act as secretary of the meeting.
Section 2.8. Action by Written Consent of Directors. Unless otherwise
restricted by the certificate of incorporation or these bylaws, any action
required or permitted to be taken at any meeting of the Board of Directors, or
of any committee thereof, may be taken without a meeting if all members of the
Board or such committee, as the case may be, consent thereto in writing, and the
writing or writings are filed with the minutes of proceedings of the Board or
committee.
ARTICLE III
Committees
----------
Section 3.1. Committees. The Board of Directors may, by resolution
passed by a majority of the whole Board, designate one or more committees, each
committee to consist of one or more of the directors of the corporation. The
Board may designate one or more directors as alternate members of any committee,
who may replace any absent or disqualified member at any meeting of the
committee. In the absence or disqualification of a member of the committee, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in place of any
such absent or disqualified member. Any such committee, to the extent provided
in the resolution of the Board of Directors, shall have and may exercise all the
powers and authority of the Board of Directors in the management of the business
and affairs of the Corporation, and may authorize the seal of the corporation to
be affixed to all papers which may require it; but no such committee shall have
power or authority in reference to amending the certificate of incorporation
(except that a committee may, to the extent authorized in the resolution or
resolutions providing for the issuance of shares of stock adopted by the Board
of Directors as provided in Section 151(a) of the General Corporation Law, fix
any of the preferences or rights of the shares), adopting an agreement of merger
or consolidation, recommending to the stockholders the sale, lease or exchange
of all or substantially all of the corporations property and assets,
recommending to the
5
<PAGE> 10
stockholders a dissolution of the Corporation or a revocation of dissolution, or
amending these bylaws; and, unless the resolution expressly so provides, no such
committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock.
Section 3.2. Committee Rules, Unless the Board of Directors otherwise
provides, each committee designated by the Board may make, alter and repeal
rules for the conduct of its business. In the absence of such rules each
committee shall conduct its business in the same manner as the Board of
Directors conducts its business pursuant to Article II of these bylaws.
ARTICLE IV
Officers
--------
Section 4.1. Executive Officers; Election; Qualifications; Term of
Office; Resignation; Removal; Vacancies. The Board of Directors shall choose a
President, a Secretary, a Chief Executive officer and a Chief Financial Officer.
The Board of Directors may, if it so determines, choose a Chairman of the Board
and a Vice Chairman of the Board from among its members, provided that such
appointment shall not constitute an appointment as an executive officer of the
Corporation. The Board of Directors may also choose one or more Vice Presidents,
one or more Assistant Secretaries, a Treasurer and one or more Assistant
Treasurers. Each such officer shall hold office until the first meeting of the
Board of Directors after the annual meeting of stockholders next succeeding this
election, and until his successor is elected and qualified or until his earlier
resignation or removal. Any officer may resign at any time upon Written notice
to the corporation. The Board of Directors may remove any officer with or
without cause at any time, but such removal shall be without prejudice to the
contractual rights of such officer, if any, with the corporation. Any number of
offices may be held by the same person. Any vacancy occurring in any office of
the corporation by death, resignation, removal or otherwise may be filled for
the unexpired portion of the term by the Board of Directors at any regular or
special meeting.
Section 4.2. Powers and Duties of Executive Officers. The officers of
the corporation shall have such powers and duties in the management of the
corporation as may be prescribed by the Board of Directors and, to the extent
not so provided, as generally pertain to their respective offices, subject to
the control of the Board of Directors. The Board of Directors may require any
officer, agent or employee to give security for the faithful performance of his
duties.
6
<PAGE> 11
ARTICLE V
Stock
-----
Section 5.1. Certificates. Every holder of stock shall be entitled to
have a certificate signed by or in the name of the corporation by the Chairman
or Vice Chairman of the Board of Directors, if any, or the President or a Vice
President, and by the Treasurer, or the Secretary or an Assistant Secretary, of
the corporation, certifying the number of shares owned by him in the
corporation. Any of or all the signatures on the certificate may be a facsimile.
In case any officer, transfer agent, or registrar who has signed or whose
facsimile signature has been placed upon a certificate shall have ceased to be
such officer, transfer agent, or registrar before such certificate is issued, it
may be issued by the corporation with the same effect as if he were such
officer, transfer agent, or registrar at the date of issue.
Section 5.2. Lost, Stolen or Destroyed Stock Certificates; Issuance of
New Certificates. The corporation may issue a new certificate of stock in the
place of any certificate theretofore issued by it, alleged to have been lost,
stolen or destroyed, and the corporation may require the owner of the lost,
stolen or destroyed certificate, or his legal representative, to give the
corporation a bond sufficient to indemnify it against any claim that may be made
against it on account of the alleged loss, theft or destruction of any such
certificate or the issuance of such new certificate.
ARTICLE VI
Miscellaneous
-------------
Section 6.1. Fiscal Year. The fiscal year of the corporation shall be
the calendar year.
Section 6.2. Seal. The corporate seal shall have the name of the
corporation inscribed thereon and shall be in such form as may be approved from
time to time by the Board of Directors.
Section 6.3. Waiver of Notice of Meetings of Stockholders, Directors and
Committees. Any written waiver of notice, signed by the person entitled to
notice, whether before or after the time stated therein, shall be deemed
equivalent to notice. Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting, except when the person attends a meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of any
regular or special meeting of the stockholders, directors, or members of a
committee of directors need be specified in any written waiver of notice.
7
<PAGE> 12
Section 6.4. Indemnification of Directors, Officers, Employees and Other
Agents.
Section 6.4.1. Third Party Actions. The corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending, or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the corporation) by reason of the fact that he is or was a director or
officer of the corporation, or that such director or officer is or was serving
at the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture trust or other enterprise
(collectively "Agent"), against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement (if such settlement is approved in advance
by the Company, which approval shall not be unreasonably withheld actually and
reasonably incurred by him in connection with such action, suit or proceeding if
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contenders or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interest of the corporation, and with respect to any
criminal action or proceeding, had reasonable cause to believe that his conduct
was unlawful.
Section 6.4.2. Actions By Or In The Right Of The Corporation. The
corporation shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened; pending or completed action or suit by or in
the right of the corporation to procure a judgment in its favor by reason of the
fact that he is or was an Agent (as defined in Section 6.4.1.) against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in manner he reasonably believed to be in or not opposed to the
best interests of the corporation and except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable to the corporation unless and only to the extent that
the Delaware Court of Chancery or the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the Delaware
Court of Chancery or such other court shall deem proper.
Section 6.4.3. Successful Defense. To the extent that an Agent of the
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred
8
<PAGE> 13
to in Sections 6.4.1. and 6.4.2., or in defense of any claim, issue or matter
therein; he shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith.
Section 6.4.4. Determination Of Conduct. Any indemnification under
Sections 6.4.1. and 6.4.2. (unless ordered by a court) shall be made by the
corporation only as authorized in the specific case upon a determination that
the indemnification of the Agent is proper in the circumstances because he has
met the applicable standard of conduct set forth in Sections 6.4.1. and 6.4.2.
Such determination shall be made (1) by the Board of Directors by a majority
vote of a quorum consisting of directors who were not parties to such action,
suit or proceeding or (2) or if such quorum is not obtainable or, even if
obtainable, a quorum of disinterested directors so directs, by independent legal
counsel in a written opinion or (3) by the stockholders.
Section 6.4.5. Payment Of Expenses In Advance. Expenses incurred in
defending a civil or criminal action, suit or proceeding shall be paid by the
corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of the director,
officer, employee or agent to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the corporation as
authorized in this Section 6.4.
Section 6.4.6. Indemnity Not Exclusive. The indemnification and
advancement of expenses provided or granted pursuant to the other subsections of
this Section 6.4 shall not be deemed exclusive of any other rights to which
those seeking indemnification or advancement of expenses may be entitled under
any bylaw, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office.
Section 6.4.7. Insurance Indemnification. The corporation shall have the
power to purchase and maintain insurance on behalf of any person who is or was
an Agent of the corporation, or is or was serving at the request of the
corporation, as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him and incurred by him in any such capacity, or arising out of
his status as such, whether or not the corporation would have the power to
indemnify him against such liability under the provisions of this Section 6.4.
Section 6.4.8. The Corporation. For the purposes of this Section 6.4,
references to "the corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
9
<PAGE> 14
directors and officers, so that any person who is or was a director or Agent of
such constituent corporation, or is or was serving at the request of such
constituent corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, shall stand
in the same position under and subject to the provisions of this Section 6.4
(including, without limitation the provisions of Section 6.4.4) with respect to
the resulting or surviving corporation as he would have with respect to such
constituent corporation if its separate existence had continued.
Section 6.4.9. Employee Benefit Plans. For purposes of this Section 6.4,
references to "other enterprises" shall include employee benefit plans;
references to "fines" shall include any excise taxes assessed on a person with
respect to an employee benefit plan; and references to "serving at the request
of the corporation" shall include any service as a director, officer, employee
or agent of the corporation which imposes duties on, or involves services by,
such director, officer, employee, or agent with respect to an employee benefit
plan, its participants, or beneficiaries; and a person who acted in good faith
and in a manner he reasonably believed to be in the interest of the participants
and beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner " not opposed to the best interests of the corporation" as referred to in
this Section 6.4.
Section 6.4.10. Indemnity-fund. Upon resolution passed by the Board, the
corporation may establish a trust or other designated account, grant a security
interest-or use other means (including, without limitation, a letter of credit),
to ensure the payment of certain of its obligations arising under this Section
6.4 and/or agreements which may be entered into between the corporation and its
officers and directors from time to time.
Section 6.4.11. Indemnification of Other Persons. The provisions of this
Section 6.4 shall not be deemed to preclude the indemnification of any person
who is not an Agent (as defined in Section 6.4.1.), but whom the corporation has
the power or obligation to indemnify under the provisions of the General
Corporation Law of the State of Delaware or otherwise. The corporation may, in
its sole discretion, indemnify an employee, trustee or other agent as permitted
by the General Corporation Law of the State of Delaware. The corporation shall
indemnify an employee, trustee or other agent where required by law.
Section 6.4.12. Savings Clause. If this Section 6.4 or any portion
thereof shall be invalidated on any ground by any court of competent
jurisdiction, then the corporation shall nevertheless indemnify each Agent
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement with respect to any action, suit, proceeding or investigation,
whether civil, criminal or administrative, and whether internal or external,
including a grand jury proceeding and an action or suit brought by or in the
right of the corporation, to the full extent permitted by any applicable portion
of this Section 6.4
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<PAGE> 15
that shall not have been invalidated, or by any other applicable law.
Section 6.4.13. Continuation of Indemnification And Advancement of
Expenses. The indemnification and advancement of expenses provided by, or
granted pursuant to, this Section 6.4 shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
Section 6.5. Interested Directors; Quorum. No contract or transaction
between the corporation and one or more of its directors or officers, or between
the corporation and any other corporation, partnership, association, or other
organization in which one or more of its directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the Board or committee thereof which authorizes
the contract or transaction, or solely because his or their Votes are counted
for such purpose, if: (1) the material facts as to his relationship or interest
and as to the contract or transaction are disclosed or are known to the Board of
Directors or the committee, and the Board or committee in good faith authorizes
the contract or transaction by the affirmative votes of a majority of the
disinterested directors, even though the disinterested directors be less than a
quorum; or (2) the material facts as to his, relationship or interest and as to
the contract or transaction are disclosed or are known to the stockholders
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of the stockholders; or (3) the contract or
transaction is fair as to the corporation as of the time it is authorized,
approved or ratified, by the Board of Directors, a committee thereof, or the
stockholders. Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or of a committee
which authorizes the contract or transaction.
Section 6.6. Records and Reports.
Section 6.6.1. Form of Records. Any records maintained, by the
corporation in the regular course of its business, including its stock ledger,
books of account, and minute books, may be kept on, or be in the form of, punch
cards, magnetic tape, photographs, microphotographs, or any other information
storage device, provided that the records so kept can be converted into clearly
legible form within a reasonable time. The corporation shall so convert any
records so kept upon the request of any person entitled to inspect the same.
Section 6.6.2 Maintenance And Inspection Of Records. The corporation
shall, either at its principal executive office or at such place or places as
designated by the board of directors, keep a record of its stockholders listing
their names and
11
<PAGE> 16
addresses and the number and class of shares held by each stockholder, a copy of
these by-laws as amended to date, accounting books, and other records.
Any stockholder of record, in person or by attorney or other agent,
shall, upon written demand under oath stating the purpose thereof, have the
right during the usual hours for business to inspect for any proper purpose the
corporation's stock ledger, a list of its stockholders, and its other books and
records and to make copies or extracts therefrom. A proper purpose shall mean a
purpose reasonably related to such person's interest as a stockholder. In every
instance where an attorney or other agent is the person who seeks the right to
inspection, the demand under oath shall be accompanied by a power of attorney or
such other writing that authorizes the attorney or other agent to so act on
behalf of the stockholder. The demand under oath shall be directed to the
corporation at its registered office in Delaware or at its principal place of
business.
Section 6.6.3. Inspection By Directors. Any director shall have the
right to examine the corporation's stock ledger, a list of its stockholders, and
its other books and records for a purpose reasonably related to his position as
a director. The Court of Chancery is hereby vested with the exclusive
jurisdiction to determine whether a director is entitled to the inspection
sought. The Court may summarily order the corporation to permit the director to
inspect any and a11 books and records, the stock ledger, and the stock list and
to make copies or extracts therefrom. The Court may, in its discretion,
prescribe any limitations or conditions with reference to the inspection, or
award such other and further relief as the Court may deem just and proper.
Section 6.6.4. Annual Statement To Stockholders. The Board of Directors
shall present at each annual meeting, and at any special meeting of the
stockholders when called for by vote of the stockholders, a full and clear
statement of the business and condition of the corporation.
Section 6.7. Amendment of Bylaws. These bylaws may be altered or
repealed, and new bylaws made, by the Board of Directors, but the stockholders
may make additional bylaws and may alter and repeal any bylaws whether adopted
by them or otherwise.
ARTICLE VII
Application of California Corporations Code
-------------------------------------------
Notwithstanding any provision to the contrary in Articles I-VI, for so
long as the corporation is qualified as a foreign corporation subject to Section
2115 of the California Corporations Code ("Code"), the following sections of
these Bylaws shall apply to the corporation and shall control in the
12
<PAGE> 17
event of any conflict with any provision in Articles I-VI. Notwithstanding any
provision to the contrary in Articles I-VI, Sections 7.5.5 and 7.5.6 shall apply
to the corporation and shall control in the event of any conflict with any
provision in Articles I-VI for so long as the corporation has its principal
executive office in the State of California or customarily holds meetings of the
Board of Directors in the State of California.
Section 7.1. Cumulative voting. At a stockholders' meeting at which
directors are to be elected, a stockholder shall be entitled to cumulate votes
(i.e., cast for any candidate a number of votes greater than the number of votes
which such stockholder normally is entitled to cast) if the candidates' names
have been placed in nomination prior to commencement of the voting and the
stockholder has given notice prior to commencement of the voting of the
stockholder's intention to cumulate votes. If any stockholder has given such a
notice, then every stockholder entitled to vote may cumulate votes for
candidates in nomination either (i) by giving one candidate a number of votes
equal to the number of directors to be elected multiplied by the number of votes
to which that stockholder's shares are normally entitled or (ii) by distributing
the stockholder's votes on the same principle among any or all of the
candidates, as the stockholder thinks fit. The candidates receiving the highest
number of affirmative votes, up to the number of directors to be elected, shall
be elected; votes against any candidate and votes withheld shall have no legal
effect.
Section 7.2. Election and Term of Directors. Directors shall be elected
at each annual meeting of stockholders to hold office until the next annual
meeting. Each director, including a director elected to fill a vacancy, shall
hold office until the expiration of the term for which elected and until a
successor has been elected and qualified.
Section 7.3. Removal of Directors. No director may be removed (unless
the entire Board is removed), when the votes cast against removal, or not
consenting in writing to the removal, would be sufficient to elect the director
if voted cumulatively at an election at which the same total number of votes
were cast (or, if the action is taken by written consent, all shares entitled to
vote were voted) and the entire number of directors authorized at the time of
director's most recent election were then being elected.
Section 7.4. Indemnification of Directors, officers, Employees, and
Other Agents.
Section 7.4.1. Indemnification of Directors and Officers. The
corporation shall, to the maximum extent and in the manner permitted by the
Code, indemnify each of its directors and officers against expenses (as defined
in Section 317(a) of the Code), judgments, fines, settlements, and other amounts
actually and reasonably incurred in connection with any proceeding (as defined
in Section 317(a) of the Code), arising by reason of the
13
<PAGE> 18
fact that such person is or was an agent of the corporation. For purposes of
this Section 7.4.1, a "director" or "officer" of the corporation includes any
person (i) who is or was a director or officer of the corporation, (ii) who is
or was serving at the request of the corporation as a director or officer of
another corporation, partnership, joint venture, trust or other enterprise, or
(iii) who was a director or officer of a corporation which was a predecessor
corporation of the corporation or of another enterprise at the request of such
predecessor corporation.
Section 7.4.2. Indemnification of Others. The corporation shall have the
power, to the extent and in the manner permitted by the Code, to indemnify each
of its employees and agents (other than directors and officers) against expenses
(as defined in Section 317(a) of the Code), judgments, fines,, settlements, and
other amounts actually and reasonably incurred in connection with any proceeding
(as defined in Section 317(a) of the Code), arising by reason of the fact that
such person is or was an agent of the corporation. For purposes of this Section
7.4, an "employee" or "agent" of the corporation (other than a director or
officer) includes any person (i) who is or was an employee or agent of the
corporation, (ii) who is or was serving at the request of the corporation as an
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, or (iii) who was an employee or agent of a corporation which
was a predecessor corporation of the corporation or of another enterprise at the
request of such predecessor corporation.
Section 7.4.3. Payment of Expenses in Advance. Expenses incurred in
defending any civil or criminal action or proceeding for which indemnification
is required pursuant to Section 7.4.1 or for which indemnification is permitted
pursuant to Section 7.4.2 following authorization thereof by the Board of
Directors shall be paid by the corporation in advance of the final disposition
of such action or proceeding upon receipt of an undertaking by or on behalf of
the indemnified party to repay such amount if it shall ultimately be determined
that the indemnified party is not entitled to be indemnified as authorized in
this Section 7.4.
Section 7.4.4. Indemnity not Exclusive. The indemnification provided by
this Section 7.4 shall not be deemed exclusive of any other rights to which
those seeking indemnification may be entitled under any bylaw, agreement, vote
of stockholders or disinterested directors or otherwise, both as to action in an
official capacity and as to action in another capacity while holding such
office, to the extent that such additional rights to indemnification are
authorized in the certificate of incorporation.
Section 7.4.5. Insurance Indemnification. The corporation shall have the
power to purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or
14
<PAGE> 19
agent of the corporation against any liability asserted against or incurred by
such person in such capacity or arising out of such person's status as such,
whether or not the corporation would have the power to indemnify him against
such liability under the provisions of this Section 7.4.
Section 7.4.6. Conflicts. No indemnification or advance shall be made
under this Section 7.4, except where such indemnification or advance is mandated
by law or the order, judgment or decree of any court of competent jurisdiction,
in any circumstance where it appears:
(1) That it would be inconsistent with a provision of the certificate of
incorporation, these bylaws, a resolution of the stockholders or an agreement in
effect at the time of the accrual of the alleged cause of the action asserted in
the proceeding in which the expenses were incurred or other amounts were paid,
which prohibits or otherwise limits indemnification or
(2) That it would be inconsistent with any condition expressly imposed
by a court in approving a settlement.
Section 7.5. Records And Reports.
Section 7.5.1. Maintenance and Inspection of Share Register. The
corporation shall keep either at its principal executive office or at the office
of its transfer agent or registrar (if either be appointed) , as determined by
resolution of the board of directors, a record of its stockholders listing the
names and addresses of all stockholders and the number and class of shares held
by each stockholder.
A stockholder or stockholders of the corporation who holds at least five
percent (5%) in the aggregate of the outstanding voting shares of the
corporation or who holds at least one percent (1%) of such Voting shares and has
filed a Schedule 14B with the Securities and Exchange Commission relating to the
election of directors, may (i) inspect and copy the records of shareholders'
names, addresses, and shareholdings during usual business hours on five (5) days
prior written demand on the corporation, (ii) obtain from the transfer agent of
the corporation, on written demand and on the tender of such transfer agent's
usual charges for such list, a list of the names and addresses of the
stockholders who are entitled to vote for the election of directors, and their
shareholdings', as of the most recent record date for which that list has been
compiled or as of a date specified by the stockholder after the date of demand.
Such list shall be made available to any such. stockholder by the transfer agent
on or before the later of five (5) days after the demand is received or five (5)
days after the date specified in the demand as the date as of which the list is
to be compiled.
The record of stockholders shall also be open to inspection on the
written demand of any stockholder or holder of a voting trust certificate, at
any time during usual business hours, for a
15
<PAGE> 20
purpose reasonably related to the holder's interests as a stockholder or as the
holder of a voting trust certificate.
Any inspection and copying under this Section 7.5.1 may be made in
person or by an agent or attorney of the stockholder or holder of a voting trust
certificate making the demand.
Section 7.5.2. Maintenance and Inspection of Bylaws. The corporation
shall keep at its principal executive office or, if its principal executive
office is not in the State of California, at its principal business office in
California the original or a copy of these bylaws as amended to date, which
bylaws shall be open to inspection by the stockholders at all reasonable times
during office hours. If the principal executive office of the corporation is
outside the State of California and the corporation has no principal business
office in such state, then the secretary shall, upon the written request of any
stockholder, furnish to that stockholder a copy of these bylaws as amended to
date.
Section 7.5.3. Maintenance and Inspection of Other Corporate Records.
The accounting books and records and the minutes of proceedings of the
stockholders, of the Board of Directors, and of any committee or committees of
the Board of Directors shall be kept at such place or places as are designated
by the Board of Directors or, in absence of such designation, at the principal
executive office of the corporation. The minutes shall be kept in written form,
and the accounting books and records shall be kept either in written form or in
any other form capable of being converted into written form.
The minutes and accounting books and records shall be open to inspection
upon the written demand of any stockholder or holder of a voting trust
certificate, at any reasonable time during usual business hours, for a purpose
reasonably related to the holder's interests as a stockholder or as the holder
of a voting trust certificate. The inspection may be made in person or by an
agent or attorney and shall include the right to copy and make extracts. Such
rights of inspection shall extend to the records of each subsidiary corporation
of the corporation.
Section 7.5.4. Inspection by Directors. Every director shall have the
absolute right at any reasonable time to inspect all books, records, and
documents of every kind as well as the physical properties of the corporation
and each of its subsidiary corporations, Such inspection by a director may be
made in person or by an agent or attorney. The right of inspection includes the
right to copy and make extracts of documents.
Section 7.5.5. Annual Report to Stockholders; Waiver. The Board of
Directors shall cause an annual report to be sent to the stockholders not later
than one hundred twenty (120) days after the close of the fiscal year adopted by
the corporation. Such report shall be sent at least fifteen (15) days (or, if
sent by third-class mail, thirty-five (35) days) before the annual
16
<PAGE> 21
meeting of stockholders to be held during the next fiscal year in the manner as
provided in Section 1501 of the Code.
The annual report shall contain (i) a balance sheet as of the end of the
fiscal year, (ii) an income statement, (iii) a statement of changes in financial
position for the fiscal year, and (iv) any report of independent accountants or,
if there is no such report, the certificate of an authorized officer of the
corporation that the statements were prepared without audit from the books and
records of the corporation.
The foregoing requirement of an annual report shall be waived so long as
the shares of the corporation are held by fewer than one hundred (100) holders
of record.
Section 7.5.6. Financial Statements. If no annual report for the fiscal
year has been sent to stockholders, then the corporation shall, upon the written
request of any stockholder made more than one hundred twenty (120) days after
the close of such fiscal year, deliver or mail to the person making the request,
within thirty (30) days thereafter, a copy of a balance sheet as of the end of
such fiscal year and an income statement and statement of changes in financial
position for such fiscal year.
If a stockholder or stockholders holding at least five percent (5%) of
the outstanding shares of any class of stock of the corporation makes a written
request to the corporation for an income statement of the corporation for the
three-month, six-month or nine-month period of the then current fiscal year
ended more than thirty (30) days before the date of the request, and for a
balance sheet of the corporation as of the end of that period, then the Chief
Financial Officer shall cause that statement to be prepared, if not already
prepared, and shall deliver personally or mail that statement or statements to
the person making the request within thirty (30) days after the receipt of the
request. If the corporation has not sent to the stockholders its annual report
for the last fiscal year, the statements referred to in the first paragraph of
this Section 7.5.6 shall likewise be delivered or mailed to the stockholder or
stockholders within thirty (30) days after the request.
The quarterly income statements and balance sheets referred to in this
section shall be accompanied by the report, if any, of any independent
accountants engaged by the corporation or by the certificate of an authorized
officer of the corporation that the financial statements were prepared without
audit from the books and records of the corporation.
17
<PAGE> 1
EXHIBIT 3.5
AMENDED AND RESTATED BYLAWS
OF
ABGENIX, INC.
(A DELAWARE CORPORATION)
<PAGE> 2
<TABLE>
<CAPTION>
AMENDED AND RESTATED BYLAWS OF
ABGENIX, INC.
(a Delaware corporation)
TABLE OF CONTENTS
Page
<S> <C> <C>
ARTICLE I CORPORATE OFFICES....................................................................1
1.1 REGISTERED OFFICE..............................................................1
1.2 OTHER OFFICES..................................................................1
ARTICLE II MEETINGS OF STOCKHOLDERS............................................................1
2.1 PLACE OF MEETINGS..............................................................1
2.2 ANNUAL MEETING.................................................................1
2.3 SPECIAL MEETING................................................................1
2.4 NOTICE OF STOCKHOLDERS' MEETINGS...............................................2
2.5 ADVANCE NOTICE OF STOCKHOLDER NOMINEES AND
STOCKHOLDER BUSINESS...........................................................2
2.6 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE...................................3
2.7 QUORUM.........................................................................4
2.8 ADJOURNED MEETING; NOTICE......................................................4
2.9 VOTING.........................................................................4
2.10 STOCKHOLDER ACTION BY WRITTEN CONSENT
WITHOUT A MEETING..............................................................4
2.11 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING.....................................5
2.12 PROXIES........................................................................6
2.13 ORGANIZATION...................................................................6
2.14 LIST OF STOCKHOLDERS ENTITLED TO VOTE..........................................6
2.15 WAIVER OF NOTICE...............................................................7
ARTICLE III DIRECTORS..........................................................................7
3.1 POWERS.........................................................................7
3.2 NUMBER OF DIRECTORS............................................................7
3.3 ELECTION AND TERM OF OFFICE OF DIRECTORS.......................................7
3.4 RESIGNATION AND VACANCIES......................................................8
3.5 REMOVAL OF DIRECTORS...........................................................9
3.6 PLACE OF MEETINGS; MEETINGS BY TELEPHONE.......................................9
3.7 FIRST MEETINGS.................................................................9
3.8 REGULAR MEETINGS...............................................................9
3.9 SPECIAL MEETINGS; NOTICE......................................................10
</TABLE>
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<PAGE> 3
<TABLE>
<CAPTION>
TABLE OF CONTENTS
(Continued)
Page
<S> <C> <C>
3.10 QUORUM........................................................................10
3.11 WAIVER OF NOTICE..............................................................10
3.12 ADJOURNMENT...................................................................10
3.13 NOTICE OF ADJOURNMENT.........................................................11
3.14 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING.............................11
3.15 FEES AND COMPENSATION OF DIRECTORS............................................11
3.16 APPROVAL OF LOANS TO OFFICERS.................................................11
3.17 SOLE DIRECTOR PROVIDED BY CERTIFICATE
OF INCORPORATION ..........................................................11
ARTICLE IV COMMITTEES.........................................................................12
4.1 COMMITTEES OF DIRECTORS.......................................................12
4.2 MEETINGS AND ACTION OF COMMITTEES.............................................12
4.3 COMMITTEE MINUTES.............................................................13
ARTICLE V OFFICERS............................................................................13
5.1 OFFICERS......................................................................13
5.2 ELECTION OF OFFICERS..........................................................13
5.3 SUBORDINATE OFFICERS..........................................................13
5.4 REMOVAL AND RESIGNATION OF OFFICERS...........................................14
5.5 VACANCIES IN OFFICES..........................................................14
5.6 CHAIRMAN OF THE BOARD.........................................................14
5.7 PRESIDENT.....................................................................14
5.8 VICE PRESIDENTS...............................................................15
5.9 SECRETARY.....................................................................15
5.10 CHIEF FINANCIAL OFFICER.......................................................15
5.11 ASSISTANT SECRETARY...........................................................16
5.12 ADMINISTRATIVE OFFICERS.......................................................16
5.13 AUTHORITY AND DUTIES OF OFFICERS..............................................16
ARTICLE VI INDEMNIFICATION OF DIRECTORS, OFFICERS,
EMPLOYEES AND OTHER AGENTS.................................................17
6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS.....................................17
6.2 INDEMNIFICATION OF OTHERS.....................................................18
6.3 INSURANCE.....................................................................18
</TABLE>
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<PAGE> 4
<TABLE>
<CAPTION>
TABLE OF CONTENTS
(Continued)
Page
<S> <C> <C>
ARTICLE VII RECORDS AND REPORTS...............................................................18
7.1 MAINTENANCE AND INSPECTION OF RECORDS.........................................18
7.2 INSPECTION BY DIRECTORS.......................................................19
7.3 ANNUAL STATEMENT TO STOCKHOLDERS..............................................19
7.4 REPRESENTATION OF SHARES OF OTHER CORPORATIONS................................19
7.5 CERTIFICATION AND INSPECTION OF AMENDED AND RESTATE D
BYLAWS ..................................................................19
ARTICLE VIII GENERAL MATTERS..................................................................19
8.1 RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING ........................19
8.2 CHECKS; DRAFTS; EVIDENCES OF INDEBTEDNESS.....................................20
8.3 CORPORATE CONTRACTS AND INSTRUMENTS: HOW EXECUTED ...........................20
8.4 STOCK CERTIFICATES; TRANSFER; PARTLY PAID SHARES..............................20
8.5 SPECIAL DESIGNATION ON CERTIFICATES...........................................21
8.6 LOST CERTIFICATES.............................................................21
8.7 TRANSFER AGENTS AND REGISTRARS................................................22
8.8 CONSTRUCTION; DEFINITIONS.....................................................22
ARTICLE IX AMENDMENTS.........................................................................22
</TABLE>
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<PAGE> 5
AMENDED AND RESTATED BYLAWS
OF
ABGENIX, INC.
(a Delaware corporation)
ARTICLE I
CORPORATE OFFICES
1.1 REGISTERED OFFICE
The registered office of the corporation shall be fixed in the
certificate of incorporation of the corporation.
1.2 OTHER OFFICES
The board of directors may at any time establish branch or subordinate
offices at any place or places where the corporation is qualified to do
business.
ARTICLE II
MEETINGS OF STOCKHOLDERS
2.1 PLACE OF MEETINGS
Meetings of stockholders shall be held at any place within or outside
the State of Delaware designated by the board of directors. In the absence of
any such designation, stockholders' meetings shall be held at the principal
executive office of the corporation.
2.2 ANNUAL MEETING
The annual meeting of stockholders shall be held each year on a date and
at a time designated by the board of directors. In the absence of such
designation, the annual meeting of stockholders shall be held on the last
Wednesday of May in each year at 10:00 a.m. However, if such day falls on a
legal holiday, then the meeting shall be held at the same time and place on the
next succeeding full business day. At the meeting, directors shall be elected,
and any other proper business may be transacted.
2.3 SPECIAL MEETING
A special meeting of the stockholders may be called at any time by the
board of directors, by the chairman of the board, or by the president.
<PAGE> 6
If a special meeting is called by any person or persons other than the
board of directors, then the request shall be in writing, specifying the time of
such meeting and the general nature of the business proposed to be transacted,
and shall be delivered personally or sent by registered mail or by telegraphic
or other facsimile transmission to the chairman of the board, the president, or
the secretary of the corporation. The officer receiving the request shall cause
notice to be promptly given to the stockholders entitled to vote, in accordance
with the provisions of Sections 2.4 and 2.6 of these Amended and Restated
Bylaws, that a meeting will be held at the time requested by the person or
persons calling the meeting, so long as that time is not less than thirty-five
(35) nor more than sixty (60) days after the receipt of the request. If the
notice is not given within twenty (20) days after receipt of the request, then
the person or persons requesting the meeting may give the notice. Nothing
contained in this paragraph of this Section 2.3 shall be construed as limiting,
fixing or affecting the time when a meeting of stockholders called by action of
the board of directors may be held.
2.4 NOTICE OF STOCKHOLDERS' MEETINGS
All notices of meetings of stockholders shall be sent or otherwise given
in accordance with Section 2.6 of these Amended and Restated Bylaws not less
than ten (10) nor more than sixty (60) days before the date of the meeting. The
notice shall specify the place, date and hour of the meeting and (i) in the case
of a special meeting, the purpose or purposes for which the meeting is called
(no business other than that specified in the notice may be transacted) or (ii)
in the case of the annual meeting, those matters which the board of directors,
at the time of giving the notice, intends to present for action by the
stockholders (but any proper matter may be presented at the meeting for such
action). The notice of any meeting at which directors are to be elected shall
include the name of any nominee or nominees who, at the time of the notice, the
board intends to present for election.
2.5 ADVANCE NOTICE OF STOCKHOLDER NOMINEES AND STOCKHOLDER
BUSINESS
Subject to the rights of holders of any class or series of stock having
a preference over the Common Stock as to dividends or upon liquidation,
(a) nominations for the election of directors, and
(b) business proposed to be brought before any stockholder meeting
may be made by the board of directors or proxy committee appointed by the board
of directors or by any stockholder entitled to vote in the election of directors
generally if such nomination or business proposed is otherwise proper business
before such meeting. However, any such stockholder may nominate one or more
persons for election as directors at a meeting or propose business to be brought
before a meeting, or both, only if such stockholder has given timely notice in
proper written form of their intent to make such nomination or nominations or to
propose such business. To be timely, such stockholder's notice must be delivered
to or mailed and received at the principal executive offices of the corporation
not less than one hundred twenty (120) calendar days in advance of the date
specified in the corporation's
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<PAGE> 7
proxy statement released to stockholders in connection with the previous year's
annual meeting of stockholders; provided, however, that in the event that no
annual meeting was held in the previous year or the date of the annual meeting
has been changed by more than thirty (30) days from the date contemplated at the
time of the previous year's proxy statement, notice by the stockholder to be
timely must be so received a reasonable time before the solicitation is made. To
be in proper form, a stockholder's notice to the secretary shall set forth:
(i) the name and address of the stockholder who intends to make the
nominations or propose the business and, as the case may be, of the
person or persons to be nominated or of the business to be proposed;
(ii) a representation that the stockholder is a holder of record of
stock of the corporation entitled to vote at such meeting and, if
applicable, intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the notice;
(iii) if applicable, a description of all arrangements or understandings
between the stockholder and each nominee and any other person or persons
(naming such person or persons) pursuant to which the nomination or
nominations are to be made by the stockholder;
(iv) such other information regarding each nominee or each matter of
business to be proposed by such stockholder as would be required to be
included in a proxy statement filed pursuant to the proxy rules of the
Securities and Exchange Commission had the nominee been nominated, or
intended to be nominated, or the matter been proposed, or intended to be
proposed by the board of directors; and
(v) if applicable, the consent of each nominee to serve as director of
the corporation if so elected.
The chairman of the meeting shall refuse to acknowledge the nomination
of any person or the proposal of any business not made in compliance with the
foregoing procedure.
2.6 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE
Written notice of any meeting of stockholders shall be given either
personally or by first-class mail or by telegraphic or other written
communication. Notices not personally delivered shall be sent charges prepaid
and shall be addressed to the stockholder at the address of that stockholder
appearing on the books of the corporation or given by the stockholder to the
corporation for the purpose of notice. Notice shall be deemed to have been given
at the time when delivered personally or deposited in the mail or sent by
telegram or other means of written communication.
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An affidavit of the mailing or other means of giving any notice of any
stockholders' meeting, executed by the secretary, assistant secretary or any
transfer agent of the corporation giving the notice, shall be prima facie
evidence of the giving of such notice.
2.7 QUORUM
The holders of a majority in voting power of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stock holders for the
transaction of business except as otherwise provided by statute or by the
certificate of incorporation. If, however, such quorum is not present or
represented at any meeting of the stockholders, then either (i) the chairman of
the meeting or (ii) the stockholders entitled to vote thereat, present in person
or represented by proxy, shall have power to adjourn the meeting in accordance
with Section 2.7 of these Amended and Restated Bylaws.
When a quorum is present at any meeting, the vote of the holders of a
majority of the stock having voting power present in person or represented by
proxy shall decide any question brought before such meeting, unless the question
is one upon which, by express provision of the laws of the State of Delaware or
of the certificate of incorporation or these Amended and Restated Bylaws, a
different vote is required, in which case such express provision shall govern
and control the decision of the question.
If a quorum be initially present, the stockholders may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum, if any action taken is approved by a
majority of the stockholders initially constituting the quorum.
2.8 ADJOURNED MEETING; NOTICE
When a meeting is adjourned to another time and place, unless these
Amended and Restated Bylaws otherwise require, notice need not be given of the
adjourned meeting if the time and place thereof are announced at the meeting at
which the adjournment is taken. At the adjourned meeting the corporation may
transact any business that might have been transacted at the original meeting.
If the adjournment is for more than thirty (30) days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
2.9 VOTING
The stockholders entitled to vote at any meeting of stockholders shall
be determined in accordance with the provisions of Section 2.11 of these Amended
and Restated Bylaws, subject to the provisions of Sections 217 and 218 of the
General Corporation Law of Delaware (relating to voting rights of fiduciaries,
pledgors and joint owners, and to voting trusts and other voting agreements).
Except as may be otherwise provided in the certificate of incorporation
or these Amended and Restated Bylaws, each stockholder shall be entitled to one
vote for each share of capital stock held by
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such stockholder and stockholders shall not be entitled to cumulate their votes
in the election of directors or with respect to any matter submitted to a vote
of the stockholders.
Notwithstanding the foregoing, if the stockholders of the corporation
are entitled, pursuant to Sections 2115 and 301.5 of the California Corporations
Code, to cumulate their votes in the election of directors, each such
stockholder shall be entitled to cumulate votes (i.e., cast for any candidate a
number of votes greater than the number of votes that such stockholder normally
is entitled to cast) only if the candidates' names have been properly placed in
nomination (in accordance with these Amended and Restated Bylaws) prior to
commencement of the voting, and the stockholder requesting cumulative voting has
given notice prior to commencement of the voting of the stockholder's intention
to cumulate votes. If cumulative voting is properly requested, each holder of
stock, or of any class or classes or of a series or series thereof, who elects
to cumulate votes shall be entitled to as many votes as equals the number of
votes that (absent this provision as to cumulative voting) he or she would be
entitled to cast for the election of directors with respect to his or her shares
of stock multiplied by the number of directors to be elected by him, and he or
she may cast all of such votes for a single director or may distribute them
among the number to be voted for, or for any two or more of them, as he or she
may see fit.
2.10 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Unless otherwise provided in the Certificate of Incorporation, any
action required or permitted to be taken at any annual or special meeting of
stockholders may be taken without a meeting, without prior notice and without a
vote, if a consent or consents in writing setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted. Such consents shall be delivered to the corporation by delivery to it
registered office in the state of Delaware, its principal place of business, or
an officer or agent of the corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. Delivery made to a
corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested.
2.11 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING
For purposes of determining the stockholders entitled to notice of any
meeting or to vote thereat, the board of directors may fix, in advance, a record
date, which shall not precede the date upon which the resolution fixing the
record date is adopted by the board of directors and which shall not be more
than sixty (60) days nor less than ten (10) days before the date of any such
meeting, and in such event only stockholders of record on the date so fixed are
entitled to notice and to vote, notwithstanding any transfer of any shares on
the books of the corporation after the record date.
If the board of directors does not so fix a record date, the record date
for determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business
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on the business day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the business day next preceding
the day on which the meeting is held.
A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting
unless the board of directors fixes a new record date for the adjourned meeting,
but the board of directors shall fix a new record date if the meeting is
adjourned for more than thirty (30) days from the date set for the original
meeting.
The record date for any other purpose shall be as provided in Section
8.1 of these Amended and Restated Bylaws.
2.12 PROXIES
Every person entitled to vote for directors, or on any other matter,
shall have the right to do so either in person or by one or more agents
authorized by a written proxy signed by the person and filed with the secretary
of the corporation, but no such proxy shall be voted or acted upon after three
(3) years from its date, unless the proxy provides for a longer period. A proxy
shall be deemed signed if the stockholder's name is placed on the proxy (whether
by manual signature, typewriting, telegraphic transmission, telefacsimile or
otherwise) by the stockholder or the stockholder's attorney-in-fact. The
revocability of a proxy that states on its face that it is irrevocable shall be
governed by the provisions of Section 212(e) of the General Corporation Law of
Delaware.
2.13 ORGANIZATION
The president, or in the absence of the president, the chairman of the
board, or, in the absence of the president and the chairman of the board, one of
the corporation's vice presidents, shall call the meeting of the stockholders to
order, and shall act as chairman of the meeting. In the absence of the
president, the chairman of the board, and all of the vice presidents, the
stockholders shall appoint a chairman for such meeting. The chairman of any
meeting of stockholders shall determine the order of business and the procedures
at the meeting, including such matters as the regulation of the manner of voting
and the conduct of business. The secretary of the corporation shall act as
secretary of all meetings of the stockholders, but in the absence of the
secretary at any meeting of the stockholders, the chairman of the meeting may
appoint any person to act as secretary of the meeting.
2.14 LIST OF STOCKHOLDERS ENTITLED TO VOTE
The officer who has charge of the stock ledger of the corporation shall
prepare and make, at least ten (10) days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior to
the meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where
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the meeting is to be held. The list shall also be produced and kept at the time
and place of the meeting during the whole time thereof, and may be inspected by
any stockholder who is present.
2.15 WAIVER OF NOTICE
Whenever notice is required to be given under any provision of the
General Corporation Law of Delaware or of the certificate of incorporation or
these Amended and Restated Bylaws, a written waiver thereof, signed by the
person entitled to notice, whether before or after the time stated therein,
shall be deemed equivalent to notice. Attendance of a person at a meeting shall
constitute a waiver of notice of such meeting, except when the person attends a
meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the stockholders need be specified in any written
waiver of notice unless so required by the certificate of incorporation or these
Amended and Restated Bylaws.
ARTICLE III
DIRECTORS
3.1 POWERS
Subject to the provisions of the General Corporation Law of Delaware and
to any limitations in the Certificate of Incorporation or these Amended and
Restated Bylaws relating to action required to be approved by the stockholders
or by the outstanding shares, the business and affairs of the corporation shall
be managed and all corporate powers shall be exercised by or under the direction
of the board of directors.
3.2 NUMBER OF DIRECTORS
The number of members of the board of directors shall be as determined
by the board of directors.
No reduction of the authorized number of directors shall have the effect
of removing any director before that director's term of office expires.
3.3 ELECTION AND TERM OF OFFICE OF DIRECTORS
Except as provided in Section 3.4 of these Amended and Restated Bylaws,
directors shall be elected at each annual meeting of stockholders to hold office
until the next annual meeting. Each direc tor, including a director elected or
appointed to fill a vacancy, shall hold office until the expiration of the term
for which elected and until a successor has been elected and qualified.
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3.4 RESIGNATION AND VACANCIES
Any director may resign effective on giving written notice to the
chairman of the board, the president, the secretary or the board of directors,
unless the notice specifies a later time for that resignation to become
effective. If the resignation of a director is effective at a future time, the
board of directors may elect a successor to take office when the resignation
becomes effective.
Vacancies in the board of directors may be filled by a majority of the
remaining directors, even if less than a quorum, or by a sole remaining
director; however, a vacancy created by the removal of a director by the vote of
the stockholders or by court order may be filled only by the affirmative vote of
a majority of the shares represented and voting at a duly held meeting at which
a quorum is present (which shares voting affirmatively also constitute a
majority of the required quorum). Each director so elected shall hold office
until the next annual meeting of the stockholders and until a successor has been
elected and qualified.
Unless otherwise provided in the certificate of incorporation or these
Amended and Restated Bylaws:
(i) Vacancies and newly created directorships resulting from any
increase in the authorized number of directors elected by all of the
stockholders having the right to vote as a single class may be filled by a
majority of the directors then in office, although less than a quorum, or by a
sole remaining director.
(ii) Whenever the holders of any class or classes of stock or
series thereof are entitled to elect one or more directors by the provisions of
the certificate of incorporation, vacancies and newly created directorships of
such class or classes or series may be filled by a majority of the directors
elected by such class or classes or series thereof then in office, or by a sole
remaining director so elected.
If at any time, by reason of death or resignation or other cause, the
corporation should have no directors in office, then any officer or any
stockholder or an executor, administrator, trustee or guardian of a stockholder,
or other fiduciary entrusted with like responsibility for the person or estate
of a stockholder, may call a special meeting of stockholders in accordance with
the provisions of the certificate of incorporation or these Amended and Restated
Bylaws, or may apply to the Court of Chancery for a decree summarily ordering an
election as provided in Section 211 of the General Corporation Law of Delaware.
If, at the time of filling any vacancy or any newly created
directorship, the directors then in office constitute less than a majority of
the whole board (as constituted immediately prior to any such increase), then
the Court of Chancery may, upon application of any stockholder or stockholders
holding at least ten (10) percent of the total number of the shares at the time
outstanding having the right to vote for such directors, summarily order an
election to be held to fill any such vacancies or newly created directorships,
or to replace the directors chosen by the directors then in office as aforesaid,
which
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election shall be governed by the provisions of Section 211 of the General
Corporation Law of Delaware as far as applicable.
3.5 REMOVAL OF DIRECTORS
Unless otherwise restricted by statute, by the certificate of
incorporation or by these Amended and Restated Bylaws, any director or the
entire board of directors may be removed, with or without cause, by the holders
of a majority of the shares then entitled to vote at an election of directors;
provided, however, that, if and so long as stockholders of the corporation are
entitled to cumulative voting, if less than the entire board is to be removed,
no director may be removed without cause if the votes cast against his removal
would be sufficient to elect him if then cumulatively voted at an election of
the entire board of directors.
3.6 PLACE OF MEETINGS; MEETINGS BY TELEPHONE
Regular meetings of the board of directors may be held at any place
within or outside the State of Delaware that has been designated from time to
time by resolution of the board. In the absence of such a designation, regular
meetings shall be held at the principal executive office of the corporation.
Special meetings of the board may be held at any place within or outside the
State of Delaware that has been designated in the notice of the meeting or, if
not stated in the notice or if there is no notice, at the principal executive
office of the corporation.
Any meeting of the board, regular or special, may be held by conference
telephone or similar communication equipment, so long as all directors
participating in the meeting can hear one another; and all such participating
directors shall be deemed to be present in person at the meeting.
3.7 FIRST MEETINGS
The first meeting of each newly elected board of directors shall be held
at such time and place as shall be fixed by the vote of the stockholders at the
annual meeting. In the event of the failure of the stockholders to fix the time
or place of such first meeting of the newly elected board of directors, or in
the event such meeting is not held at the time and place so fixed by the
stockholders, the meeting may be held at such time and place as shall be
specified in a notice given as hereinafter provided for special meetings of the
board of directors, or as shall be specified in a written waiver signed by all
of the directors.
3.8 REGULAR MEETINGS
Regular meetings of the board of directors may be held without notice at
such time as shall from time to time be determined by the board of directors. If
any regular meeting day shall fall on a legal holiday, then the meeting shall be
held at the same time and place on the next succeeding full business day.
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3.9 SPECIAL MEETINGS; NOTICE
Special meetings of the board of directors for any purpose or purposes
may be called at any time by the chairman of the board, the president, any vice
president, the secretary or any two directors.
Notice of the time and place of special meetings shall be delivered
personally or by telephone to each director or sent by first-class mail,
telecopy or telegram, charges prepaid, addressed to each director at that
director's address as it is shown on the records of the corporation. If the
notice is mailed, it shall be deposited in the United States mail at least four
(4) days before the time of the holding of the meeting. If the notice is
delivered personally or by telephone, telecopy or telegram, it shall be
delivered personally or by telephone or to the telegraph company at least
forty-eight (48) hours before the time of the holding of the meeting. Any oral
notice given personally or by telephone may be communicated either to the
director or to a person at the office of the director who the person giving the
notice has reason to believe will promptly communicate it to the director. The
notice need not specify the purpose or the place of the meeting, if the meeting
is to be held at the principal executive office of the corporation.
3.10 QUORUM
A majority of the authorized number of directors shall constitute a
quorum for the transaction of business, except to adjourn as provided in Section
3.12 of these Amended and Restated Bylaws. Every act or decision done or made by
a majority of the directors present at a duly held meeting at which a quorum is
present shall be regarded as the act of the board of directors, subject to the
provisions of the certificate of incorporation and applicable law.
A meeting at which a quorum is initially present may continue to
transact business notwithstanding the withdrawal of directors, if any action
taken is approved by at least a majority of the quorum for that meeting.
3.11 WAIVER OF NOTICE
Notice of a meeting need not be given to any director (i) who signs a
waiver of notice, whether before or after the meeting, or (ii) who attends the
meeting other than for the express purposed of objecting at the beginning of the
meeting to the transaction of any business because the meeting is not lawfully
called or convened. All such waivers shall be filed with the corporate records
or made part of the minutes of the meeting. A waiver of notice need not specify
the purpose of any regular or special meeting of the board of directors.
3.12 ADJOURNMENT
A majority of the directors present, whether or not constituting a
quorum, may adjourn any meeting of the board to another time and place.
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3.13 NOTICE OF ADJOURNMENT
Notice of the time and place of holding an adjourned meeting of the
board need not be given unless the meeting is adjourned for more than
twenty-four (24) hours. If the meeting is adjourned for more than twenty-four
(24) hours, then notice of the time and place of the adjourned meeting shall be
given before the adjourned meeting takes place, in the manner specified in
Section 3.9 of these Amended and Restated Bylaws, to the directors who were not
present at the time of the adjournment.
3.14 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Any action required or permitted to be taken by the board of directors
may be taken without a meeting, provided that all members of the board
individually or collectively consent in writing to that action. Such action by
written consent shall have the same force and effect as a unanimous vote of the
board of directors. Such written consent and any counterparts thereof shall be
filed with the minutes of the proceedings of the board of directors.
3.15 FEES AND COMPENSATION OF DIRECTORS
Directors and members of committees may receive such compensation, if
any, for their services and such reimbursement of expenses as may be fixed or
determined by resolution of the board of directors. This Section 3.15 shall not
be construed to preclude any director from serving the corporation in any other
capacity as an officer, agent, employee or otherwise and receiving compensation
for those services.
3.16 APPROVAL OF LOANS TO OFFICERS
The corporation may lend money to, or guarantee any obligation of, or
otherwise assist any officer or other employee of the corporation or any of its
subsidiaries, including any officer or employee who is a director of the
corporation or any of its subsidiaries, whenever, in the judgment of the
directors, such loan, guaranty or assistance may reasonably be expected to
benefit the corporation. The loan, guaranty or other assistance may be with or
without interest and may be unsecured, or secured in such manner as the board of
directors shall approve, including, without limitation, a pledge of shares of
stock of the corporation. Nothing contained in this section shall be deemed to
deny, limit or restrict the powers of guaranty or warranty of the corporation at
common law or under any statute.
3.17 SOLE DIRECTOR PROVIDED BY CERTIFICATE OF INCORPORATION
In the event only one director is required by these Amended and Restated
Bylaws or the certificate of incorporation, then any reference herein to
notices, waivers, consents, meetings or other actions by a majority or quorum of
the directors shall be deemed to refer to such notice, waiver, etc., by such
sole director, who shall have all the rights and duties and shall be entitled to
exercise all of the powers and shall assume all the responsibilities otherwise
herein described as given to the board of directors.
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ARTICLE IV
COMMITTEES
4.1 COMMITTEES OF DIRECTORS
The board of directors may, by resolution adopted by a majority of the
authorized number of directors, designate one (1) or more committees, each
consisting of two or more directors, to serve at the pleasure of the board. The
board may designate one (1) or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
the committee. The appointment of members or alternate members of a committee
requires the vote of a majority of the authorized number of directors. Any
committee, to the extent provided in the resolution of the board, shall have and
may exercise all the powers and authority of the board, but no such committee
shall have the power or authority to (i) amend the certificate of incorporation
(except that a committee may, to the extent authorized in the resolution or
resolutions providing for the issuance of shares of stock adopted by the board
of directors as provided in Section 151(a) of the General Corporation Law of
Delaware, fix the designations and any of the preferences or rights of such
shares relating to dividends, redemption, dissolution, any distribution of
assets of the corporation or the conversion into, or the exchange of such shares
for, shares of any other class or classes or any other series of the same or any
other class or classes of stock of the corporation), (ii) adopt an agreement of
merger or consolidation under Sections 251 or 252 of the General Corporation Law
of Delaware, (iii) recommend to the stockholders the sale, lease or exchange of
all or substantially all of the corporation's property and assets, (iv)
recommend to the stockholders a dissolution of the corporation or a revocation
of a dissolution or (v) amend the Amended and Restated Bylaws of the
corporation; and, unless the board resolution establishing the committee, the
Amended and Restated Bylaws or the certificate of incorporation expressly so
provide, no such committee shall have the power or authority to declare a
dividend, to authorize the issuance of stock, or to adopt a certificate of
ownership and merger pursuant to Section 253 of the General Corporation Law of
Delaware.
4.2 MEETINGS AND ACTION OF COMMITTEES
Meetings and actions of committees shall be governed by, and held and
taken in accordance with, the following provisions of Article III of these
Amended and Restated Bylaws: Section 3.6 (place of meetings; meetings by
telephone), Section 3.8 (regular meetings), Section 3.9 (special meetings;
notice), Section 3.10 (quorum), Section 3.11 (waiver of notice), Section 3.12
(adjournment), Section 3.13 (notice of adjournment) and Section 3.14 (board
action by written consent without meeting), with such changes in the context of
those Amended and Restated Bylaws as are necessary to substitute the committee
and its members for the board of directors and its members; provided, however,
that the time of regular meetings of committees may be determined either by
resolution of the board of directors or by resolution of the committee, that
special meetings of committees may also be called by resolution of the board of
directors, and that notice of special meetings of committees shall also be given
to all alternate members, who shall have the right to attend all meetings of the
committee. The board of directors may adopt rules
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for the government of any committee not inconsistent with the provisions of
these Amended and Restated Bylaws.
4.3 COMMITTEE MINUTES
Each committee shall keep regular minutes of its meetings and report the
same to the board of directors when required.
ARTICLE V
OFFICERS
5.1 OFFICERS
The Corporate Officers of the corporation shall be a president, a
secretary and a chief financial officer. The corporation may also have, at the
discretion of the board of directors, a chairman of the board, one or more vice
presidents (however denominated), one or more assistant secretaries, a treasurer
and one or more assistant treasurers, and such other officers as may be
appointed in accordance with the provisions of Section 5.3 of these Amended and
Restated Bylaws. Any number of offices may be held by the same person.
In addition to the Corporate Officers of the Company described above,
there may also be such Administrative Officers of the corporation as may be
designated and appointed from time to time by the president of the corporation
in accordance with the provisions of Section 5.12 of these Amended and Restated
Bylaws.
5.2 ELECTION OF OFFICERS
The Corporate Officers of the corporation, except such officers as may
be appointed in accordance with the provisions of Section 5.3 or Section 5.5 of
these Amended and Restated Bylaws, shall be chosen by the board of directors,
subject to the rights, if any, of an officer under any contract of employment,
and shall hold their respective offices for such terms as the board of directors
may from time to time determine.
5.3 SUBORDINATE OFFICERS
The board of directors may appoint, or may empower the president to
appoint, such other Corporate Officers as the business of the corporation may
require, each of whom shall hold office for such period, have such power and
authority, and perform such duties as are provided in these Amended and Restated
Bylaws or as the board of directors may from time to time determine.
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The president may from time to time designate and appoint Administrative
Officers of the corporation in accordance with the provisions of Section 5.12 of
these Amended and Restated Bylaws.
5.4 REMOVAL AND RESIGNATION OF OFFICERS
Subject to the rights, if any, of a Corporate Officer under any contract
of employment, any Corporate Officer may be removed, either with or without
cause, by the board of directors at any regular or special meeting of the board
or, except in case of a Corporate Officer chosen by the board of directors, by
any Corporate Officer upon whom such power of removal may be conferred by the
board of directors.
Any Corporate Officer may resign at any time by giving written notice to
the corporation. Any resignation shall take effect at the date of the receipt of
that notice or at any later time specified in that notice; and, unless otherwise
specified in that notice, the acceptance of the resignation shall not be
necessary to make it effective. Any resignation is without prejudice to the
rights, if any, of the corporation under any contract to which the Corporate
Officer is a party.
Any Administrative Officer designated and appointed by the president may
be removed, either with or without cause, at any time by the president. Any
Administrative Officer may resign at any time by giving written notice to the
president or to the secretary of the corporation.
5.5 VACANCIES IN OFFICES
A vacancy in any office because of death, resignation, removal,
disqualification or any other cause shall be filled in the manner prescribed in
these Amended and Restated Bylaws for regular appointments to that office.
5.6 CHAIRMAN OF THE BOARD
The chairman of the board, if such an officer be elected, shall, if
present, preside at meetings of the board of directors and exercise such other
powers and perform such other duties as may from time to time be assigned to him
by the board of directors or as may be prescribed by these Amended and Restated
Bylaws. If there is no president, then the chairman of the board shall also be
the chief executive officer of the corporation and shall have the powers and
duties prescribed in Section 5.7 of these Amended and Restated Bylaws.
5.7 PRESIDENT
Subject to such supervisory powers, if any, as may be given by the board
of directors to the chairman of the board, if there be such an officer, the
president shall be the chief executive officer of the corporation and shall,
subject to the control of the board of directors, have general supervision,
direction and control of the business and the officers of the corporation. He or
she shall preside at all meetings of the stockholders and, in the absence or
nonexistence of a chairman of the board, at all meetings of the board of
directors. He or she shall have the general powers and duties of management
usually vested
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in the office of president of a corporation, and shall have such other powers
and perform such other duties as may be prescribed by the board of directors or
these Amended and Restated Bylaws.
5.8 VICE PRESIDENTS
In the absence or disability of the president, and if there is no
chairman of the board, the vice presidents, if any, in order of their rank as
fixed by the board of directors or, if not ranked, a vice president designated
by the board of directors, shall perform all the duties of the president and
when so acting shall have all the powers of, and be subject to all the
restrictions upon, the president. The vice presidents shall have such other
powers and perform such other duties as from time to time may be prescribed for
them respectively by the board of directors, these Amended and Restated Bylaws,
the president or the chairman of the board.
5.9 SECRETARY
The secretary shall keep or cause to be kept, at the principal executive
office of the corporation or such other place as the board of directors may
direct, a book of minutes of all meetings and actions of the board of directors,
committees of directors and stockholders. The minutes shall show the time and
place of each meeting, whether regular or special (and, if special, how
authorized and the notice given), the names of those present at directors'
meetings or committee meetings, the number of shares present or represented at
stockholders' meetings and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal
executive office of the corporation or at the office of the corporation's
transfer agent or registrar, as determined by resolution of the board of
directors, a share register or a duplicate share register, showing the names of
all stockholders and their addresses, the number and classes of shares held by
each, the number and date of certificates evidencing such shares and the number
and date of cancellation of every certificate surrendered for cancellation.
The secretary shall give, or cause to be given, notice of all meetings
of the stockholders and of the board of directors required to be given by law or
by these Amended and Restated Bylaws. He or she shall keep the seal of the
corporation, if one be adopted, in safe custody and shall have such other powers
and perform such other duties as may be prescribed by the board of directors or
by these Amended and Restated Bylaws.
5.10 CHIEF FINANCIAL OFFICER
The chief financial officer shall keep and maintain, or cause to be kept
and maintained, adequate and correct books and records of accounts of the
properties and business transactions of the corporation, including accounts of
its assets, liabilities, receipts, disbursements, gains, losses, capital,
retained earnings and shares. The books of account shall at all reasonable times
be open to inspection by any director for a purpose reasonably related to his
position as a director.
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The chief financial officer shall deposit all money and other valuables
in the name and to the credit of the corporation with such depositaries as may
be designated by the board of directors. He or she shall disburse the funds of
the corporation as may be ordered by the board of directors, shall render to the
president and directors, whenever they request it, an account of all of his or
her transactions as chief financial officer and of the financial condition of
the corporation, and shall have such other powers and perform such other duties
as may be prescribed by the board of directors or these Amended and Restated
Bylaws.
5.11 ASSISTANT SECRETARY
The assistant secretary, if any, or, if there is more than one, the
assistant secretaries in the order determined by the board of directors (or if
there be no such determination, then in the order of their election) shall, in
the absence of the secretary or in the event of his or her inability or refusal
to act, perform the duties and exercise the powers of the secretary and shall
perform such other duties and have such other powers as the board of directors
may from time to time prescribe.
5.12 ADMINISTRATIVE OFFICERS
In addition to the Corporate Officers of the corporation as provided in
Section 5.1 of these Amended and Restated Bylaws and such subordinate Corporate
Officers as may be appointed in accordance with Section 5.3 of these Amended and
Restated Bylaws, there may also be such Administrative Officers of the
corporation as may be designated and appointed from time to time by the
president of the corporation. Administrative Officers shall perform such duties
and have such powers as from time to time may be determined by the president or
the board of directors in order to assist the Corporate Officers in the
furtherance of their duties. In the performance of such duties and the exercise
of such powers, however, such Administrative Officers shall have limited
authority to act on behalf of the corporation as the board of directors shall
establish, including but not limited to limitations on the dollar amount and on
the scope of agreements or commitments that may be made by such Administrative
Officers on behalf of the corporation, which limitations may not be exceeded by
such individuals or altered by the president without further approval by the
board of directors.
5.13 AUTHORITY AND DUTIES OF OFFICERS
In addition to the foregoing powers, authority and duties, all officers
of the corporation shall respectively have such authority and powers and perform
such duties in the management of the business of the corporation as may be
designated from time to time by the board of directors.
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ARTICLE VI
INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES
AND OTHER AGENTS
6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS
The corporation shall, to the maximum extent and in the manner permitted
by the General Corporation Law of Delaware as the same now exists or may
hereafter be amended, indemnify any person against expenses (including
attorneys' fees), judgments, fines, and amounts paid in settlement actually and
reasonably incurred in connection with any threatened, pending or completed
action, suit, or proceeding in which such person was or is a party or is
threatened to be made a party by reason of the fact that such person is or was a
director or officer of the corporation. For purposes of this Section 6.1, a
"director" or "officer" of the corporation shall mean any person (i) who is or
was a director or officer of the corporation, (ii) who is or was serving at the
request of the corporation as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise, or (iii) who was a
director or officer of a corporation which was a predecessor corporation of the
corporation or of another enterprise at the request of such predecessor
corporation.
The corporation shall be required to indemnify a director or officer in
connection with an action, suit, or proceeding (or part thereof) initiated by
such director or officer only if the initiation of such action, suit, or
proceeding (or part thereof) by the director or officer was authorized by the
Board of Directors of the corporation.
The corporation shall pay the expenses (including attorney's fees)
incurred by a director or officer of the corporation entitled to indemnification
hereunder in defending any action, suit or proceeding referred to in this
Section 6.1 in advance of its final disposition; provided, however, that payment
of expenses incurred by a director or officer of the corporation in advance of
the final disposition of such action, suit or proceeding shall be made only upon
receipt of an undertaking by the director or officer to repay all amounts
advanced if it should ultimately be determined that the director of officer is
not entitled to be indemnified under this Section 6.1 or otherwise.
The rights conferred on any person by this Article shall not be
exclusive of any other rights which such person may have or hereafter acquire
under any statute, provision of the corporation's Certificate of Incorporation,
these Amended and Restated Bylaws, agreement, vote of the stockholders or
disinterested directors or otherwise.
Any repeal or modification of the foregoing provisions of this Article
shall not adversely affect any right or protection hereunder of any person in
respect of any act or omission occurring prior to the time of such repeal or
modification.
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6.2 INDEMNIFICATION OF OTHERS
The corporation shall have the power, to the maximum extent and in the
manner permitted by the General Corporation Law of Delaware as the same now
exists or may hereafter be amended, to indemnify any person (other than
directors and officers) against expenses (including attorneys' fees), judgments,
fines, and amounts paid in settlement actually and reasonably incurred in
connection with any threatened, pending or completed action, suit, or
proceeding, in which such person was or is a party or is threatened to be made a
party by reason of the fact that such person is or was an employee or agent of
the corporation. For purposes of this Section 6.2, an "employee" or "agent" of
the corporation (other than a director or officer) shall mean any person (i) who
is or was an employee or agent of the corporation, (ii) who is or was serving at
the request of the corporation as an employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, or (iii) who was an
employee or agent of a corporation which was a predecessor corporation of the
corporation or of another enterprise at the request of such predecessor
corporation.
6.3 INSURANCE
The corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the corporation,
or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against him or her and incurred
by him or her in any such capacity, or arising out of his or her status as such,
whether or not the corporation would have the power to indemnify him or her
against such liability under the provisions of the General Corporation Law of
Delaware.
ARTICLE VII
RECORDS AND REPORTS
7.1 MAINTENANCE AND INSPECTION OF RECORDS
The corporation shall, either at its principal executive office or at
such place or places as designated by the board of directors, keep a record of
its stockholders listing their names and addresses and the number and class of
shares held by each stockholder, a copy of these Amended and Restated Bylaws as
amended to date, accounting books and other records of its business and
properties.
Any stockholder of record, in person or by attorney or other agent,
shall, upon written demand under oath stating the purpose thereof, have the
right during the usual hours for business to inspect for any proper purpose the
corporation's stock ledger, a list of its stockholders, and its other books and
records and to make copies or extracts therefrom. A proper purpose shall mean a
purpose reasonably related to such person's interest as a stockholder. In every
instance where an attorney or other agent is the person who seeks the right to
inspection, the demand under oath shall be accompanied by a power
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of attorney or such other writing that authorizes the attorney or other agent to
so act on behalf of the stockholder. The demand under oath shall be directed to
the corporation at its registered office in Delaware or at its principal place
of business.
7.2 INSPECTION BY DIRECTORS
Any director shall have the right to examine (and to make copies of) the
corporation's stock ledger, a list of its stockholders and its other books and
records for a purpose reasonably related to his or her position as a director.
7.3 ANNUAL STATEMENT TO STOCKHOLDERS
The board of directors shall present at each annual meeting, and at any
special meeting of the stockholders when called for by vote of the stockholders,
a full and clear statement of the business and condition of the corporation.
7.4 REPRESENTATION OF SHARES OF OTHER CORPORATIONS
The chairman of the board, if any, the president, any vice president,
the chief financial officer, the secretary or any assistant secretary of this
corporation, or any other person authorized by the board of directors or the
president or a vice president, is authorized to vote, represent and exercise on
behalf of this corporation all rights incident to any and all shares of the
stock of any other corporation or corporations standing in the name of this
corporation. The authority herein granted may be exercised either by such person
directly or by any other person authorized to do so by proxy or power of
attorney duly executed by such person having the authority.
7.5 CERTIFICATION AND INSPECTION OF Amended and Restated Bylaws
The original or a copy of these Amended and Restated Bylaws, as amended
or otherwise altered to date, certified by the secretary, shall be kept at the
corporation's principal executive office and shall be open to inspection by the
stockholders of the corporation, at all reasonable times during office hours.
ARTICLE VIII
GENERAL MATTERS
8.1 RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING
For purposes of determining the stockholders entitled to receive payment
of any dividend or other distribution or allotment of any rights or the
stockholders entitled to exercise any rights in respect of any change,
conversion or exchange of stock, or for the purpose of any other lawful action,
the board of directors may fix, in advance, a record date, which shall not
precede the date upon which the
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resolution fixing the record date is adopted and which shall not be more than
sixty (60) days before any such action. In that case, only stockholders of
record at the close of business on the date so fixed are entitled to receive the
dividend, distribution or allotment of rights, or to exercise such rights, as
the case may be, notwithstanding any transfer of any shares on the books of the
corporation after the record date so fixed, except as otherwise provided by law.
If the board of directors does not so fix a record date, then the record
date for determining stockholders for any such purpose shall be at the close of
business on the day on which the board of directors adopts the applicable
resolution.
8.2 CHECKS; DRAFTS; EVIDENCES OF INDEBTEDNESS
From time to time, the board of directors shall determine by resolution
which person or persons may sign or endorse all checks, drafts, other orders for
payment of money, notes or other evidences of indebtedness that are issued in
the name of or payable to the corporation, and only the persons so authorized
shall sign or endorse those instruments.
8.3 CORPORATE CONTRACTS AND INSTRUMENTS: HOW EXECUTED
The board of directors, except as otherwise provided in these Amended
and Restated Bylaws, may authorize and empower any officer or officers, or agent
or agents, to enter into any contract or execute any instrument in the name of
and on behalf of the corporation; such power and authority may be general or
confined to specific instances. Unless so authorized or ratified by the board of
directors or within the agency power of an officer, no officer, agent or
employee shall have any power or authority to bind the corporation by any
contract or engagement or to pledge its credit or to render it liable for any
purpose or for any amount.
8.4 STOCK CERTIFICATES; TRANSFER; PARTLY PAID SHARES
The shares of the corporation shall be represented by certificates,
provided that the board of directors of the corporation may provide by
resolution or resolutions that some or all of any or all classes or series of
its stock shall be uncertificated shares. Any such resolution shall not apply to
shares represented by a certificate until such certificate is surrendered to the
corporation. Notwithstanding the adoption of such a resolution by the board of
directors, every holder of stock represented by certificates and, upon request,
every holder of uncertificated shares, shall be entitled to have a certificate
signed by, or in the name of the corporation by, the chairman or vice-chairman
of the board of directors, or the president or vice-president, and by the
treasurer or an assistant treasurer, or the secretary or an assistant secretary
of such corporation representing the number of shares registered in certificate
form. Any or all of the signatures on the certificate may be a facsimile. In
case any officer, transfer agent or registrar who has signed or whose facsimile
signature has been placed upon a certificate has ceased to be such officer,
transfer agent or registrar before such certificate is issued, it may be issued
by the corporation with the same effect as if he or she were such officer,
transfer agent or registrar at the date of issue.
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Certificates for shares shall be of such form and device as the board of
directors may designate and shall state the name of the record holder of the
shares represented thereby; its number; date of issuance; the number of shares
for which it is issued; a summary statement or reference to the powers,
designations, preferences or other special rights of such stock and the
qualifications, limitations or restrictions of such preferences and/or rights,
if any; a statement or summary of liens, if any; a conspicuous notice of
restrictions upon transfer or registration of transfer, if any; a statement as
to any applicable voting trust agreement; if the shares be assessable, or, if
assessments are collectible by personal action, a plain statement of such facts.
Upon surrender to the secretary or transfer agent of the corporation of
a certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, it shall be the duty of the
corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate and record the transaction upon its books.
The corporation may issue the whole or any part of its shares as partly
paid and subject to call for the remainder of the consideration to be paid
therefor. Upon the face or back of each stock certificate issued to represent
any such partly paid shares, or upon the books and records of the corporation in
the case of uncertificated partly paid shares, the total amount of the
consideration to be paid therefor and the amount paid thereon shall be stated.
Upon the declaration of any dividend on fully paid shares, the corporation shall
declare a dividend upon partly paid shares of the same class, but only upon the
basis of the percentage of the consideration actually paid thereon.
8.5 SPECIAL DESIGNATION ON CERTIFICATES
If the corporation is authorized to issue more than one class of stock
or more than one series of any class, then the powers, the designations, the
preferences and the relative, participating, optional or other special rights of
each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate that the corporation shall
issue to represent such class or series of stock; provided, how ever, that,
except as otherwise provided in Section 202 of the General Corporation Law of
Delaware, in lieu of the foregoing requirements there may be set forth on the
face or back of the certificate that the corporation shall issue to represent
such class or series of stock a statement that the corporation will furnish
without charge to each stockholder who so requests the powers, the designations,
the preferences and the relative, participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights.
8.6 LOST CERTIFICATES
Except as provided in this Section 8.6, no new certificates for shares
shall be issued to replace a previously issued certificate unless the latter is
surrendered to the corporation and cancelled at the same time. The board of
directors may, in case any share certificate or certificate for any other
security is lost, stolen or destroyed, authorize the issuance of replacement
certificates on such terms and conditions as the board may require; the board
may require indemnification of the corporation secured by a bond or
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other adequate security sufficient to protect the corporation against any claim
that may be made against it, including any expense or liability, on account of
the alleged loss, theft or destruction of the certificate or the issuance of the
replacement certificate.
8.7 TRANSFER AGENTS AND REGISTRARS
The board of directors may appoint one or more transfer agents or
transfer clerks, and one or more registrars, each of which shall be an
incorporated bank or trust company -- either domestic or foreign, who shall be
appointed at such times and places as the requirements of the corporation may
necessitate and the board of directors may designate.
8.8 CONSTRUCTION; DEFINITIONS
Unless the context requires otherwise, the general provisions, rules of
construction and definitions in the General Corporation Law of Delaware shall
govern the construction of these Amended and Restated Bylaws. Without limiting
the generality of this provision, as used in these Amended and Restated Bylaws,
the singular number includes the plural, the plural number includes the
singular, and the term "person" includes both an entity and a natural person.
ARTICLE IX
AMENDMENTS
The original or other Amended and Restated Bylaws of the corporation may
be adopted, amended or repealed by the stockholders entitled to vote or by the
board of directors of the corporation. The fact that such power has been so
conferred upon the directors shall not divest the stockholders of the power, nor
limit their power to adopt, amend or repeal Amended and Restated Bylaws.
Whenever an amendment or new bylaw is adopted, it shall be copied in the
book of Amended and Restated Bylaws with the original Amended and Restated
Bylaws, in the appropriate place. If any bylaw is repealed, the fact of repeal
with the date of the meeting at which the repeal was enacted or the filing of
the operative written consent(s) shall be stated in said book.
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EXHIBIT 10.1
ABGENIX, INC.
INDEMNIFICATION AGREEMENT
This Indemnification Agreement ("Agreement") is effective as of
_______________, 1998 by and between Abgenix, Inc., a Delaware corporation (the
"Company"), and __________________, ("Indemnitee").
WHEREAS, the Company desires to attract and retain the services of
highly qualified individuals, such as Indemnitee, to serve the Company and its
related entities;
WHEREAS, in order to induce Indemnitee to continue to provide services
to the Company, the Company wishes to provide for the indemnification of, and
the advancement of expenses to, Indemnitee to the maximum extent permitted by
law;
WHEREAS, the Company and Indemnitee recognize the substantial increase
in corporate litigation in general, subjecting directors, officers, employees,
agents and fiduciaries to expensive litigation risks at the same time as the
availability and coverage of liability insurance has been severely limited; and
WHEREAS, the Company and Indemnitee desire to continue to have in place
the additional protection provided by an indemnification agreement to provide
indemnification and advancement of expenses to the Indemnitee to the maximum
extent permitted by Delaware law;
WHEREAS, in view of the considerations set forth above, the Company
desires that Indemnitee shall be indemnified and advanced expenses by the
Company as set forth herein;
NOW, THEREFORE, the Company and Indemnitee hereby agree as set forth
below.
1. Certain Definitions.
(a) "Change in Control" shall mean, and shall be deemed to have
occurred if, on or after the date of this Agreement, (i) any "person" (as such
term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934,
as amended) or group acting in concert, other than a trustee or other fiduciary
holding securities under an employee benefit plan of the Company acting in such
capacity or a corporation owned directly or indirectly by the stockholders of
the Company in
<PAGE> 2
substantially the same proportions as their ownership of stock of the Company,
becomes the "beneficial owner" (as defined in Rule 13d-3 under said Act),
directly or indirectly, of securities of the Company representing more than 50%
of the total voting power represented by the Company's then outstanding Voting
Securities, (ii) during any period of two consecutive years, individuals who at
the beginning of such period constitute the Board of Directors of the Company
and any new director whose election by the Board of Directors or nomination for
election by the Company's stockholders was approved by a vote of at least two
thirds (2/3) of the directors then still in office who either were directors at
the beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a majority thereof,
(iii) the stockholders of the Company approve a merger or consolidation of the
Company with any other corporation other than a merger or consolidation which
would result in the Voting Securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into Voting Securities of the surviving entity) at least 80% of
the total voting power represented by the Voting Securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation, or (iv) the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale or disposition
by the Company of (in one transaction or a series of related transactions) all
or substantially all of the Company's assets.
(b) "Claim" shall mean with respect to a Covered Event: any
threatened, pending or completed action, suit, proceeding or alternative dispute
resolution mechanism, or any hearing, inquiry or investigation that Indemnitee
in good faith believes might lead to the institution of any such action, suit,
proceeding or alternative dispute resolution mechanism, whether civil, criminal,
administrative, investigative or other.
(c) References to the "Company" shall include, in addition to
Abgenix, Inc., any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger to which Abgenix, Inc. (or
any of its wholly owned subsidiaries) is a party which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, employees, agents or fiduciaries, so that if Indemnitee is
or was a director, officer, employee, agent or fiduciary of such constituent
corporation, or is or was serving at the request of such constituent corporation
as a director, officer, employee, agent or fiduciary of another corporation,
partnership, joint venture, employee benefit plan, trust or other enterprise,
Indemnitee shall stand in the same position under the provisions of this
Agreement with respect to the resulting or surviving corporation as Indemnitee
would have with respect to such constituent corporation if its separate
existence had continued.
(d) "Covered Event" shall mean any event or occurrence related to
the fact that Indemnitee is or was a director, officer, employee, agent or
fiduciary of the Company, or any subsidiary of the Company, or is or was serving
at the request of the Company as a director, officer, employee, agent or
fiduciary of another corporation, partnership, joint venture, trust or other
enterprise, or by reason of any action or inaction on the part of Indemnitee
while serving in such capacity.
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(e) "Expenses" shall mean any and all expenses (including
attorneys' fees and all other costs, expenses and obligations incurred in
connection with investigating, defending, being a witness in or participating in
(including on appeal), or preparing to defend, to be a witness in or to
participate in, any action, suit, proceeding, alternative dispute resolution
mechanism, hearing, inquiry or investigation), judgments, fines, penalties and
amounts paid in settlement (if such settlement is approved in advance by the
Company, which approval shall not be unreasonably withheld) of any Claim and any
federal, state, local or foreign taxes imposed on the Indemnitee as a result of
the actual or deemed receipt of any payments under this Agreement.
(f) "Expense Advance" shall mean a payment to Indemnitee pursuant
to Section 3 of Expenses in advance of the settlement of or final judgement in
any action, suit, proceeding or alternative dispute resolution mechanism,
hearing, inquiry or investigation which constitutes a Claim.
(g) "Independent Legal Counsel" shall mean an attorney or firm of
attorneys, selected in accordance with the provisions of Section 2(d) hereof,
who shall not have otherwise performed services for the Company or Indemnitee
within the last three years (other than with respect to matters concerning the
rights of Indemnitee under this Agreement, or of other Indemnitees under similar
indemnity agreements).
(h) References to "other enterprises" shall include employee
benefit plans; references to "fines" shall include any excise taxes assessed on
Indemnitee with respect to an employee benefit plan; and references to "serving
at the request of the Company" shall include any service as a director, officer,
employee, agent or fiduciary of the Company which imposes duties on, or involves
services by, such director, officer, employee, agent or fiduciary with respect
to an employee benefit plan, its participants or its beneficiaries; and if
Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to
be in the interest of the participants and beneficiaries of an employee benefit
plan, Indemnitee shall be deemed to have acted in a manner "not opposed to the
best interests of the Company" as referred to in this Agreement.
(i) "Reviewing Party" shall mean, subject to the provisions of
Section 2(d), any person or body appointed by the Board of Directors in
accordance with applicable law to review the Company's obligations hereunder and
under applicable law, which may include a member or members of the Company's
Board of Directors, Independent Legal Counsel or any other person or body not a
party to the particular Claim for which Indemnitee is seeking indemnification.
(j) "Section" refers to a section of this Agreement unless
otherwise indicated.
(k) "Voting Securities" shall mean any securities of the Company
that vote generally in the election of directors.
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<PAGE> 4
2. Indemnification.
(a) Indemnification of Expenses. Subject to the provisions of
Section 2(b) below, the Company shall indemnify Indemnitee for Expenses to the
fullest extent permitted by law if Indemnitee was or is or becomes a party to or
witness or other participant in, or is threatened to be made a party to or
witness or other participant in, any Claim (whether by reason of or arising in
part out of a Covered Event), including all interest, assessments and other
charges paid or payable in connection with or in respect of such Expenses.
(b) Review of Indemnification Obligations. Notwithstanding the
foregoing, in the event any Reviewing Party shall have determined (in a written
opinion, in any case in which Independent Legal Counsel is the Reviewing Party)
that Indemnitee is not entitled to be indemnified hereunder under applicable
law, (i) the Company shall have no further obligation under Section 2(a) to make
any payments to Indemnitee not made prior to such determination by such
Reviewing Party, and (ii) the Company shall be entitled to be reimbursed by
Indemnitee (who hereby agrees to reimburse the Company) for all Expenses
theretofore paid to Indemnitee to which Indemnitee is not entitled hereunder
under applicable law; provided, however, that if Indemnitee has commenced or
thereafter commences legal proceedings in a court of competent jurisdiction to
secure a determination that Indemnitee is entitled to be indemnified hereunder
under applicable law, any determination made by any Reviewing Party that
Indemnitee is not entitled to be indemnified hereunder under applicable law
shall not be binding and Indemnitee shall not be required to reimburse the
Company for any Expenses theretofore paid in indemnifying Indemnitee until a
final judicial determination is made with respect thereto (as to which all
rights of appeal therefrom have been exhausted or lapsed). Indemnitee's
obligation to reimburse the Company for any Expenses shall be unsecured and no
interest shall be charged thereon.
(c) Indemnitee Rights on Unfavorable Determination; Binding
Effect. If any Reviewing Party determines that Indemnitee substantively is not
entitled to be indemnified hereunder in whole or in part under applicable law,
Indemnitee shall have the right to commence litigation seeking an initial
determination by the court or challenging any such determination by such
Reviewing Party or any aspect thereof, including the legal or factual bases
therefor, and, subject to the provisions of Section 15, the Company hereby
consents to service of process and to appear in any such proceeding. Absent such
litigation, any determination by any Reviewing Party shall be conclusive and
binding on the Company and Indemnitee.
(d) Selection of Reviewing Party; Change in Control. If there has
not been a Change in Control, any Reviewing Party shall be selected by the Board
of Directors, and if there has been such a Change in Control (other than a
Change in Control which has been approved by a majority of the Company's Board
of Directors who were directors immediately prior to such Change in Control),
any Reviewing Party with respect to all matters thereafter arising concerning
the rights of Indemnitee to indemnification of Expenses under this Agreement or
any other agreement or under the Company's Certificate of Incorporation or
Bylaws as now or hereafter in effect, or under any other applicable law, if
desired by Indemnitee, shall be Independent Legal Counsel selected by
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<PAGE> 5
Indemnitee and approved by the Company (which approval shall not be unreasonably
withheld). Such counsel, among other things, shall render its written opinion to
the Company and Indemnitee as to whether and to what extent Indemnitee would be
entitled to be indemnified hereunder under applicable law and the Company agrees
to abide by such opinion. The Company agrees to pay the reasonable fees of the
Independent Legal Counsel referred to above and to indemnify fully such counsel
against any and all expenses (including attorneys' fees), claims, liabilities
and damages arising out of or relating to this Agreement or its engagement
pursuant hereto. Notwithstanding any other provision of this Agreement, the
Company shall not be required to pay Expenses of more than one Independent Legal
Counsel in connection with all matters concerning a single Indemnitee, and such
Independent Legal Counsel shall be the Independent Legal Counsel for any or all
other Indemnitees unless (i) the employment of separate counsel by one or more
Indemnitees has been previously authorized by the Company in writing, or (ii) an
Indemnitee shall have provided to the Company a written statement that such
Indemnitee has reasonably concluded that there may be a conflict of interest
between such Indemnitee and the other Indemnitees with respect to the matters
arising under this Agreement.
(e) Mandatory Payment of Expenses. Notwithstanding any other
provision of this Agreement other than Section 10 hereof, to the extent that
Indemnitee has been successful on the merits or otherwise, including, without
limitation, the dismissal of an action without prejudice, in defense of any
Claim, Indemnitee shall be indemnified against all Expenses incurred by
Indemnitee in connection therewith.
3. Expense Advances.
(a) Obligation to Make Expense Advances. Upon receipt of a
written undertaking by or on behalf of the Indemnitee to repay such amounts if
it shall ultimately be determined that the Indemnitee is not entitled to be
indemnified therefore by the Company hereunder under applicable law, the Company
shall make Expense Advances to Indemnitee.
(b) Form of Undertaking. Any obligation to repay any Expense
Advances hereunder pursuant to a written undertaking by the Indemnitee shall be
unsecured and no interest shall be charged thereon.
(c) Determination of Reasonable Expense Advances. The parties
agree that for the purposes of any Expense Advance for which Indemnitee has made
written demand to the Company in accordance with this Agreement, all Expenses
included in such Expense Advance that are certified by affidavit of Indemnitee's
counsel as being reasonable shall be presumed conclusively to be reasonable.
4. Procedures for Indemnification and Expense Advances.
(a) Timing of Payments. All payments of Expenses (including
without limitation Expense Advances) by the Company to the Indemnitee pursuant
to this Agreement shall be made
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to the fullest extent permitted by law as soon as practicable after written
demand by Indemnitee therefor is presented to the Company, but in no event later
than thirty (30) business days after such written demand by Indemnitee is
presented to the Company, except in the case of Expense Advances, which shall be
made no later than ten (10) business days after such written demand by
Indemnitee is presented to the Company.
(b) Notice/Cooperation by Indemnitee. Indemnitee shall, as a
condition precedent to Indemnitee's right to be indemnified or Indemnitee's
right to receive Expense Advances under this Agreement, give the Company notice
in writing as soon as practicable of any Claim made against Indemnitee for which
indemnification will or could be sought under this Agreement. Notice to the
Company shall be directed to the Chief Executive Officer of the Company at the
address shown on the signature page of this Agreement (or such other address as
the Company shall designate in writing to Indemnitee). In addition, Indemnitee
shall give the Company such information and cooperation as it may reasonably
require and as shall be within Indemnitee's power.
(c) No Presumptions; Burden of Proof. For purposes of this
Agreement, the termination of any Claim by judgment, order, settlement (whether
with or without court approval) or conviction, or upon a plea of nolo
contendere, or its equivalent, shall not create a presumption that Indemnitee
did not meet any particular standard of conduct or have any particular belief or
that a court has determined that indemnification is not permitted by this
Agreement or applicable law. In addition, neither the failure of any Reviewing
Party to have made a determination as to whether Indemnitee has met any
particular standard of conduct or had any particular belief, nor an actual
determination by any Reviewing Party that Indemnitee has not met such standard
of conduct or did not have such belief, prior to the commencement of legal
proceedings by Indemnitee to secure a judicial determination that Indemnitee
should be indemnified under this Agreement under applicable law, shall be a
defense to Indemnitee's claim or create a presumption that Indemnitee has not
met any particular standard of conduct or did not have any particular belief. In
connection with any determination by any Reviewing Party or otherwise as to
whether the Indemnitee is entitled to be indemnified hereunder under applicable
law, the burden of proof shall be on the Company to establish that Indemnitee is
not so entitled.
(d) Notice to Insurers. If, at the time of the receipt by the
Company of a notice of a Claim pursuant to Section 4(b) hereof, the Company has
liability insurance in effect which may cover such Claim, the Company shall give
prompt notice of the commencement of such Claim to the insurers in accordance
with the procedures set forth in the respective policies. The Company shall
thereafter take all necessary or desirable action to cause such insurers to pay,
on behalf of the Indemnitee, all amounts payable as a result of such Claim in
accordance with the terms of such policies.
(e) Selection of Counsel. In the event the Company shall be
obligated hereunder to provide indemnification for or make any Expense Advances
with respect to the Expenses of any Claim, the Company, if appropriate, shall be
entitled to assume the defense of such Claim with counsel approved by Indemnitee
(which approval shall not be unreasonably withheld) upon the
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delivery to Indemnitee of written notice of the Company's election to do so.
After delivery of such notice, approval of such counsel by Indemnitee and the
retention of such counsel by the Company, the Company will not be liable to
Indemnitee under this Agreement for any fees or expenses of separate counsel
subsequently retained by or on behalf of Indemnitee with respect to the same
Claim; provided that, (i) Indemnitee shall have the right to employ Indemnitee's
separate counsel in any such Claim at Indemnitee's expense and (ii) if (A) the
employment of separate counsel by Indemnitee has been previously authorized by
the Company, (B) Indemnitee shall have reasonably concluded that there may be a
conflict of interest between the Company and Indemnitee in the conduct of any
such defense, or (C) the Company shall not continue to retain such counsel to
defend such Claim, then the fees and expenses of Indemnitee's separate counsel
shall be Expenses for which Indemnitee may receive indemnification or Expense
Advances hereunder.
5. Additional Indemnification Rights; Nonexclusivity.
(a) Scope. The Company hereby agrees to indemnify the Indemnitee
to the fullest extent permitted by law, notwithstanding that such
indemnification is not specifically authorized by the other provisions of this
Agreement, the Company's Certificate of Incorporation, the Company's Bylaws or
by statute. In the event of any change after the date of this Agreement in any
applicable law, statute or rule which expands the right of a Delaware
corporation to indemnify a member of its board of directors or an officer,
employee, agent or fiduciary, it is the intent of the parties hereto that
Indemnitee shall enjoy by this Agreement the greater benefits afforded by such
change. In the event of any change in any applicable law, statute or rule which
narrows the right of a Delaware corporation to indemnify a member of its board
of directors or an officer, employee, agent or fiduciary, such change, to the
extent not otherwise required by such law, statute or rule to be applied to this
Agreement, shall have no effect on this Agreement or the parties' rights and
obligations hereunder except as set forth in Section 10(a) hereof.
(b) Nonexclusivity. The indemnification and the payment of
Expense Advances provided by this Agreement shall be in addition to any rights
to which Indemnitee may be entitled under the Company's Certificate of
Incorporation, its Bylaws, any other agreement, any vote of stockholders or
disinterested directors, the General Corporation Law of the State of Delaware,
or otherwise. The indemnification and the payment of Expense Advances provided
under this Agreement shall continue as to Indemnitee for any action taken or not
taken while serving in an indemnified capacity even though subsequent thereto
Indemnitee may have ceased to serve in such capacity.
6. No Duplication of Payments. The Company shall not be liable under
this Agreement to make any payment in connection with any Claim made against
Indemnitee to the extent Indemnitee has otherwise actually received payment
(under any insurance policy, provision of the Company's Certificate of
Incorporation, Bylaws or otherwise) of the amounts otherwise payable hereunder.
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7. Partial Indemnification. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of Expenses incurred in connection with any Claim, but not, however, for
all of the total amount thereof, the Company shall nevertheless indemnify
Indemnitee for the portion of such Expenses to which Indemnitee is entitled.
8. Mutual Acknowledgment. Both the Company and Indemnitee acknowledge
that in certain instances, federal law or applicable public policy may prohibit
the Company from indemnifying its directors, officers, employees, agents or
fiduciaries under this Agreement or otherwise. Indemnitee understands and
acknowledges that the Company has undertaken or may be required in the future to
undertake with the Securities and Exchange Commission to submit the question of
indemnification to a court in certain circumstances for a determination of the
Company's right under public policy to indemnify Indemnitee.
9. Liability Insurance. To the extent the Company maintains liability
insurance applicable to directors, officers, employees, agents or fiduciaries,
Indemnitee shall be covered by such policies in such a manner as to provide
Indemnitee the same rights and benefits as are provided to the most favorably
insured of the Company's directors, if Indemnitee is a director; or of the
Company's officers, if Indemnitee is not a director of the Company but is an
officer; or of the Company's key employees, agents or fiduciaries, if Indemnitee
is not an officer or director but is a key employee, agent or fiduciary.
10. Exceptions. Notwithstanding any other provision of this Agreement,
the Company shall not be obligated pursuant to the terms of this Agreement:
(a) Excluded Action or Omissions. To indemnify or make Expense
Advances to Indemnitee with respect to Claims arising out of acts, omissions or
transactions for which Indemnitee is prohibited from receiving indemnification
under applicable law.
(b) Claims Initiated by Indemnitee. To indemnify or make Expense
Advances to Indemnitee with respect to Claims initiated or brought voluntarily
by Indemnitee and not by way of defense, counterclaim or crossclaim, except (i)
with respect to actions or proceedings brought to establish or enforce a right
to indemnification under this Agreement or any other agreement or insurance
policy or under the Company's Certificate of Incorporation or Bylaws now or
hereafter in effect relating to Claims for Covered Events, (ii) in specific
cases if the Board of Directors has approved the initiation or bringing of such
Claim, or (iii) as otherwise required under Section 145 of the Delaware General
Corporation Law, regardless of whether Indemnitee ultimately is determined to be
entitled to such indemnification, Expense Advances, or insurance recovery, as
the case may be.
(c) Lack of Good Faith. To indemnify Indemnitee for any Expenses
incurred by the Indemnitee with respect to any action instituted (i) by
Indemnitee to enforce or interpret this Agreement, if a court having
jurisdiction over such action determines as provided in Section 13 that each of
the material assertions made by the Indemnitee as a basis for such action was
not made in
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good faith or was frivolous, or (ii) by or in the name of the Company to enforce
or interpret this Agreement, if a court having jurisdiction over such action
determines as provided in Section 13 that each of the material defenses asserted
by Indemnitee in such action was made in bad faith or was frivolous.
(d) Claims Under Section 16(b). To indemnify Indemnitee for
Expenses and the payment of profits arising from the purchase and sale by
Indemnitee of securities in violation of Section 16(b) of the Securities
Exchange Act of 1934, as amended, or any similar successor statute.
11. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original.
12. Binding Effect; Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the parties
hereto and their respective successors, assigns (including any direct or
indirect successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business or assets of the Company), spouses, heirs and
personal and legal representatives. The Company shall require and cause any
successor (whether direct or indirect, and whether by purchase, merger,
consolidation or otherwise) to all, substantially all, or a substantial part, of
the business or assets of the Company, by written agreement in form and
substance satisfactory to Indemnitee, expressly to assume and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform if no such succession had taken place. This Agreement
shall continue in effect regardless of whether Indemnitee continues to serve as
a director, officer, employee, agent or fiduciary (as applicable) of the Company
or of any other enterprise at the Company's request.
13. Expenses Incurred in Action Relating to Enforcement or
Interpretation. In the event that any action is instituted by Indemnitee under
this Agreement or under any liability insurance policies maintained by the
Company to enforce or interpret any of the terms hereof or thereof, Indemnitee
shall be entitled to be indemnified for all Expenses incurred by Indemnitee with
respect to such action (including without limitation attorneys' fees),
regardless of whether Indemnitee is ultimately successful in such action, unless
as a part of such action a court having jurisdiction over such action makes a
final judicial determination (as to which all rights of appeal therefrom have
been exhausted or lapsed) that each of the material assertions made by
Indemnitee as a basis for such action was not made in good faith or was
frivolous; provided, however, that until such final judicial determination is
made, Indemnitee shall be entitled under Section 3 to receive payment of Expense
Advances hereunder with respect to such action. In the event of an action
instituted by or in the name of the Company under this Agreement to enforce or
interpret any of the terms of this Agreement, Indemnitee shall be entitled to be
indemnified for all Expenses incurred by Indemnitee in defense of such action
(including without limitation costs and expenses incurred with respect to
Indemnitee's counterclaims and cross-claims made in such action), unless as a
part of such action a court having jurisdiction over such action makes a final
judicial determination (as to which all rights of appeal therefrom have been
exhausted or lapsed) that each of the material defenses asserted by Indemnitee
in such action was made in bad faith or was frivolous; provided, however, that
until
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such final judicial determination is made, Indemnitee shall be entitled under
Section 3 to receive payment of Expense Advances hereunder with respect to such
action.
14. Period of Limitations. No legal action shall be brought and no cause
of action shall be asserted by or in the right of the Company against
Indemnitee, Indemnitee's estate, spouse, heirs, executors or personal or legal
representatives after the expiration of two years from the date of accrual of
such cause of action, and any claim or cause of action of the Company shall be
extinguished and deemed released unless asserted by the timely filing of a legal
action within such two year period; provided, however, that if any shorter
period of limitations is otherwise applicable to any such cause of action, such
shorter period shall govern.
15. Notice. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed duly given (i) if
delivered by hand and signed for by the party addressed, on the date of such
delivery, or (ii) if mailed by domestic certified or registered mail with
postage prepaid, on the third business day after the date postmarked. Addresses
for notice to either party are as shown on the signature page of this Agreement,
or as subsequently modified by written notice.
16. Consent to Jurisdiction. The Company and Indemnitee each hereby
irrevocably consent to the jurisdiction of the courts of the State of Delaware
for all purposes in connection with any action or proceeding which arises out of
or relates to this Agreement and agree that any action instituted under this
Agreement shall be commenced, prosecuted and continued only in the Court of
Chancery of the State of Delaware in and for New Castle County, which shall be
the exclusive and only proper forum for adjudicating such a claim.
17. Severability. The provisions of this Agreement shall be severable in
the event that any of the provisions hereof (including any provision within a
single section, paragraph or sentence) are held by a court of competent
jurisdiction to be invalid, void or otherwise unenforceable, and the remaining
provisions shall remain enforceable to the fullest extent permitted by law.
Furthermore, to the fullest extent possible, the provisions of this Agreement
(including without limitation each portion of this Agreement containing any
provision held to be invalid, void or otherwise unenforceable, that is not
itself invalid, void or unenforceable) shall be construed so as to give effect
to the intent manifested by the provision held invalid, illegal or
unenforceable.
18. Choice of Law. This Agreement, and all rights, remedies,
liabilities, powers and duties of the parties to this Agreement, shall be
governed by and construed in accordance with the laws of the State of Delaware
as applied to contracts between Delaware residents entered into and to be
performed entirely in the State of Delaware without regard to principles of
conflicts of laws.
19. Subrogation. In the event of payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of Indemnitee, who shall execute all documents required and shall do
all acts that may be necessary to secure such rights and to enable the Company
effectively to bring suit to enforce such rights.
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20. Amendment and Termination. No amendment, modification, termination
or cancellation of this Agreement shall be effective unless it is in writing
signed by both the parties hereto. No waiver of any of the provisions of this
Agreement shall be deemed to be or shall constitute a waiver of any other
provisions hereof (whether or not similar), nor shall such waiver constitute a
continuing waiver.
21. Integration and Entire Agreement. This Agreement sets forth the
entire understanding between the parties hereto and supersedes and merges all
previous written and oral negotiations, commitments, understandings and
agreements relating to the subject matter hereof between the parties hereto.
22. No Construction as Employment Agreement. Nothing contained in this
Agreement shall be construed as giving Indemnitee any right to be retained in
the employ of the Company or any of its subsidiaries or affiliated entities.
IN WITNESS WHEREOF, the parties hereto have executed this
Indemnification Agreement as of the date first above written.
ABGENIX, INC.
By: AGREED TO AND ACCEPTED
-------------------------------
Print Name: INDEMNITEE:
----------------------- ----------------------------
Title:
----------------------------
----------------------------------------
Address: 7601 Dumbarton Circle (signature)
Fremont, CA 94555
Print Name:
----------------------------
Address:
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EXHIBIT 10.2
ABGENIX, INC.
1996 INCENTIVE STOCK PLAN
1. Purposes of the Plan. The purposes of this Stock Plan are:
- to attract and retain the best available personnel for
positions of substantial responsibility,
- to provide additional incentive to Employees, Directors
and Consultants, and
- to promote the success of the Company's business.
Options granted under the Plan may be Incentive Stock Options or
Nonstatutory Stock Options, as determined by the Administrator at the time of
grant. Stock Purchase Rights may also be granted under the Plan.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Administrator" means the Board or any of its Committees as
shall be administering the Plan, in accordance with Section 4 of the Plan.
(b) "Applicable Laws" means the requirements relating to the
administration of stock option plans under U. S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any foreign country or jurisdiction where Options or Stock Purchase Rights are,
or will be, granted under the Plan.
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" means a committee of Directors appointed by the
Board in accordance with Section 4 of the Plan.
(f) "Common Stock" means the common stock of the Company.
(g) "Company" means Abgenix, Inc., a Delaware corporation.
(h) "Consultant" means any person, including an advisor, engaged by
the Company or a Parent or Subsidiary to render services to such entity.
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(i) "Director" means a member of the Board.
(j) "Disability" means total and permanent disability as defined
in Section 22(e)(3) of the Code.
(k) "Employee" means any person, including Officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company. A Service
Provider shall not cease to be an Employee in the case of (i) any leave of
absence approved by the Company or (ii) transfers between locations of the
Company or between the Company, its Parent, any Subsidiary, or any successor.
For purposes of Incentive Stock Options, no such leave may exceed ninety days,
unless reemployment upon expiration of such leave is guaranteed by statute or
contract. If reemployment upon expiration of a leave of absence approved by the
Company is not so guaranteed, on the 181st day of such leave any Incentive Stock
Option held by the Optionee shall cease to be treated as an Incentive Stock
Option and shall be treated for tax purposes as a Nonstatutory Stock Option.
Neither service as a Director nor payment of a director's fee by the Company
shall be sufficient to constitute "employment" by the Company.
(l) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(m) "Fair Market Value" means, as of any date, the value of Common
Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the last market trading day prior to the time of determination, as reported in
The Wall Street Journal or such other source as the Administrator deems
reliable;
(ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market Value of
a Share of Common Stock shall be the mean between the high bid and low asked
prices for the Common Stock on the last market trading day prior to the day of
determination, as reported in The Wall Street Journal or such other source as
the Administrator deems reliable; or
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value shall be determined in good faith by the
Administrator.
(n) "Incentive Stock Option" means an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
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(o) "Nonstatutory Stock Option" means an Option not intended to
qualify as an Incentive Stock Option.
(p) "Notice of Grant" means a written or electronic notice
evidencing certain terms and conditions of an individual Option or Stock
Purchase Right grant. The Notice of Grant is part of the Option Agreement.
(q) "Officer" means a person who is an officer of the Company
within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
(r) "Option" means a stock option granted pursuant to the Plan.
(s) "Option Agreement" means an agreement between the Company and
an Optionee evidencing the terms and conditions of an individual Option grant.
The Option Agreement is subject to the terms and conditions of the Plan.
(t) "Option Exchange Program" means a program whereby outstanding
Options are surrendered in exchange for Options with a lower exercise price.
(u) "Optioned Stock" means the Common Stock subject to an Option or
Stock Purchase Right.
(v) "Optionee" means the holder of an outstanding Option or Stock
Purchase Right granted under the Plan.
(w) "Parent" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(x) "Plan" means this Stock Plan.
(y) "Restricted Stock" means shares of Common Stock acquired
pursuant to a grant of Stock Purchase Rights under Section 11 of the Plan.
(z) "Restricted Stock Purchase Agreement" means a written agreement
between the Company and the Optionee evidencing the terms and restrictions
applying to stock purchased under a Stock Purchase Right. The Restricted Stock
Purchase Agreement is subject to the terms and conditions of the Plan and the
Notice of Grant.
(aa) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3, as in effect when discretion is being exercised with
respect to the Plan.
(bb) "Section 16(b)" means Section 16(b) of the Exchange Act.
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(cc) "Service Provider" means an Employee, Director or Consultant.
(dd) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 13 of the Plan.
(ee) "Stock Purchase Right" means the right to purchase Common
Stock pursuant to Section 11 of the Plan, as evidenced by a Notice of Grant.
(ff) "Subsidiary" means a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section 13 of
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is 2,891,250 Shares. The Shares may be authorized, but unissued,
or reacquired Common Stock.
If an Option or Stock Purchase Right expires or becomes
unexercisable without having been exercised in full, or is surrendered pursuant
to an Option Exchange Program, the unpurchased Shares which were subject thereto
shall become available for future grant or sale under the Plan (unless the Plan
has terminated); provided, however, that Shares that have actually been issued
under the Plan, whether upon exercise of an Option or Right, shall not be
returned to the Plan and shall not become available for future distribution
under the Plan, except that if Shares of Restricted Stock are repurchased by the
Company at their original purchase price, such Shares shall become available for
future grant under the Plan.
4. Administration of the Plan.
(a) Procedure.
(i) Multiple Administrative Bodies. The Plan may be
administered by different Committees with respect to different groups of Service
Providers.
(ii) Section 162(m). To the extent that the Administrator
determines it to be desirable to qualify Options granted hereunder as
"performance-based compensation" within the meaning of Section 162(m) of the
Code, the Plan shall be administered by a Committee of two or more "outside
directors" within the meaning of Section 162(m) of the Code.
(iii) Rule 16b-3. To the extent desirable to qualify
transactions hereunder as exempt under Rule 16b-3, the transactions contemplated
hereunder shall be structured to satisfy the requirements for exemption under
Rule 16b-3.
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(iv) Other Administration. Other than as provided above, the
Plan shall be administered by (A) the Board or (B) a Committee, which committee
shall be constituted to satisfy Applicable Laws.
(b) Powers of the Administrator. Subject to the provisions of the
Plan, and in the case of a Committee, subject to the specific duties delegated
by the Board to such Committee, the Administrator shall have the authority, in
its discretion:
(i) to determine the Fair Market Value;
(ii) to select the Service Providers to whom Options and
Stock Purchase Rights may be granted hereunder;
(iii) to determine the number of shares of Common Stock to be
covered by each Option and Stock Purchase Right granted hereunder;
(iv) to approve forms of agreement for use under the Plan;
(v) to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any Option or Stock Purchase Right granted
hereunder. Such terms and conditions include, but are not limited to, the
exercise price, the time or times when Options or Stock Purchase Rights may be
exercised (which may be based on performance criteria), any vesting acceleration
or waiver of forfeiture restrictions, and any restriction or limitation
regarding any Option or Stock Purchase Right or the shares of Common Stock
relating thereto, based in each case on such factors as the Administrator, in
its sole discretion, shall determine;
(vi) to reduce the exercise price of any Option or Stock
Purchase Right to the then current Fair Market Value if the Fair Market Value of
the Common Stock covered by such Option or Stock Purchase Right shall have
declined since the date the Option or Stock Purchase Right was granted;
(vii) to institute an Option Exchange Program;
(viii)to construe and interpret the terms of the Plan and
awards granted pursuant to the Plan;
(ix) to prescribe, amend and rescind rules and regulations
relating to the Plan, including rules and regulations relating to sub-plans
established for the purpose of qualifying for preferred tax treatment under
foreign tax laws;
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(x) to modify or amend each Option or Stock Purchase Right
(subject to Section 15(c) of the Plan), including the discretionary authority to
extend the post-termination exercisability period of Options longer than is
otherwise provided for in the Plan;
(xi) to allow Optionees to satisfy withholding tax
obligations by electing to have the Company withhold from the Shares to be
issued upon exercise of an Option or Stock Purchase Right that number of Shares
having a Fair Market Value equal to the amount required to be withheld. The Fair
Market Value of the Shares to be withheld shall be determined on the date that
the amount of tax to be withheld is to be determined. All elections by an
Optionee to have Shares withheld for this purpose shall be made in such form and
under such conditions as the Administrator may deem necessary or advisable;
(xii) to authorize any person to execute on behalf of the
Company any instrument required to effect the grant of an Option or Stock
Purchase Right previously granted by the Administrator;
(xiii)to make all other determinations deemed necessary or
advisable for administering the Plan.
(c) Effect of Administrator's Decision. The Administrator's
decisions, determinations and interpretations shall be final and binding on all
Optionees and any other holders of Options or Stock Purchase Rights.
5. Eligibility. Nonstatutory Stock Options and Stock Purchase Rights may
be granted to Service Providers. Incentive Stock Options may be granted only to
Employees.
6. Limitations.
(a) Each Option shall be designated in the Option Agreement as
either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year (under
all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such
Options shall be treated as Nonstatutory Stock Options. For purposes of this
Section 6(a), Incentive Stock Options shall be taken into account in the order
in which they were granted. The Fair Market Value of the Shares shall be
determined as of the time the Option with respect to such Shares is granted.
(b) Neither the Plan nor any Option or Stock Purchase Right shall
confer upon an Optionee any right with respect to continuing the Optionee's
relationship as a Service Provider with the Company, nor shall they interfere in
any way with the Optionee's right or the Company's right to terminate such
relationship at any time, with or without cause.
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<PAGE> 7
(c) The following limitations shall apply to grants of Options:
(i) No Service Provider shall be granted, in any fiscal year
of the Company, Options to purchase more than 750,000 Shares.
(ii) In connection with his or her initial service, a Service
Provider may be granted Options to purchase up to an additional 750,000 Shares
which shall not count against the limit set forth in subsection (i) above.
(iii) The foregoing limitations shall be adjusted
proportionately in connection with any change in the Company's capitalization as
described in Section 13.
(iv) If an Option is cancelled in the same fiscal year of the
Company in which it was granted (other than in connection with a transaction
described in Section 13), the cancelled Option will be counted against the
limits set forth in subsections (i) and (ii) above. For this purpose, if the
exercise price of an Option is reduced, the transaction will be treated as a
cancellation of the Option and the grant of a new Option.
7. Term of Plan. Subject to Section 19 of the Plan, the Plan shall become
effective upon its adoption by the Board. It shall continue in effect for a term
of ten (10) years unless terminated earlier under Section 15 of the Plan.
8. Term of Option. The term of each Option shall be stated in the Option
Agreement. In the case of an Incentive Stock Option, the term shall be ten (10)
years from the date of grant or such shorter term as may be provided in the
Option Agreement. Moreover, in the case of an Incentive Stock Option granted to
an Optionee who, at the time the Incentive Stock Option is granted, owns stock
representing more than ten percent (10%) of the total combined voting power of
all classes of stock of the Company or any Parent or Subsidiary, the term of the
Incentive Stock Option shall be five (5) years from the date of grant or such
shorter term as may be provided in the Option Agreement.
9. Option Exercise Price and Consideration.
(a) Exercise Price. The per share exercise price for the Shares to
be issued pursuant to exercise of an Option shall be determined by the
Administrator, subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time the
Incentive Stock Option is granted, owns stock representing more than ten percent
(10%) of the voting power of all classes of stock of the Company or any Parent
or Subsidiary, the per Share exercise price shall be no less than 110% of the
Fair Market Value per Share on the date of grant.
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<PAGE> 8
(B) granted to any Employee other than an Employee
described in paragraph (A) immediately above, the per Share exercise price shall
be no less than 100% of the Fair Market Value per Share on the date of grant.
(ii) In the case of a Nonstatutory Stock Option, the per
Share exercise price shall be determined by the Administrator. In the case of a
Nonstatutory Stock Option intended to qualify as "performance-based
compensation" within the meaning of Section 162(m) of the Code, the per Share
exercise price shall be no less than 100% of the Fair Market Value per Share on
the date of grant.
(iii) Notwithstanding the foregoing, Options may be granted
with a per Share exercise price of less than 100% of the Fair Market Value per
Share on the date of grant pursuant to a merger or other corporate transaction.
(b) Waiting Period and Exercise Dates. At the time an Option is
granted, the Administrator shall fix the period within which the Option may be
exercised and shall determine any conditions which must be satisfied before the
Option may be exercised.
(c) Form of Consideration. The Administrator shall determine the
acceptable form of consideration for exercising an Option, including the method
of payment. In the case of an Incentive Stock Option, the Administrator shall
determine the acceptable form of consideration at the time of grant. Such
consideration may consist entirely of:
(i) cash;
(ii) check;
(iii) promissory note;
(iv) other Shares which (A) in the case of Shares acquired
upon exercise of an option, have been owned by the Optionee for more than six
months on the date of surrender, and (B) have a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares as to which said
Option shall be exercised;
(v) consideration received by the Company under a cashless
exercise program implemented by the Company in connection with the Plan;
(vi) a reduction in the amount of any Company liability to
the Optionee, including any liability attributable to the Optionee's
participation in any Company-sponsored deferred compensation program or
arrangement;
(vii) any combination of the foregoing methods of payment; or
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<PAGE> 9
(viii)such other consideration and method of payment for the
issuance of Shares to the extent permitted by Applicable Laws.
10. Exercise of Option.
(a) Procedure for Exercise; Rights as a Stockholder. Any Option
granted hereunder shall be exercisable according to the terms of the Plan and at
such times and under such conditions as determined by the Administrator and set
forth in the Option Agreement. Unless the Administrator provides otherwise,
vesting of Options granted hereunder shall be tolled during any unpaid leave of
absence. An Option may not be exercised for a fraction of a Share.
An Option shall be deemed exercised when the Company
receives: (i) written or electronic notice of exercise (in accordance with the
Option Agreement) from the person entitled to exercise the Option, and (ii) full
payment for the Shares with respect to which the Option is exercised. Full
payment may consist of any consideration and method of payment authorized by the
Administrator and permitted by the Option Agreement and the Plan. Shares issued
upon exercise of an Option shall be issued in the name of the Optionee or, if
requested by the Optionee, in the name of the Optionee and his or her spouse.
Until the Shares are issued (as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent of the Company), no right
to vote or receive dividends or any other rights as a stockholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option.
The Company shall issue (or cause to be issued) such Shares promptly after the
Option is exercised. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the Shares are issued, except as
provided in Section 13 of the Plan.
Exercising an Option in any manner shall decrease the number
of Shares thereafter available, both for purposes of the Plan and for sale under
the Option, by the number of Shares as to which the Option is exercised.
(b) Termination of Relationship as a Service Provider. If an
Optionee ceases to be a Service Provider, other than upon the Optionee's death
or Disability, the Optionee may exercise his or her Option within such period of
time as is specified in the Option Agreement to the extent that the Option is
vested on the date of termination (but in no event later than the expiration of
the term of such Option as set forth in the Option Agreement). In the absence of
a specified time in the Option Agreement, the Option shall remain exercisable
for three (3) months following the Optionee's termination. If, on the date of
termination, the Optionee is not vested as to his or her entire Option, the
Shares covered by the unvested portion of the Option shall revert to the Plan.
If, after termination, the Optionee does not exercise his or her Option within
the time specified by the Administrator, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan.
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<PAGE> 10
(c) Disability of Optionee. If an Optionee ceases to be a Service
Provider as a result of the Optionee's Disability, the Optionee may exercise his
or her Option within such period of time as is specified in the Option Agreement
to the extent the Option is vested on the date of termination (but in no event
later than the expiration of the term of such Option as set forth in the Option
Agreement). In the absence of a specified time in the Option Agreement, the
Option shall remain exercisable for twelve (12) months following the Optionee's
termination. If, on the date of termination, the Optionee is not vested as to
his or her entire Option, the Shares covered by the unvested portion of the
Option shall revert to the Plan. If, after termination, the Optionee does not
exercise his or her Option within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.
(d) Death of Optionee. If an Optionee dies while a Service
Provider, the Option may be exercised within such period of time as is specified
in the Option Agreement (but in no event later than the expiration of the term
of such Option as set forth in the Notice of Grant), by the Optionee's estate or
by a person who acquires the right to exercise the Option by bequest or
inheritance, but only to the extent that the Option is vested on the date of
death. In the absence of a specified time in the Option Agreement, the Option
shall remain exercisable for twelve (12) months following the Optionee's
termination. If, at the time of death, the Optionee is not vested as to his or
her entire Option, the Shares covered by the unvested portion of the Option
shall immediately revert to the Plan. The Option may be exercised by the
executor or administrator of the Optionee's estate or, if none, by the person(s)
entitled to exercise the Option under the Optionee's will or the laws of descent
or distribution. If the Option is not so exercised within the time specified
herein, the Option shall terminate, and the Shares covered by such Option shall
revert to the Plan.
(e) Buyout Provisions. The Administrator may at any time offer to
buy out for a payment in cash or Shares an Option previously granted based on
such terms and conditions as the Administrator shall establish and communicate
to the Optionee at the time that such offer is made.
11. Stock Purchase Rights.
(a) Rights to Purchase. Stock Purchase Rights may be issued either
alone, in addition to, or in tandem with other awards granted under the Plan
and/or cash awards made outside of the Plan. After the Administrator determines
that it will offer Stock Purchase Rights under the Plan, it shall advise the
offeree in writing or electronically, by means of a Notice of Grant, of the
terms, conditions and restrictions related to the offer, including the number of
Shares that the offeree shall be entitled to purchase, the price to be paid, and
the time within which the offeree must accept such offer. The offer shall be
accepted by execution of a Restricted Stock Purchase Agreement in the form
determined by the Administrator.
(b) Repurchase Option. Unless the Administrator determines
otherwise, the Restricted Stock Purchase Agreement shall grant the Company a
repurchase option exercisable upon the voluntary or involuntary termination of
the purchaser's service with the Company for any reason
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<PAGE> 11
(including death or Disability). The purchase price for Shares repurchased
pursuant to the Restricted Stock Purchase Agreement shall be the original price
paid by the purchaser and may be paid by cancellation of any indebtedness of the
purchaser to the Company. The repurchase option shall lapse at a rate determined
by the Administrator.
(c) Other Provisions. The Restricted Stock Purchase Agreement shall
contain such other terms, provisions and conditions not inconsistent with the
Plan as may be determined by the Administrator in its sole discretion.
(d) Rights as a Stockholder. Once the Stock Purchase Right is
exercised, the purchaser shall have the rights equivalent to those of a
stockholder, and shall be a stockholder when his or her purchase is entered upon
the records of the duly authorized transfer agent of the Company. No adjustment
will be made for a dividend or other right for which the record date is prior to
the date the Stock Purchase Right is exercised, except as provided in Section 13
of the Plan.
12. Non-Transferability of Options and Stock Purchase Rights. Unless
determined otherwise by the Administrator, an Option or Stock Purchase Right may
not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any
manner other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Optionee, only by the Optionee. If the
Administrator makes an Option or Stock Purchase Right transferable, such Option
or Stock Purchase Right shall contain such additional terms and conditions as
the Administrator deems appropriate.
13. Adjustments Upon Changes in Capitalization, Dissolution, Merger or
Asset Sale.
(a) Changes in Capitalization. Subject to any required action by
the stockholders of the Company, the number of shares of Common Stock covered by
each outstanding Option and Stock Purchase Right, and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options or Stock Purchase Rights have yet been granted or which have
been returned to the Plan upon cancellation or expiration of an Option or Stock
Purchase Right, as well as the price per share of Common Stock covered by each
such outstanding Option or Stock Purchase Right, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without receipt
of consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option or Stock
Purchase Right.
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<PAGE> 12
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Administrator shall notify each
Optionee as soon as practicable prior to the effective date of such proposed
transaction. The Administrator in its discretion may provide for an Optionee to
have the right to exercise his or her Option until ten (10) days prior to such
transaction as to all of the Optioned Stock covered thereby, including Shares as
to which the Option would not otherwise be exercisable. In addition, the
Administrator may provide that any Company repurchase option applicable to any
Shares purchased upon exercise of an Option or Stock Purchase Right shall lapse
as to all such Shares, provided the proposed dissolution or liquidation takes
place at the time and in the manner contemplated. To the extent it has not been
previously exercised, an Option or Stock Purchase Right will terminate
immediately prior to the consummation of such proposed action.
(c) Merger or Asset Sale. In the event of a merger of the Company
with or into another corporation, or the sale of substantially all of the assets
of the Company, each outstanding Option and Stock Purchase Right shall be
assumed or an equivalent option or right substituted by the successor
corporation or a Parent or Subsidiary of the successor corporation. In the event
that the successor corporation refuses to assume or substitute for the Option or
Stock Purchase Right, the Optionee shall fully vest in and have the right to
exercise the Option or Stock Purchase Right as to all of the Optioned Stock,
including Shares as to which it would not otherwise be vested or exercisable. If
an Option or Stock Purchase Right becomes fully vested and exercisable in lieu
of assumption or substitution in the event of a merger or sale of assets, the
Administrator shall notify the Optionee in writing or electronically that the
Option or Stock Purchase Right shall be fully vested and exercisable for a
period of fifteen (15) days from the date of such notice, and the Option or
Stock Purchase Right shall terminate upon the expiration of such period. For the
purposes of this paragraph, the Option or Stock Purchase Right shall be
considered assumed if, following the merger or sale of assets, the option or
right confers the right to purchase or receive, for each Share of Optioned Stock
subject to the Option or Stock Purchase Right immediately prior to the merger or
sale of assets, the consideration (whether stock, cash, or other securities or
property) received in the merger or sale of assets by holders of Common Stock
for each Share held on the effective date of the transaction (and if holders
were offered a choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding Shares); provided, however, that if
such consideration received in the merger or sale of assets is not solely common
stock of the successor corporation or its Parent, the Administrator may, with
the consent of the successor corporation, provide for the consideration to be
received upon the exercise of the Option or Stock Purchase Right, for each Share
of Optioned Stock subject to the Option or Stock Purchase Right, to be solely
common stock of the successor corporation or its Parent equal in fair market
value to the per share consideration received by holders of Common Stock in the
merger or sale of assets.
14. Date of Grant. The date of grant of an Option or Stock Purchase Right
shall be, for all purposes, the date on which the Administrator makes the
determination granting such Option or Stock Purchase Right, or such other later
date as is determined by the Administrator. Notice of the
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<PAGE> 13
determination shall be provided to each Optionee within a reasonable time after
the date of such grant.
15. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time amend,
alter, suspend or terminate the Plan.
(b) Stockholder Approval. The Company shall obtain stockholder
approval of any Plan amendment to the extent necessary and desirable to comply
with Applicable Laws.
(c) Effect of Amendment or Termination. No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any Optionee,
unless mutually agreed otherwise between the Optionee and the Administrator,
which agreement must be in writing and signed by the Optionee and the Company.
Termination of the Plan shall not affect the Administrator's ability to exercise
the powers granted to it hereunder with respect to Options granted under the
Plan prior to the date of such termination.
16. Conditions Upon Issuance of Shares.
(a) Legal Compliance. Shares shall not be issued pursuant to the
exercise of an Option or Stock Purchase Right unless the exercise of such Option
or Stock Purchase Right and the issuance and delivery of such Shares shall
comply with Applicable Laws and shall be further subject to the approval of
counsel for the Company with respect to such compliance.
(b) Investment Representations. As a condition to the exercise of
an Option or Stock Purchase Right, the Company may require the person exercising
such Option or Stock Purchase Right to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required.
17. Inability to Obtain Authority. The inability of the Company to obtain
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company's counsel to be necessary to the lawful issuance and sale
of any Shares hereunder, shall relieve the Company of any liability in respect
of the failure to issue or sell such Shares as to which such requisite authority
shall not have been obtained.
18. Reservation of Shares. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
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<PAGE> 14
19. Stockholder Approval. The Plan shall be subject to approval by the
stockholders of the Company within twelve (12) months after the date the Plan is
adopted. Such stockholder approval shall be obtained in the manner and to the
degree required under Applicable Laws.
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<PAGE> 15
ABGENIX, INC.
1996 INCENTIVE STOCK PLAN
STOCK OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in the Plan shall have
the same defined meanings in this Option Agreement.
I. NOTICE OF STOCK OPTION GRANT
[Optionee's Name and Address]
You have been granted an option to purchase Common Stock of the Company,
subject to the terms and conditions of the Plan and this Option Agreement, as
follows:
Grant Number _________________________
Date of Grant _________________________
Vesting Commencement Date _________________________
Exercise Price per Share $________________________
Total Number of Shares Granted _________________________
Total Exercise Price $_________________________
Type of Option: ___ Incentive Stock Option
___ Nonstatutory Stock Option
Term/Expiration Date: _________________________
Vesting Schedule:
This Option may be exercised, in whole or in part, in accordance with the
following schedule:
[25% of the Shares subject to the Option shall vest twelve months after
the Vesting Commencement Date, and 1/48 of the Shares subject to the Option
shall vest each month thereafter, subject to the Optionee continuing to be a
Service Provider on such dates].
<PAGE> 16
Termination Period:
This Option may be exercised for [30/60/90] days after Optionee ceases to
be a Service Provider. Upon the death or Disability of the Optionee, this Option
may be exercised for one year after Optionee ceases to be a Service Provider. In
no event shall this Option be exercised later than the Term/Expiration Date as
provided above.
II. AGREEMENT
1. Grant of Option. The Plan Administrator of the Company hereby grants
to the Optionee named in the Notice of Grant attached as Part I of this
Agreement (the "Optionee") an option (the "Option") to purchase the number of
Shares, as set forth in the Notice of Grant, at the exercise price per share set
forth in the Notice of Grant (the "Exercise Price"), subject to the terms and
conditions of the Plan, which is incorporated herein by reference. Subject to
Section 15(c) of the Plan, in the event of a conflict between the terms and
conditions of the Plan and the terms and conditions of this Option Agreement,
the terms and conditions of the Plan shall prevail.
If designated in the Notice of Grant as an Incentive Stock Option
("ISO"), this Option is intended to qualify as an Incentive Stock Option under
Section 422 of the Code. However, if this Option is intended to be an Incentive
Stock Option, to the extent that it exceeds the $100,000 rule of Code Section
422(d) it shall be treated as a Nonstatutory Stock Option ("NSO").
2. Exercise of Option.
(a) Right to Exercise. This Option is exercisable during its term
in accordance with the Vesting Schedule set out in the Notice of Grant and the
applicable provisions of the Plan and this Option Agreement.
(b) Method of Exercise. This Option is exercisable by delivery of
an exercise notice, in the form attached as Exhibit A (the "Exercise Notice"),
which shall state the election to exercise the Option, the number of Shares in
respect of which the Option is being exercised (the "Exercised Shares"), and
such other representations and agreements as may be required by the Company
pursuant to the provisions of the Plan. The Exercise Notice shall be completed
by the Optionee and delivered to the Secretary of the Company. The Exercise
Notice shall be accompanied by payment of the aggregate Exercise Price as to all
Exercised Shares. This Option shall be deemed to be exercised upon receipt by
the Company of such fully executed Exercise Notice accompanied by such aggregate
Exercise Price.
No Shares shall be issued pursuant to the exercise of this Option
unless such issuance and exercise complies with Applicable Laws. Assuming such
compliance, for income tax purposes the Exercised Shares shall be considered
transferred to the Optionee on the date the Option is exercised with respect to
such Exercised Shares.
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<PAGE> 17
3. Method of Payment. Payment of the aggregate Exercise Price shall be by
any of the following, or a combination thereof, at the election of the Optionee:
(a) cash; or
(b) check; or
(c) consideration received by the Company under a cashless exercise
program implemented by the Company in connection with the Plan; or
(d) surrender of other Shares which (i) in the case of Shares
acquired upon exercise of an option, have been owned by the Optionee for more
than six (6) months on the date of surrender, AND (ii) have a Fair Market Value
on the date of surrender equal to the aggregate Exercise Price of the Exercised
Shares; or
(e) with the Administrator's consent, delivery of Optionee's
promissory note (the "Note") in the form attached hereto as Exhibit C, in the
amount of the aggregate Exercise Price of the Exercised Shares together with the
execution and delivery by the Optionee of the Security Agreement attached hereto
as Exhibit B. The Note shall bear interest at the "applicable federal rate"
prescribed under the Code and its regulations at time of purchase, and shall be
secured by a pledge of the Shares purchased by the Note pursuant to the Security
Agreement.
4. Non-Transferability of Option. This Option may not be transferred in
any manner otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of Optionee only by the Optionee. The terms
of the Plan and this Option Agreement shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.
5. Term of Option. This Option may be exercised only within the term set
out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option Agreement.
6. Tax Consequences. Some of the federal tax consequences relating to
this Option, as of the date of this Option, are set forth below. THIS SUMMARY IS
NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.
THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR
DISPOSING OF THE SHARES.
(a) Exercising the Option.
(i) Nonstatutory Stock Option. The Optionee may incur regular
federal income tax liability upon exercise of a NSO. The Optionee will be
treated as having received compensation income (taxable at ordinary income tax
rates) equal to the excess, if any, of the Fair
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<PAGE> 18
Market Value of the Exercised Shares on the date of exercise over their
aggregate Exercise Price. If the Optionee is an Employee or a former Employee,
the Company will be required to withhold from his or her compensation or collect
from Optionee and pay to the applicable taxing authorities an amount in cash
equal to a percentage of this compensation income at the time of exercise, and
may refuse to honor the exercise and refuse to deliver Shares if such
withholding amounts are not delivered at the time of exercise.
(ii) Incentive Stock Option. If this Option qualifies as an
ISO, the Optionee will have no regular federal income tax liability upon its
exercise, although the excess, if any, of the Fair Market Value of the Exercised
Shares on the date of exercise over their aggregate Exercise Price will be
treated as an adjustment to alternative minimum taxable income for federal tax
purposes and may subject the Optionee to alternative minimum tax in the year of
exercise. In the event that the Optionee ceases to be an Employee but remains a
Service Provider, any Incentive Stock Option of the Optionee that remains
unexercised shall cease to qualify as an Incentive Stock Option and will be
treated for tax purposes as a Nonstatutory Stock Option on the date three (3)
months and one (1) day following such change of status.
(b) Disposition of Shares.
(i) NSO. If the Optionee holds NSO Shares for at least one
year, any gain realized on disposition of the Shares will be treated as
long-term capital gain for federal income tax purposes.
(ii) ISO. If the Optionee holds ISO Shares for at least one
year after exercise and two years after the grant date, any gain realized on
disposition of the Shares will be treated as long-term capital gain for federal
income tax purposes. If the Optionee disposes of ISO Shares within one year
after exercise or two years after the grant date, any gain realized on such
disposition will be treated as compensation income (taxable at ordinary income
rates) to the extent of the excess, if any, of the lesser of (A) the difference
between the Fair Market Value of the Shares acquired on the date of exercise and
the aggregate Exercise Price, or (B) the difference between the sale price of
such Shares and the aggregate Exercise Price. Any additional gain will be taxed
as capital gain, short-term or long-term depending on the period that the ISO
Shares were held.
(c) Notice of Disqualifying Disposition of ISO Shares. If the
Optionee sells or otherwise disposes of any of the Shares acquired pursuant to
an ISO on or before the later of (i) two years after the grant date, or (ii) one
year after the exercise date, the Optionee shall immediately notify the Company
in writing of such disposition. The Optionee agrees that he or she may be
subject to income tax withholding by the Company on the compensation income
recognized from such early disposition of ISO Shares by payment in cash or out
of the current earnings paid to the Optionee.
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<PAGE> 19
7. Entire Agreement; Governing Law. The Plan is incorporated herein by
reference. The Plan and this Option Agreement constitute the entire agreement of
the parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof, and may not be modified adversely to the
Optionee's interest except by means of a writing signed by the Company and
Optionee. This agreement is governed by the internal substantive laws, but not
the choice of law rules, of California.
8. NO GUARANTEE OF CONTINUED SERVICE. OPTIONEE ACKNOWLEDGES AND AGREES
THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED
ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (AND NOT
THROUGH THE ACT OF BEING HIRED, BEING GRANTED AN OPTION OR PURCHASING SHARES
HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE
TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO
NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A
SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL
NOT INTERFERE WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO TERMINATE
OPTIONEE'S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT
CAUSE.
By your signature and the signature of the Company's representative
below, you and the Company agree that this Option is granted under and governed
by the terms and conditions of the Plan and this Option Agreement. Optionee has
reviewed the Plan and this Option Agreement in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Option
Agreement and fully understands all provisions of the Plan and Option Agreement.
Optionee hereby agrees to accept as binding, conclusive and final all decisions
or interpretations of the Administrator upon any questions relating to the Plan
and Option Agreement. Optionee further agrees to notify the Company upon any
change in the residence address indicated below.
OPTIONEE: ABGENIX, INC.
- ----------------------------------- -------------------------------------
Signature By
- ------------------------------------ -------------------------------------
Print Name Title
- ------------------------------------
Residence Address
- ------------------------------------
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<PAGE> 20
CONSENT OF SPOUSE
The undersigned spouse of Optionee has read and hereby approves the terms
and conditions of the Plan and this Option Agreement. In consideration of the
Company's granting his or her spouse the right to purchase Shares as set forth
in the Plan and this Option Agreement, the undersigned hereby agrees to be
irrevocably bound by the terms and conditions of the Plan and this Option
Agreement and further agrees that any community property interest shall be
similarly bound. The undersigned hereby appoints the undersigned's spouse as
attorney-in-fact for the undersigned with respect to any amendment or exercise
of rights under the Plan or this Option Agreement.
---------------------------------------
Spouse of Optionee
-6-
<PAGE> 21
EXHIBIT A
ABGENIX, INC.
1996 INCENTIVE STOCK PLAN
EXERCISE NOTICE
Abgenix, Inc.
7601 Dumbarton Circle
Fremont, CA 94555
Attention: Secretary
1. Exercise of Option. Effective as of today, ________________, 199__,
the undersigned ("Purchaser") hereby elects to purchase ______________ shares
(the "Shares") of the Common Stock of Abgenix, Inc. (the "Company") under and
pursuant to the 1996 Incentive Stock Plan (the "Plan") and the Stock Option
Agreement dated , 19___ (the "Option Agreement"). The purchase price for the
Shares shall be $ , as required by the Option Agreement.
2. Delivery of Payment. Purchaser herewith delivers to the Company the
full purchase price for the Shares.
3. Representations of Purchaser. Purchaser acknowledges that Purchaser
has received, read and understood the Plan and the Option Agreement and agrees
to abide by and be bound by their terms and conditions.
4. Rights as Stockholder. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the Shares, no right to vote or receive dividends or
any other rights as a stockholder shall exist with respect to the Optioned
Stock, notwithstanding the exercise of the Option. The Shares so acquired shall
be issued to the Optionee as soon as practicable after exercise of the Option.
No adjustment will be made for a dividend or other right for which the record
date is prior to the date of issuance, except as provided in Section 13 of the
Plan.
5. Tax Consultation. Purchaser understands that Purchaser may suffer
adverse tax consequences as a result of Purchaser's purchase or disposition of
the Shares. Purchaser represents that Purchaser has consulted with any tax
consultants Purchaser deems advisable in connection with the purchase or
disposition of the Shares and that Purchaser is not relying on the Company for
any tax advice.
6. Entire Agreement; Governing Law. The Plan and Option Agreement are
incorporated herein by reference. This Agreement, the Plan and the Option
Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all
<PAGE> 22
prior undertakings and agreements of the Company and Purchaser with respect to
the subject matter hereof, and may not be modified adversely to the Purchaser's
interest except by means of a writing signed by the Company and Purchaser. This
agreement is governed by the internal substantive laws, but not the choice of
law rules, of the State of California.
Submitted by: Accepted by:
PURCHASER: ABGENIX, INC.
- ---------------------------------- ------------------------------------
Signature By
- ---------------------------------- ------------------------------------
Print Name Its
Address: Address:
- --------------------------------- Abgenix, Inc.
- --------------------------------- 7601 Dumbarton Circle
Fremont, CA 94555
------------------------------------
Date Received
-2-
<PAGE> 23
EXHIBIT B
SECURITY AGREEMENT
This Security Agreement is made as of __________, 19___ between Abgenix,
Inc., a Delaware corporation ("Pledgee"), and _________________________
("Pledgor").
Recitals
Pursuant to Pledgor's election to purchase Shares under the Option
Agreement dated ________ (the "Option"), between Pledgor and Pledgee under
Pledgee's 1996 Incentive Stock Plan, and Pledgor's election under the terms of
the Option to pay for such shares with his promissory note (the "Note"), Pledgor
has purchased _________ shares of Pledgee's Common Stock (the "Shares") at a
price of $________ per share, for a total purchase price of $__________. The
Note and the obliga tions thereunder are as set forth in Exhibit C to the
Option.
NOW, THEREFORE, it is agreed as follows:
1. Creation and Description of Security Interest. In consideration of the
transfer of the Shares to Pledgor under the Option Agreement, Pledgor, pursuant
to the California Commercial Code, hereby pledges all of such Shares (herein
sometimes referred to as the "Collateral") represented by certificate number
______, duly endorsed in blank or with executed stock powers, and herewith
delivers said certificate to the Secretary of Pledgee ("Pledgeholder"), who
shall hold said certificate subject to the terms and conditions of this Security
Agreement.
The pledged stock (together with an executed blank stock assignment for
use in transferring all or a portion of the Shares to Pledgee if, as and when
required pursuant to this Security Agreement) shall be held by the Pledgeholder
as security for the repayment of the Note, and any extensions or renewals
thereof, to be executed by Pledgor pursuant to the terms of the Option, and the
Pledge holder shall not encumber or dispose of such Shares except in accordance
with the provisions of this Security Agreement.
2. Pledgor's Representations and Covenants. To induce Pledgee to enter
into this Security Agreement, Pledgor represents and covenants to Pledgee, its
successors and assigns, as follows:
a. Payment of Indebtedness. Pledgor will pay the principal sum of
the Note secured hereby, together with interest thereon, at the time and in the
manner provided in the Note.
b. Encumbrances. The Shares are free of all other encumbrances,
defenses and liens, and Pledgor will not further encumber the Shares without the
prior written consent of Pledgee.
-1-
<PAGE> 24
c. Margin Regulations. In the event that Pledgee's Common Stock is
now or later becomes margin-listed by the Federal Reserve Board and Pledgee is
classified as a "lender" within the meaning of the regulations under Part 207 of
Title 12 of the Code of Federal Regulations ("Regulation G"), Pledgor agrees to
cooperate with Pledgee in making any amendments to the Note or providing any
additional collateral as may be necessary to comply with such regulations.
3. Voting Rights. During the term of this pledge and so long as all
payments of principal and interest are made as they become due under the terms
of the Note, Pledgor shall have the right to vote all of the Shares pledged
hereunder.
4. Stock Adjustments. In the event that during the term of the pledge any
stock dividend, reclassification, readjustment or other changes are declared or
made in the capital structure of Pledgee, all new, substituted and additional
shares or other securities issued by reason of any such change shall be
delivered to and held by the Pledgee under the terms of this Security Agreement
in the same manner as the Shares originally pledged hereunder. In the event of
substitution of such securities, Pledgor, Pledgee and Pledgeholder shall
cooperate and execute such documents as are reasonable so as to provide for the
substitution of such Collateral and, upon such substitution, references to
"Shares" in this Security Agreement shall include the substituted shares of
capital stock of Pledgor as a result thereof.
5. Options and Rights. In the event that, during the term of this pledge,
subscription Options or other rights or options shall be issued in connection
with the pledged Shares, such rights, Options and options shall be the property
of Pledgor and, if exercised by Pledgor, all new stock or other securities so
acquired by Pledgor as it relates to the pledged Shares then held by
Pledgeholder shall be immediately delivered to Pledgeholder, to be held under
the terms of this Security Agreement in the same manner as the Shares pledged.
6. Default. Pledgor shall be deemed to be in default of the Note and of
this Security Agreement in the event:
a. Payment of principal or interest on the Note shall be
delinquent for a period of 10 days or more; or
b. Pledgor fails to perform any of the covenants set forth in the
Option or contained in this Security Agreement for a period of 10 days after
written notice thereof from Pledgee.
In the case of an event of Default, as set forth above, Pledgee shall
have the right to accelerate payment of the Note upon notice to Pledgor, and
Pledgee shall thereafter be entitled to pursue its remedies under the [state]
Commercial Code.
7. Release of Collateral. Subject to any applicable contrary rules under
Regulation G, there shall be released from this pledge a portion of the pledged
Shares held by Pledgeholder here
-2-
<PAGE> 25
under upon payments of the principal of the Note. The number of the pledged
Shares which shall be released shall be that number of full Shares which bears
the same proportion to the initial number of Shares pledged hereunder as the
payment of principal bears to the initial full principal amount of the Note.
8. Withdrawal or Substitution of Collateral. Pledgor shall not sell,
withdraw, pledge, substitute or otherwise dispose of all or any part of the
Collateral without the prior written consent of Pledgee.
9. Term. The within pledge of Shares shall continue until the payment of
all indebtedness secured hereby, at which time the remaining pledged stock shall
be promptly delivered to Pledgor, subject to the provisions for prior release of
a portion of the Collateral as provided in paragraph 7 above.
10. Insolvency. Pledgor agrees that if a bankruptcy or insolvency
proceeding is instituted by or against it, or if a receiver is appointed for the
property of Pledgor, or if Pledgor makes an assignment for the benefit of
creditors, the entire amount unpaid on the Note shall become immediately due and
payable, and Pledgee may proceed as provided in the case of default.
11. Pledgeholder Liability. In the absence of willful or gross
negligence, Pledgeholder shall not be liable to any party for any of his acts,
or omissions to act, as Pledgeholder.
12. Invalidity of Particular Provisions. Pledgor and Pledgee agree that
the enforceability or invalidity of any provision or provisions of this Security
Agreement shall not render any other provision or provisions herein contained
unenforceable or invalid.
13. Successors or Assigns. Pledgor and Pledgee agree that all of the
terms of this Security Agreement shall be binding on their respective successors
and assigns, and that the term "Pledgor" and the term "Pledgee" as used herein
shall be deemed to include, for all purposes, the respective designees,
successors, assigns, heirs, executors and administrators.
14. Governing Law. This Security Agreement shall be interpreted and
governed under the internal substantive laws, but not the choice of law rules,
of California.
-3-
<PAGE> 26
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
"PLEDGOR" ---------------------------------
Signature
---------------------------------
Print Name
Address: ---------------------------------
---------------------------------
"PLEDGEE" Abgenix, Inc.,
a Delaware corporation
--------------------------------
Signature
--------------------------------
Print Name
--------------------------------
Title
"PLEDGEHOLDER" --------------------------------
Secretary of
Abgenix, Inc.
-4-
<PAGE> 27
EXHIBIT C
NOTE
$_______________ Fremont, California
______________, 19___
FOR VALUE RECEIVED, _______________ promises to pay to Abgenix, Inc., a
Delaware corporation (the "Company"), or order, the principal sum of
_______________________ ($_____________), together with interest on the unpaid
principal hereof from the date hereof at the rate of _______________ percent
(____%) per annum, compounded semiannually.
Principal and interest shall be due and payable on __________, 19___.
Payment of principal and interest shall be made in lawful money of the United
States of America.
The undersigned may at any time prepay all or any portion of the
principal or interest owing hereunder.
This Note is subject to the terms of the Option, dated as of
________________. This Note is secured in part by a pledge of the Company's
Common Stock under the terms of a Security Agreement of even date herewith and
is subject to all the provisions thereof.
The holder of this Note shall have full recourse against the undersigned,
and shall not be required to proceed against the collateral securing this Note
in the event of default.
In the event the undersigned shall cease to be an employee, director or
consultant of the Company for any reason, this Note shall, at the option of the
Company, be accelerated, and the whole unpaid balance on this Note of principal
and accrued interest shall be immediately due and payable.
Should any action be instituted for the collection of this Note, the
reasonable costs and attorneys' fees therein of the holder shall be paid by the
undersigned.
------------------------------------
------------------------------------
<PAGE> 28
ABGENIX, INC.
1996 INCENTIVE STOCK PLAN
NOTICE OF GRANT OF STOCK PURCHASE RIGHT
Unless otherwise defined herein, the terms defined in the Plan shall have
the same defined meanings in this Notice of Grant.
[Grantee's Name and Address]
You have been granted the right to purchase Common Stock of the Company,
subject to the Company's Repurchase Option and your ongoing status as a Service
Provider (as described in the Plan and the attached Restricted Stock Purchase
Agreement), as follows:
Grant Number _________________________
Date of Grant _________________________
Price Per Share $________________________
Total Number of Shares Subject _________________________
to This Stock Purchase Right
Expiration Date: _________________________
YOU MUST EXERCISE THIS STOCK PURCHASE RIGHT BEFORE THE EXPIRATION DATE OR
IT WILL TERMINATE AND YOU WILL HAVE NO FURTHER RIGHT TO PURCHASE THE SHARES. By
your signature and the signature of the Company's representative
below, you and the Company agree that this Stock Purchase Right is granted under
and governed by the terms and conditions of the 1996 Incentive Stock Plan and
the Restricted Stock Purchase Agreement, attached hereto as Exhibit A-1, both of
which are made a part of this document. You further agree to execute the
attached Restricted Stock Purchase Agreement as a condition to purchasing any
shares under this Stock Purchase Right.
GRANTEE: ABGENIX, INC.
- --------------------------- --------------------------------
Signature By
- --------------------------- --------------------------------
Print Name Title
<PAGE> 29
EXHIBIT A-1
ABGENIX, INC.
1996 INCENTIVE STOCK PLAN
RESTRICTED STOCK PURCHASE AGREEMENT
Unless otherwise defined herein, the terms defined in the Plan shall have
the same defined meanings in this Restricted Stock Purchase Agreement.
WHEREAS the Purchaser named in the Notice of Grant, (the "Purchaser") is
an Service Provider, and the Purchaser's continued participation is considered
by the Company to be important for the Company's continued growth; and
WHEREAS in order to give the Purchaser an opportunity to acquire an
equity interest in the Company as an incentive for the Purchaser to participate
in the affairs of the Company, the Admin istrator has granted to the Purchaser a
Stock Purchase Right subject to the terms and conditions of the Plan and the
Notice of Grant, which are incorporated herein by reference, and pursuant to
this Restricted Stock Purchase Agreement (the "Agreement").
NOW THEREFORE, the parties agree as follows:
1. Sale of Stock. The Company hereby agrees to sell to the Purchaser and
the Purchaser hereby agrees to purchase shares of the Company's Common Stock
(the "Shares"), at the per Share purchase price and as otherwise described in
the Notice of Grant.
2. Payment of Purchase Price. The purchase price for the Shares may be
paid by delivery to the Company at the time of execution of this Agreement of
cash, a check, or some combination thereof.
3. Repurchase Option.
(a) In the event the Purchaser ceases to be a Service Provider for
any or no reason (including death or disability) before all of the Shares are
released from the Company's Repurchase Option (see Section 4), the Company
shall, upon the date of such termination (as reasonably fixed and determined by
the Company) have an irrevocable, exclusive option (the "Repurchase Option") for
a period of sixty (60) days from such date to repurchase up to that number of
shares which constitute the Unreleased Shares (as defined in Section 4) at the
original purchase price per share (the "Repurchase Price"). The Repurchase
Option shall be exercised by the Company by delivering written notice to the
Purchaser or the Purchaser's executor (with a copy to the Escrow Holder) AND, at
the Company's option, (i) by delivering to the Purchaser or the Purchaser's
executor a check in the amount of the aggregate Repurchase Price, or (ii) by
cancelling an amount of the Purchaser's indebtedness to the Company equal to the
aggregate Repurchase Price, or (iii) by a combination of (i) and (ii) so that
the combined payment and cancellation of indebtedness equals the aggregate
Repurchase Price. Upon delivery of such notice and the payment of the aggregate
Repurchase Price,
<PAGE> 30
the Company shall become the legal and beneficial owner of the Shares being
repurchased and all rights and interests therein or relating thereto, and the
Company shall have the right to retain and transfer to its own name the number
of Shares being repurchased by the Company.
(b) Whenever the Company shall have the right to repurchase Shares
hereunder, the Company may designate and assign one or more employees, officers,
directors or stockholders of the Company or other persons or organizations to
exercise all or a part of the Company's purchase rights under this Agreement and
purchase all or a part of such Shares. If the Fair Market Value of the Shares to
be repurchased on the date of such designation or assignment (the "Repurchase
FMV") exceeds the aggregate Repurchase Price of such Shares, then each such
designee or assignee shall pay the Company cash equal to the difference between
the Repurchase FMV and the aggregate Repurchase Price of such Shares.
4. Release of Shares From Repurchase Option.
(a) _______________________ percent (______%) of the Shares shall
be released from the Company's Repurchase Option [one year] after the Date of
Grant and __________________ percent (______%) of the Shares [at the end of each
month thereafter], provided that the Purchaser does not cease to be a Service
Provider prior to the date of any such release.
(b) Any of the Shares that have not yet been released from the
Repurchase Option are referred to herein as "Unreleased Shares."
(c) The Shares that have been released from the Repurchase Option
shall be delivered to the Purchaser at the Purchaser's request (see Section 6).
5. Restriction on Transfer. Except for the escrow described in Section 6
or the transfer of the Shares to the Company or its assignees contemplated by
this Agreement, none of the Shares or any beneficial interest therein shall be
transferred, encumbered or otherwise disposed of in any way until such Shares
are released from the Company's Repurchase Option in accordance with the provi
sions of this Agreement, other than by will or the laws of descent and
distribution.
6. Escrow of Shares.
(a) To ensure the availability for delivery of the Purchaser's
Unreleased Shares upon repurchase by the Company pursuant to the Repurchase
Option, the Purchaser shall, upon execution of this Agreement, deliver and
deposit with an escrow holder designated by the Company (the "Escrow Holder")
the share certificates representing the Unreleased Shares, together with the
stock assignment duly endorsed in blank, attached hereto as Exhibit A-2. The
Unreleased Shares and stock assignment shall be held by the Escrow Holder,
pursuant to the Joint Escrow Instructions of the Company and Purchaser attached
hereto as Exhibit A-3, until such time as the Company's Repurchase Option
expires. As a further condition to the Company's obligations under this
-2-
<PAGE> 31
Agreement, the Company may require the spouse of Purchaser, if any, to execute
and deliver to the Company the Consent of Spouse attached hereto as Exhibit A-4.
(b) The Escrow Holder shall not be liable for any act it may do or
omit to do with respect to holding the Unreleased Shares in escrow while acting
in good faith and in the exercise of its judgment.
(c) If the Company or any assignee exercises the Repurchase Option
hereunder, the Escrow Holder, upon receipt of written notice of such exercise
from the proposed transferee, shall take all steps necessary to accomplish such
transfer.
(d) When the Repurchase Option has been exercised or expires
unexercised or a portion of the Shares has been released from the Repurchase
Option, upon request the Escrow Holder shall promptly cause a new certificate to
be issued for the released Shares and shall deliver the certificate to the
Company or the Purchaser, as the case may be.
(e) Subject to the terms hereof, the Purchaser shall have all the
rights of a stockholder with respect to the Shares while they are held in
escrow, including without limitation, the right to vote the Shares and to
receive any cash dividends declared thereon. If, from time to time during the
term of the Repurchase Option, there is (i) any stock dividend, stock split or
other change in the Shares, or (ii) any merger or sale of all or substantially
all of the assets or other acquisition of the Company, any and all new,
substituted or additional securities to which the Purchaser is entitled by
reason of the Purchaser's ownership of the Shares shall be immediately subject
to this escrow, deposited with the Escrow Holder and included thereafter as
"Shares" for purposes of this Agreement and the Repurchase Option.
7. Legends. The share certificate evidencing the Shares, if any, issued
hereunder shall be endorsed with the following legend (in addition to any legend
required under applicable state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS UPON TRANSFER AND RIGHTS OF REPURCHASE AS SET FORTH IN AN AGREEMENT
BETWEEN THE COMPANY AND THE SHAREHOLDER, A COPY OF WHICH IS ON FILE WITH THE
SECRETARY OF THE COMPANY.
8. Adjustment for Stock Split. All references to the number of Shares and
the purchase price of the Shares in this Agreement shall be appropriately
adjusted to reflect any stock split, stock dividend or other change in the
Shares which may be made by the Company after the date of this Agreement.
9. Tax Consequences. The Purchaser has reviewed with the Purchaser's own
tax advisors the federal, state, local and foreign tax consequences of this
investment and the transactions contem plated by this Agreement. The Purchaser
is relying solely on such advisors and not on any
-3-
<PAGE> 32
statements or representations of the Company or any of its agents. The Purchaser
understands that the Purchaser (and not the Company) shall be responsible for
the Purchaser's own tax liability that may arise as a result of the transactions
contemplated by this Agreement. The Purchaser understands that Section 83 of the
Internal Revenue Code of 1986, as amended (the "Code"), taxes as ordinary income
the difference between the purchase price for the Shares and the Fair Market
Value of the Shares as of the date any restrictions on the Shares lapse. In this
context, "restriction" includes the right of the Company to buy back the Shares
pursuant to the Repurchase Option. The Purchaser understands that the Purchaser
may elect to be taxed at the time the Shares are purchased rather than when and
as the Repurchase Option expires by filing an election under Section 83(b) of
the Code with the IRS within 30 days from the date of purchase. The form for
making this election is attached as Exhibit A-5 hereto.
THE PURCHASER ACKNOWLEDGES THAT IT IS THE PURCHASER'S SOLE
RESPONSIBILITY AND NOT THE COMPANY'S TO FILE TIMELY THE ELECTION UNDER SECTION
83(b), EVEN IF THE PURCHASER REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO MAKE
THIS FILING ON THE PURCHASER'S BEHALF.
10. General Provisions.
(a) This Agreement shall be governed by the internal substantive
laws, but not the choice of law rules of California. This Agreement, subject to
the terms and conditions of the Plan and the Notice of Grant, represents the
entire agreement between the parties with respect to the purchase of the Shares
by the Purchaser. Subject to Section 15(c) of the Plan, in the event of a
conflict between the terms and conditions of the Plan and the terms and
conditions of this Agreement, the terms and conditions of the Plan shall
prevail. Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Agreement.
(b) Any notice, demand or request required or permitted to be given
by either the Company or the Purchaser pursuant to the terms of this Agreement
shall be in writing and shall be deemed given when delivered personally or
deposited in the U.S. mail, First Class with postage prepaid, and addressed to
the parties at the addresses of the parties set forth at the end of this
Agreement or such other address as a party may request by notifying the other in
writing.
Any notice to the Escrow Holder shall be sent to the Company's
address with a copy to the other party hereto.
(c) The rights of the Company under this Agreement shall be
transferable to any one or more persons or entities, and all covenants and
agreements hereunder shall inure to the benefit of, and be enforceable by the
Company's successors and assigns. The rights and obligations of the Purchaser
under this Agreement may only be assigned with the prior written consent of the
Company.
-4-
<PAGE> 33
(d) Either party's failure to enforce any provision of this
Agreement shall not in any way be construed as a waiver of any such provision,
nor prevent that party from thereafter enforcing any other provision of this
Agreement. The rights granted both parties hereunder are cumulative and shall
not constitute a waiver of either party's right to assert any other legal remedy
available to it.
(e) The Purchaser agrees upon request to execute any further
documents or instruments necessary or desirable to carry out the purposes or
intent of this Agreement.
(f) PURCHASER ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES
PURSUANT TO SECTION 4 HEREOF IS EARNED ONLY BY CONTINUING SERVICE AS A SERVICE
PROVIDER AT THE WILL OF THE COMPANY (AND NOT THROUGH THE ACT OF BEING HIRED OR
PURCHASING SHARES HEREUNDER). PURCHASER FURTHER ACKNOWLEDGES AND AGREES THAT
THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE
SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED
ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT
ALL, AND SHALL NOT INTERFERE WITH PURCHASER'S RIGHT OR THE COMPANY'S RIGHT TO
TERMINATE PURCHASER'S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR
WITHOUT CAUSE.
By Purchaser's signature below, Purchaser represents that he or she is
familiar with the terms and provisions of the Plan, and hereby accepts this
Agreement subject to all of the terms and provisions thereof. Purchaser has
reviewed the Plan and this Agreement in their entirety, has had an opportunity
to obtain the advice of counsel prior to executing this Agreement and fully
understands all provisions of this Agreement. Purchaser agrees to accept as
binding, conclusive and final all decisions or interpretations of the
Administrator upon any questions arising under the Plan or this Agreement.
Purchaser further agrees to notify the Company upon any change in the residence
indicated in the Notice of Grant.
DATED: ---------------------
PURCHASER: ABGENIX, INC.
- ------------------------------ ----------------------------------
Signature By
- ------------------------------ ----------------------------------
Print Name Title
-5-
<PAGE> 34
EXHIBIT A-2
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED I, __________________________, hereby sell, assign
and transfer unto ______________________________ (__________) shares of the
Common Stock of Abgenix, Inc. standing in my name of the books of said
corporation represented by Certificate No. _____ herewith and do hereby
irrevocably constitute and appoint to transfer the said stock on the books of
the within named corporation with full power of substitution in the premises.
This Stock Assignment may be used only in accordance with the Restricted
Stock Purchase Agreement (the "Agreement") between________________________ and
the undersigned dated ______________, 19__.
Dated: _______________, 19
Signature:______________________________
INSTRUCTIONS: Please do not fill in any blanks other than the signature line.
The purpose of this assignment is to enable the Company to exercise the
Repurchase Option, as set forth in the Agreement, without requiring additional
signatures on the part of the Purchaser.
<PAGE> 35
EXHIBIT A-3
JOINT ESCROW INSTRUCTIONS
, 19
Corporate Secretary
Abgenix, Inc.
7601 Dumbarton Circle
Fremont, CA 94555
Dear :
As Escrow Agent for both Abgenix, Inc., a Delaware corporation (the
"Company"), and the undersigned purchaser of stock of the Company (the
"Purchaser"), you are hereby authorized and directed to hold the documents
delivered to you pursuant to the terms of that certain Restricted Stock Purchase
Agreement ("Agreement") between the Company and the undersigned, in accordance
with the following instructions:
1. In the event the Company and/or any assignee of the Company (referred
to collectively as the "Company") exercises the Company's Repurchase Option set
forth in the Agreement, the Company shall give to Purchaser and you a written
notice specifying the number of shares of stock to be purchased, the purchase
price, and the time for a closing hereunder at the principal office of the
Company. Purchaser and the Company hereby irrevocably authorize and direct you
to close the transaction contemplated by such notice in accordance with the
terms of said notice.
2. At the closing, you are directed (a) to date the stock assignments
necessary for the transfer in question, (b) to fill in the number of shares
being transferred, and (c) to deliver same, together with the certificate
evidencing the shares of stock to be transferred, to the Company or its
assignee, against the simultaneous delivery to you of the purchase price (by
cash, a check, or some combination thereof) for the number of shares of stock
being purchased pursuant to the exercise of the Company's Repurchase Option.
3. Purchaser irrevocably authorizes the Company to deposit with you any
certificates evidencing shares of stock to be held by you hereunder and any
additions and substitutions to said shares as defined in the Agreement.
Purchaser does hereby irrevocably constitute and appoint you as Purchaser's
attorney-in-fact and agent for the term of this escrow to execute with respect
to such securities all documents necessary or appropriate to make such
securities negotiable and to complete any transaction herein contemplated,
including but not limited to the filing with any applicable state blue sky
authority of any required applications for consent to, or notice of transfer of,
the securities. Subject to the provisions of this paragraph 3, Purchaser shall
exercise all rights and privileges of a stockholder of the Company while the
stock is held by you.
<PAGE> 36
4. Upon written request of the Purchaser, but no more than once per
calendar year, unless the Company's Repurchase Option has been exercised, you
shall deliver to Purchaser a certificate or certificates representing so many
shares of stock as are not then subject to the Company's Repurchase Option.
Within 90 days after Purchaser ceases to be a Service Provider, you shall
deliver to Purchaser a certificate or certificates representing the aggregate
number of shares held or issued pursuant to the Agreement and not purchased by
the Company or its assignees pursuant to exercise of the Company's Repurchase
Option.
5. If at the time of termination of this escrow you should have in your
possession any documents, securities, or other property belonging to Purchaser,
you shall deliver all of the same to Purchaser and shall be discharged of all
further obligations hereunder.
6. Your duties hereunder may be altered, amended, modified or revoked
only by a writing signed by all of the parties hereto.
7. You shall be obligated only for the performance of such duties as are
specifically set forth herein and may rely and shall be protected in relying or
refraining from acting on any instrument reasonably believed by you to be
genuine and to have been signed or presented by the proper party or parties. You
shall not be personally liable for any act you may do or omit to do hereunder as
Escrow Agent or as attorney-in-fact for Purchaser while acting in good faith,
and any act done or omitted by you pursuant to the advice of your own attorneys
shall be conclusive evidence of such good faith.
8. You are hereby expressly authorized to disregard any and all warnings
given by any of the parties hereto or by any other person or corporation,
excepting only orders or process of courts of law, and are hereby expressly
authorized to comply with and obey orders, judgments or decrees of any court. In
case you obey or comply with any such order, judgment or decree, you shall not
be liable to any of the parties hereto or to any other person, firm or
corporation by reason of such compliance, notwithstanding any such order,
judgment or decree being subsequently reversed, modified, annulled, set aside,
vacated or found to have been entered without jurisdiction.
9. You shall not be liable in any respect on account of the identity,
authorities or rights of the parties executing or delivering or purporting to
execute or deliver the Agreement or any documents or papers deposited or called
for hereunder.
10. You shall not be liable for the outlawing of any rights under the
statute of limitations with respect to these Joint Escrow Instructions or any
documents deposited with you.
11. You shall be entitled to employ such legal counsel and other experts
as you may deem necessary properly to advise you in connection with your
obligations hereunder, may rely upon the advice of such counsel, and may pay
such counsel reasonable compensation therefor.
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<PAGE> 37
12. Your responsibilities as Escrow Agent hereunder shall terminate if
you shall cease to be an officer or agent of the Company or if you shall resign
by written notice to each party. In the event of any such termination, the
Company shall appoint a successor Escrow Agent.
13. If you reasonably require other or further instruments in connection
with these Joint Escrow Instructions or obligations in respect hereto, the
necessary parties hereto shall join in furnishing such instruments.
14. It is understood and agreed that should any dispute arise with
respect to the delivery and/or ownership or right of possession of the
securities held by you hereunder, you are authorized and directed to retain in
your possession without liability to anyone all or any part of said securities
until such disputes shall have been settled either by mutual written agreement
of the parties concerned or by a final order, decree or judgment of a court of
competent jurisdiction after the time for appeal has expired and no appeal has
been perfected, but you shall be under no duty whatsoever to institute or defend
any such proceedings.
15. Any notice required or permitted hereunder shall be given in writing
and shall be deemed effectively given upon personal delivery or upon deposit in
the United States Post Office, by registered or certified mail with postage and
fees prepaid, addressed to each of the other parties thereunto entitled at the
following addresses or at such other addresses as a party may designate by ten
days' advance written notice to each of the other parties hereto.
COMPANY: Abgenix, Inc.
7601 Dumbarton Circle
Fremont, CA 94555
PURCHASER:
-----------------------
-----------------------
-----------------------
ESCROW AGENT: Corporate Secretary
Abgenix, Inc.
7601 Dumbarton Circle
Fremont, CA 94555
16. By signing these Joint Escrow Instructions, you become a party hereto
only for the purpose of said Joint Escrow Instructions; you do not become a
party to the Agreement.
17. This instrument shall be binding upon and inure to the benefit of the
parties hereto, and their respective successors and permitted assigns.
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<PAGE> 38
18. These Joint Escrow Instructions shall be governed by, and construed
and enforced in accordance with, the internal substantive laws, but not the
choice of law rules, of the State of California.
Very truly yours,
ABGENIX, INC.
-------------------------------------
By
-------------------------------------
Title
PURCHASER:
-------------------------------------
Signature
-------------------------------------
Print Name
ESCROW AGENT:
- -------------------------------------
Corporate Secretary
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<PAGE> 39
EXHIBIT A-4
CONSENT OF SPOUSE
I, ____________________, spouse of ___________________, have read and
approve the foregoing Restricted Stock Purchase Agreement (the "Agreement"). In
consideration of the Company's grant to my spouse of the right to purchase
shares of Abgenix, Inc., as set forth in the Agreement, I hereby appoint my
spouse as my attorney-in-fact in respect to the exercise of any rights under the
Agreement and agree to be bound by the provisions of the Agreement insofar as I
may have any rights in said Agreement or any shares issued pursuant thereto
under the community property laws or similar laws relating to marital property
in effect in the state of our residence as of the date of the signing of the
foregoing Agreement.
Dated: _______________, 19
------------------------------------------
Signature of Spouse
<PAGE> 40
EXHIBIT A-5
ELECTION UNDER SECTION 83(b)
OF THE INTERNAL REVENUE CODE OF 1986
The undersigned taxpayer hereby elects, pursuant to Section 83(b) of the
Internal Revenue Code of 1986, as amended, to include in taxpayer's gross income
for the current taxable year the amount of any compensation taxable to taxpayer
in connection with his or her receipt of the property described below:
1. The name, address, taxpayer identification number and taxable year of the
undersigned are as follows:
NAME: TAXPAYER: SPOUSE:
ADDRESS:
IDENTIFICATION NO.: TAXPAYER: SPOUSE:
TAXABLE YEAR:
2. The property with respect to which the election is made is described as
follows: shares (the "Shares") of the Common Stock of Abgenix, Inc. (the
"Company").
3. The date on which the property was transferred is: ________________, 19__.
4. The property is subject to the following restrictions:
The Shares may be repurchased by the Company, or its assignee, upon
certain events. This right lapses with regard to a portion of the Shares
based on the continued performance of services by the taxpayer over time.
5. The fair market value at the time of transfer, determined without regard
to any restriction other than a restriction which by its terms will never
lapse, of such property is:
$_______________.
6. The amount (if any) paid for such property is:
$_______________.
The undersigned has submitted a copy of this statement to the person for whom
the services were performed in connection with the undersigned's receipt of the
above-described property. The transferee of such property is the person
performing the services in connection with the transfer of said property.
The undersigned understands that the foregoing election may not be revoked
except with the consent of the Commissioner.
Dated: ___________________, 19____ ______________________________________
Taxpayer
The undersigned spouse of taxpayer joins in this election.
Dated: ___________________, 19____ ______________________________________
Spouse of Taxpayer
<PAGE> 1
EXHIBIT 10.3
ABGENIX, INC.
1998 EMPLOYEE STOCK PURCHASE PLAN
The following constitute the provisions of the 1998 Employee Stock Purchase
Plan of Abgenix, Inc.
1. Purpose. The purpose of the Plan is to provide employees of the
Company and its Designated Subsidiaries with an opportunity to purchase Common
Stock of the Company through accumulated payroll deductions. It is the intention
of the Company to have the Plan qualify as an "Employee Stock Purchase Plan"
under Section 423 of the Internal Revenue Code of 1986, as amended. The
provisions of the Plan, accordingly, shall be construed so as to extend and
limit participation in a manner consistent with the requirements of that section
of the Code.
2. Definitions.
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(c) "Common Stock" shall mean the Common Stock of the Company.
(d) "Company" shall mean Abgenix, Inc. and any Designated Subsidiary
of the Company.
(e) "Compensation" shall mean all base straight time gross earnings,
overtime and commissions, but exclusive of payments for shift premium, incentive
compensation, incentive payments, bonuses and other compensation.
(f) "Designated Subsidiary" shall mean any Subsidiary which has been
designated by the Board from time to time in its sole discretion as eligible to
participate in the Plan.
(g) "Employee" shall mean any individual who is an Employee of the
Company for tax purposes whose customary employment with the Company is at least
twenty (20) hours per week and more than five (5) months in any calendar year.
For purposes of the Plan, the employment relationship shall be treated as
continuing intact while the individual is on sick leave or other leave of
absence approved by the Company. Where the period of leave exceeds 90 days and
the individual's right to reemployment is not guaranteed either by statute or by
contract, the employment relationship shall be deemed to have terminated on the
91st day of such leave.
(h) "Enrollment Date" shall mean the first day of each Offering
Period.
(i) "Exercise Date" shall mean the last day of each Purchase Period.
<PAGE> 2
(j) "Fair Market Value" shall mean, as of any date, the value of
Common Stock determined as follows:
(1) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the last market trading day on the date of such determination, as reported in
The Wall Street Journal or such other source as the Administrator deems
reliable, or;
(2) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the mean of the closing bid and asked prices for the Common Stock on
the date of such determination, as reported in The Wall Street Journal or such
other source as the Board deems reliable, or;
(3) In the absence of an established market for the Common Stock,
the Fair Market Value thereof shall be determined in good faith by the Board,
or;
(4) For purposes of the Enrollment Date of the first Offering
Period under the Plan, the Fair Market Value shall be the initial price to the
public as set forth in the final prospectus included within the registration
statement in Form S-1 filed with the Securities and Exchange Commission for the
initial public offering of the Company's Common Stock (the "Registration
Statement").
(k) "Offering Periods" shall mean the periods of approximately
twenty-four (24) months during which an option granted pursuant to the Plan may
be exercised, commencing on the first Trading Day on or after May 1 and November
1 of each year and terminating on the last Trading Day in the periods ending
twenty-four months later; provided, however, that the first Offering Period
under the Plan shall commence with the first Trading Day on or after the date on
which the Securities and Exchange Commission declares the Company's Registration
Statement effective. The duration and timing of Offering Periods may be changed
pursuant to Section 4 of this Plan.
(l) "Plan" shall mean this 1998 Employee Stock Purchase Plan.
(m) "Purchase Price" shall mean an amount equal to 85% of the Fair
Market Value of a share of Common Stock on the Enrollment Date or on the
Exercise Date, whichever is lower.
(n) "Purchase Period" shall mean the approximately six month period
commencing after one Exercise Date and ending with the next Exercise Date,
except that the first Purchase Period of any Offering Period shall commence on
the Enrollment Date and end with the next Exercise Date.
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<PAGE> 3
(o) "Reserves" shall mean the number of shares of Common Stock covered
by each option under the Plan which have not yet been exercised and the number
of shares of Common Stock which have been authorized for issuance under the Plan
but not yet placed under option.
(p) "Subsidiary" shall mean a corporation, domestic or foreign, of
which not less than 50% of the voting shares are held by the Company or a
Subsidiary, whether or not such corporation now exists or is hereafter organized
or acquired by the Company or a Subsidiary.
(q) "Trading Day" shall mean a day on which national stock exchanges
and the Nasdaq System are open for trading.
3. Eligibility.
(a) Any Employee who shall be employed by the Company on a given
Enrollment Date shall be eligible to participate in the Plan.
(b) Any provisions of the Plan to the contrary notwithstanding, no
Employee shall be granted an option under the Plan (i) to the extent that,
immediately after the grant, such Employee (or any other person whose stock
would be attributed to such Employee pursuant to Section 424(d) of the Code)
would own capital stock of the Company and/or hold outstanding options to
purchase such stock possessing five percent (5%) or more of the total combined
voting power or value of all classes of the capital stock of the Company or of
any Subsidiary, or (ii) to the extent that his or her rights to purchase stock
under all employee stock purchase plans of the Company and its subsidiaries
accrues at a rate which exceeds Twenty-Five Thousand Dollars ($25,000) worth of
stock (determined at the fair market value of the shares at the time such option
is granted) for each calendar year in which such option is outstanding at any
time.
4. Offering Periods. The Plan shall be implemented by consecutive,
overlapping Offering Periods with a new Offering Period commencing on the first
Trading Day on or after May 1 and November 1 each year, or on such other date as
the Board shall determine, and continuing thereafter until terminated in
accordance with Section 20 hereof; provided, however, that the first Offering
Period under the Plan shall commence with the first Trading Day on or after the
date on which the Securities and Exchange Commission declares the Company's
Registration Statement effective. The Board shall have the power to change the
duration of Offering Periods (including the commencement dates thereof) with
respect to future offerings without stockholder approval if such change is
announced at least five (5) days prior to the scheduled beginning of the first
Offering Period to be affected thereafter.
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<PAGE> 4
5. Participation.
(a) An eligible Employee may become a participant in the Plan by
completing a subscription agreement authorizing payroll deductions in the form
of Exhibit A to this Plan and filing it with the Company's payroll office prior
to the applicable Enrollment Date.
(b) Payroll deductions for a participant shall commence on the first
payroll following the Enrollment Date and shall end on the last payroll in the
Offering Period to which such authorization is applicable, unless sooner
terminated by the participant as provided in Section 10 hereof.
6. Payroll Deductions.
(a) At the time a participant files his or her subscription agreement,
he or she shall elect to have payroll deductions made on each pay day during the
Offering Period in an amount not exceeding fifteen percent (15%) of the
Compensation which he or she receives on each pay day during the Offering
Period.
(b) All payroll deductions made for a participant shall be credited to
his or her account under the Plan and shall be withheld in whole percentages
only. A participant may not make any additional payments into such account.
(c) A participant may discontinue his or her participation in the Plan
as provided in Section 10 hereof, or, may increase or decrease the rate of his
or her payroll deductions during the Offering Period by completing or filing
with the Company a new subscription agreement authorizing a change in payroll
deduction rate. The Board may, in its discretion, limit the number of
participation rate changes during any Offering Period. The change in rate shall
be effective with the first full payroll period following five (5) business days
after the Company's receipt of the new subscription agreement unless the Company
elects to process a given change in participation more quickly. A participant's
subscription agreement shall remain in effect for successive Offering Periods
unless terminated as provided in Section 10 hereof.
(d) Notwithstanding the foregoing, to the extent necessary to comply
with Section 423(b)(8) of the Code and Section 3(b) hereof, a participant's
payroll deductions may be decreased to zero percent (0%) at any time during a
Purchase Period. Payroll deductions shall recommence at the rate provided in
such participant's subscription agreement at the beginning of the first Purchase
Period which is scheduled to end in the following calendar year, unless
terminated by the participant as provided in Section 10 hereof.
(e) At the time the option is exercised, in whole or in part, or at
the time some or all of the Company's Common Stock issued under the Plan is
disposed of, the participant must make adequate provision for the Company's
federal, state, or other tax withholding obligations, if any, which arise upon
the exercise of the option or the disposition of the Common Stock. At any time,
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<PAGE> 5
the Company may, but shall not be obligated to, withhold from the participant's
compensation the amount necessary for the Company to meet applicable withholding
obligations, including any withholding required to make available to the Company
any tax deductions or benefits attributable to sale or early disposition of
Common Stock by the Employee.
7. Grant of Option. On the Enrollment Date of each Offering Period, each
eligible Employee participating in such Offering Period shall be granted an
option to purchase on each Exercise Date during such Offering Period (at the
applicable Purchase Price) up to a number of shares of the Company's Common
Stock determined by dividing such Employee's payroll deductions accumulated
prior to such Exercise Date and retained in the Participant's account as of the
Exercise Date by the applicable Purchase Price; provided that in no event shall
an Employee be permitted to purchase during each Purchase Period more than
10,000 shares of the Company's Common Stock (subject to any adjustment pursuant
to Section 19) on the Enrollment Date, and provided further that such purchase
shall be subject to the limitations set forth in Sections 3(b) and 12 hereof.
Exercise of the option shall occur as provided in Section 8 hereof, unless the
participant has withdrawn pursuant to Section 10 hereof. The option shall expire
on the last day of the Offering Period.
8. Exercise of Option. Unless a participant withdraws from the Plan as
provided in Section 10 hereof, his or her option for the purchase of shares
shall be exercised automatically on the Exercise Date, and the maximum number of
full shares subject to option shall be purchased for such participant at the
applicable Purchase Price with the accumulated payroll deductions in his or her
account. No fractional shares shall be purchased; any payroll deductions
accumulated in a participant's account which are not sufficient to purchase a
full share shall be retained in the participant's account for the subsequent
Purchase Period or Offering Period, subject to earlier withdrawal by the
participant as provided in Section 10 hereof. Any other monies left over in a
participant's account after the Exercise Date shall be returned to the
participant. During a participant's lifetime, a participant's option to purchase
shares hereunder is exercisable only by him or her.
9. Delivery. As promptly as practicable after each Exercise Date on which
a purchase of shares occurs, the Company shall arrange the delivery to each
participant, as appropriate, of a certificate representing the shares purchased
upon exercise of his or her option.
10. Withdrawal.
(a) A participant may withdraw all but not less than all the payroll
deductions credited to his or her account and not yet used to exercise his or
her option under the Plan at any time by giving written notice to the Company in
the form of Exhibit B to this Plan. All of the participant's payroll deductions
credited to his or her account shall be paid to such participant promptly after
receipt of notice of withdrawal and such participant's option for the Offering
Period shall be automatically terminated, and no further payroll deductions for
the purchase of shares shall be made for such Offering Period. If a participant
withdraws from an Offering Period, payroll
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<PAGE> 6
deductions shall not resume at the beginning of the succeeding Offering Period
unless the participant delivers to the Company a new subscription agreement.
(b) A participant's withdrawal from an Offering Period shall not have
any effect upon his or her eligibility to participate in any similar plan which
may hereafter be adopted by the Company or in succeeding Offering Periods which
commence after the termination of the Offering Period from which the participant
withdraws.
11. Termination of Employment.
Upon a participant's ceasing to be an Employee, for any reason, he or
she shall be deemed to have elected to withdraw from the Plan and the payroll
deductions credited to such participant's account during the Offering Period but
not yet used to exercise the option shall be returned to such participant or, in
the case of his or her death, to the person or persons entitled thereto under
Section 15 hereof, and such participant's option shall be automatically
terminated. The preceding sentence notwithstanding, a participant who receives
payment in lieu of notice of termination of employment shall be treated as
continuing to be an Employee for the participant's customary number of hours per
week of employment during the period in which the participant is subject to such
payment in lieu of notice.
12. Interest. No interest shall accrue on the payroll deductions of a
participant in the Plan.
13. Stock.
(a) The maximum number of shares of the Company's Common Stock which
shall be made available for sale under the Plan shall be 250,000 shares, plus an
annual increase to be added on the date of each annual meeting of the
stockholders equal to the lesser of (i) 250,000 shares, (ii) 1% of the
outstanding shares on the record date for such annual meeting of stockholders or
(iii) a lesser amount determined by the Board, subject to adjustment upon
changes in capitalization of the Company as provided in Section 19 hereof. If,
on a given Exercise Date, the number of shares with respect to which options are
to be exercised exceeds the number of shares then available under the Plan, the
Company shall make a pro rata allocation of the shares remaining available for
purchase in as uniform a manner as shall be practicable and as it shall
determine to be equitable.
(b) The participant shall have no interest or voting right in shares
covered by his option until such option has been exercised.
(c) Shares to be delivered to a participant under the Plan shall be
registered in the name of the participant or in the name of the participant and
his or her spouse.
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<PAGE> 7
14. Administration. The Plan shall be administered by the Board or a
committee of members of the Board appointed by the Board. The Board or its
committee shall have full and exclusive discretionary authority to construe,
interpret and apply the terms of the Plan, to determine eligibility and to
adjudicate all disputed claims filed under the Plan. Every finding, decision and
determination made by the Board or its committee shall, to the full extent
permitted by law, be final and binding upon all parties.
15. Designation of Beneficiary.
(a) A participant may file a written designation of a beneficiary who
is to receive any shares and cash, if any, from the participant's account under
the Plan in the event of such participant's death subsequent to an Exercise Date
on which the option is exercised but prior to delivery to such participant of
such shares and cash. In addition, a participant may file a written designation
of a beneficiary who is to receive any cash from the participant's account under
the Plan in the event of such participant's death prior to exercise of the
option. If a participant is married and the designated beneficiary is not the
spouse, spousal consent shall be required for such designation to be effective.
(b) Such designation of beneficiary may be changed by the participant
at any time by written notice. In the event of the death of a participant and in
the absence of a beneficiary validly designated under the Plan who is living at
the time of such participant's death, the Company shall deliver such shares
and/or cash to the executor or administrator of the estate of the participant,
or if no such executor or administrator has been appointed (to the knowledge of
the Company), the Company, in its discretion, may deliver such shares and/or
cash to the spouse or to any one or more dependents or relatives of the
participant, or if no spouse, dependent or relative is known to the Company,
then to such other person as the Company may designate.
16. Transferability. Neither payroll deductions credited to a participant's
account nor any rights with regard to the exercise of an option or to receive
shares under the Plan may be assigned, transferred, pledged or otherwise
disposed of in any way (other than by will, the laws of descent and distribution
or as provided in Section 15 hereof) by the participant. Any such attempt at
assignment, transfer, pledge or other disposition shall be without effect,
except that the Company may treat such act as an election to withdraw funds from
an Offering Period in accordance with Section 10 hereof.
17. Use of Funds. All payroll deductions received or held by the Company
under the Plan may be used by the Company for any corporate purpose, and the
Company shall not be obligated to segregate such payroll deductions.
18. Reports. Individual accounts shall be maintained for each participant
in the Plan. Statements of account shall be given to participating Employees at
least annually, which statements shall set forth the amounts of payroll
deductions, the Purchase Price, the number of shares purchased and the remaining
cash balance, if any.
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<PAGE> 8
19. Adjustments Upon Changes in Capitalization, Dissolution, Liquidation,
Merger or Asset Sale.
(a) Changes in Capitalization. Subject to any required action by the
stockholders of the Company, the Reserves, the maximum number of shares each
participant may purchase each Purchase Period (pursuant to Section 7), as well
as the price per share and the number of shares of Common Stock covered by each
option under the Plan which has not yet been exercised shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration". Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an option.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Offering Period then in progress
shall be shortened by setting a new Exercise Date (the "New Exercise Date"), and
shall terminate immediately prior to the consummation of such proposed
dissolution or liquidation, unless provided otherwise by the Board. The New
Exercise Date shall be before the date of the Company's proposed dissolution or
liquidation. The Board shall notify each participant in writing, at least
fifteen (15) business days prior to the New Exercise Date, that the Exercise
Date for the participant's option has been changed to the New Exercise Date and
that the participant's option shall be exercised automatically on the New
Exercise Date, unless prior to such date the participant has withdrawn from the
Offering Period as provided in Section 10 hereof.
(c) Merger or Asset Sale. In the event of a proposed sale of all or
substantially all of the assets of the Company, or the merger of the Company
with or into another corporation, each outstanding option shall be assumed or an
equivalent option substituted by the successor corporation or a Parent or
Subsidiary of the successor corporation. In the event that the successor
corporation refuses to assume or substitute for the option, any Purchase Periods
then in progress shall be shortened by setting a new Exercise Date (the "New
Exercise Date") and any Offering Periods then in progress shall end on the New
Exercise Date. The New Exercise Date shall be before the date of the Company's
proposed sale or merger. The Board shall notify each participant in writing, at
least fifteen (15) business days prior to the New Exercise Date, that the
Exercise Date for the participant's option has been changed to the New Exercise
Date and that the participant's option shall be exercised automatically on the
New Exercise Date, unless prior to such date the participant has withdrawn from
the Offering Period as provided in Section 10 hereof.
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<PAGE> 9
20. Amendment or Termination.
(a) The Board of Directors of the Company may at any time and for any
reason terminate or amend the Plan. Except as provided in Section 19 hereof, no
such termination can affect options previously granted, provided that an
Offering Period may be terminated by the Board of Directors on any Exercise Date
if the Board determines that the termination of the Plan is in the best
interests of the Company and its stockholders. Except as provided in Section 19
hereof, no amendment may make any change in any option theretofore granted which
adversely affects the rights of any participant. To the extent necessary to
comply with Section 423 of the Code (or any successor rule or provision or any
other applicable law, regulation or stock exchange rule), the Company shall
obtain stockholder approval in such a manner and to such a degree as required.
(b) Without stockholder consent and without regard to whether any
participant rights may be considered to have been "adversely affected," the
Board (or its committee) shall be entitled to change the Offering Periods, limit
the frequency and/or number of changes in the amount withheld during an Offering
Period, establish the exchange ratio applicable to amounts withheld in a
currency other than U.S. dollars, permit payroll withholding in excess of the
amount designated by a participant in order to adjust for delays or mistakes in
the Company's processing of properly completed withholding elections, establish
reasonable waiting and adjustment periods and/or accounting and crediting
procedures to ensure that amounts applied toward the purchase of Common Stock
for each participant properly correspond with amounts withheld from the
participant's Compensation, and establish such other limitations or procedures
as the Board (or its committee) determines in its sole discretion advisable
which are consistent with the Plan.
21. Notices. All notices or other communications by a participant to the
Company under or in connection with the Plan shall be deemed to have been duly
given when received in the form specified by the Company at the location, or by
the person, designated by the Company for the receipt thereof.
22. Conditions Upon Issuance of Shares. Shares shall not be issued with
respect to an option unless the exercise of such option and the issuance and
delivery of such shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without limitation, the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, the rules and regulations promulgated thereunder, and the requirements
of any stock exchange upon which the shares may then be listed, and shall be
further subject to the approval of counsel for the Company with respect to such
compliance.
As a condition to the exercise of an option, the Company may require
the person exercising such option to represent and warrant at the time of any
such exercise that the shares are being purchased only for investment and
without any present intention to sell or distribute such shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned applicable provisions of law.
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<PAGE> 10
23. Term of Plan. The Plan shall become effective upon the earlier to occur
of its adoption by the Board of Directors or its approval by the stockholders of
the Company. It shall continue in effect for a term of ten (10) years unless
sooner terminated under Section 20 hereof.
24. Automatic Transfer to Low Price Offering Period. To the extent
permitted by any applicable laws, regulations, or stock exchange rules if the
Fair Market Value of the Common Stock on any Exercise Date in an Offering Period
is lower than the Fair Market Value of the Common Stock on the Enrollment Date
of such Offering Period, then all participants in such Offering Period shall be
automatically withdrawn from such Offering Period immediately after the exercise
of their option on such Exercise Date and automatically re-enrolled in the
immediately following Offering Period as of the first day thereof.
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<PAGE> 11
EXHIBIT A
ABGENIX, INC.
1998 EMPLOYEE STOCK PURCHASE PLAN
SUBSCRIPTION AGREEMENT
_____ Original Application Enrollment Date: ___________
_____ Change in Payroll Deduction Rate
_____ Change of Beneficiary(ies)
1. ____________________________ hereby elects to participate in the Abgenix,
Inc. 1998 Employee Stock Purchase Plan (the "Employee Stock Purchase Plan")
and subscribes to purchase shares of the Company's Common Stock in
accordance with this Subscription Agreement and the Employee Stock Purchase
Plan.
2. I hereby authorize payroll deductions from each paycheck in the amount of
____% of my Compensation on each payday (up to 10%) during the Offering
Period in accordance with the Employee Stock Purchase Plan. (Please note
that no fractional percentages are permitted.)
3. I understand that said payroll deductions shall be accumulated for the
purchase of shares of Common Stock at the applicable Purchase Price
determined in accordance with the Employee Stock Purchase Plan. I
understand that if I do not withdraw from an Offering Period, any
accumulated payroll deductions will be used to automatically exercise my
option.
4. I have received a copy of the complete Employee Stock Purchase Plan. I
understand that my participation in the Employee Stock Purchase Plan is in
all respects subject to the terms of the Plan. I understand that my ability
to exercise the option under this Subscription Agreement is subject to
stockholder approval of the Employee Stock Purchase Plan.
5. Shares purchased for me under the Employee Stock Purchase Plan should be
issued in the name(s) of (Employee or Employee and Spouse only): .
6. I understand that if I dispose of any shares received by me pursuant to the
Plan within 2 years after the Enrollment Date (the first day of the
Offering Period during which I purchased such shares) or one year after the
Exercise Date, I will be treated for federal income tax purposes as having
received ordinary income at the time of such disposition in an amount equal
to the
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excess of the fair market value of the shares at the time such shares were
purchased by me over the price which I paid for the shares. I hereby agree
to notify the Company in writing within 30 days after the date of any
disposition of my shares and I will make adequate provision for Federal,
state or other tax withholding obligations, if any, which arise upon the
disposition of the Common Stock. The Company may, but will not be obligated
to, withhold from my compensation the amount necessary to meet any
applicable withholding obligation including any withholding necessary to
make available to the Company any tax deductions or benefits attributable
to sale or early disposition of Common Stock by me. If I dispose of such
shares at any time after the expiration of the 2-year and 1-year holding
periods, I understand that I will be treated for federal income tax
purposes as having received income only at the time of such disposition,
and that such income will be taxed as ordinary income only to the extent of
an amount equal to the lesser of (1) the excess of the fair market value of
the shares at the time of such disposition over the purchase price which I
paid for the shares, or (2) 15% of the fair market value of the shares on
the first day of the Offering Period. The remainder of the gain, if any,
recognized on such disposition will be taxed as capital gain.
7. I hereby agree to be bound by the terms of the Employee Stock Purchase
Plan. The effectiveness of this Subscription Agreement is dependent upon my
eligibility to participate in the Employee Stock Purchase Plan.
8. In the event of my death, I hereby designate the following as my
beneficiary(ies) to receive all payments and shares due me under the
Employee Stock Purchase Plan:
NAME: (Please print)
------------------------------------------
(First) (Middle) (Last)
- ------------------------------- --------------------------------------------
Relationship
--------------------------------------------
(Address)
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Employee's Social
Security Number: -----------------------------------
Employee's Address: -----------------------------------
-----------------------------------
-----------------------------------
I UNDERSTAND THAT THIS SUBSCRIPTION AGREEMENT SHALL REMAIN IN EFFECT THROUGHOUT
SUCCESSIVE OFFERING PERIODS UNLESS TERMINATED BY ME.
Dated:
------------------------- ---------------------------------------
Signature of Employee
---------------------------------------
Spouse's Signature
(If beneficiary other than spouse)
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EXHIBIT B
ABGENIX, INC.
1998 EMPLOYEE STOCK PURCHASE PLAN
NOTICE OF WITHDRAWAL
The undersigned participant in the Offering Period of the Abgenix, Inc.
1998 Employee Stock Purchase Plan which began on ____________, 19____ (the
"Enrollment Date") hereby notifies the Company that he or she hereby withdraws
from the Offering Period. He or she hereby directs the Company to pay to the
undersigned as promptly as practicable all the payroll deductions credited to
his or her account with respect to such Offering Period. The undersigned
understands and agrees that his or her option for such Offering Period will be
automatically terminated. The undersigned understands further that no further
payroll deductions will be made for the purchase of shares in the current
Offering Period and the undersigned shall be eligible to participate in
succeeding Offering Periods only by delivering to the Company a new Subscription
Agreement.
Name and Address of Participant:
----------------------------------------
----------------------------------------
----------------------------------------
Signature:
----------------------------------------
Date:
----------------------------------
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<PAGE> 1
EXHIBIT 10.4
ABGENIX, INC.
1998 DIRECTOR OPTION PLAN
1. Purposes of the Plan. The purposes of this 1998 Director Option Plan
are to attract and retain the best available personnel for service as Outside
Directors (as defined herein) of the Company, to provide additional incentive to
the Outside Directors of the Company to serve as Directors, and to encourage
their continued service on the Board.
All options granted hereunder shall be nonstatutory stock options.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Board" means the Board of Directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, as amended.
(c) "Common Stock" means the Common Stock of the Company.
(d) "Company" means Abgenix, Inc., a Delaware corporation.
(e) "Director" means a member of the Board.
(f) "Employee" means any person, including officers and Directors,
employed by the Company or any Subsidiary of the Company. Employees of the
Parent of the Company shall not be employees of the Company unless they are also
employed by the Company. The payment of a Director's fee by the Company shall
not be sufficient in and of itself to constitute "employment" by the Company.
(g) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(h) "Fair Market Value" means, as of any date, the value of Common
Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported, as quoted on such exchange or system for
the market trading day at the time of determination, or if the determination is
not made on a market trading date, the last market trading day prior to the time
of determination) as reported in The Wall Street Journal or such other source as
the Administrator deems reliable;
<PAGE> 2
(ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market Value of
a Share of Common Stock shall be the mean between the high bid and low asked
prices for the Common Stock on the date of determination, as reported in The
Wall Street Journal or such other source as the Board deems reliable, or;
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith by the
Board.
(i) "Inside Director" means a Director who is an Employee.
(j) "New Outside Director" means an Outside Director who becomes a
Director after the effective date of the Company's initial public offering of
its Common Stock.
(k) "Option" means a stock option granted pursuant to the Plan.
(l) "Optioned Stock" means the Common Stock subject to an Option.
(m) "Optionee" means a Director who holds an Option.
(n) "Outside Director" means a Director who is not an Employee.
(o) "Parent" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(p) "Plan" means this 1998 Director Option Plan.
(q) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 10 of the Plan.
(r) "Subsidiary" means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Internal Revenue Code of
1986.
3. Stock Subject to the Plan. Subject to the provisions of Section 10 of
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is 250,000 Shares of Common Stock (the "Pool"). The Shares may be
authorized, but unissued, or reacquired Common Stock.
If an Option expires or becomes unexercisable without having been
exercised in full, the unpurchased Shares which were subject thereto shall
become available for future grant or sale
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<PAGE> 3
under the Plan (unless the Plan has terminated). Shares that have actually been
issued under the Plan shall not be returned to the Plan and shall not become
available for future distribution under the Plan.
4. Administration and Grants of Options under the Plan.
(a) Procedure for Grants. All grants of Options to Outside Directors
under this Plan shall be automatic and nondiscretionary and shall be made
strictly in accordance with the following provisions:
(i) No person shall have any discretion to select which Outside
Directors shall be granted Options or to determine the number of Shares to be
covered by Options granted to Outside Directors.
(ii) After the effective date of the Company's initial public
offering of its Common Stock, each New Outside Director shall be automatically
granted an Option to purchase 30,000 Shares (the "First Option") on the date on
which such person first becomes an Outside Director, whether through election by
the stockholders of the Company or appointment by the Board to fill a vacancy;
provided, however, that an Inside Director who ceases to be an Inside Director
but who remains a Director shall not receive a First Option.
(iii) Commencing with the fiscal year beginning January 1, 1999,
each Outside Director, with the exception of the Chairman of the Board of
Directors, shall be automatically granted an Option to purchase 7,500 Shares (a
"Subsequent Option") on the date of the Company's Annual Meeting of Stockholders
upon such Outside Director's reelection, if on such date, he or she shall have
served on the Board for at least six (6) months.
(iv) Commencing with the fiscal year beginning January 1, 1999,
the Chairman of the Board of Directors, provided he or she is an Outside
Director, shall be automatically granted an Option to purchase 10,000 Shares (a
"Subsequent Option") on the date of the Company's Annual Meeting of Stockholders
upon the Chairman's reelection, if on such date, he shall have served on the
Board for at least six (6) months.
(v) Notwithstanding the provisions of subsections (ii), (iii) and
(iv) hereof, any exercise of an Option granted before the Company has obtained
stockholder approval of the Plan in accordance with Section 16 hereof shall be
conditioned upon obtaining such stockholder approval of the Plan in accordance
with Section 16 hereof.
(vi) The terms of a First Option granted hereunder shall be as
follows:
(A) the term of the First Option shall be ten (10) years.
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<PAGE> 4
(B) the First Option shall be exercisable only while the
Outside Director remains a Director of the Company, except as set forth in
Sections 8 and 10 hereof.
(C) the exercise price per Share shall be 100% of the Fair
Market Value per Share on the date of grant of the First Option. In the event
that the date of grant of the First Option is not a trading day, the exercise
price per Share shall be the Fair Market Value on the next trading day
immediately following the date of grant of the First Option.
(D) subject to Section 10 hereof, the First Option shall
become exercisable as to one fourth (1/4) of the Shares on the one year
anniversary of the date of grant, and one forty eighth (1/48) of the Shares
subject to the First Option on the last day of each full month thereafter,
provided that the Optionee continues to serve as a Director on such dates.
(vii) The terms of a Subsequent Option granted hereunder shall
be as follows:
(A) the term of the Subsequent Option shall be ten (10)
years.
(B) the Subsequent Option shall be exercisable only while
the Outside Director remains a Director of the Company, except as set forth in
Sections 8 and 10 hereof.
(C) the exercise price per Share shall be 100% of the Fair
Market Value per Share on the date of grant of the Subsequent Option. In the
event that the date of grant of the Subsequent Option is not a trading day, the
exercise price per Share shall be the Fair Market Value on the next trading day
immediately following the date of grant of the Subsequent Option.
(D) subject to Section 10 hereof, the Subsequent Option
shall become exercisable as to one forty eighth (1/48) of the Shares subject to
the Subsequent Option on the last day of each full month after the date of
grant, provided that the Optionee continues to serve as a Director on such
dates.
(viii) In the event that any Option granted under the Plan would
cause the number of Shares subject to outstanding Options plus the number of
Shares previously purchased under Options to exceed the Pool, then the remaining
Shares available for Option grant shall be granted under Options to the Outside
Directors on a pro rata basis. No further grants shall be made until such time,
if any, as additional Shares become available for grant under the Plan through
action of the Board or the stockholders to increase the number of Shares which
may be issued under the Plan or through cancellation or expiration of Options
previously granted hereunder.
5. Eligibility. Options may be granted only to Outside Directors. All
Options shall be automatically granted in accordance with the terms set forth in
Section 4 hereof.
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<PAGE> 5
The Plan shall not confer upon any Optionee any right with respect to
continuation of service as a Director or nomination to serve as a Director, nor
shall it interfere in any way with any rights which the Director or the Company
may have to terminate the Director's relationship with the Company at any time.
6. Term of Plan. The Plan shall become effective upon the earlier to
occur of its adoption by the Board or its approval by the stockholders of the
Company as described in Section 16 of the Plan. It shall continue in effect for
a term of ten (10) years unless sooner terminated under Section 11 of the Plan.
7. Form of Consideration. The consideration to be paid for the Shares to
be issued upon exercise of an Option, including the method of payment, shall
consist of (i) cash, (ii) check, (iii) other shares which (x) in the case of
Shares acquired upon exercise of an Option, have been owned by the Optionee for
more than six (6) months on the date of surrender, and (y) have a Fair Market
Value on the date of surrender equal to the aggregate exercise price of the
Shares as to which said Option shall be exercised, (iv) delivery of a properly
executed exercise notice together with such other documentation as the Company
and the broker, if applicable, shall require to effect an exercise of the Option
and delivery to the Company of the sale or loan proceeds required to pay the
exercise price, or (v) any combination of the foregoing methods of payment.
8. Exercise of Option.
(a) Procedure for Exercise, Rights as a Stockholder. Any Option
granted hereunder shall be exercisable at such times as are set forth in Section
4 hereof, provided, however, that no Options shall be exercisable until
stockholder approval of the Plan in accordance with Section 16 hereof has been
obtained.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may consist of any consideration and method of payment
allowable under Section 7 of the Plan. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the stock certificate evidencing such Shares, no right
to vote or receive dividends or any other rights as a stockholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option.
A share certificate for the number of Shares so acquired shall be issued to the
Optionee as soon as practicable after exercise of the Option. No adjustment
shall be made for a dividend or other right for which the record date is prior
to the date the stock certificate is issued, except as provided in Section 10 of
the Plan.
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<PAGE> 6
Exercise of an Option in any manner shall result in a decrease in the
number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(b) Termination of Continuous Status as a Director. Subject to
Section 10 hereof, in the event an Optionee's status as a Director terminates
(other than upon the Optionee's death or disability), the Optionee may exercise
his or her Option, but only within ninety (90) days following the date of such
termination, and only to the extent that the Optionee was entitled to exercise
it on the date of such termination (but in no event later than the expiration of
its ten (10) year term); provided, however, that in the event that a sale of the
Option Stock received upon exercise of this Option would subject the Director to
liability under Section 16(b) of the Securities and Exchange Act of 1934, as
amended, then the option will terminate on the earlier of (i) fifteenth day
after the last date upon which such sale would result in liability, or (ii) two
hundred ten (210) days following the date of such termination of status as a
Director (but in no event later than the expiration of its ten (10) year term).
To the extent that the Optionee was not entitled to exercise an Option on the
date of such termination, and to the extent that the Optionee does not exercise
such Option (to the extent otherwise so entitled) within the time specified
herein, the Option shall terminate.
(c) Disability of Optionee. In the event Optionee's status as a
Director terminates as a result of disability, the Optionee may exercise his or
her Option, but only within twelve (12) months following the date of such
termination, and only to the extent that the Optionee was entitled to exercise
it on the date of such termination (but in no event later than the expiration of
its ten (10) year term). To the extent that the Optionee was not entitled to
exercise an Option on the date of the time specified herein, the Option shall
terminate.
(d) Death of Optionee. In the event of an Optionee's death, the
Optionee's estate or a person who acquired the right to exercise the Option by
bequest or inheritance may exercise the Option, but only within twelve (12)
months following the date of death, and only to the extent that the Optionee was
entitled to exercise it on the date of death (but in no event later than the
expiration of its ten (10) year term). To the extent that the Optionee was not
entitled to exercise an Option on the date of death, and to the extent that the
Optionee's estate or a person who acquired the right to exercise such Option
does not exercise such Option (to the extent otherwise so entitled) within the
time specified herein, the Option shall terminate.
9. Non-Transferability of Options. The Option may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee.
10. Adjustments Upon Changes in Capitalization, Dissolution, Merger or
Asset Sale.
(a) Changes in Capitalization. Subject to any required action by the
stockholders of the Company, the number of Shares covered by each outstanding
Option, the number of Shares
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<PAGE> 7
which have been authorized for issuance under the Plan but as to which no
Options have yet been granted or which have been returned to the Plan upon
cancellation or expiration of an Option, as well as the price per Share covered
by each such outstanding Option, and the number of Shares issuable pursuant to
the automatic grant provisions of Section 4 hereof shall be proportionately
adjusted for any increase or decrease in the number of issued Shares resulting
from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the
number of issued Shares effected without receipt of consideration by the
Company; provided, however, that conversion of any convertible securities of the
Company shall not be deemed to have been "effected without receipt of
consideration." Except as expressly provided herein, no issuance by the Company
of shares of stock of any class, or securities convertible into shares of stock
of any class, shall affect, and no adjustment by reason thereof shall be made
with respect to, the number or price of Shares subject to an Option.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, to the extent that an Option has not
been previously exercised, it shall terminate immediately prior to the
consummation of such proposed action.
(c) Merger or Asset Sale. In the event of a merger of the Company
with or into another corporation or the sale of substantially all of the assets
of the Company, outstanding Options may be assumed or equivalent options may be
substituted by the successor corporation or a Parent or Subsidiary thereof (the
"Successor Corporation"). If an Option is assumed or substituted for, the Option
or equivalent option shall continue to be exercisable as provided in Section 4
hereof for so long as the Optionee serves as a Director or a director of the
Successor Corporation. Following such assumption or substitution, if the
Optionee's status as a Director or director of the Successor Corporation, as
applicable, is terminated other than upon a voluntary resignation by the
Optionee, the Option or option shall become fully exercisable, including as to
Shares for which it would not otherwise be exercisable. Thereafter, the Option
or option shall remain exercisable in accordance with Sections 8(b) through (d)
above.
If the Successor Corporation does not assume an outstanding Option or
substitute for it an equivalent option, the Option shall become fully vested and
exercisable, including as to Shares for which it would not otherwise be
exercisable. In such event the Board shall notify the Optionee that the Option
shall be fully exercisable for a period of thirty (30) days from the date of
such notice, and upon the expiration of such period the Option shall terminate.
For the purposes of this Section 10(c), an Option shall be considered
assumed if, following the merger or sale of assets, the Option confers the right
to purchase or receive, for each Share of Optioned Stock subject to the Option
immediately prior to the merger or sale of assets, the consideration (whether
stock, cash, or other securities or property) received in the merger or sale of
assets by holders of Common Stock for each Share held on the effective date of
the transaction (and if holders were offered a choice of consideration, the type
of consideration chosen by the holders of a majority of the outstanding Shares).
If such consideration received in the merger or sale of assets is not solely
common stock of the successor corporation or its Parent, the Administrator may,
with the
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<PAGE> 8
consent of the successor corporation, provide for the consideration to be
received upon the exercise of the Option, for each Share of Optioned Stock
subject to the Option, to be solely common stock of the successor corporation or
its Parent equal in fair market value to the per share consideration received by
holders of Common Stock in the merger or sale of assets.
11. Amendment and Termination of the Plan.
(a) Amendment and Termination. Except as set forth in Section 4, the
Board may at any time amend, alter, suspend, or discontinue the Plan, but no
amendment, alteration, suspension, or discontinuation shall be made which would
impair the rights of any Optionee under any grant theretofore made, without his
or her consent. In addition, to the extent necessary and desirable to comply
with any applicable law or regulation, the Company shall obtain stockholder
approval of any Plan amendment in such a manner and to such a degree as
required.
(b) Effect of Amendment or Termination. Any such amendment or
termination of the Plan shall not affect Options already granted and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated.
12. Time of Granting Options. The date of grant of an Option shall, for
all purposes, be the date determined in accordance with Section 4 hereof.
13. Conditions Upon Issuance of Shares. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, state securities laws, and the requirements of any stock exchange
upon which the Shares may then be listed, and shall be further subject to the
approval of counsel for the Company with respect to such compliance.
As a condition to the exercise of an Option, the Company may require
the person exercising such Option to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares, if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned relevant provisions of law.
Inability of the Company to obtain authority from any regulatory
body having jurisdiction, which authority is deemed by the Company's counsel to
be necessary to the lawful issuance and sale of any Shares hereunder, shall
relieve the Company of any liability in respect of the failure to issue or sell
such Shares as to which such requisite authority shall not have been obtained.
14. Reservation of Shares. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of
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<PAGE> 9
the Plan.
15. Option Agreement. Options shall be evidenced by written option
agreements in such form as the Board shall approve.
16. Stockholder Approval. Continuance of the Plan shall be subject to
approval by the stockholders of the Company at or prior to the first annual
meeting of stockholders held subsequent to the granting of an Option hereunder.
Such stockholder approval shall be obtained in the degree and manner required
under applicable state and federal law.
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<PAGE> 10
ABGENIX, INC.
1998 DIRECTOR OPTION PLAN
STOCK OPTION AGREEMENT
Abgenix, Inc., a Delaware corporation (the "Company"), has granted to
(the "Optionee"), an option to purchase a total of ) shares of the Company's
Common Stock (the "Optioned Stock"), at the price determined as provided herein,
and in all respects subject to the terms, definitions and provisions of the
Company's 1998 Director Option Plan (the "Plan") adopted by the Company which is
incorporated herein by reference. The terms defined in the Plan shall have the
same defined meanings herein.
1. Nature of the Option. This Option is a nonstatutory option and is not
intended to qualify for any special tax benefits to the Optionee.
2. Exercise Price. The exercise price is $_____ for each share of Common
Stock.
3. Exercise of Option. This Option shall be exercisable during its term
in accordance with the provisions of Section 8 of the Plan as follows:
(i) Right to Exercise.
(a) This Option shall become exercisable in installments
cumulatively with respect to one forty-eighth (1/48) of the Optioned Stock at
the end of each full month commencing upon the last date of the month in which
the Optioned Stock is granted; provided, however, that in no event shall any
Option be exercisable prior to the date the stockholders of the Company approve
the Plan.
(b) This Option may not be exercised for a fraction of a share.
(c) In the event of Optionee's death, disability or other
termination of service as a Director, the exercisability of the Option is
governed by Section 8 of the Plan.
(ii) Method of Exercise. This Option shall be exercisable by written
notice which shall state the election to exercise the Option and the number of
Shares in respect of which the Option is being exercised. Such written notice,
in the form attached hereto as Exhibit A, shall be signed by the Optionee and
shall be delivered in person or by certified mail to the Secretary of the
Company. The written notice shall be accompanied by payment of the exercise
price.
4. Method of Payment. Payment of the exercise price shall be by any of
the following, or a combination thereof, at the election of the Optionee:
<PAGE> 11
(i) cash;
(ii) check; or
(iii) surrender of other shares which (x) in the case of Shares
acquired upon exercise of an Option, have been owned by the Optionee for more
than six (6) months on the date of surrender, and (y) have a Fair Market Value
on the date of surrender equal to the aggregate exercise price of the Shares as
to which said Option shall be exercised; or
(iv) delivery of a properly executed exercise notice together with
such other documentation as the Company and the broker, if applicable, shall
require to effect an exercise of the Option and delivery to the Company of the
sale or loan proceeds required to pay the exercise price.
5. Restrictions on Exercise. This Option may not be exercised if the
issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
federal or state securities or other law or regulations, or if such issuance
would not comply with the requirements of any stock exchange upon which the
Shares may then be listed. As a condition to the exercise of this Option, the
Company may require Optionee to make any representation and warranty to the
Company as may be required by any applicable law or regulation.
6. Non-Transferability of Option. This Option may not be transferred in
any manner otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of Optionee only by the Optionee. The terms
of this Option shall be binding upon the executors, administrators, heirs,
successors and assigns of the Optionee.
7. Term of Option. This Option may not be exercised more than ten (10)
years from the date of grant of this Option, and may be exercised during such
period only in accordance with the Plan and the terms of this Option.
8. Taxation Upon Exercise of Option. Optionee understands that, upon
exercise of this Option, he or she will recognize income for tax purposes in an
amount equal to the excess of the then Fair Market Value of the Shares purchased
over the exercise price paid for such Shares. Since the Optionee is subject to
Section 16(b) of the Securities Exchange Act of 1934, as amended, under certain
limited circumstances the measurement and timing of such income (and the
commencement of any capital gain holding period) may be deferred, and the
Optionee is advised to contact a tax advisor concerning the application of
Section 83 in general and the availability a Section 83(b) election in
particular in connection with the exercise of the Option. Upon a resale of such
Shares by the Optionee, any difference between the sale price and the Fair
Market Value of the Shares on the date of exercise of the Option, to the extent
not included in income as described above, will be treated as capital gain or
loss.
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<PAGE> 12
DATE OF GRANT: ___________________
ABGENIX, INC.
a Delaware corporation
By: _________________________________
Optionee acknowledges receipt of a copy of the Plan, a copy of which is
attached hereto, and represents that he or she is familiar with the terms and
provisions thereof, and hereby accepts this Option subject to all of the terms
and provisions thereof. Optionee hereby agrees to accept as binding, conclusive
and final all decisions or interpretations of the Board upon any questions
arising under the Plan.
Dated: ___________________
_____________________________________
Optionee
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<PAGE> 13
EXHIBIT A
1998 DIRECTOR OPTION PLAN
EXERCISE NOTICE
Abgenix, Inc.
7601 Dumbarton Circle
Fremont, CA 94555
Attention: Corporate Secretary
1. Exercise of Option. The undersigned ("Optionee") hereby elects to
exercise Optionee's option to purchase shares of the Common Stock (the "Shares")
of Abgenix, Inc. (the "Company") under and pursuant to the Company's 1998
Director Option Plan and the Director Option Agreement dated _________________
(the "Agreement").
2. Representations of Optionee. Optionee acknowledges that Optionee has
received, read and understood the Agreement.
3. Federal Restrictions on Transfer. Optionee understands that the
Shares must be held indefinitely unless they are registered under the Securities
Act of 1933, as amended (the "1933 Act"), or unless an exemption from such
registration is available, and that the certificate(s) representing the Shares
may bear a legend to that effect. Optionee understands that the Company is under
no obligation to register the Shares and that an exemption may not be available
or may not permit Optionee to transfer Shares in the amounts or at the times
proposed by Optionee.
4. Tax Consequences. Optionee understands that Optionee may suffer
adverse tax consequences as a result of Optionee's purchase or disposition of
the Shares. Optionee represents that Optionee has consulted with any tax
consultant(s) Optionee deems advisable in connection with the purchase or
disposition of the Shares and that Optionee is not relying on the Company for
any tax advice.
5. Delivery of Payment. Optionee herewith delivers to the Company the
aggregate purchase price for the Shares that Optionee has elected to purchase
and has made provision for the payment of any federal or state withholding taxes
required to be paid or withheld by the Company.
6. Entire Agreement. The Agreement is incorporated herein by
reference. This Exercise Notice and the Agreement constitute the entire
agreement of the parties and supersede in their entirety all prior undertakings
and agreements of the Company and Optionee with respect to the subject matter
hereof This Exercise Notice and the Agreement are governed by Delaware law
except for that body of law pertaining to conflict of laws.
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<PAGE> 14
Submitted by: Accepted by:
OPTIONEE: ABGENIX, INC.
__________________________________ __________________________________
Its: _____________________________
Address:
Dated: ___________________________ Dated: ___________________________
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<PAGE> 15
EXHIBIT F
<PAGE> 1
EXHIBIT 10.5
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS A
REGISTRATION UNDER SUCH ACT IS IN EFFECT AS TO SUCH TRANSFER, SUCH TRANSFER IS
MADE PURSUANT TO RULE 144, OR, IN THE OPINION OF COUNSEL, REASONABLY
SATISFACTORY TO THE COMPANY AND ITS COUNSEL, SUCH REGISTRATION IS NOT REQUIRED.
No. W-1 Right to Purchase 71,667 Shares of Series A
Convertible Preferred Stock of Abgenix, Inc.
ABGENIX, INC.
Series A Senior Convertible Preferred Stock Purchase Warrant
Abgenix, Inc., a Delaware corporation (the "Company"), hereby certifies
that, for value received Cell Genesys, Inc. ("Cell Genesys") or registered
assign (the "Holder"), is entitled, subject to the terms set forth below, to
purchase from the Company upon surrender hereof Seventy-One Thousand Six
Hundred and Sixty Seven (71,667) fully paid and nonassessable shares of Series
A Senior Convertible Preferred Stock of the Company (the "Series A Preferred
Stock"). The number, character and Exercise Price of such shares of Series A
Preferred Stock are subject to adjustment as provided herein. The term
"Warrant" as used herein shall include this Warrant and any Warrant delivered in
substitution or exchange herefor as provided herein.
This Warrant is issued in consideration of the credit guaranty (the
"Guaranty") provided by Cell Genesys in connection with certain tenant
improvements and capital equipment leaselines for the Company.
1. TERM OF WARRANT. Subject to the terms and conditions set forth
herein, this Warrant shall be exercisable by the Holder, in whole or in part,
at any time or from time to time before 5:00 P.M., California time, on the date
three (3) years from issuance, and shall be void thereafter.
2. EXERCISE PRICE. This Warrant may be exercised at an exercise price of
$6.00 per share (the "Exercise Price").
3. EXERCISE OF WARRANT.
3.1 General. This Warrant may be exercised by the Holder by
surrender of this Warrant, with the form of subscription at the end hereof duly
executed by the Holder, to the Company at its principal office, accompanied by
payment in cash or by check acceptable to the Company of the aggregate Exercise
Price of the shares to be purchased.
<PAGE> 2
3.2 No Fractional Shares. No fractional shares shall be issued upon
the exercise of this Warrant. In lieu of any fractional share to which the
Holder would otherwise be entitled, the Company shall make a cash payment equal
to the Exercise Price multiplied by such fraction.
3.3 Rights of Stockholders. This Warrant shall not entitle its
Holder to any of the rights of a stockholder of the Company.
4. DELIVERY OF STOCK CERTIFICATES ON EXERCISE. As soon as practicable
after the exercise of this Warrant and in any event no later than 10 days
thereafter, the Company at its expense (including the payment by it of any
applicable issue taxes) will cause to be issued in the name of and delivered to
the Holder, or as the Holder (upon payment by the Holder of any applicable
transfer taxes) may direct, a certificate or certificates for the number of
fully paid and nonassessable shares of Series A Preferred Stock to which the
Holder shall be entitled on such exercise, together with any other stock or
other securities and property (including cash, where applicable) to which the
Holder is entitled upon such exercise.
5. ADJUSTMENTS. The Exercise Price and the number of shares
purchasable hereunder are subject to adjustment from time to time as follows:
5.1 Conversion or Redemption of Series A Preferred Stock. Should all
of the Company's Series A Preferred Stock be, or if outstanding would be, at
any time prior to the expiration of this Warrant, redeemed or converted into
shares of the Company's Common Stock in accordance with Section 2.4 of the
Company's Certificate of Designation of Series A Senior Convertible Preferred
Stock, then this Warrant shall immediately become exercisable for that number
of shares of the Company's Common Stock equal to the number of shares of the
Common Stock that would have been received if this Warrant had been exercised
in full and the Series A Preferred Stock received thereupon had been
simultaneously converted immediately prior to such event, and the Exercise
Price shall be immediately adjusted to equal the quotient obtained by dividing
(x) the aggregate Exercise Price of the maximum number of shares of Series A
Preferred Stock for which this Warrant was exercisable immediately prior to
such conversion or redemption, by (y) the number of shares of Common Stock for
which this Warrant is exercisable immediately after such conversion or
redemption. For purposes of the foregoing, the "Articles" shall mean the
Articles of Incorporation of the Company as amended and/or restated and
effective immediately prior to the redemption or conversion of all of the
Company's Series A Preferred Stock.
5.2 Reclassification, etc. If the Company, at any time while this
Warrant, or any portion of this Warrant, remains outstanding and unexpired, by
reclassification of securities or otherwise, shall change any of the securities
issuable upon
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<PAGE> 3
exercise of this Warrant into the same or a different number of securities of
any other class or classes, this Warrant shall thereafter represent the right
to acquire such number and kind of securities as would have been issuable as
the result of such change with respect to the securities that were issuable
under this Warrant immediately prior to such reclassification or other change
and the Exercise Price therefor shall be appropriately adjusted. No adjustment
shall be made pursuant to this Section 5.2 upon any conversion or redemption of
the Series A Preferred Stock, which is the subject of Section 5.1.
5.3 Merger, Sale of Assets, etc. If at any time while this Warrant,
or any portion of this Warrant, is outstanding and unexpired there shall be (i)
a reorganization (other than a combination, reclassification, exchange or
subdivision of shares otherwise provided for herein), (ii) a merger or
consolidation of the Company with or into another corporation in which the
Company is not the surviving entity, or a reverse triangular merger in which
the Company is the surviving entity but the shares of the Company's capital
stock outstanding immediately prior to the merger are converted by virtue of
the merger into other property, whether in the form of securities, cash, or
otherwise, or (iii) a sale or transfer of the Company's properties and assets
as, or substantially as, an entirety to any other person, then, as a part of
such reorganization, merger, consolidation, sale or transfer, lawful provision
shall be made so that the Holder shall thereafter be entitled to receive upon
exercise of this Warrant, during the period specified herein and upon payment
of the Exercise Price then in effect, the number of shares of stock or other
securities or property of the successor corporation resulting from such
reorganization, merger, consolidation, sale or transfer that a holder of the
shares of the capital stock of the Company deliverable upon exercise if this
Warrant would have been entitled to receive in such reorganization,
consolidation, merger, sale or transfer of this Warrant had been exercised
immediately before such reorganization, merger, consolidation, sale or
transfer, all subject to further adjustment as provided in this Section 5. The
foregoing provisions of this Section 5.3 shall similarly apply to successive
reorganizations, consolidations, mergers, sales and transfers and to the stock
or securities of any other corporation that are at the time receivable upon the
exercise of this Warrant. If the per share consideration payable to the Holder
for shares in connection with any such transaction is in a form other than cash
or marketable securities, then the value of such consideration shall be
determined in good faith by the Company's Board of Directors. In all events,
appropriate adjustment (as determined in good faith by the Company's Board of
Directors) shall be made in the application of the provisions of this Warrant
with respect to the rights and interests of the Holder after the transaction,
to the end that the provisions of this Warrant shall be applicable after that
event, as near as reasonably may be, in relation to any shares or other
property deliverable after that event upon exercise of this Warrant.
-3-
<PAGE> 4
5.4 Split, Subdivision or Combination of Shares. If the Company at
any time while this Warrant, or any portion of this Warrant, remains outstanding
and unexpired shall split, subdivide or combine the securities issuable upon
exercise of this Warrant into a different number of securities of the same
class, the number of shares for which this Warrant may be exercised shall be
proportionately increased and the Exercise Price for such securities shall be
proportionately decreased in the case of a split or subdivision and such number
of shares shall be proportionately decreased and the Exercise Price for such
securities shall be proportionately increased in the case of a combination.
5.5 Adjustments for Dividends in Stock or Other Securities or
Property. If while this Warrant, or any portion of this Warrant, remains
outstanding and unexpired the holders of the securities issuable upon exercise
of this Warrant shall have received, or, on or after the record date fixed for
the determination of eligible shareholders, shall have become entitled to
receive, without payment therefor, other or additional stock or other securities
or property (other than cash) of the Company by way of dividend, then and in
each case, this Warrant shall represent the right to acquire, in addition to the
number of shares of the security receivable upon exercise of this Warrant, and
without payment of any additional consideration therefor, the amount of such
other or additional stock or other securities or property (other than cash) of
the Company that such holder would hold on the date of such exercise had it been
the holder of record of the security issuable upon exercise of this Warrant on
the date hereof and had thereafter, during the period from the date hereof to
and including the date of such exercise, retained such shares and/or all other
additional stock available by it as aforesaid during such period, giving affect
to all adjustments called for during such period by the provisions of this
Section 5.
5.6 No Impairment. The Company will not, by any voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Company, but will at all times in good
faith assist in the carrying out of all the provisions of this Section 5 and in
the taking of all such reasonable action as may be necessary or appropriate in
order to protect the rights of the Holder against Impairment.
6. RESERVATION OF STOCK ISSUABLE ON EXERCISE OF WARRANT. The Company
will at all times reserve and keep available, solely for issuance and deliver
on the exercise of the Warrant, all shares of Series A Preferred Stock (or
other securities) from time to time issuable on the exercise of this Warrant.
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<PAGE> 5
7. COMPLIANCE WITH SECURITIES ACT; TRANSFERABILITY OF WARRANT;
DISPOSITION OF SHARES.
(a) Legends. This Warrant and the shares issued upon the
exercise hereof shall be imprinted with a legend in substantially the
following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED UNLESS A REGISTRATION UNDER SUCH ACT IS IN EFFECT AS TO SUCH
TRANSFER, SUCH TRANSFER IS MADE PURSUANT TO RULE 144, OR, IN THE OPINION
OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY AND ITS COUNSEL, SUCH
REGISTRATION IS NOT REQUIRED."
(b) Transferability and Nonnegotiability of Warrant. This Warrant
may not be assigned or transferred except as provided herein and in
accordance with and subject to the provisions of the Securities Act of
1933, as amended (the "Act"). Any purported transfer or assignment made
other than in accordance with this Section 7(b) shall be null and void and
of no force and effect. This Warrant may be transferred or assigned
pursuant to Rule 144 promulgated under the Act or pursuant to an opinion
of counsel to the Holder, in form and substance reasonably acceptable to
the Company, that (i) the transferee is a person to whom the Warrant and
the underlying shares may be legally transferred without registration
under the Act; and (ii) such transfer will not violate any applicable law
or governmental rule or regulation including, without limitation, any
applicable federal or state securities law.
(c) Loss or Destruction of Warrant. Upon receipt by the Company of
evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Warrant, and (in the case of loss, theft or
destruction) of reasonably satisfactory indemnification, or (in the case of
mutilation) surrender and cancellation of this Warrant, the Company will
execute and deliver a new Warrant of like tenor and date and any such
lost, stolen, or destroyed Warrant shall thereupon become void.
(d) Indemnification. The Holder and each holder of series A
Preferred Stock or other securities issued or issuable upon exercise of
this warrant shall indemnify and hold harmless the Company, its directors
and officers, and each person, if any, who controls the Company, against
any losses, claims, damages or liabilities (other than consequential
damages), joint or several, to which the Company or any such director,
officer or any such person may become subject under the Act or statute or
common law, to the extent, and only to the extent, that such losses,
claims, damages or liabilities, or actions in respect thereof, result
directly from the disposition by the Holder of this Warrant, the Series A
Preferred Stock or any other
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<PAGE> 6
securities issued upon exercise of this Warrant in violation of the
provisions of Section 7(b) of this Warrant.
8. RIGHTS OF HOLDER. The Holder shall not, by virtue hereof, be
entitled to any of the rights of a shareholder of the Company, either at law or
in equity, and the rights of the Holder are limited to those expressed in this
Warrant and provided for under applicable laws and are not enforceable against
the Company except to the extent set forth herein or provided for under
applicable laws.
9. NOTICES. All notices and other communications from the Company to
the holder of this Warrant shall be delivered in person or mailed by first class
certified mail to the holder at the following address:
Cell Genesys, Inc.
342 Lakeside Drive
Foster City, California 94404
Attn: President and CEO
10. BREACH OF GUARANTY. In the event that Cell Genesys is in default
of its obligations under the Guaranty, this Warrant shall immediately cease to
be exercisable and Holder shall have no further rights to purchase shares
hereunder.
11. MISCELLANEOUS. This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or termination
is sought. This Warrant shall be governed by and construed under the laws of the
State of California, as applied to agreements among California residents entered
into and performed entirely within California. The headings in this Warrant are
for purposes of reference only, and shall not limit or otherwise affect any of
the terms hereof.
Date: January 23, 1997 ABGENIX, INC.
By: /s/ R. Scott Greer
-------------------------------
R. Scott Greer
President and Chief
Executive Officer
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<PAGE> 1
EXHIBIT 10.6
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS A
REGISTRATION UNDER SUCH ACT IS IN EFFECT AS TO SUCH TRANSFER, SUCH TRANSFER IS
MADE PURSUANT TO RULE 144, OR, IN THE OPINION OF COUNSEL, REASONABLY
SATISFACTORY TO THE COMPANY AND ITS COUNSEL, SUCH REGISTRATION IS NOT REQUIRED.
No. W-2 Right to Purchase 50,000 Shares of Series A
Convertible Preferred Stock of Abgenix, Inc.
ABGENIX, INC.
Series A Senior Convertible Preferred Stock Purchase Warrant
Abgenix, Inc., a Delaware corporation (the "Company"), hereby certifies
that, for value received Cell Genesys, Inc. ("Cell Genesys") or registered
assign (the "Holder"), is entitled, subject to the terms set forth below, to
purchase from the Company upon surrender hereof Fifty Thousand (50,000) fully
paid and nonassessable shares of Series A Senior Convertible Preferred Stock of
the Company (the "Series A Preferred Stock"). The number, character and Exercise
Price of such shares of Series A Preferred Stock are subject to adjustment as
provided herein. The term "Warrant" as used herein shall include this Warrant
and any Warrant delivered in substitution or exchange herefor as provided
herein.
This Warrant is issued in consideration of the credit guaranty (the
"Guaranty") provided by Cell Genesys in connection with certain tenant
improvements and capital equipment leaselines for the Company.
1. TERM OF WARRANT. Subject to the terms and conditions set forth
herein, this Warrant shall be exercisable by the Holder, in whole or in part,
at any time or from time to time before 5:00 P.M., California time, on the date
three (3) years from issuance, and shall be void thereafter.
2. EXERCISE PRICE. This Warrant may be exercised at an exercise price of
$6.00 per share (the "Exercise Price").
3. EXERCISE OF WARRANT.
3.1 General. This Warrant may be exercised by the Holder by
surrender of this Warrant, with the form of subscription at the end hereof duly
executed by the Holder, to the Company at its principal office, accompanied by
payment in cash or by check acceptable to the Company of the aggregate Exercise
Price of the shares to be purchased.
<PAGE> 2
3.2 No Fractional Shares. No fractional shares shall be issued upon
the exercise of this Warrant. In lieu of any fractional share to which the
Holder would otherwise be entitled, the Company shall make a cash payment equal
to the Exercise Price multiplied by such fraction.
3.3 Rights of Stockholders. This Warrant shall not entitle its
Holder to any of the rights of a stockholder of the Company.
4. DELIVERY OF STOCK CERTIFICATES ON EXERCISE. As soon as practicable
after the exercise of this Warrant and in any event no later than 10 days
thereafter, the Company at its expense (including the payment by it of any
applicable issue taxes) will cause to be issued in the name of and delivered to
the Holder, or as the Holder (upon payment by the Holder of any applicable
transfer taxes) may direct, a certificate or certificates for the number of
fully paid and nonassessable shares of Series A Preferred Stock to which the
Holder shall be entitled on such exercise, together with any other stock or
other securities and property (including cash, where applicable) to which the
Holder is entitled upon such exercise.
5. ADJUSTMENTS. The Exercise Price and the number of shares
purchasable hereunder are subject to adjustment from time to time as follows:
5.1 Conversion or Redemption of Series A Preferred Stock. Should all
of the Company's Series A Preferred Stock be, or if outstanding would be, at
any time prior to the expiration of this Warrant, redeemed or converted into
shares of the Company's Common Stock in accordance with Section 2.4 of the
Company's Certificate of Designation of Series A Senior Convertible Preferred
Stock, then this Warrant shall immediately become exercisable for that number
of shares of the Company's Common Stock equal to the number of shares of the
Common Stock that would have been received if this Warrant had been exercised
in full and the Series A Preferred Stock received thereupon had been
simultaneously converted immediately prior to such event, and the Exercise
Price shall be immediately adjusted to equal the quotient obtained by dividing
(x) the aggregate Exercise Price of the maximum number of shares of Series A
Preferred Stock for which this Warrant was exercisable immediately prior to
such conversion or redemption, by (y) the number of shares of Common Stock for
which this Warrant is exercisable immediately after such conversion or
redemption. For purposes of the foregoing, the "Articles" shall mean the
Articles of Incorporation of the Company as amended and/or restated and
effective immediately prior to the redemption or conversion of all of the
Company's Series A Preferred Stock.
5.2 Reclassification, etc. If the Company, at any time while this
Warrant, or any portion of this Warrant, remains outstanding and unexpired, by
reclassification of securities or otherwise, shall change any of the securities
issuable upon
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<PAGE> 3
exercise of this Warrant into the same or a different number of securities of
any other class or classes, this Warrant shall thereafter represent the right
to acquire such number and kind of securities as would have been issuable as
the result of such change with respect to the securities that were issuable
under this Warrant immediately prior to such reclassification or other change
and the Exercise Price therefor shall be appropriately adjusted. No adjustment
shall be made pursuant to this Section 5.2 upon any conversion or redemption of
the Series A Preferred Stock, which is the subject of Section 5.1.
5.3 Merger, Sale of Assets, etc. If at any time while this Warrant,
or any portion of this Warrant, is outstanding and unexpired there shall be (i)
a reorganization (other than a combination, reclassification, exchange or
subdivision of shares otherwise provided for herein), (ii) a merger or
consolidation of the Company with or into another corporation in which the
Company is not the surviving entity, or a reverse triangular merger in which
the Company is the surviving entity but the shares of the Company's capital
stock outstanding immediately prior to the merger are converted by virtue of
the merger into other property, whether in the form of securities, cash, or
otherwise, or (iii) a sale or transfer of the Company's properties and assets
as, or substantially as, an entirety to any other person, then, as a part of
such reorganization, merger, consolidation, sale or transfer, lawful provision
shall be made so that the Holder shall thereafter be entitled to receive upon
exercise of this Warrant, during the period specified herein and upon payment
of the Exercise Price then in effect, the number of shares of stock or other
securities or property of the successor corporation resulting from such
reorganization, merger, consolidation, sale or transfer that a holder of the
shares of the capital stock of the Company deliverable upon exercise if this
Warrant would have been entitled to receive in such reorganization,
consolidation, merger, sale or transfer of this Warrant had been exercised
immediately before such reorganization, merger, consolidation, sale or
transfer, all subject to further adjustment as provided in this Section 5. The
foregoing provisions of this Section 5.3 shall similarly apply to successive
reorganizations, consolidations, mergers, sales and transfers and to the stock
or securities of any other corporation that are at the time receivable upon the
exercise of this Warrant. If the per share consideration payable to the Holder
for shares in connection with any such transaction is in a form other than cash
or marketable securities, then the value of such consideration shall be
determined in good faith by the Company's Board of Directors. In all events,
appropriate adjustment (as determined in good faith by the Company's Board of
Directors) shall be made in the application of the provisions of this Warrant
with respect to the rights and interests of the Holder after the transaction,
to the end that the provisions of this Warrant shall be applicable after that
event, as near as reasonably may be, in relation to any shares or other
property deliverable after that event upon exercise of this Warrant.
-3-
<PAGE> 4
5.4 Split, Subdivision or Combination of Shares. If the Company at
any time while this Warrant, or any portion of this Warrant, remains outstanding
and unexpired shall split, subdivide or combine the securities issuable upon
exercise of this Warrant into a different number of securities of the same
class, the number of shares for which this Warrant may be exercised shall be
proportionately increased and the Exercise Price for such securities shall be
proportionately decreased in the case of a split or subdivision and such number
of shares shall be proportionately decreased and the Exercise Price for such
securities shall be proportionately increased in the case of a combination.
5.5 Adjustments for Dividends in Stock or Other Securities or
Property. If while this Warrant, or any portion of this Warrant, remains
outstanding and unexpired the holders of the securities issuable upon exercise
of this Warrant shall have received, or, on or after the record date fixed for
the determination of eligible shareholders, shall have become entitled to
receive, without payment therefor, other or additional stock or other securities
or property (other than cash) of the Company by way of dividend, then and in
each case, this Warrant shall represent the right to acquire, in addition to the
number of shares of the security receivable upon exercise of this Warrant, and
without payment of any additional consideration therefor, the amount of such
other or additional stock or other securities or property (other than cash) of
the Company that such holder would hold on the date of such exercise had it been
the holder of record of the security issuable upon exercise of this Warrant on
the date hereof and had thereafter, during the period from the date hereof to
and including the date of such exercise, retained such shares and/or all other
additional stock available by it as aforesaid during such period, giving affect
to all adjustments called for during such period by the provisions of this
Section 5.
5.6 No Impairment. The Company will not, by any voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Company, but will at all times in good
faith assist in the carrying out of all the provisions of this Section 5 and in
the taking of all such reasonable action as may be necessary or appropriate in
order to protect the rights of the Holder against Impairment.
6. RESERVATION OF STOCK ISSUABLE ON EXERCISE OF WARRANT. The Company
will at all times reserve and keep available, solely for issuance and deliver
on the exercise of the Warrant, all shares of Series A Preferred Stock (or
other securities) from time to time issuable on the exercise of this Warrant.
-4-
<PAGE> 5
7. COMPLIANCE WITH SECURITIES ACT; TRANSFERABILITY OF WARRANT;
DISPOSITION OF SHARES.
(a) Legends. This Warrant and the shares issued upon the
exercise hereof shall be imprinted with a legend in substantially the
following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED UNLESS A REGISTRATION UNDER SUCH ACT IS IN EFFECT AS TO SUCH
TRANSFER, SUCH TRANSFER IS MADE PURSUANT TO RULE 144, OR, IN THE OPINION
OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY AND ITS COUNSEL, SUCH
REGISTRATION IS NOT REQUIRED."
(b) Transferability and Nonnegotiability of Warrant. This Warrant
may not be assigned or transferred except as provided herein and in
accordance with and subject to the provisions of the Securities Act of
1933, as amended (the "Act"). Any purported transfer or assignment made
other than in accordance with this Section 7(b) shall be null and void and
of no force and effect. This Warrant may be transferred or assigned
pursuant to Rule 144 promulgated under the Act or pursuant to an opinion
of counsel to the Holder, in form and substance reasonably acceptable to
the Company, that (i) the transferee is a person to whom the Warrant and
the underlying shares may be legally transferred without registration
under the Act; and (ii) such transfer will not violate any applicable law
or governmental rule or regulation including, without limitation, any
applicable federal or state securities law.
(c) Loss or Destruction of Warrant. Upon receipt by the Company of
evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Warrant, and (in the case of loss, theft or
destruction) of reasonably satisfactory indemnification, or (in the case of
mutilation) surrender and cancellation of this Warrant, the Company will
execute and deliver a new Warrant of like tenor and date and any such
lost, stolen, or destroyed Warrant shall thereupon become void.
(d) Indemnification. The Holder and each holder of series A
Preferred Stock or other securities issued or issuable upon exercise of
this warrant shall indemnify and hold harmless the Company, its directors
and officers, and each person, if any, who controls the Company, against
any losses, claims, damages or liabilities (other than consequential
damages), joint or several, to which the Company or any such director,
officer or any such person may become subject under the Act or statute or
common law, to the extent, and only to the extent, that such losses,
claims, damages or liabilities, or actions in respect thereof, result
directly from the disposition by the Holder of this Warrant, the Series A
Preferred Stock or any other
-5-
<PAGE> 6
securities issued upon exercise of this Warrant in violation of the
provisions of Section 7(b) of this Warrant.
8. RIGHTS OF HOLDER. The Holder shall not, by virtue hereof, be
entitled to any of the rights of a shareholder of the Company, either at law or
in equity, and the rights of the Holder are limited to those expressed in this
Warrant and provided for under applicable laws and are not enforceable against
the Company except to the extent set forth herein or provided for under
applicable laws.
9. NOTICES. All notices and other communications from the Company to
the holder of this Warrant shall be delivered in person or mailed by first class
certified mail to the holder at the following address:
Cell Genesys, Inc.
342 Lakeside Drive
Foster City, California 94404
Attn: President and CEO
10. BREACH OF GUARANTY. In the event that Cell Genesys is in default
of its obligations under the Guaranty, this Warrant shall immediately cease to
be exercisable and Holder shall have no further rights to purchase shares
hereunder.
11. MISCELLANEOUS. This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or termination
is sought. This Warrant shall be governed by and construed under the laws of the
State of California, as applied to agreements among California residents entered
into and performed entirely within California. The headings in this Warrant are
for purposes of reference only, and shall not limit or otherwise affect any of
the terms hereof.
Date: March 27, 1997 ABGENIX, INC.
By: /s/ R. Scott Greer
-------------------------------
R. Scott Greer
President and Chief
Executive Officer
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EXHIBIT 10.8E
CONFIDENTIAL TREATMENT REQUESTED BY ABGENIX, INC.
AMENDMENT NO. 5 TO COLLABORATION AGREEMENT
This Amendment to Collaboration Agreement (the "Amendment"), effective
as of November __, 1997, (the "Amendment Effective Date"), is made by and
between Xenotech, L.P., a California limited partnership ("XT"), Abgenix, Inc.
("ABX"), a Delaware corporation and wholly-owned subsidiary of Cell Genesys
Inc., ("CGI"), and JT Immunotech USA Inc., a New York corporation ("JT
Immunotech"), and amends that certain Collaboration Agreement originally entered
into by JT Immunotech, XT, and CGI (and subsequently assigned from CGI to ABX)
effective as of June 28, 1996 (the "Collaboration Agreement"), as amended by
that certain Amendment No. 1 to Collaboration Agreement, dated as of June 30,
1993 ("Amendment No. 1"), that certain Amendment No. 2 to Collaboration
Agreement, dated as of January 1, 1994 ("Amendment No. 2"), that certain
Amendment No. 3 to Collaboration Agreement, dated as of July 1, 1995 ("Amendment
No. 3"), and that certain Amendment No. 4 to Collaboration Agreement, dated as
of June 28, 1996 ("Amendment No. 4").
RECITALS
A. XT is a limited partnership formed in June 1991 by JT Immunotech, a
wholly-owned indirect subsidiary of Japan Tobacco Inc. ("JTI"), and CGI to
research, develop, use, modify, make, have made, sell and otherwise dispose of
certain products and hold the rights to certain technology relating to human
monoclonal antibodies derived from transgenic mice;
B. CGI has assigned all of its rights and any obligations under the
Collaboration Agreement, and various other agreements, to its wholly-owned
subsidiary ABX; and
C. The parties desire to amend the Collaboration Agreement to facilitate
research, development and commercialization of therapeutic products for gene
therapy developed through use of certain technology relating to human monoclonal
antibodies derived from transgenic mice.
NOW THEREFORE, it is agreed by and between the parties to amend the
Collaboration Agreement as follows:
1. All capitalized terms not defined in this Amendment shall have the
meanings given to them in the Collaboration Agreement.
2. Section 1.6 is amended to read in its entirety as follows:
1.6 "Licensed Product" shall mean Monoclonal Antibodies, Genetic Material
encoding such Monoclonal Antibodies or any fragment of such Monoclonal
Antibodies, the Monoclonal Antibody-producing mouse, and any discrete
product incorporating a Monoclonal Antibody or Genetic Material encoding a
Monoclonal Antibody or any fragment of a Monoclonal Antibody.
<PAGE> 2
3. The following new Sections 1.13 is added following Section 1.12 of the
Collaboration Agreement:
1.13 "Genetic Material" shall mean a nucleotide sequence, including DNA,
RNA, and complementary and reverse complementary nucleotide sequences
thereto, whether coding or noncoding and whether intact or a fragment.
4. Exhibit B of the Collaboration Agreement is amended to read in its
entirety as set forth in Amended Exhibit B attached hereto.
5. Exhibit F of the Collaboration Agreement is amended to read in its
entirety as set forth in Amended Exhibit F attached hereto.
6. Except as specifically modified or amended hereby or by Amendment No. 1,
Amendment No. 2, Amendment No. 3 or Amendment No. 4, the Agreement shall
remain in full force and effect and, as so modified or amended, is hereby
ratified, confirmed and approved. No provision of this Amendment may be
modified or amended except expressly in a writing signed by the parties
nor shall any terms be waived except expressly in a writing signed by the
party charged therewith. This Amendment shall be governed in accordance
with the laws of the State of California, without regard to the principles
of conflicts of laws.
IN WITNESS WHEREOF, each of the parties has executed this Amendment as
of the date indicated on this Amendment.
ABGENIX, INC. JT IMMUNOTECH USA, INC.
By /s/ R. Scott Greer By /s/ Noriaki Okubo
------------------------------ ------------------------------
Name R. Scott Greer Name Noriaki Okubo
---------------------------- ----------------------------
Title President and CEO Title President
--------------------------- ---------------------------
Date Date
---------------------------- ----------------------------
XENOTECH, INC. (as General Partner of XENOTECH, L.P.)
By /s/ Noriaki Okubo By /s/ Raymond M. Withy
------------------------------ ------------------------------
Name Noriaki Okubo Name Raymond M. Withy
---------------------------- ----------------------------
Title President and CEO Title Chairman
--------------------------- ---------------------------
Date Date
---------------------------- ----------------------------
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Exhibit B
Docket No. Filing Date Serial No. Title Inventors
[***]
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
<PAGE> 4
Exhibit B
Docket No. Filing Date Serial No. Title Inventors
[***]
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
<PAGE> 5
Exhibit F
[***]
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
<PAGE> 6
Exhibit F
[***]
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
<PAGE> 7
Exhibit F
[***]
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
<PAGE> 8
Exhibit F
[***]
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
<PAGE> 1
EXHIBIT 10.12
CONFIDENTIAL TREATMENT REQUESTED BY ABGENIX, INC.
AMENDED AND RESTATED
ANTI-IL-8 PRODUCT LICENSE AGREEMENT
THIS AMENDED AND RESTATED PRODUCT LICENSE AGREEMENT (the "Agreement") to
agreement originally made as of March 19, 1996, is made as of the original date
by and between Xenotech, L.P., a California limited partnership ("XT"), and each
of Cell Genesys, Inc. ("CGI"), a Delaware corporation, and Japan Tobacco Inc., a
Japanese corporation ("JTI").
RECITALS
A. XT desires to grant JTI an exclusive license in the JTI Territory
under the Licensed Technology to commercialize Products, and JTI wishes to
acquire such a license, on the terms and conditions herein.
B. XT desires to grant CGI an exclusive license in the CGI Territory
under the Licensed Technology to commercialize Products, and CGI wishes to
acquire such a license, on the terms and conditions herein.
C. XT desires to grant to JTI and CGI a co-exclusive license in the
Rest of the World under the Licensed Technology to commercialize Products, and
JTI and CGI wish to acquire such a license.
NOW, THEREFORE, for and in consideration of the covenants, conditions,
and undertakings hereinafter set forth, it is agreed by and between the parties
as follows:
1. DEFINITIONS
Incorporation by Reference. For purposes of this Agreement, the terms
set forth in this Article shall have the meanings set forth below.
1.l "Affiliate" shall mean any entity which controls, is controlled
by or is under common control with any of CGI, JTI or XT. An entity shall be
regarded as in control of another entity if it owns or controls at least fifty
percent (50%) of the shares of the subject entity entitled to vote in the
election of directors (or, in the case of an entity that is not a corporation,
for the election of the corresponding managing authority); provided, however, XT
shall not be an Affiliate of CGI or JTI under this Agreement and XT shall not be
considered controlled by CGI or JTI for purposes of determining Affiliates of
CGI or JTI.
<PAGE> 2
1.2 "[***] Technology" shall mean (i) all U.S. patent applications
and patents listed on Schedule 1 and patents issuing on such patent applications
owned by or licensed to XT which relate to the [***], in each case to the extent
XT has the right to license or sublicense the same; (ii) any continuations,
divisionals, reexaminations, reissues or extensions of any of (i) above; (iii)
any foreign counterparts issued or issuing on any of (i) or (ii) above; and (iv)
[***] as set forth in Schedule 1.
1.3 "CGI Territory" shall mean the United States of America and its
territories and possessions, Canada and Mexico.
1.4 "Core Technology" shall have the meaning set forth in Section
10.3.
1.5 "Effective Date" shall mean March 19, 1996.
1.6 "IND" shall mean an Investigational New Drug Exemption for a
Product, as defined in the U.S. Food, Drug and Cosmetic Act and the regulations
promulgated thereunder, or its non-U.S. equivalent.
1.7 "JTI Territory" shall mean Japan, Taiwan, and South Korea
(including the territory comprising North Korea if it should be reunited with
South Korea).
1.8 "License Date" shall mean, for each of CGI and JTI, the date that
such party has executed this Agreement.
1.9 "License Fee" shall have the meaning set forth in Article 3
hereof.
1.10 "Licensed Field" shall mean [***].
1.11 "Licensed Technology" shall mean the [***] Technology and the
[***] Technology.
1.12 "Master Research License and Option Agreement" shall mean that
certain Master Research License and Option Agreement entered into by CGI, JTI
and XT as of June 28, 1996, as it may be amended.
1.13 "Net Sales" shall mean the [***] by CGI or JTI, as the
case may be, or its Affiliates and Sublicensees for sales of Product to
non-Affiliate customers, [***], with respect to such sales, and [***], as
reflected in [***] of CGI or JTI and its Affiliates or Sublicensees, [***].
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respect to the omitted portions.
<PAGE> 3
1.14 "Product" shall mean [***] but not limited to any [***]. Product
as used herein shall not include a [***].
1.15 "Product Antigen" shall mean Interleukin 8.
1.16 "Rest of the World" shall mean all parts of the world not
included in the CGI Territory or the JTI Territory.
1.17 "Sublicensee" shall mean a third party that is not an Affiliate
to whom CGI or JTI, as the case may be, has granted a sublicense under the
Licensed Technology to make, use and/or sell Product to the extent of the rights
of CGI or JTI, as the case may be, therein. "Sublicensee" shall also include a
third party to whom CGI or JTI has granted the right to distribute Product under
the Licensed Technology to the extent of the rights of CGI or JTI, as the case
may be, therein, provided that such third party is responsible for the marketing
and promotion of Product within the applicable country.
1.18 "Territory" shall mean those countries of the world in which CGI
or JTI, as the case may be, has exclusive or co-exclusive license rights
pursuant to this Agreement,
1.19 "Universal Receptor Product" shall mean a substance that is
developed utilizing [***] Universal Receptor Technology.
1.20 "Universal Receptor Technology" shall mean technology for
universal receptors [***]. As used herein: (i) "universal receptor" shall mean a
receptor [***]
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<PAGE> 4
[***].
1.21 "Valid Claim" shall mean a claim of a pending or issued and
unexpired patent included within the Licensed Technology, which has not been
held unenforceable, unpatentable or invalid by a court or other governmental
agency of competent jurisdiction, and which has not been admitted to be invalid
or unenforceable through reissue, disclaimer or otherwise.
1.22 "[***] Technology" shall mean (i) all U.S. patent applications
and patents listed on Schedule 2 and patents issuing on such applications; (ii)
any continuations, divisionals, reexaminations, reissues or extensions of any of
(i) above; (iii) any foreign counterparts issued or issuing on any of (i) or
(ii) above; and (iv) the Mice (as such term is defined in the Master Research
License and Option Agreement) and [***] as set forth on Schedule 2.
2. LICENSE GRANTS
2.1 Grant to CGI. Subject to the terms and conditions of this
Agreement and effective as of the CGI License Date, XT hereby grants to CGI an
exclusive license or sublicense, as the case may be, under the Licensed
Technology, to make and have made Product anywhere in the world for use, sale,
import or other distribution in the CGI Territory in the Licensed Field. Such
license or sublicense shall be exclusive even as to XT, and shall include the
exclusive right to grant and authorize sublicenses for exploitation within the
CGI Territory (excluding any rights to the Mice as defined in the Master
Research License and Option Agreement).
2.2 Grant to JTI. Subject to the terms and conditions of this
Agreement, and effective as of the JTI License Date, XT hereby grants to JTI an
exclusive license or sublicense, as the case may be, under the Licensed
Technology, to make and have made Product anywhere in the world for use, sale,
import or other distribution in the JTI Territory in the Licensed Field. Such
license or sublicense shall be exclusive even as to XT, and shall include the
exclusive right to grant and authorize sublicenses for exploitation within the
JTI Territory (excluding any rights to the Mice as defined in the Master
Research License and Option Agreement).
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<PAGE> 5
2.3 Rest of World. Subject to the terms and conditions of this
Agreement, effective as of the CGI License Date and the JTI License Date, as the
case may be, XT hereby grants to each of CGI and JTI a co-exclusive license or
sublicense, as the case may be, under the Licensed Technology, to make and have
made Product anywhere in the world for use, sale, import or other distribution
in the Rest of the World in the Licensed Field. Such co-exclusive licenses or
sublicenses shall be co-exclusive even as to XT and shall include the
co-exclusive right to grant and authorize sublicenses for exploitation within
the Rest of the world (excluding any rights to the Mice as defined in the Master
Research License and Option Agreement)
3. LICENSE FEE
Subject to Section 15.1, each of CGI and JTI shall pay to XT a license
fee of [***].
4. ROYALTIES
4.1 Royalty Rates. In consideration for the license and rights
granted herein, CGI and JTI each agree to pay to XT royalties of [***] of Net
Sales of Product by it and its Affiliates and Sublicensees.
4.2 Royalty Offsets. CGI or JTI, as the case may be, shall have the
right to reduce the rate at which any royalties due to XT are payable pursuant
to Section 4.1 to offset [***]; provided, however, that the royalty rates paid
by such licensee pursuant to Section 4.1 shall not be reduced to less than [***]
of the rate set forth in Section 4.1. [***].
4.3 Single Royalty; Non-Royalty Sales. Only one royalty shall be
payable with respect to any Product, regardless of how many claims of patents
within the Licensed Technology cover such Product. In addition, no royalty shall
be payable under this Article 4 with respect to sales of Product among CGI or
JTI, as the case may be, and its Affiliates and/or Sublicensees or for use in
research and/or development or clinical trials.
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<PAGE> 6
4.4 No Patent Protection. Royalties shall be payable at the rates
specified in Section 4.1 or 4.2 above only with respect to sales of a Product
that would infringe a Valid Claim in the country in which such Product is sold.
In the event that such Product is not covered by a Valid Claim in such country,
XT shall be paid a royalty on such sales in accordance with this Article 4,
[***].
4.5 Combination Products. In the event that Product is sold in
combination as a single product with another product or component, Net Sales
from such combination sales for purposes of calculating the amounts due under
this Article 4 shall be [***]. In the event that no such separate sales are made
in the same quarter by CGI or JTI, as the case may be, Net Sales for royalty
determination shall be [***].
4.6 Termination of Royalties. Royalties under Section 4.1, 4.2 or 4.4
will be due until the later of (i) ten years from the first commercial sale of
Product in any country or (ii) on a country-by-country basis, the expiration of
the last-to-expire patent within the Licensed Technology covering the Product in
such country,
5. THIRD PARTY ROYALTIES
5.1 Royalties Payable by XT. XT will be responsible for the payment
of any royalties, license fees and milestone and/or other payments due to third
parties under licenses or similar agreements entered into by XT necessary to
allow the manufacture, use or sale of Product. CGI and/or JTI, as the case may
be, shall reimburse XT for any royalties paid by XT to third parties under
licenses or similar agreements covering Product necessary to allow the
manufacture, use, sale or other exploitation of Product in accordance with this
Agreement. CGI and/or JTI shall continue any such reimbursement payments to XT
until XT's obligation to pay royalties to a third party under any license
covering Product expires or terminates. XT agrees not to enter into any license
or similar agreement after the Effective Date which would obligate CGI and/or
JTI, as they case may be, to make any payments under this Section 5.1 without
the prior written consent of CGI and/or JTI, as the case may be.
5.2 Royalties Payable by CGI or JTI. CGI and JTI, as the case may be,
will be responsible for the payment of any royalties, license fees and milestone
and other payments due to
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<PAGE> 7
third parties under licenses or similar agreements entered into by such party to
allow the manufacture, use or sale of Product.
6. ACCOUNTING AND RECORDS
6.1 Royalty Reports and Payments. After the first commercial sale of
Product on which royalties are required, CGI and JTI each agrees to make
quarterly written reports to XT within eighty days after the end of each
calendar quarter, stating in each such report the number, description, and
aggregate Net Sales of Product sold during the calendar quarter upon which a
royalty is payable under Article 4 above. Concurrently with the making of such
reports, CGI or JTI, as the case may be, shall pay to XT royalties at the
applicable rate specified in Section 4.1, 4.2 or 4.4 above and all royalties
payable pursuant to Section 5.1 above, and any adjustment to Net Sales for a
prior period in accordance with the definition of Net Sales in Section 1.13
hereof. All payments to XT hereunder shall be made in U.S. Dollars to a bank
account designated by XT.
6.2 Early Third Party License Payments. If XT is obligated to pay
royalties to a third party prior to ninety days after the end of the calendar
quarter, XT shall so notify CGI or JTI, as the case may be, and such licensee
shall provide the reports and payments set forth in Section 6.1 above not later
than ten (10) days before the date such payments are due to the third party. Up
to thirty-five days before such payments are due, XT may provide CGI or JTI with
an invoice by facsimile setting forth the royalties XT must pay third parties
with respect to such licensee's activities in its Territory in the preceding
quarter, and such licensee shall pay such invoices within thirty days of receipt
of such invoice.
6.3 Records; Inspection. CGI and JTI shall keep (and cause its
Affiliates and Sublicensees to keep) complete, true and accurate books of
account and records for the purpose of determining the royalty amounts payable
to XT under this Agreement. Such books and records shall be kept at the
principal place of business of CGI and JTI or its Affiliates or Sublicensees, as
the case may be, for at least three years following the end of the calendar
quarter to which they pertain. Such records of each licensee or its Affiliates
or Sublicensee will be open for inspection during such three-year period by a
representative of XT for the purpose of verifying the royalty statements. CGI
and JTI shall each require each of its Sublicensees to maintain similar books
and records and to open such records for inspection during the same three-year
period by a representative of CGI or JTI, as the case may be, reasonably
satisfactory to XT on behalf of, and as required by, XT for the purpose of
verifying the royalty statements. All such inspections may be made no more than
once each calendar year, at reasonable times mutually agreed by XT and the
particular licensee. The XT representative will be obliged to execute a
reasonable confidentiality agreement prior to commencing any such
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<PAGE> 8
inspection. Inspections conducted under this section 6.3 shall be at the expense
of XT, unless a variation or error of CGI or JTI, as the case may be, producing
an increase exceeding [***] of the amount stated for the period covered by the
inspection is established in the course of any such inspection, whereupon all
costs relating thereto will be paid by the particular licensee. Upon the
expiration of three years following the end of any fiscal year, the calculation
of royalties payable with respect to such year shall be binding and conclusive,
and CGI and JTI, as the case may be, shall be released from any liability or
accountability with respect to royalties for such year.
6.4 Currency Conversion. If any currency conversion shall be required
in connection with the calculation of royalties hereunder, such conversion shall
be made using the selling exchange rate for conversion of the foreign currency
into U.S. Dollars, quoted for current transactions reported in The Wall Street
Journal for the last business day of the calendar quarter to which such payment
pertains.
6.5 Late Payments. Any payments due from Licensee that are not paid
on the date such payments are due under this Agreement shall bear interest to
the extent permitted by applicable law at [***], calculated on the number of
days such payment is delinquent. This Section 6.5 shall in no way limit any
other remedies available to any party.
6.6 Withholding Taxes.
6.6.1 Unless immediately reimbursable under Section 6.6.2 below,
all payments required to be made pursuant to Articles 3, 4 and 5 hereof shall be
without deduction or withholding for or on account of any taxes (other than
taxes imposed on or measured by net income) or similar governmental charge
imposed by a jurisdiction. Such taxes are referred to herein as "Withholding
Taxes" and such Withholding Taxes shall be the sole responsibility of the
withholding party. The withholding party shall provide a certificate evidencing
payment of any Withholding Taxes hereunder.
6.6.2 XT agrees to elect to claim a tax credit for Withholding
Taxes with respect to which it is entitled so to elect, and further agrees not
to amend such election for the full carry-forward period with respect to such
credit. At the time that XT realizes a reduction in U.S. tax liability by
actually utilizing the Withholding Taxes as a credit against regular U.S. tax
liability (determined on a "first-in-first-out" basis pro rata with other
available foreign tax credits), then the amount of such reduction attributable
to such credit shall immediately be reimbursed to the withholding party. For
these purposes, a reduction in U.S. tax liability shall include both a direct
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<PAGE> 9
reduction in XT's own tax liability and a reduction in the U.S. tax liability of
any of its partners.
6.7 Tax Indemnity. Except as provided in Section 6.6, each party (the
"Tax Indemnitor") shall indemnify and hold harmless the other party hereto (each
a "Tax Indemnitee") from and against any tax or similar governmental charge
assessed solely because of this Agreement, with respect to and directly
attributable to the income or the assets of the Tax Indemnitor. In the event
that any governmental agency shall make a claim against a party hereto which
could give rise to an indemnity hereunder, such potential Tax Indemnitee shall
give reasonably prompt notice to the potential Tax Indemnitor of the assertion
of such claim. If the transmission of such notice is unreasonably deferred and
has a material, adverse affect on the ability of the potential Tax indemnitor to
challenge such claim, such potential Tax Indemnitor shall be released from
liability hereunder. The Tax Indemnitor alone shall (at its own expense) control
the defense or compromise of any such claim. The Tax Indemnitee shall execute
any documents required to enable Tax Indemnitor to defend such claim, provide
any information necessary therefor, and cooperate with Tax Indemnitor in such
defense.
6.8 XT Tax Indemnity. XT shall indemnify and hold harmless CGI and
JTI and their Affiliates from and against any increase to their respective
country of incorporation income tax liability directly attributable to a
positive adjustment to the amount of gross receipts (an "Adjustment" ) reported
or reportable by such party from the income, including the royalty income,
received from CGI or JTI on Covered Products. The amount payable hereunder shall
be equal to the difference between (a) the product of (i) the amount of the
Adjustment, and (ii) the highest combined marginal corporate tax rate in their
respective country of incorporation in effect for the taxable year for which
such Adjustment is made, and (b) the reduction in the party's foreign tax
liability, which for purposes of this Agreement shall be equal to the product of
(i) the amount of any correlative adjustment to its foreign taxable income, and
(ii) the highest combined marginal foreign corporate tax rate in effect for the
taxable year for which the correlative adjustment is made. No indemnification
payment shall be required hereunder until comprehensive efforts to obtain a
correlative adjustment to CGI's or JTI's, as the case may be, or its Affiliates'
taxable income in a foreign state (which may include, for example invoking
competent authority provisions under the U.S. Japanese Income Tax Treaty (if
applicable)or other applicable bilateral tax treaty) have, to the extent
reasonable to do so, been exhausted.
7. RESEARCH DEVELOPMENT
7.1 Funding and Conduct. CGI and JTI shall each independently furnish
and be responsible for funding and conducting all of its preclinical and
clinical research and development of Product, at its own expense.
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<PAGE> 10
7.2 Biomaterials. Xenotech shall make available to each of CGI and
JTI DNA or cDNA available to Xenotech and appropriate for use in development of
the Product, as well as the related data. The DNA or cDNA thus made available
will be used only by CGI and JTI and its permitted Affiliates and Sublicensees
and manufacturing subcontractors. Xenotech shall also make available as part of
the license granted hereunder to CGI and JTI any hybridomas, any reagents used
for hybridoma generation and any materials from generated hybridomas including
purified antibodies available to Xenotech and appropriate for use in development
of Product, as well as the related data. Such hybridomas, reagents and
materials, as well as the related data thus made available will be used only by
CGI and JTI and their Affiliates and Sublicensees and manufacturing
subcontractors.
7.3 Specialized Services. XT shall consider making available, as
reasonably requested by CGI and JTI, specialized services of the Xenotech
Division of CGI to aid in development of the Product. Such services shall be
paid for by the requesting party.
8. SHARING OF CLINICAL DATA
CGI and JTI and their respective Affiliates and Sublicensees shall be
free to use data prepared by or on behalf of Xenotech under joint funding by
them. However, there shall be no obligation for sharing data developed
independently, whether through the Xenotech Division as provided in Section 7.3
or otherwise, by or on behalf of CGI or JTI. As long as their development
projects remain on similar timelines, CGI and JTI will consider bilateral
sharing of relevant Product development information end clinical data.
9. DUE DILIGENCE
9.1 [***].
9.1.1 CGI and JTI, as the case may be, agree to [***] within
[***] from its respective License Date.
9.1.2 In the event that either CGI or JTI believes [***] in its
Territory, the [***] set forth in Section 9.1.1 shall be [***]; or, in the event
that either CGI or JTI believes [***] in its Territory, the [***] set forth in
Section 9.1.1 shall he [***].
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9.1.3 Notwithstanding the foregoing, each of CGI and JTI shall
be [***] in the United States or Japan.
9.2 Failure to Meet Due Diligence Obligation.
9.2.1 If the diligence requirements set forth in Section 9.1 are
not met by CGI (or its Affiliates or Sublicensees) in the United States or by
JTI (or its Affiliates or Sublicensees) in Japan, such licensee's rights in the
CGI Territory or the JTI Territory, as the case may be, will become co-exclusive
with the other licensee in such territory and all rights to the Product in the
Rest of the World will remain or become the exclusive rights of the other
licensee, upon written notice by XT to such licensee and subject to Sections
9.3, 9,4 and 14.3 below.
9.2.2. Notwithstanding Section 9.2.1, the license granted
hereunder to CGI or JTI, as the case may be, shall not become co-exclusive by
reason of [***], to the extent that prudent business judgment, based on
circumstances outside of such licensee's reasonable control, reasonably
justifies such delay.
9.3 Dispute Resolution. In the event that a dispute arises whether
the diligence requirements in Article 9 have been met, or circumstances exist
which CGI or JTI, respectively, believes justifies a failure on its part to meet
such obligation, the parties will attempt to resolve any dispute by mutual
agreement, and, if required, the Chief Executive Officer of CGI and the Vice
President of the Pharmaceutical Division of JTI shall meet personally and
negotiate in good faith to resolve such dispute during a period of thirty days
following licensee's receipt of the notice under Section 9.2.1.
9.4 Arbitration. In the event that the parties are unable to resolve
such dispute pursuant to Section 9.3 above, such dispute shall be settled
between XT and the other party by binding arbitration as set forth in Section
16.12. If the arbitrator determines that the party acted in good faith, but
failed to meet its obligations under Section 9.1 above, the license granted to
such party shall not terminate unless the nonperforming party fails to cure such
non-performance within a reasonable period of time, as determined by the
arbitrator.
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10. PATENTS
10.1 [***] Technology.
(a) XT or its licensor, as they may agree, shall have
responsibility for preparing, filing, prosecuting and maintaining patents and
patent applications worldwide relating to the [***] Technology and conducting
any interferences, oppositions, reexaminations, or requesting reissues or patent
term extensions with respect to the [***] Technology. XT shall keep CGI and JTI
each reasonably informed as to the status of such patent matters in its
Territory, including without limitation, by providing such licensee the
opportunity to review and comment on any documents which will be filed in any
patent office, and providing such licensee copies of any documents received by
XT from such patent offices including notice of all interferences,
reexaminations, oppositions or requests for patent term extensions. CGI and JTI
shall cooperate with and assist XT in connection with such activities, at XT's
request and expense.
(b) In the event that CGI or JTI, as the case may be, becomes
aware that any [***] Technology necessary for the practice of the licenses
granted herein is infringed or misappropriated by a third party or is subject to
a declaratory judgment action arising from such infringement, such party shall
promptly notify XT (and the other licensee) and XT shall thereafter promptly
notify the owner of such intellectual property. XT or its licensor, as they may
agree, shall have the exclusive right to enforce, or defend any declaratory
judgment action, at its expense, involving any [***] Technology. In such event,
XT shall keep CGI and/or JTI, as the case may be, reasonably informed of the
progress of any such claim, suit or proceeding in its Territory. Any recovery
received by XT as a result of any such claim, suit or proceeding shall be used
first to reimburse XT for all expenses (including attorneys, and professional
fees) incurred in connection with such claim, suit or proceeding, [***].
10.2 [***] Technology.
10.2.1 XT shall have the initial worldwide responsibility for
preparing, filing, prosecuting and maintaining patent applications and
conducting any interferences, oppositions, reexaminations, or requesting
reissues or patent term extensions with respect to [***] Technology. XT shall
give CGI and JTI each the opportunity to review the status of all such pending
patent applications and actions in its Territory and shall keep CGI and/or JTI,
as the case may be, fully informed of the progress of such applications and
actions, including, without limitation, by promptly providing CGI and/or JTI
with copies of all correspondence sent to and received from patent offices, and
providing notice of all interferences, reexaminations,
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oppositions or requests for patent term extensions. [***]. In the event that XT
declines or fails to prepare, file, prosecute or maintain such patent
applications or patents or take such other actions, relating to the Product it
shall promptly and in no event later than ninety days prior to any filing
deadline, provide notice to CGI and JTI. CGI and JTI shall promptly discuss and
agree on who should assume such responsibilities and how the expenses related
thereto should be allocated.
10.2.2 In the event that a licensee becomes aware that any [***]
Technology necessary for the practice of the license granted herein is infringed
or misappropriated by a third party in any country in which CGI or JTI has
rights hereunder, or is subject to a declaratory judgment action arising from
such infringement in such country, CGI or JTI, as the case may be, shall
promptly notify XT and XT shall thereafter promptly notify the owner of such
intellectual property.
10.2.3 CGI or JTI, as the case may be, shall have the exclusive
right to enforce, or defend any declaratory judgment action, in any country in
which it has exclusive rights hereunder, at its expense, involving [***]
Technology. In such event, the party involved in such claim, suit or proceeding,
shall keep XT and the other of CGI or JTI reasonably informed of the progress of
any such claim, suit or proceeding. Any recovery by such party received as a
result of any such claim, suit or proceeding shall be used first to reimburse
such party for all expenses (including attorneys, and professional fees)
incurred in connection with such claim, suit or proceeding, and [***].
10.2.4 CGI and JTI shall consult and agree whether, and if so,
how, to enforce the [***] Technology in a country in which CGI and JTI have
co-exclusive rights hereunder. However, [***] (except as otherwise provided
below). The party taking such action shall keep XT and the other of CGI or JTI
reasonably informed of the progress of any such claim, suit or proceeding. Any
recovery by such party received as a result of any such claim, suit or
proceeding shall be used first to reimburse such party for all expenses
(including attorneys' and professional fees) incurred in connection with such
claim, suit or proceeding [***].
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10.3 Infringement Claims. If the production, sale or use of Product
pursuant to this Agreement results in any claim, suit or proceeding alleging
patent infringement against CGI or JTI (or their respective Affiliates or
Sublicensees), CGI or JTI, as the case may be, shall promptly notify XT thereof
in writing setting forth the facts of such claim in reasonable detail. [***]
CGI, JTI and XT dated March 22, 1996, as it may be amended from time to time,
CGI or JTI, as the case may be, shall have the exclusive right to defend and
control the defense of any such claim, suit or proceeding, at its own expense,
using counsel of its choice. Such parties shall keep XT reasonably informed of
all material developments in connection with any such claim, suit or proceeding
as it relates to Licensed Technology. The other of CGI or JTI may participate in
the defense. of any such claim, suit or proceeding at its own expense through
counsel of its choice. CGI or JTI, as the case may be, [***] pursuant to this
Agreement. Notwithstanding the above, neither CGI nor JTI shall be able to
settle any such claim, suit or proceeding that impinges upon the rights of JTI
or CGI, as the case may be, including, without limitation, involving any
admission of the invalidity of the Licensed Technology or rights to the Product
Antigen outside its Territory without the prior approval of XT.
10.4 Patent Marking, CGI and JTI agree to mark and have its Affiliates
and Sublicensees mark all Products sold pursuant to this Agreement in accordance
with the applicable statute or regulations in the country or countries of
manufacture and sale thereof.
11. CONFIDENTIALITY
11.1 Confidential Information. Except as expressly provided herein,
the parties agree that, for the term of this Agreement and for five years
thereafter, the receiving party shall keep completely confidential and shall not
publish or otherwise disclose and shall not use for any purpose any information
furnished to it by another party hereto pursuant to this Agreement except to the
extent that it can be established by the receiving party by competent proof that
such information:
(a) was already known to the receiving party, other than under
an obligation of confidentiality, at the time of disclosure;
(b) was generally available to the public or otherwise part of
the public domain at the time of its disclosure to the receiving party;
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(c) became generally available to the public or otherwise part
of the public domain after its disclosure and other than through any act or
omission of the receiving party in breach of this Agreement; or
(d) was subsequently lawfully disclosed to the receiving party
by a person other than a party or developed by the receiving party without
reference to any information or materials disclosed by the disclosing party.
11.2 Permitted Disclosures. Notwithstanding Sections 11.1 above and
16.16 below, each party hereto may disclose another party's information to the
extent such disclosure is reasonably necessary in filing or prosecuting patent
applications, prosecuting or defending litigation, complying with applicable
governmental regulations or otherwise submitting information to tax or other
governmental authorities, making a permitted sublicense or other exercise of its
rights hereunder or conducting clinical trials, provided that if a party is
required to make any such disclosure of the other party's secret or confidential
information, other than pursuant to a confidentiality agreement, it will give
reasonable advance notice to the latter party of such disclosure requirement
and, save to the extent inappropriate in the case of patent applications, will
use efforts consistent with prudent business judgment to secure confidential
treatment of such information prior to its disclosure (whether through
protective orders or otherwise) Notwithstanding the foregoing, XT shall not
disclose to third parties, clinical data or regulatory filings received from CGI
or JTI except as agreed in writing by such party.
12. SUBLICENSES
Pursuant to Article 2 herein, CGI and JTI shall each have the exclusive
right in in the CGI Territory and the JTI Territory, respectively, and the
co-exclusive right in the Rest of the World to grant and authorize sublicenses
to third parties; provided, however, such party shall remain responsible for any
payments due XT for Net Sales of Product by any Sublicensee. [***]. Any
sublicense granted by CGI or JTI pursuant to this Agreement shall. provide that
the Sublicensee will be subject to the applicable terms of this Agreement. CGI
or JTI, as the case may be, shall provide XT with a copy of relevant portions of
each sublicense agreement, as reasonably required by XT.
13. INDEMNITY
13.1 CGI. Subject to compliance by XT and/or JTI with its obligations
set forth in Section 13.3 below, CGI agrees:
(a) to indemnify and hold XT and its directors, officers,
employees and agents harmless from and against any
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losses, claims, damages, liabilities or actions (including reasonable attorneys'
fees and court and other expenses of litigation) (collectively, the
"Liabilities") suffered or incurred in connection with third party claims
relating to the Core Technology arising from any Product manufactured, used,
sold or otherwise distributed by CGI and its Affiliates or Sublicensees;
(b) to indemnify and hold XT, JTI, JTI's Affiliates and their
directors, officers, employees and agents harmless from and against any
Liabilities suffered or incurred in connection with third party claims relating
to intellectual property rights (other than Core Technology) arising from any
Product manufactured, used, sold or otherwise distributed by CGI and its
Affiliates or Sublicensees; and
(c) to indemnify and hold XT, JTI, JTI's Affiliates and their
directors, officers, employees and agents harmless from and against any
Liabilities suffered or incurred in connection with third party claims other
than relating to Core Technology or other intellectual property rights arising
from any Product manufactured, used, sold or otherwise distributed by CGI and
its Affiliates or Sublicensees; provided, however, that CGI shall not be
required to provide indemnification under this clause (c) to any party for any
Liabilities suffered or incurred in connection with third party claims resulting
from the gross negligence, recklessness or intentional misconduct by such party
or its Affiliates, or their directors, officers, employees or agent.
13.2 JTI. Subject to compliance by XT and/or CGI with its obligations
set forth in Section 13.3 below, JTI agrees:
(a) to indemnify and hold XT and its directors, officers,
employees and agents harmless from and against any Liabilities suffered or
incurred in connection with third party claims relating to the Core Technology
arising from any Product manufactured, used, sold or otherwise distributed by
JTI and its Affiliates or Sublicensees;
(b) to indemnify and hold XT, CGI, CGI's Affiliates and their
directors, officers, employees and agents harmless from and against any
Liabilities suffered or incurred in connection with third party claims relating
to intellectual property rights (other then Core Technology) arising form any
Product manufactured, used, sold or otherwise distributed by JTI and its
Affiliates or Sublicensees;
(c) to indemnify and hold XT, CGI, CGI's Affiliates and their
directors, officers, employees and agents harmless from and against any
Liabilities suffered or incurred in connection with third party claims other
than relating to Core Technology or other intellectual property rights arising
from any Product manufactured, used, sold or otherwise distributed by JTI and
its Affiliates or Sublicensees; provided, however, that JTI shall not
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be required to provide indemnification under this clause (c) to any party for
any Liabilities resulting from the gross negligence, recklessness or intentional
misconduct by such party or its Affiliates, or their directors, officers,
employees or agents.
13.3 Procedure. If a party (an "Indemnitee") intends to claim
indemnification under this Article 13, it shall promptly notify the indemnifying
party (the "Indemnitor") in writing of any loss, claim, damage, liability or
action in respect of which the Indemnitee or its directors, officers, employees
or agents intend to claim such indemnification, and the Indemnitor shall have
the right to participate in, and, to the extent the Indemnitor so desires, to
assume the defense thereof with counsel mutually satisfactory to the parties;
provided, however, that an Indemnitee shall have the right to retain its own
counsel, with the fees and expenses to be paid by the Indemnitor, if
representation of such Indemnitee by the counsel retained by the Indemnitor
would be inappropriate due to actual or potential differing interests between
such Indemnitee and any other party represented by such counsel in such
proceeding. The indemnity agreement in this Article 13 shall not apply to
amounts paid in settlement of any loss, claim, damage, liability or action if
such settlement is effected without the consent of the Indemnitor, which consent
shall not be withheld or delayed unreasonably. The failure to deliver written
notice to the Indemnitor within a reasonable time after the commencement of any
such action, if prejudicial to its ability to defend such action, shall relieve
such Indemnitor of any liability to the Indemnitee under this Article 13, but
the omission so to deliver written notice to the Indemnitor shall not relieve it
of any liability that it may have to any party claiming indemnification
otherwise than under this Article 13. The party claiming indemnification under
this Article 13, its employees and agents, shall cooperate fully with the
Indemnitor and its legal representatives in the investigation of any action,
claim or liability covered by this indemnification.
14. REPRESENTATIONS AND WARRANTIES
14.1 XT. XT represents and warrants that:
(i) it has the full right and authority to enter into this
Agreement and grant the rights and licenses granted herein;
(ii) it has not previously granted and will not grant any
rights inconsistent or in conflict with the rights and licenses granted to CGI
and JTI herein;
(iii) there are no existing or threatened actions, suits or
claims pending against XT with respect to the Licensed Technology or the right
of XT to enter into and perform its obligations under this Agreement;
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(iv) it has not previously granted, and will not grant during
the term of this Agreement, any right, license or interest in and to the
Licensed Technology, or any portion thereof, with respect to the Product, or its
manufacture or use;
(v) Schedule 1 hereto sets forth the [***] Technology as of
the Effective Date and Schedule 2 hereto sets forth The [***] Technology as of
the Effective Date; and
(vi) Schedule 3 hereto sets forth all royalties, license fees,
milestone payments and similar payments due to third parties for which a Grantee
would be obligated to reimburse XT under the Product Licenses as of the
Effective Date.
In the event that XT acquires rights to intellectual property
that would become either [***] Technology or [***] Technology, XT will promptly
update Schedule 1 or Schedule 2, as the case may be, and provide copies thereof
to each Grantee. In the event that XT enters into any agreement which could
require a Grantee to reimburse XT for any additional royalties, license fees,
milestone payments or similar payments, XT will promptly update Schedule 3 and
provide copies thereof to each Grantee.
14.2 CGI and JTI. Each of CGI and JTI represents and warrants that:
(i) it has the full right and authority to enter into this Agreement, (ii) to
its knowledge, there are no existing or threatened actions, suits or claims
pending with respect to the subject matter hereof (except for the pending or
threatened litigation with GenPharm International, Inc.) or the right of it to
enter into and perform its obligations under this Agreement; and (iii) it has
not entered and during the term of this Agreement will not enter any other
agreement inconsistent or in conflict with this Agreement.
14.3 Disclaimer. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS
AGREEMENT, XT MAKES NO REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND,
EITHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND VALIDITY OF LICENSED
TECHNOLOGY CLAIMS, ISSUED OR PENDING.
14.4 Effect of Representations and Warranties. It is understood that
if the representations and warranties under this Article 13 are not true and
accurate and a party incurs liabilities, costs or other expenses is a result of
such falsity, the party at fault shall indemnify, defend and hold the injured
party harmless from and against any such liabilities, costs or expenses
incurred, provided that the party at fault receives prompt notice of any claim
against the injured party resulting from or related to such falsity and the sole
right to control the defense or settlement thereof.
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15. TERM AND TERMINATION
15.1 Effectiveness. This Agreement shall become effective as of the
Effective Date and the license rights granted by XT under Article 2 above shall
be in full force and effect as to any licensee who shall have executed this
Agreement as of such date. In the event that either CGI or JTI shall not have
executed this Agreement as of the Effective Date, such party shall have the
option to become a party to this Agreement and to obtain the license rights
granted by XT under Article 2 above until September 1, 1996, whereupon such
option shall terminate, and, notwithstanding the termination of such option,
this Agreement and the license as to XT and the other party (the "Licensed
Party") shall continue in full force and effect for the term set forth in
Section 15.2 below. The Licensed Party shall thereupon have an option (the
"Exclusive License Option") to obtain all of the other worldwide license rights
offered hereunder in addition to the rights granted to the Licensed Party under
Article 2. The Exclusive License Option shall be exercisable by the Licensed
Party until March 1, 1997 at an exercise price equal to the License Fee, which
shall be paid within sixty days of exercise of the Exclusive License Option.
Upon exercise of the Exclusive License Option, the Licensed Party shall have an
exclusive worldwide license or sublicense, as the case may be, under the
Licensed Technology to make and have made the Product for use, sale or other
distribution in the Licensed Field, subject to the terms and conditions of this
Agreement.
15.2 Term. Unless earlier terminated pursuant to the other provisions
of this Article 15, this Agreement shall continue in full force and effect until
the later of (i) the expiration of the last to expire patent within the Licensed
Technology claiming the Product or (ii) the twentieth anniversary of the
Effective Date. The licenses granted under Article 2 and, if applicable, Section
15.1 above, and the obligations of CGI and JTI to reimburse XT for payments made
pursuant to licenses granted by third parties subject to Section 5 herein, shall
survive the expiration (but not an earlier termination) of this Agreement;
provided that such licenses shall become nonexclusive.
15.3 Termination for Breach. Any party to this Agreement may terminate
this Agreement as to another party hereto in the event such other party shall
have materially breached or defaulted in the performance of any of its material
obligations hereunder, and such shall have continued for sixty days after
written notice thereof was provided to the breaching party by the nonbreaching
party that terminates the Agreement as to such party. Any termination shall
become effective at the end of such sixty day period unless the breaching party
has cured any such breach or default prior to the expiration of the sixty day
period. However, if the party alleged to be in breach of this Agreement disputes
such breach within such sixty day period, the non-breaching party shall not have
the right to terminate this Agreement unless it has been determined by an
arbitration
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proceeding in accordance with Section 16.12 below that this Agreement was
materially breached, and the breaching party fails to cure such breach within
thirty days following the final decision of the arbitrators or such other time
as directed by the arbitrators.
15.4 Other Termination Rights. CGI or JTI may terminate this Agreement
and the license granted to such party herein, in its entirety or as to any
particular patent within the Licensed Technology in a particular country, at any
time, by providing XT ninety-days written notice. In the event of termination as
to a particular country, the subject patent in such country shall cease to be
within the Licensed Technology for all purposes of this Agreement that apply to
the terminating party.
15.5 Effect of Termination.
15.5.1 In the event that this Agreement (i) is terminated under
Section 15,3 above, by reason of a breach by CGI or JTI, this Agreement shall
terminate with respect to the breaching party only, and shall continue in effect
with respect to XT and the non-breaching party; (ii) is terminated by CGI or JTI
by reason of a breach by XT, this Agreement shall terminate as to XT and the
terminating party, and shall continue in effect with respect to XT and the other
of CGI and JTI; or (iii) is terminated by CGI or JTI in its entirety under
Section 15.4 above, this Agreement shall terminate with respect to the party
exercising its right to terminate thereunder, and shall continue in effect in
its entirety with respect to XT and the non-terminating party. In each case, the
non-breaching or non-terminating license shall thereupon have the right to
obtain an exclusive license or sublicense, as the case may be, under the
Licensed Technology, to make and have made Product for use, sale or other
distribution in the Licensed Field throughout the world, on the terms and
conditions set forth herein that are applicable to it.
15.5.2 Termination of this Agreement for any reason shall not
release any party hereto from any liability which at the time of such
termination has already accrued to the other party or which is attributable to a
period prior to such termination.
15.5.3 In the event this Agreement is terminated with respect to
CGI or JTI for any reason, such licensee and its Affiliates and Sublicensees
shall have the right to sell or otherwise dispose of the stock of any Product
subject to this Agreement then on hand. Upon termination of this Agreement by XT
for any reason, any sublicense granted by a licensee hereunder shall survive,
provided that upon request by XT, such Sublicensee promptly agrees in writing to
be bound by the applicable terms of this Agreement.
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15.5.4 This Agreement, including, without limitation, any
licenses or sublicenses granted pursuant to this Agreement, shall survive any
dissolution, liquidation or acquisition of XT. Such licenses shall remain in
full force and effect even after any distribution, following dissolution, of the
intellectual property owned or licensed to XT, to any entity. Any transfer of
such intellectual property prior to or following dissolution shall be subject to
the licenses granted herein.
15.5.5 This Agreement, including the licenses granted in Article
2 and, if applicable, Section 15.1, is independent of, and shall not be affected
by, any breach or termination of the Master Research License and Option
Agreement or any other agreement among the parties or their Affiliates.
15.5.6 Sections 6.3, 6.5, 6.6, 6.7 and 6.8 and Articles 11, 13,
15 and 16 shall survive the expiration and any termination of this Agreement for
any reason.
16. MISCELLANEOUS
16.1 Governing Laws. This Agreement shall be interpreted and construed
in accordance with the laws of the State of California, without regard to
conflicts of law principles.
16.2 Waiver. It is agreed that no waiver by any party hereto of any
breach or default of any of the covenants or agreements herein set forth shall
be deemed a waiver as to any subsequent and/or similar breach or default.
16.3 Assignment. This Agreement and the licenses granted hereunder may
not be assigned by CGI or JTI to any third party without the written consent of
XT, and XT may not assign this Agreement to a third party without the consent of
both CGI and JTI; except any party may assign this Agreement without such
consent to (a) an Affiliate (provided that such Affiliate is two-thirds or
greater owned directly or indirectly) or (b) an entity that acquires
substantially all of the assets of the monoclonal antibody business segment of
the assigning party. The terms and conditions of this Agreement shall be binding
on and inure to the benefit of the permitted successors and assigns of the
parties.
16.4 Independent Contractors. The relationship of the parties hereto
is that of independent contractors. The parties hereto are not deemed to be
agents, partners or joint venturers of the others for any purpose as a result of
this Agreement or the transactions contemplated thereby.
16.5 Compliance with Laws. In exercising their rights under this
license, the parties shall fully comply with the requirements of any and all
applicable laws, regulations, rules and orders of any governmental body having
jurisdiction over the exercise of rights under this license.
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16.6 No Implied Obligations. Except as expressly provided in Article 9
above, nothing in this Agreement shall be deemed to require CGI or JTI to
exploit the Licensed Technology nor to prevent CGI or JTI from commercializing
products similar to or competitive with any Product, in addition to or in lieu
of such Product.
16.7 Notices. Any notice required or permitted to be given to the
parties hereto shall be given in writing and shall be deemed to have been
properly given if delivered in person or when received if mailed by first class
certified mail to the other party at the appropriate address as set forth below
or to such other addresses as may be designated in writing by the parties from
time to time during the term of this Agreement.
Xenotech: Xenotech, L.P.
322 Lakeside Drive
Foster City, California 94404
Attn: Chief Financial Officer
Japan Tobacco Inc.: Japan Tobacco Inc.
JT Building
2-1 Toranomon 2-chome
Minato-ku, Tokyo 105
Japan
Attn: Vice President,
Pharmaceutical Division
with a copy to: JT America Inc.
1825 South Grant Street, Suite 220
San Mateo, CA 94402
Attn: President
and to: Gilbert, Segall and Young LLP
430 Park Avenue New York, NY 10022
Attn: Neal N. Beaton, Esq.
Cell Genesys, Inc.: Cell Genesys, Inc.
322 Lakeside Drive
Foster City/ California 94404
Attn: President
with a copy to: Heller Ehrman White & McAuliffe
525 University Avenue
Palo Alto, California 94301
Attn: Julian N. Stern, Esq.
16.8 Export Laws. Notwithstanding anything to the contrary contained
herein, all obligations of XT, CGI and JTI are subject to prior compliance with
United States and Japanese export regulations and such other United States and
Japanese laws and, regulations as may be applicable, and to obtaining all
necessary
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approvals required by the applicable agencies of the government of the United
States and Japan. CGI and JTI each shall use efforts consistent with prudent
business judgment to obtain such approvals. XT shall cooperate with CGI and JTI
and shall provide assistance to them as reasonably necessary to obtain any
required approvals.
16.9 Severability. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision, and the parties shall discuss in good faith appropriate
revised arrangements.
16.10 Force Majeure. Nonperformance of any party (except for payment
obligations) shall be excused to the extent that performance is rendered
impossible by strike, fire, earthquake, flood, governmental acts or orders or
restrictions, failure of suppliers, or any other reason where failure to
perform, is beyond the reasonable control and not caused by the negligence,
intentional conduct or misconduct of the nonperforming party.
16.11 No Consequential Damages. IN NO EVENT SHALL ANY PARTY HERETO BE
LIABLE FOR SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF THIS
AGREEMENT OR THE EXERCISE OF RIGHTS HEREUNDER.
16.12 Dispute Resolution; Arbitration. The parties will attempt to
resolve any dispute under this Agreement by mutual agreement, and, if required,
there shall be a face-to-face meeting between senior executives of the parties.
Any dispute under this Agreement which is not settled after such meeting, shall
be finally settled by binding arbitration, conducted in accordance with the
Rules of Arbitration of the International Chamber of Commerce by three
arbitrators appointed in accordance with said rules. The arbitration proceedings
and all pleadings and written evidence shall be in the English language. Any
written evidence originally in a language other than English shall be submitted
in English translation accompanied by the original or a true copy thereof. The
costs of the arbitration, including administrative and arbitrators' fees, shall
be shared equally by the parties. Each party shall bear its own costs and
attorneys' and witness' foes. The prevailing party in any arbitration, as
determined by the arbitration panel, shall be entitled to an award against the
other party in the amount of the prevailing party's costs and reasonable
attorneys, fees. The arbitration shall be held in San Francisco, California,
unless initiated by XT or CGI against JTI in which event it will be held in
Tokyo, Japan. A disputed performance or suspended performances pending the
resolution of the arbitration must be completed within thirty days following the
final decision of the arbitrators. Any arbitration shall be completed within six
months from the filing of notice of a request for such arbitration.
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6.13 Complete Agreement. It is understood and agreed by the parties
that this Agreement constitutes the entire agreement, both written and oral,
among the parties with respect to the subject matter hereof, and that all prior
agreements respecting the subject matter hereof, either written or oral,
expressed or implied, shall be abrogated, canceled, and are null and void and of
no effect. No amendment or change hereof or addition hereto shall be effective
or binding on either of the parties hereto unless reduced to writing and
executed by the respective duly authorized representatives of XT, CGI and JTI.
16.14 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original and both together shall be
deemed to be one and the same agreement.
16.15 Headings. The captions to the several Articles and Sections
hereof are not a part of this Agreement, but are included merely for convenience
of reference only and shall not affect its meaning or interpretation.
16.16 Nondisclosure. Except as provided in Article 11, each of the
parties hereto agrees not to disclose to any third party the terms of this
Agreement without the prior written consent of each other party hereto, except
to advisors, investors and others on a need to know basis under circumstances
that reasonably ensure the confidentiality thereof, or to the extent required by
law. Without limitation upon any provision of this Agreement, each of the
parties hereto shall be responsible for
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the observance by its employees, consultants and contractors of the foregoing
confidentiality obligations.
IN WITNESS WHEREOF, the parties have executed this Agreement, in
triplicate originals, their respective originals, hereunto duly authorized, as
of the day and year first above written.
JAPAN TOBACCO INC. CELGENESYS INC.
By:_____________________ By:/s/ Scott Greer
R. Scott Greer
Name:___________________ Senior Vice President,
Corporate Development
Title:__________________
Date: 6/19/96
Date:___________________
XENOTECH, INC. (as General
Partner of XENOTECH, L.P.)
By: /s/ Takahashi Kamiya
Takashi Kamiya
Chairman
Date: 6/19/96
By: /s/ Raymond M. Withy
Raymond M. Withy President and
Chief Executive Officer
Date: 6/19/96
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Schedule 1 [***]
[***]
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
<PAGE> 27
Schedule 2
Patents
DOCKET NO.FILING DATE SERIAL NO. TITLE INVENTORS
[***]
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
<PAGE> 28
Schedule 2
Patents
DOCKET NO.FILING DATE SERIAL NO. TITLE INVENTORS
[***]
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
<PAGE> 29
Schedule 2
[***]
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
<PAGE> 30
SCHEDULE 2
[***]
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
<PAGE> 31
SCHEDULE 2
[***]
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
<PAGE> 32
SCHEDULE 2
[***]
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
<PAGE> 33
SCHEDULE 2
[***]
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
<PAGE> 34
SCHEDULE 3
ROYALTIES PAYABLE BY XENOTECH
(1) [***]
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
<PAGE> 1
EXHIBIT 10.13A
CONFIDENTIAL TREATMENT REQUESTED BY ABGENIX, INC.
AMENDMENT TO MASTER RESEARCH LICENSE AND OPTION AGREEMENT
This Amendment of Master Research License and Option Agreement (the
"Amendment"), effective as of November __, 1997, (the "Amendment Effective
Date"), is made by and between Xenotech, L.P., a California limited partnership
("XT"), Abgenix, Inc. ("ABX"), a Delaware corporation and wholly-owned
subsidiary of Cell Genesys, Inc., a Delaware corporation ("CGI"), and Japan
Tobacco Inc., a Japanese corporation ("JT"), and amends that certain Master
Research License and Option Agreement among JT, ABX, and XT effective as of June
28, 1996 (the "1996 Master Agreement").
RECITALS
A. XT is a limited partnership formed in June 1991 by JT Immunotech USA, Inc., a
wholly-owned indirect subsidiary of JT, and CGI to research, develop, use,
modify, make, have made, sell and otherwise dispose of certain products and hold
the rights to certain technology relating to human monoclonal antibodies derived
from transgenic mice.
B. CGI has assigned all of its rights and any obligations under the 1996 Master
Agreement, and various other agreements, to its wholly-owned subsidiary ABX.
C. The parties desire to amend the 1996 Master Agreement to (i) provide for the
transfer of transgenic mice to third parties under certain circumstances
provided herein, (ii) modify the 1996 Master Agreement, and the form Product
Licenses attached thereto, in order to facilitate commercialization of the
XenoMouse(TM) transgenic mice and related technology, and (iii) clarify the
manner in which rights obtained by XT from third parties are incorporated into
the licenses granted under the 1996 Master Agreement.
NOW THEREFORE, it is agreed by and between the parties to amend the 1996 Master
Agreement as follows:
1. All capitalized terms not defined in this Amendment shall have the meanings
given to them in the 1996 Master Agreement.
2. Section 1.10 is amended to read in its entirety as follows:
1.10 "Covered Product" shall mean any Antibody Product which incorporates
(i) an Antibody which binds to a particular Antigen or (ii) Genetic
Material encoding such an Antibody wherein said Genetic Material does not
encode multiple Antibodies.
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3. Section 1.19 is amended to read in its entirety as follows:
1.19 "Licensed Technology" shall mean the [***] Technology, the [***]
Technology, and the XT-Controlled Rights.
4. Sections 1.34 and 1.35 are deleted from the 1996 Master Agreement.
5. The following new Sections 1.37, 1.38, 1.39, 1.40, 1.41, 1.42, 1.43, 1.44
and 1.45 are added following Section 1.36 of the 1996 Master Agreement:
1.37 "Antibody" shall mean a composition comprising a whole antibody or a
fragment thereof, said antibody or fragment having been derived from the
Licensed Technology and/or generated from Mice or Future Generation Mice or
having been derived from nucleotide sequences encoding, or amino acid
sequences of, an antibody obtained from Mice or Future Generation Mice.
1.38 "Antibody Product" shall mean any product comprising an Antibody or
Genetic Material encoding an Antibody wherein, in respect of each Antibody
Product, said Genetic Material does not encode multiple Antibodies.
1.39 "Antibody-Secreting Cell" shall mean a cell that secretes an Antibody,
except where such cell is part of a mammal.
1.40 "Antigen Invention" shall mean intellectual property rights in and to
patentable inventions (including patent and patent applications) which both
(i) include claims to the following:
(A) [***]
(B) [***]
(C) [***]
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with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
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(D) [***]
and (ii) wherein, but for a license thereto, such claims would be infringed
by the manufacture, use, sale, offer for sale, or import of Antibody
Products to such Antigen.
1.41 "Genetic Material" shall mean a nucleotide sequence, including DNA,
RNA, and complementary and reverse complementary nucleotide sequences
thereto, whether coding or noncoding and whether intact or a fragment.
1.42 "GenPharm Cross License" shall mean that certain Cross License
Agreement, effective as of March 26, 1997, entered into by and among the
parties, GenPharm International, Inc. ("GenPharm") and the other parties
named therein, as the same may be amended from time to time.
1.43 "Research License" shall have the meaning set forth in Article 3 of
this Agreement.
1.44 "Transgenic Product" shall mean any product constituting (i) Mice or
Future Generation Mice, (ii) Genetic Material from Mice or Future
Generation Mice, or (iii) an Antibody-Secreting Cell.
1.45 "XT-Controlled Rights" shall mean all rights to intellectual property
or technology that are licensed to XT pursuant to the agreements listed on
Exhibit H or any other license or similar agreement granting XT rights to
intellectual property or technology (each such agreement an "XT
In-License"), to the extent that XT has the right under the terms of the
applicable XT In-License to further license or sublicense such rights
during the term of this Agreement.
6. Section 2.3 is amended to read in its entirety as follows:
2.3 The Mice shall only be used by a Grantee pursuant to the Research
License set forth in Article 3 hereof for research and development purposes
or pursuant to a Product License and shall not be transferred or otherwise
made available to any third party, except as provided in Sections 2.7 of
this Agreement or as provided under an applicable Product License entered
into between the Grantee and XT.
7. The following new Sections 2.7 and 2.8 shall be inserted following Section
2.6 of the 1996 Master Agreement:
2.7 Transfer of Mice: Notwithstanding any provision to the contrary in this
Agreement or any Material Transfer Agreement entered into between the
parties under Sections 2.1, 2.2 or 2.3 (or any other agreement between
parties to this
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
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Agreement, as such agreements are amended from time to time), Grantees and XT
shall have the right to transfer physical possession of one or more sterilized
male Mice or sterilized male Future Generation Mice (in each case, sterilized
using a method agreed upon by JT and ABX) or Transgenic Products, but not other
Mice or Future Generation Mice, to third parties (including Affiliates) for
research and development purposes, with the proviso that such research and
development purposes shall not exceed the rights conferred in accordance with
Section 3 hereof; and further provided that, as to transfers of Mice and Future
Generation Mice (but not of other Transgenic Products), Grantees shall only be
permitted to make transfers of such Mice and Future Generation Mice to third
parties on the following terms and conditions:
(a) Mice and Future Generation Mice shall not be transferred to any
third party by a Grantee except under a written agreement (the "Third-Party
Transfer Agreement") providing, among other things, that:
(1) all Mice and Future Generation Mice shall be the property of
the respective owners of such Mice and Future Generation Mice prior to
their transfer to the third party, and the transfer of physical
possession to such third party, and/or possession or use by such third
party, of Mice or Future Generation Mice shall not be, nor be
construed as, a sale, lease, offer to sell or lease, or other transfer
of title to any Mice or Future Generation Mice;
(2) all Mice and Future Generation Mice shall remain in the
control of such third party and shall not be transferred to any other
party (other than the transferring Grantee);
(3) the third party shall not attempt to use the Mice or Future
Generation Mice, or any others materials derived in whole or part from
the Mice or Future Generation Mice (including Genetic Materials) to
reproduce the Mice or Future Generation Mice or to generate or produce
other transgenic mice or other transgenic animals;
(4) if the third party is a for-profit pharmaceutical or
for-profit biotechnology company, [***]; provided, however, that this
provision shall not restrict or prohibit any authorized manufacture,
use, or sale or other commercialization of materials derived from the
Mice or Future Generation Mice in accordance with a license or
sublicense from XT or a Grantee (or a Sublicensee of XT or a Grantee)
under this Agreement, a Product License, or otherwise;
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with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
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(5) the third party shall not sell, have sold, lease, offer to
sell or lease, otherwise transfer title to any Mice, Future Generation
Mice, Antibody-Secreting Cells derived from the Mice or Future
Generation Mice, or (except as provided in (6) below) Genetic
Materials derived from the Mice or Future Generation Mice;
(6) the third party shall not sell, have sold, lease, offer to
sell or lease, otherwise transfer title to, or otherwise distribute or
commercialize any Antibody or Antibody Product without obtaining a
license, sublicense, or other authorization from the transferring
Grantee;
(7) the third party shall not use the Mice or Future Generation
Mice to make or use antibodies to [***]; and
(8) XT shall be a third-party beneficiary of the commitments by
third parties set forth in items (1) through (7) above.
(b) Grantees shall not grant any license, sublicense, or other
authorization of the type described in Section 2.7(a)(6) to third parties
unless such license, sublicense, or other authorization does not conflict
with the applicable terms of this Agreement, any applicable Product
License, and the GenPharm Cross-License.
(c) Nothing in this Section 2.7 shall be construed as granting
Grantees the right to sublicense any third party to sell, have sold, lease,
or offer to sell or lease, any Covered Product, other than pursuant to a
sublicense under a Product License entered into by Grantee under the terms
of this Agreement.
2.8 Transfer of Transgenic Products and Antibody Products: When transferring
physical possession of any Transgenic Product or Antibody Product to a third
party, the transferring Grantee shall obtain a written agreement from the third
party that such transferred materials remain the property of the respective
owner of such materials prior to their transfer to the third party, and the
transfer of physical possession to such third party, and/or possession or use by
such third party, of such materials shall not be, nor be construed as, a sale,
lease, offer to sell or lease, or other transfer of title to such transferred
materials. If a Grantee has authority to sell or otherwise transfer title to
materials pursuant to a Product License, the terms of this Section 2.8 shall not
apply to the transfer of such materials by such Grantee.
8. Article 3 ("Grant of Research License") is amended to read in its entirety
as follows:
3.1 Grant. XT hereby grants to each Grantee a co-exclusive (with each other and
XT), worldwide, royalty-free, fully paid up, perpetual, irrevocable license (or
sublicense, as appropriate) under the Licensed Technology to use for research,
and to
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
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develop, make, have made, use, import, export or otherwise transfer
physical possession of (but not to sell, lease, offer to sell or lease, or
otherwise transfer title to) Transgenic Products and Antibody Products (the
"Research License"); provided, however, that (i) the right to transfer
physical possession of Mice and Future Generation Mice pursuant to this
Research License shall be limited as set forth in Section 2.7 of this
Agreement, and (ii) as to all XT-Controlled Rights, the foregoing grant
shall be subject in all respects to the applicable XT In-License(s)
pursuant to which such XT-Controlled Rights were granted to XT.
3.2 Sublicenses.
(a) Each Grantee may grant to third parties non-exclusive sublicenses
under the Research License (i) to use Transgenic Products and (ii) to
research, develop, make, have made, use, import and export (but not to
sell, lease, offer to sell or lease, or otherwise transfer title to)
Antibody Products, Antibody-Secreting Cells, and Genetic Materials, solely
for research and development purposes; provided, that the transfer of Mice
and Future Generation Mice by Grantees shall be subject to the restrictions
set forth in Section 2.7 of this Agreement.
(b) [***]; provided, however, that this Subsection 3.2(b) shall not
restrict or prohibit any authorized manufacture, use, or sale or other
commercialization of materials derived from the Mice or Future Generation
Mice in accordance with a license or sublicense from XT or a Grantee (or a
Sublicensee of XT or a Grantee).
(c) Sublicenses under this Section 3.2 shall not include the right to
grant further sublicenses to use the Mice or Future Generation Mice, but
may include the right to grant further sublicenses as to other rights
sublicensed hereunder upon the approval of the Grantee which sublicensed
such rights. Except as set forth in this Section 3.2, Grantees shall have
no other right to grant sublicenses under the Research License unless
otherwise agreed in writing by Xenotech. It is understood that after a
Grantee has entered into a Product License under this Agreement for
Antibody Products related to a particular Antigen, that Grantee may, among
other things, sublicense third parties under such Product License to use
any Mice or Future Generation Mice transferred to that third party by the
Grantee pursuant to Section 2.7 of this Agreement to research, develop,
make, have made, use, import, export, sell, lease, offer to sell or lease,
otherwise transfer title, or otherwise distribute or commercialize Antibody
Products covered by such Product License.
3.3 Direct Sublicense to CGI. With regard to rights and sublicenses under
the GenPharm Cross License sublicensed to ABX under Section 3.1 above
("ABX's
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with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
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GenPharm Research Rights"), it is understood and agreed that, in the event
that CGI obtains (i) a sublicense of rights from ABX under a Product
License and (ii) a corresponding sublicense related to the Product Antigen
from XT (a "Direct CGI Sublicense") pursuant to that certain Direct
Sublicense to Cell Genesys entered into by and between CGI and XT effective
as of October __, 1997, the grant of ABX's GenPharm Research Rights under
this Article 3 shall be subject to the Direct CGI Sublicense, and ABX's
GenPharm Research Rights shall be subordinate to the rights granted under
the Direct CGI Sublicense to the extent, and for so long as, required under
the GenPharm Cross License. Upon any termination or expiration of the
Direct CGI Sublicense (and all sublicenses, if any, thereunder), ABX's
GenPharm Research Rights shall no longer be subject to the grant of rights
and sublicenses under the Direct CGI Sublicense.
9. Section 4.2(i)(a) and (b) are amended to read in their entirety as follows:
(a) During the term of this Agreement, the Grantees shall meet [***],
at such times and locations as they may agree. Each Grantee may select
[***] Additional Antigens at [***]. Thereafter, each Grantee may, at such
quarterly meetings, select (i) up to three (3) Additional Antigens per
calendar six-month period during the time from January 1, 1997 to June 30,
1997, and (ii) up to four (4) Additional Antigens per calendar six-month
period thereafter. At the time that a Grantee selects an Antigen [***], it
shall also provide to the other Grantee a summary of the scientific
background to the selection of such Antigen, [***]. Such disclosure shall
be without any warranty regarding, or agreement to license, such rights.
The Grantee selecting an Antigen shall also inform the other Grantee of
[***].
(b) If a Grantee does not select an Additional Antigen at a particular
[***], provided, however, that it may not [***]. Once selected an
Additional Antigen shall [***].
The remainder of Section 4.2 shall not be changed by this Amendment.
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
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10. Section 6.1 is amended to read in its entirety as follows:
6.1 Limitations on Product Licenses. Upon execution by XT and a Grantee
(and unless and until terminated), each of the Product Licenses shall be
deemed to be a "[***] License." [***], the license shall no longer be
deemed to be a "[***] License." At no time shall either Grantee have the
right to hold [***]. In the event that a Grantee terminates a Product
License in its entirety, such license shall no longer be deemed to be held
by such Grantee for the purpose of the limitations set forth in this
Section 6.1.
11. Section 7.1 is amended to read in its entirety as follows:
7.1 In order to [***]. The right of a Grantee to license or sublicense
pursuant to this Section 7.1 shall not require the consent of the other
Grantee or of XT, and shall not require any additional obligations to XT
other than acceptance by the Grantee of the terms and conditions of the
applicable Exclusive Worldwide Product License from XT to such Grantee
related to the Antigen. A Grantee selecting an Antigen governed by the
terms of this Section 7.1 shall notify the other Grantee, at the time the
Antigen is selected, that this Section 7.1 applies. It is understood and
agreed that the other Grantee [***].
12. Section 7.2 is amended to read in its entirety as follows:
In the event that [***]
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with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
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[***]. XT will confer with CGI and JTI as to how to [***].
13. Article 8 is amended to read in its entirety as follows:
8. IN-LICENSING OR ACQUISITION; INVENTIONS
8.1 In-Licensing Third Parties Antigen Inventions.
(a) If either Grantee is licensing or otherwise acquiring from a third
party (or negotiating to license or acquire from a third party) patent
rights in an Antigen Invention that were made by a third party without the
use of Mice or Future Generation Mice, such Grantee (the "In-Licensing
Grantee") [***]. Subject to Section 4.2(iv) above, the Grantee that selects
an Antigen pursuant to Section 4.2(i)(a) above shall [***]. If both
Grantees have selected the same Antigen pursuant to Section 4.2(iv) above,
they shall mutually agree, subject to Section 4.2(iv)(d), on control of
in-licensing negotiations.
(b) If the In-Licensing Grantee licenses or acquires rights to one or
more Antigen Inventions from a third party and secures such rights for the
other Grantee pursuant to Section 8.1(a) above, and [***].
8.2 Inventions By Grantees.
(a) Inventions Made Before Selection. Subject to Sections 8.2(c), 8.4
[***] and 8.7 of this Agreement, each Grantee shall, promptly following the
selection of an Antigen by either Grantee ("selection" referring to the
process
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with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
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set forth in Section 4.2 above), disclose to the other all Antigen
Inventions related to that Antigen made, conceived and reduced to practice
by the disclosing Grantee prior to selection of the Antigen. At such time
as the non-disclosing Grantee has [***], the disclosing Grantee shall,
[***].
(b) Inventions Made After Selection. Subject to Sections 8.2(c), 8.4
[***] and 8.7, each Grantee shall, after an Antigen has been selected,
disclose to the other Grantee within a reasonable time after invention all
Antigen Inventions related to that Antigen that are made, conceived and
reduced to practice by the disclosing Grantee after the selection of the
Antigen; provided, however, that such disclosure shall only be required if
the other Grantee, at the time of invention, has [***].
(c) Limitation. Notwithstanding the foregoing Subsections 8.2(a) and
(b), neither Grantee shall be obligated to disclose, license to the other
Grantee, or negotiate for such licenses, each as set forth in Subsections
8.2(a) and (b), for [***]. The limitations set forth in this Section 8.2(c)
shall not limit the obligations set forth in Section 8.3(a).
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
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8.3 Inventions Where One Grantee Has Worldwide Exclusive Product License.
(a) Mandatory License to Inventions of Grantee: If either Grantee (the
"Exclusive Grantee") enters into an Exclusive Worldwide Product Sublicense
with respect to a particular Antigen, the other Grantee shall grant to the
Exclusive Grantee, for so long as such Exclusive Worldwide Product License
is in effect, a non-exclusive, worldwide, royalty-free license under all
Antigen Inventions specifically related to such Antigen made, conceived and
reduced to practice by the other Grantee after the time that the Exclusive
Grantee entered into the Exclusive Worldwide Product License.
(b) Mandatory License to Inventions of Third Parties: If either
Grantee (the "Exclusive Grantee") has in effect an Exclusive Worldwide
Product Sublicense with respect to a particular Antigen, the other Grantee
(i) shall not transfer to a third party any Transferred Materials for such
Antigen without the prior written consent of the Exclusive Grantee and (ii)
shall, when negotiating the terms of any material transfer agreement in
connection with transferring to a third party Transferred Materials for
such Antigen, obtain the right to license on a non-exclusive, worldwide,
royalty-free basis, to the other Grantee all Antigen Inventions
specifically related to such Antigen which are made by the third party (or
jointly by the third party and the Grantee) through use of the Transferred
Materials for such Antigen, and shall so license such Antigen Inventions to
the Exclusive Grantee for so long as such Exclusive Worldwide Product
License is in effect.
(c) Transferred Materials for an Antigen. As used in Sections 8.3, 8.4
and 8.5 of this Agreement, "Transferred Materials for X", where "X" is an
Antigen, shall include Mice or Future Generation Mice for use with such
Antigen, Antibody Products comprising Antibodies that bind to such Antigen,
and Antibody-Secreting Cells that secrete such Antibodies and Genetic
Materials that encode such Antibodies.
8.4 Third Party Inventions With Mice- [***]. The terms of this Section 8.4
shall apply when (A) an Antigen (i) has not yet been selected by either
Grantee (or has been selected and later abandoned so that it is again
available for selection) or (ii) has been selected by the transferring
Grantee or (iii) has been selected by both Grantees and both Grantees have
an option to enter into (and/or have entered into) a Co-Exclusive Worldwide
Product License, and (B) a Grantee executes a material transfer agreement
in connection with transferring to a third party Transferred Materials for
such Antigen. It is understood that if an Antigen has been selected by both
Grantees and both Grantees have the option to enter into a Co-Exclusive
Worldwide Product License with respect to such Antigen, then the Grantees
shall [***].
(a) Disclosure. When negotiating the terms of a material transfer
agreement as described in this Section 8.4, [***]
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with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
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[***]. It is understood that at such time, if any, as [***].
(b) License Negotiation. When negotiating the terms of a material
transfer agreement as described in this Section 8.4, the transferring
Grantee shall [***].
(c) Limitation. Notwithstanding (a) and (b) above, it is understood
and agreed that neither Grantee shall be obligated to disclose or license
to the other any Antigen Inventions that such Grantee is contractually
prohibited from disclosing or licensing to the other [***].
8.5 Third Party Inventions With Mice - Mandatory Disclosure and Licensing.
The terms of this Section 8.5 shall apply when a Grantee has selected an
Antigen (and has either entered into a Product License with respect to such
Antigen or has the right to acquire such a Product License) and the other
Grantee (the "Transferring Grantee") is negotiating the terms of a material
transfer agreement in connection with transferring to a third party
Transferred Materials for such Antigen. Notwithstanding the foregoing, the
terms of this Section 8.5 shall not apply where the terms of Section 8.4
apply pursuant to Section 8.4(A)(iii).
(a) Mandatory Disclosure. The Transferring Grantee shall obtain the
right to disclose to the Grantee that selected the Antigen all Antigen
Inventions made by a third party (or jointly by the third party and the
Transferring Grantee) through use of the Transferred Materials for such
Antigen transferred under a material transfer agreement as described in
this Section 8.5, and shall thereafter promptly disclose all such Antigen
Inventions to the other Grantee. It is understood that at such time, if
any, as the other Grantee no longer has a Product License or option to
enter into a Product License with respect to the Antigen, the
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with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
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Transferring Grantee shall have no obligation to disclose Antigen Inventions for
such Antigen.
(b) Mandatory License. The Transferring Grantee shall obtain the right
to license to the Grantee that selected the Antigen all Antigen Inventions
made by a third party (or jointly by the third party and the Transferring
Grantee) through use of the Transferred Materials for such Antigen
transferred under a material transfer agreement as described in this
Section 8.5. Thereafter, subject to Section 8.3(b), the Transferring
Grantee shall, if the other Grantee has in effect at the time a Product
License for such Antigen, grant a nonexclusive license to all such Antigen
Inventions in the same Territory as set forth in such Product License, and
for so long as such Product License is in effect, on commercially
reasonable terms. It is understood that at such time, if any, as the other
Grantee no longer has a Product License with respect to that Antigen, the
Transferring Grantee shall have no further obligation to license such
Antigen Inventions for the Antigen to the other Grantee.
(c) Prohibition on Transfer of Mice. Neither Grantee shall transfer
Mice or Future Generation Mice to a third party for use with an Antigen
which has been selected by the other Grantee or with respect to which the
other Grantee has entered into a Product License, unless the transferring
Grantee first obtains (i) the right to make the disclosure set forth in
Subsection (a) above and (ii) the ability to grant any license or
sublicense to the other Grantee as required Subsection (b) above.
8.6 Additional Third-Party Inventions Using Mice. The terms of this Section
8.6 shall apply when negotiating the terms of a material transfer agreement
in connection with transferring Mice or Future Generation Mice to a third
party, if such Mice or Future Generation Mice are [***].
(a) [***]. The transferring Grantee shall [***]; provided, however,
that the transferring Grantee shall [***].
(b) [***]. The transferring Grantee shall [***]. It is understood that
[***]
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[***]. Except as the Grantees may otherwise agree, it is understood that
the transferring Grantee shall [***].
8.7 Where Inventing Party Has Exclusive Worldwide Product License. If a
Grantee has entered into an Exclusive Worldwide Product License with
respect to an Antigen, or if a Grantee has an option to enter into such a
Product License and the other Grantee has no Buy-In Right with regard to
such Antigen, the Grantee that has entered into, or has the option to enter
into, the Exclusive Worldwide Product License shall not be subject to the
provisions of this Article 8 regarding Antigen Inventions for such Antigen.
8.8 Terminology. For purposes of clarification, (i) to "disclose" an
Antigen Invention, as that term is used in this Article 8, shall mean
providing the written Disclosure and Record of Invention Form attached
hereto as Exhibit G, and (ii) to "license" an Antigen Invention, as that
terms is used in this Article 8, shall mean to grant a non-exclusive
license under such Antigen Invention to the extent reasonably necessary to
make, have made, use, sell, offer to sell, and import Antibody Products to
such Antigen pursuant to a Product License entered into by the party
receiving such license under such Antigen Invention.
14. The following new Section 17.20 shall be inserted following Section 17.19:
17.20 All rights and licenses granted to Grantees hereunder shall be
subject to the GenPharm Cross License, and to the extent that this
Agreement (or any license or Product License granted or permitted under
this Agreement) purports to grant greater rights to any Grantee than is
permitted under the Cross License, such rights shall be granted only to the
extent permitted under the Cross License, and the terms of the Cross
License shall control.
15. Restated Exhibits A, B, C, and D attached hereto are hereby incorporated
into the 1996 Master Agreement as Restated Exhibits A, B, C, and D of the
1996 Master Agreement, in the place of Exhibits A, B, C, and D,
respectively.
16. Schedule 1 and Schedule 2 of the 1996 Master Agreement are amended to read
in their entirety as set forth in the Schedule 1 and Schedule 2 attached
hereto.
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respect to the omitted portions.
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17. Exhibit H attached hereto is hereby incorporated into the 1996 Master
Agreement as Exhibit H of the 1996 Master Agreement.
18. Except as specifically modified or amended hereby, the Agreement shall
remain in full force and effect and, as modified or amended, is hereby
ratified, confirmed and approved. No provision of this Amendment may be
modified or amended except expressly in a writing signed by the parties nor
shall any terms be waived except expressly in a writing signed by the party
charged therewith. This Amendment shall be governed in accordance with the
laws of the State of California, without regard to the principles of
conflicts of laws.
IN WITNESS WHEREOF, each of the parties has executed this Amendment as of
the date indicated on this Amendment.
ABGENIX, INC. JAPAN TOBACCO, INC.
By: /s/ R. Scott Greer By: /s/ Masakazu Kakei
--------------------------------- ------------------------------------
Name: R. Scott Greer Name: Masakazu Kakei
Title: President and CEO Title: Executive Director,
Pharmaceuticals
Date: Date:
XENOTECH, INC. (as General Partner of XENOTECH, L.P.)
By: /s/ Noriaki Okubo By: /s/ Raymond Withy
--------------------------------- ------------------------------------
Name: Noriaki Okubo Name: Raymond M. Withy
Title: President and CEO Title: Chairman
Date: Date:
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Schedule 1
Patent Applications
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respect to the omitted portions.
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Schedule 1
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respect to the omitted portions.
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Schedule 1
(Continued)
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respect to the omitted portions.
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Schedule 1
(Continued)
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respect to the omitted portions.
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Schedule 2 -- Patents
Docket No. Filing Date Serial No. Title Inventors
[***]
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respect to the omitted portions.
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Schedule 2 - Patents
(Continued)
Docket No. Filing Date Serial No. Title Inventors
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respect to the omitted portions.
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Schedule 2
[***]
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with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
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Schedule 2
(Continued)
[***]
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respect to the omitted portions.
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Schedule 2
(Continued)
[***]
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Schedule 2
(Continued)
[***]
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respect to the omitted portions.
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RESTATED EXHIBIT A
FORM OF EXCLUSIVE WORLDWIDE PRODUCT LICENSE
THIS PRODUCT LICENSE AGREEMENT (the "Agreement") effective the ____ day of
____________, _____, is made by and between XENOTECH, L.P., a California limited
partnership ("XT"), and [ABGENIX, INC., a Delaware corporation ("ABX")]* [JAPAN
TOBACCO INC., a Japanese corporation ("JTI")] ** ("Licensee").
RECITALS
XT desires to grant to Licensee and Licensee desires to acquire from XT an
exclusive worldwide license or sublicense, as the case may be, under the
Licensed Technology to commercialize Products, on the terms and conditions
herein.
NOW, THEREFORE, for and in consideration of the covenants, conditions, and
undertakings hereinafter set forth, it is agreed by and between the parties as
follows:
1. DEFINITIONS.
For purposes of this Agreement, the terms set forth in this Article shall
have the meanings set forth below.
1.1 "ABX" shall mean Abgenix, Inc.
1.2 "Affiliate" shall mean any entity which controls, is controlled by
or is under common control with any one of ABX, JTI or XT. An entity shall be
regarded as in control of another entity if it owns or controls at least fifty
percent (50%) of the shares of the subject entity entitled to vote in the
election of directors (or, in the case of an entity that is not a corporation,
for the election of the corresponding managing authority); provided, however, XT
shall not be an Affiliate of ABX or JTI under this Agreement and XT shall not be
considered controlled by ABX or JTI for purposes of determining Affiliates of
ABX or JTI.
1.3 "Antibody" shall mean a composition comprising a whole antibody or
a fragment thereof, said antibody or fragment having been derived from the
Licensed Technology and/or generated from the Mice or the Future Generation Mice
or having been derived from nucleotide sequences encoding, or amino acid
sequences of, such an antibody or fragment.
1.4 "Antibody Product" shall mean any product comprising an Antibody
or Genetic Material encoding an Antibody wherein, in respect of each Antibody
Product, said Genetic Material does not encode multiple Antibodies.
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1.5 "Antibody-Secreting Cell" shall mean a cell that secretes an
Antibody, except where such cell is part of a mammal.
1.6 "[***] Technology" shall mean (i) all U.S. patent applications and
patents listed on Schedule 1 and patents issuing on such patent applications
owned by or licensed to XT which relate to the [***], in each case to the extent
XT has the right to license or sublicense the same; (ii) any continuations,
divisionals, reexaminations, reissues or extensions of any of (i) above; (iii)
any foreign counterparts issued or issuing on any of (i) or (ii) above; and (iv)
[***] as set forth in Schedule 1.
1.7 "CGI" shall mean Cell Genesys, Inc.
1.8 "Effective Date" shall mean the date this Agreement is executed by
XT and Licensee.
1.9 "Future Generation Mice" shall have the meaning defined in the
Master Research License and Option Agreement, as amended.
1.10 "Genetic Material" shall mean a nucleotide sequence, including
DNA, RNA, and complementary and reverse complementary nucleotide sequences
thereto, whether coding or noncoding and whether intact or a fragment.
1.11 "GenPharm Cross License" shall mean that certain Cross License
Agreement, effective as of March 26, 1997, entered into by and among the
parties, GenPharm International, Inc. ("GenPharm") and the other parties named
therein, as the same may be amended from time to time.
1.12 "IND" shall mean an Investigational New Drug Exemption for a
Product, as defined in the U.S. Food, Drug and Cosmetic Act and the regulations
promulgated thereunder, or its non-U.S. equivalent.
1.13 "JTI" shall mean Japan Tobacco Inc.
1.14 "License Fee" shall have the meaning set forth in Article 3
hereof.
1.15 "Licensed Field" shall mean [***].
1.16 "Licensed Technology" shall mean the [***] Technology, the [***]
Technology, and XT-Controlled Rights.
1.17 "Master Research License and Option Agreement" shall mean that
certain Master Research License and Option Agreement entered into by CGI, JTI
and XT as of June 28, 1996 (and subsequently assigned by CGI to ABX), as it may
be amended.
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respect to the omitted portions.
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1.18 "Mice" shall have the meaning defined in the Master Research
License and Option Agreement, as amended.
1.19 "Net Sales" shall mean the [***] charged by Licensee or its
Affiliates and Sublicensees for sales of Product to non-Affiliate customers,
[***], with respect to such sales, and [***], as reflected in [***] of Licensee
and its Affiliates or Sublicensees, to the extent [***]. "Net Sales" for [***]
shall mean [***], where [***] shall mean the [***]. Notwithstanding the
foregoing, [***] shall include [***], but notwithstanding any of the foregoing,
shall not include [***]. Notwithstanding the foregoing, "Net Sales" for [***]
shall be [***].
1.20 "Product" and "Products" shall mean one or more Antibody Products
which incorporate (i) an Antibody which binds to the Product Antigen or (ii)
Genetic Material encoding such an Antibody wherein said Genetic Material does
not encode multiple antibodies.
1.21 "Product Antigen" shall mean ____________________.
1.22 "Sublicensee" shall mean a third party that is not an Affiliate
(provided, however, that CGI may be a Sublicensee of ABX, whether or not CGI is
an Affiliate of ABX) to whom Licensee has granted a sublicense under the
Licensed Technology to make, use and/or sell Products to the extent of the
rights of Licensee therein. "Sublicensee" shall also include a third party to
whom Licensee has granted the right to distribute Products under the Licensed
Technology to the extent of the rights of Licensee therein, provided that such
third party is responsible for the marketing and promotion of Products within
the applicable country.
1.23 "Territory" shall mean all the countries of the world.
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respect to the omitted portions.
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1.24 "Transgenic Product" shall mean any product constituting (i) Mice
or Future Generation Mice, (ii) Genetic Material from Mice or Future Generation
Mice, or (iii) an Antibody-Secreting Cell.
1.25 "Universal Receptor Product" shall mean a substance that is
developed utilizing [***] Universal Receptor Technology.
1.26 "Universal Receptor Technology" shall mean technology for
universal receptors [***]. As used herein: (i) "universal receptor" shall mean a
receptor [***].
1.27 "Valid Claim" shall mean a claim of a pending or issued, and
unexpired patent included within the Licensed Technology, which has not been
held unenforceable, unpatentable or invalid by a court or other governmental
agency of competent jurisdiction, and which has not been admitted to be invalid
or unenforceable through reissue, disclaimer or otherwise.
1.28 "[***] Technology" shall mean (i) all U.S. patent applications
and patents listed on Schedule 2 and patents issuing on such applications; (ii)
any continuations, divisionals, reexaminations, reissues or extensions of any of
(i) above; (iii) any foreign counterparts issued or issuing on any of (i) or
(ii) above; and (iv) the Mice (as such term is defined in the Master Research
License and Option Agreement) and [***] as set forth on Schedule 2.
1.29 "XT-Controlled Rights" shall mean all rights to patents or
technology that are licensed to XT pursuant to the agreements listed on Schedule
4 or any other license or similar agreement granting XT rights to patents or
technology (each such agreement an "XT In-License"), to the extent that XT has
the right under the terms of the applicable XT In-License to further license or
sublicense such rights during the Term of this Agreement.
1.30 "XT In-License" shall have the meaning set forth in Section 1.29,
above.
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respect to the omitted portions.
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2. LICENSE GRANT; USE OF MICE BY THIRD PARTIES.
2.1 Subject to the terms and conditions of this Agreement, XT hereby
grants to Licensee an exclusive license or sublicense, as the case may be, under
the Licensed Technology, to make and have made Products anywhere in the world
and to use, sell, lease, offer to sell or lease, import, export, otherwise
transfer physical possession of or otherwise transfer title to such Products in
the Licensed Field in the Territory. Such license or sublicense shall be
exclusive even as to XT, and shall include the exclusive right to grant and
authorize sublicenses for exploitation worldwide; provided, however, that
Licensee may not, under this license, grant sublicenses to any rights to the
Mice except as provided in Section 2.2 of this Agreement.
2.2 In connection with the grant of a sublicense under this Agreement
to a third party, and notwithstanding any provision to the contrary in the
Master Research License and Option Agreement or any Material Transfer Agreement
entered into between the parties under Sections 2.1, 2.2 or 2.3 of the Master
Research License and Option Agreement, Licensee shall have the right to grant a
sublicense to use Mice and Future Generation Mice transferred to the third party
pursuant to the terms of Section 2.7 of the Master Research License and Option
Agreement, and Transgenic Products other then Mice or Future Generation Mice, to
research, develop, make, have made, use, import, export, sell, lease, offer to
sell or lease or otherwise distribute or commercialize Products, with the
proviso that the sublicense described in this Section 2.2 shall not exceed the
Licensee's rights conferred in accordance with the Master Research License and
Option Agreement or this Product License.
2.3 It is understood and agreed that, as to all XT-Controlled Rights,
the grant of rights under this Article 2 shall be subject in all respects to the
applicable XT In-License(s) pursuant to which such XT-Controlled Rights were
granted to XT.
3. LICENSE FEE.
Licensee shall pay to XT within thirty days of the Effective Date a
license fee of [***].
4. ROYALTIES.
4.1 Royalty Rates. In consideration for the license and rights granted
herein, Licensee agrees to pay to XT royalties of [***] of Net Sales of Products
by it and its Affiliates and Sublicensees.
4.2 Royalty Offsets. In the event that (i) Licensee, its Affiliate or
Sublicensee is required to pay a [***], or (ii) any reimbursement payments are
due to XT pursuant to Section 5.1 below, then Licensee may deduct the aggregate
of
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any such amounts from any royalty amount owing to XT for the sale of such
Products pursuant to Section 4.1 above; provided, however, that payments from
Licensee to a third party that is an Affiliate, or was an Affiliate at any time
within two (2) years prior to the Effective Date, may not be offset under this
Section 4.2. Notwithstanding the foregoing provisions of this Section 4.2, in no
event shall the royalties due to XT pursuant to Section 4.1 above be so reduced
to less than [***] of the amount that would otherwise be due to XT thereunder.
[***].
4.3 Single Royalty; Non-Royalty Sales. Only one royalty shall be
payable with respect to any Product, regardless of how many claims or patents
within the Licensed Technology cover such Product. In addition, no royalty shall
be payable under this Article 4 with respect to sales of Products among Licensee
and its Affiliates and/or Sublicensees and their Affiliates or for use in
research and/or development or clinical trials.
4.4 No Patent Protection. Royalties shall be payable at the rates
specified in Section 4.1 or 4.2 above only with respect to sales of Products
that would infringe a Valid Claim in the country in which such Products are
sold. In the event that such Products are not covered by a Valid Claim in such
country, XT shall be paid a royalty on such sales in accordance with this
Article 4, [***].
4.5 Combination Products. In the event that a Product is sold in
combination as a single product with another product or component, Net Sales
from such combination sales for purposes of calculating the amounts due under
this Article 4 shall be [***]. In the event that no such separate sales are made
in the same quarter by Licensee, Net Sales for royalty determination shall be
[***].
4.6 Termination of Royalties. Royalties under Section 4.1, 4.2, or 4.4
will be due until the later of (i) ten years from the first commercial sale of
Products in any country or (ii) on a country-by-country basis, the expiration of
the last-to-expire patent within the Licensed Technology covering the Products
in such country.
5. THIRD PARTY ROYALTIES.
5.1 Royalties Payable by XT. XT will be responsible for the payment of
any royalties, license fees and milestone and/or other payments due to third
parties under licenses or similar agreements entered into by XT necessary to
allow the manufacture, use or sale of Products. Licensee shall reimburse XT for
any royalties paid by XT to third parties under licenses or similar agreements
covering Products necessary to allow the manufacture, use or sale or other
exploitation
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of Products anywhere in the world. Licensee shall continue any such
reimbursement payments to XT until XT's obligation to pay royalties to a third
party under any license covering Products expires or terminates. XT agrees not
to enter into any license or similar agreement after the Effective Date which
would obligate Licensee to make any payments under this Section 5.1 without the
prior written consent of Licensee.
5.2 Royalties Payable by Licensee. Xenotech shall have no
responsibility under the terms of this Agreement for the payment of any
royalties, license fees or milestone or other payments due to third parties
under licenses or similar agreements entered into by Licensee, its Affiliates,
or its Sublicensees to allow the manufacture, use or sale of Products.
6. ACCOUNTING AND RECORDS.
6.1 Royalty Reports and Payments. After the first commercial sale of
Products on which royalties are required, Licensee agrees to make quarterly
written reports to XT within eighty days after the end of each calendar quarter,
stating in each such report the number, description, and aggregate Net Sales of
Products sold during the calendar quarter upon which a royalty is payable under
Article 4 above. Concurrently with the making of such reports, Licensee shall
pay to XT royalties at the applicable rate specified in Section 4.1, 4.2 or 4.4
above and all royalties payable pursuant to Section 5.1 above, and any
adjustment to Net Sales for a prior period in accordance with the definition of
Net Sales in Section 1.11 hereof. All payments to XT hereunder shall be made in
U.S. Dollars to a bank account designated by XT.
6.2 Early Third Party License Payments. If XT is obligated to pay
royalties to a third party prior to ninety days after the end of the calendar
quarter, XT shall so notify Licensee and Licensee shall provide the reports and
payments set forth in Section 6.1 above not later than ten days before the date
such payments are due to the third party. Up to thirty-five days before such
payments are due, XT may provide Licensee with an invoice by facsimile setting
forth the royalties XT must pay third parties with respect to Licensee's
activities in the Territory in the preceding quarter, and Licensee shall pay
such invoices within thirty days of receipt of such invoice.
6.3 Records; Inspection. Licensee shall keep (and cause its Affiliates
and Sublicensees to keep) complete, true and accurate books of account and
records for the purpose of determining the royalty amounts payable to XT under
this Agreement. Such books and records shall be kept at the principal place of
business of Licensee or its Affiliates or Sublicensees, as the case may be, for
at least three years following the end of the calendar quarter to which they
pertain. Such records of Licensee or its Affiliates will be open for inspection
during such three-year period by a representative of XT for the purpose of
verifying the royalty statements. Licensee shall require each of its
Sublicensees to maintain similar books and records and to open such records for
inspection during the same three-year period by a representative of Licensee
reasonably satisfactory to XT on behalf of, and as required by, XT for the
purpose of verifying the royalty statements. All such inspections may be made no
more than once each calendar year, at reasonable times mutually agreed by XT and
Licensee. The XT representative will be obliged to execute a reasonable
confidentiality
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agreement prior to commencing any such inspection. Inspections conducted under
this Section 6.3 shall be at the expense of XT, unless a variation or error
producing an increase exceeding [***] of the amount stated for the period
covered by the inspection is established in the course of any such inspection,
whereupon all costs relating thereto will be paid by Licensee. Upon the
expiration of three years following the end of any fiscal year, the calculation
of royalties payable with respect to such year shall be binding and conclusive,
and Licensee shall be released from any liability or accountability with respect
to royalties for such year.
6.4 Currency Conversion. If any currency conversion shall be required
in connection with the calculation of royalties hereunder, such conversion shall
be made using the selling exchange rate for conversion of the foreign currency
into U.S. Dollars, quoted for current transactions reported in The Wall Street
Journal for the last business day of the calendar quarter to which such payment
pertains.
6.5 Late Payments. Any payments due from Licensee that are not paid on
the date such payments are due under this Agreement shall bear interest to the
extent permitted by applicable law [***], calculated on the number of days such
payment is delinquent. This Section 6.5 shall in no way limit any other remedies
available to any party.
6.6 Withholding Taxes.
6.6.1 Unless immediately reimbursable under Section 6.6.2 below,
all payments required to be made pursuant to Articles 3, 4 and 5 hereof shall be
without deduction or withholding for or on account of any taxes (other than
taxes imposed on or measured by net income) or similar governmental charge
imposed by a jurisdiction. Such taxes are referred to herein as "Withholding
Taxes" and such Withholding Taxes shall be the sole responsibility of the
withholding party. The withholding party shall provide a certificate evidencing
payment of any Withholding Taxes hereunder.
6.6.2 XT agrees to elect to claim a tax credit for Withholding
Taxes with respect to which it is entitled so to elect, and further agrees not
to amend such election for the full carry-forward period with respect to such
credit. At the time that XT realizes a reduction in U.S. tax liability by
actually utilizing the Withholding Taxes as a credit against regular U.S. tax
liability (determined on a "first-in-first-out" basis pro rata with other
available foreign tax credits) , then the amount of such reduction attributable
to such credit shall immediately be reimbursed to the withholding party. For
these purposes, a reduction in U.S. tax liability shall include both a direct
reduction in XT's own tax liability and a reduction in the U.S. tax liability of
any of its partners.
6.7 Tax Indemnity. Except as provided in Section 6.6, each party (the
"Tax Indemnitor") shall indemnify and hold harmless the other party hereto (each
a "Tax Indemnitee") from and against any tax or similar governmental charge
assessed solely because of this Agreement with respect to and directly
attributable to the income or the assets of the Tax Indemnitor. In the event
that any governmental agency shall make a claim against a party hereto which
could give rise
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to an indemnity hereunder, such potential Tax Indemnitee shall give reasonably
prompt notice to the potential Tax Indemnitor of the assertion of such claim. If
the transmission of such notice is unreasonably deferred and has a material,
adverse affect on the ability of the potential Tax Indemnitor to challenge such
claim, such potential Tax Indemnitor shall be released from liability hereunder.
The Tax Indemnitor alone shall (at its own expense) control the defense or
compromise of any such claim. The Tax Indemnitee shall execute any documents
required to enable Tax Indemnitor to defend such claim, provide any information
necessary therefor, and cooperate with Tax Indemnitor in such defense.
6.8 XT Tax Indemnity. XT shall indemnify and hold harmless Licensee
and its Affiliates from and against any increase to its country of incorporation
income tax liability directly attributable to a positive adjustment to the
amount of gross receipts (an "Adjustment") reported or reportable by such party
from the income, including the royalty income, received from Licensee on Covered
Products. The amount payable hereunder shall be equal to the difference between
(a) the product of (i) the amount of the Adjustment, and (ii) the highest
combined marginal corporate tax rate in the country of incorporation in effect
for the taxable year for which such Adjustment is made, and (b) the reduction in
the party's foreign tax liability, which for purposes of this Agreement shall be
equal to the product of (i) the amount of any correlative adjustment to its
foreign taxable income, and (ii) the highest combined marginal foreign corporate
tax rate in effect for the taxable year for which the correlative adjustment is
made. No indemnification payment shall be required hereunder until comprehensive
efforts to obtain a correlative adjustment to Licensee's or its Affiliates', as
the case may be, taxable income in a foreign state (which may include, for
example invoking competent authority provisions under the U.S. Japanese Income
Tax Treaty (if applicable) or other applicable bilateral tax treaty) have, to
the extent reasonable to do so, been exhausted.
7. RESEARCH AND DEVELOPMENT.
7.1 Funding and Conduct. Licensee shall independently furnish and be
responsible for funding and conducting all of its preclinical and clinical
research and development of Products, at its own expense.
7.2 Biomaterials. In the case of Previously Selected Antigens as
defined in the Master Research License and Option Agreement, at the reasonable
request of Licensee, XT shall make available as part of the license granted
hereunder to Licensee [***] thus made available will be used only by Licensee
and its Affiliates and Sublicensees and manufacturing subcontractors.
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respect to the omitted portions.
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8. DUE DILIGENCE.
8.1 [***].
8.1.1 Licensee agrees to [***] as may be agreed upon by the
parties [***] the Effective Date.
8.1.2 Notwithstanding the foregoing, Licensee shall be [***].
After [***], shall be [***] in the United States or Japan.
8.2 Failure to Meet Due Diligence Obligation.
8.2.1 If the diligence requirements set forth in Section 8.1 are
not met by Licensee (or its Affiliates or Sublicensees) in the United States or
in Japan, Licensee's rights hereunder shall terminate upon written notice by XT
to Licensee and subject to Sections 8.3, 8.4 and 13.3 below.
8.2.2 Notwithstanding Section 8.2.1, the license granted
hereunder to Licensee shall not terminate by reason of a delay [***], to the
extent that prudent business judgment, based on circumstances outside of
Licensee's reasonable control, reasonably justifies such delay.
8.3 Dispute Resolution. In the event that a dispute arises whether the
diligence requirements in Article 8 have been met or circumstances exist which
Licensee believes justifies a failure on its part to meet such obligation, the
parties will attempt to resolve any dispute by mutual agreement during a period
of 30 days following Licensee's receipt of the notice under Section 8.2.1.
8.4 Arbitration. In the event that the parties are unable to resolve
such dispute pursuant to Section 8.3 above, such dispute shall be settled
between XT and Licensee by binding arbitration as set forth in Section 14.12. If
the arbitrator determines that the party acted in good faith, but failed to meet
its obligations under Section 8.1 above, the license granted to such party shall
not terminate unless the nonperforming party fails to cure such non-performance
within a reasonable period of time, as determined by the arbitrator.
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
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9. PATENTS.
9.1 [***] Technology.
(a) XT or its licensor, as they may agree, shall have
responsibility for preparing, filing, prosecuting and maintaining patents and
patent applications worldwide relating to the [***] Technology and conducting
any interferences, oppositions, reexaminations, or requesting reissues or patent
term extensions with respect to the [***] Technology. XT shall keep Licensee
reasonably informed as to the status of such patent matters, including without
limitation, by providing Licensee the opportunity to review and comment on any
substantive documents which will be filed in any patent office, and providing
Licensee copies of any substantive documents received by XT from such patent
offices including notice of all interferences, reexaminations, oppositions or
requests for patent term extensions. Licensee shall cooperate with and assist XT
in connection with such activities, at XT's request and expense.
(b) In the event that Licensee becomes aware that any [***]
Technology necessary for the practice of the license granted herein is infringed
or misappropriated by a third party or is subject to a declaratory judgment
action arising from such infringement, Licensee shall promptly notify XT and XT
shall thereafter promptly notify the owner of such intellectual property. XT or
its licensor, as they may agree, shall have the exclusive right to enforce, or
defend any declaratory judgment action, at its expense, involving any [***]
Technology. In such event, XT shall keep Licensee reasonably informed of the
progress of any such claim, suit or proceeding. Any recovery received by XT as a
result of any such claim, suit or proceeding shall be used first to reimburse XT
for all expenses (including attorneys, and professional fees) incurred in
connection with such claim, suit or proceeding, [***].
9.2 [***] Technology.
9.2.1 Licensee shall, at its expense, have the initial worldwide
responsibility for preparing, filing, prosecuting and maintaining patent
applications and conducting any interferences, oppositions, reexaminations, or
requesting reissues or patent term extensions with respect to [***] Technology,
except to the extent XT may not have the right to do so. Licensee shall give XT
the opportunity to review the status of all such pending patent applications and
actions and shall keep XT fully informed of the progress of such applications
and actions, including, without limitation, by promptly providing XT with copies
of all substantive worldwide correspondence sent to and received from patent
offices, and providing notice of all interferences, reexaminations, oppositions
or requests for patent term extensions. In the event that Licensee declines or
fails to prepare, file, prosecute or maintain such patent applications or
patents or take such other actions, relating to the Products in any country, it
shall promptly and in no event later than ninety days prior to any filing
deadline, provide notice to XT. XT shall have the right to assume such
responsibilities at its own expense, using counsel of its choice.
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
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9.2.2 In the event that Licensee becomes aware that any [***]
Technology is infringed or misappropriated by a third party in any country of
the world, or is subject to a declaratory judgment action arising from such
infringement in any country, Licensee shall promptly notify XT and XT shall
thereafter promptly notify the owner of such intellectual property. Licensee
shall have the exclusive right to enforce, or defend any declaratory judgment
action, in any country of the world, at its expense, involving any Antigen
Technology. In such event, Licensee shall keep XT reasonably informed of the
progress of any such claim, suit or proceeding. Any recovery by Licensee
received as a result of any such claim, suit or proceeding shall be used first
to reimburse Licensee for all expenses (including attorneys, and professional
fees) incurred in connection with such claim, suit or proceeding, [***].
9.3 Infringement Claims. If the production, sale or use of Products
pursuant to this Agreement results in any claim, suit or proceeding alleging
patent infringement against Licensee (or its Affiliates or Sublicensees),
Licensee shall promptly notify XT thereof in writing setting forth the facts of
such claim in reasonable detail. [***], Licensee shall have the exclusive right
to defend and control the defense of any such claim, suit or proceeding, at its
own expense, using counsel of its choice. Licensee shall keep XT reasonably
informed of all material developments in connection with any such claim, suit or
proceeding as it relates to the Licensed Technology, Licensee shall have the
right to deduct any damages and expenses (including attorneys' and professional
fees) against any amounts due, or which may become due, to XT pursuant to this
Agreement. Notwithstanding the above, Licensee shall not be able to settle any
such claim, suit or proceeding that involves any admission of the invalidity of
the Licensed Technology.
9.4 Patent Marking. Licensee agrees to mark and have its Affiliates
and Sublicensees mark all Products sold pursuant to this Agreement in accordance
with the applicable statutes or regulations in the country or countries of
manufacture and sale thereof.
10. CONFIDENTIALITY.
10.1 Confidential Information. Except as expressly provided herein,
the parties agree that, for the term of this Agreement and for five years
thereafter, the receiving party shall keep completely confidential and shall not
publish or otherwise disclose and shall not use for any purpose any information
furnished to it by another party hereto pursuant to this Agreement except to the
extent that it can be established by the receiving party by competent proof that
such information:
(a) was already known to the receiving party, other than under an
obligation of confidentiality, at the time of disclosure;
(b) was generally available to the public or otherwise part of
the public domain at the time of its disclosure to the receiving party;
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
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(c) became generally available to the public or otherwise part of
the public domain after its disclosure and other than through any act or
omission of the receiving party in breach of this Agreement; or
(d) was subsequently lawfully disclosed to the receiving party by
a person other than a party or developed by the receiving party without
reference to any information or materials disclosed by the disclosing party.
10.2 Permitted Disclosures. Notwithstanding Sections 10.1 above and
14.16 below, each party hereto may disclose the other party's information to the
extent such disclosure is reasonably necessary in filing or prosecuting patent
applications, prosecuting or defending litigation, complying with applicable
governmental regulations or otherwise submitting information to tax or other
governmental authorities, making a permitted sublicense or other exercise of its
rights hereunder or conducting clinical trials, provided that if a party is
required to make any such disclosure of the other party's secret or confidential
information, other than pursuant to a confidentiality agreement, it will give
reasonable advance notice to the latter party of such disclosure requirement
and, save to the extent inappropriate in the case of patent applications, will
use efforts consistent with prudent business judgment to secure confidential
treatment of such information prior to its disclosure (whether through
protective orders or otherwise). Notwithstanding the foregoing, XT shall not
disclose to third parties, clinical data or regulatory filings received from
Licensee except as agreed in writing by Licensee.
11. SUBLICENSES.
Pursuant to Article 2 herein, Licensee will have the right to grant and
authorize sublicenses to third parties; provided, however, the Licensee shall
remain responsible for any payments due XT for Net Sales of Products by any
Sublicensee. [***]. Any sublicense granted by Licensee pursuant to this
Agreement shall provide that the Sublicensee will be subject to the applicable
terms of this Agreement. Licensee shall provide XT with a copy of relevant
portions of each sublicense agreement, as reasonably required by XT.
12. REPRESENTATIONS AND WARRANTIES.
12.1 XT. XT represents and warrants that:
(i) it has the full right and authority to enter into this
Agreement and grant the rights and licenses granted herein;
(ii) it has not previously granted and will not grant any rights
inconsistent or in conflict with the rights and licenses granted to Licensee
herein;
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
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(iii) there are no existing or threatened actions, suits or
claims pending against XT with respect to the Licensed Technology or the right
of XT to enter into and perform its obligations under this Agreement;
(iv) it has not previously granted, and will not grant during the
term of this Agreement, any right, license or interest in and to the Licensed
Technology, or any portion thereof, with respect to the Products, or their
manufacture or use;
(v) Schedule 3 hereto sets forth all royalties, license fees,
milestone payments and similar payments due to third parties for which Licensee
is obligated to reimburse XT under Section 5.1 above as of the Effective Date;
and
(vi) the Licensed Technology is all the technology owned by or
licensed to XT as of the Effective Date.
12.2 Licensee. Licensee represents and warrants that:
(i) it has the full right and authority to enter into this
Agreement,
(ii) to its knowledge, there are no existing or threatened
actions, suits or claims pending with respect to the subject matter hereof or
the right of Licensee to enter into and perform its obligations under this
Agreement; and
(iii) it has not entered and during the term of this Agreement
will not enter any other agreement inconsistent or in conflict with this
Agreement.
12.3 Disclaimer. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS
AGREEMENT, XT MAKES NO REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND,
EITHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND VALIDITY OF LICENSED
TECHNOLOGY CLAIMS, ISSUED OR PENDING.
12.4 Effect of Representations and Warranties. It is understood that
if the representations and warranties under this Article 12 are not true and
accurate and a party incurs liabilities, costs or other expenses as a result of
such falsity, the party at fault shall indemnify, defend and hold the injured
party harmless from and against any such liabilities, costs or expenses
incurred, provided that the party at fault receives prompt notice of any claim
against the injured party resulting from or related to such falsity and the sole
right to control the defense or settlement thereof.
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13. TERM AND TERMINATION.
13.1 Effectiveness. This Agreement shall become effective as of the
Effective Date and the license rights granted by XT under Article 2 above shall
be in full force and effect as of such date.
13.2 Term. Unless earlier terminated pursuant to the other provisions
of this Article 13, this Agreement shall continue in full force and effect until
the later of
(i) the expiration of the last to expire patent within the
Licensed Technology claiming Products; or
(ii) the twentieth anniversary of the Effective Date.
The licenses granted under Article 2 shall survive the expiration (but not an
earlier termination) of this Agreement; provided that such licenses shall in
such event become nonexclusive.
13.3 Termination for Breach. Either party to this Agreement may
terminate this Agreement in the event the other party shall have materially
breached or defaulted in the performance of any of its material obligations
hereunder, and such shall have continued for sixty days after written notice
thereof was provided to the breaching party by the nonbreaching party that
terminates the Agreement as to such party. Any termination shall become
effective at the end of such sixty day period unless the breaching party has
cured any such breach or default prior to the expiration of the sixty day
period. However, if the party alleged to be in breach of this Agreement disputes
such breach within such sixty day period, the non-breaching party shall not have
the right to terminate this Agreement unless it has been determined by an
arbitration proceeding in accordance with Section 14.12 below that this
Agreement was materially breached, and the breaching party fails to cure such
breach within thirty days following the final decision of the arbitrators or
such other time as directed by the arbitrators.
13.4 Other Termination Rights. Licensee may terminate this Agreement
and the license granted herein, in its entirety or as to any particular patent
within the Licensed Technology in a particular country, at any time, by
providing XT ninety-days written notice. In the event of termination as to a
particular country, the subject patent in such country shall cease to be within
the Licensed Technology for all purposes of this Agreement.
13.5 Effect of Termination.
13.5.1 Termination of this Agreement for any reason shall not
release either party hereto from any liability which at the time of such
termination has already accrued to the other party or which is attributable to a
period prior to such termination.
13.5.2 In the event this Agreement is terminated for any reason,
Licensee and its Affiliates and Sublicensees shall have the right to sell or
otherwise dispose of the stock of any
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Products subject to this Agreement then on hand. Upon termination of this
Agreement by XT for any reason, any sublicense granted by Licensee hereunder
shall survive, provided that upon request by XT, such Sublicensee promptly
agrees in writing to be bound by the applicable terms of this Agreement.
13.5.3 This Agreement, including, without limitation, any
licenses or sublicenses granted pursuant to this Agreement, shall survive any
dissolution, liquidation or acquisition of XT. Such licenses shall remain in
full force and effect even after any distribution, following dissolution, of the
intellectual property owned or licensed to XT, to any entity. Any transfer of
such intellectual property prior to or following dissolution shall be subject to
the licenses granted herein.
13.5.4 This Agreement, including the license granted in Article
2, is independent of, and shall not be affected by, any breach or termination of
the Master Research License and Option Agreement or any other agreement between
the parties or their Affiliates. In the event of the termination of the Master
Research License and Option Agreement, the rights and obligations of the parties
hereto under Article 12 thereof shall be deemed to be part of this Agreement.
13.5.5 Sections 6.3, 6.5, 6.6, 6.7 and 6.8 and Articles 10, 12,
13 and 14 shall survive the expiration and any termination of this Agreement for
any reason.
14. MISCELLANEOUS.
14.1 Governing Laws. This Agreement shall be interpreted and construed
in accordance with the laws of the State of California, without regard to
conflicts of law principles.
14.2 Waiver. It is agreed that no waiver by any party hereto of any
breach or default of any of the covenants or agreements herein set forth shall
be deemed a waiver as to any subsequent and/or similar breach or default.
14.3 Assignment. This Agreement and the license granted hereunder may
not be assigned by Licensee to any third party without the written consent of
XT, and XT may not assign this Agreement to a third party without the consent of
Licensee; except any party may assign this Agreement without such consent to (a)
an Affiliate (provided that such Affiliate is two-thirds or greater owned
directly or indirectly) or (b) an entity that acquires substantially all of the
assets of the monoclonal antibody business segment of the assigning party. The
terms and conditions of this Agreement shall be binding on and inure to the
benefit of the permitted successors and assigns of the parties.
14.4 Independent Contractors. The relationship of the parties hereto
is that of independent contractors. The parties hereto are not deemed to be
agents, partners or joint venturers of the others for any purpose as a result of
this Agreement or the transactions contemplated thereby.
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14.5 Compliance with Laws. In exercising their rights under this
license, the parties shall fully comply with the requirements of any and all
applicable laws, regulations, rules and orders of any governmental body having
jurisdiction over the exercise of rights under this license.
14.6 No Implied Obligations. Except as expressly provided in Article 8
above, nothing in this Agreement shall be deemed to require Licensee to exploit
the Licensed Technology nor to prevent Licensee from commercializing products
similar to or competitive with any Products, in addition to or in lieu of such
Products.
14.7 Notices. Any notice required or permitted to be given to the
parties hereto shall be given in writing and shall be deemed to have been
properly given if delivered in person or when received if mailed by first class
certified mail to the other party at the appropriate address as set forth below
or to such other addresses as may be designated in writing by the parties from
time to time during the term of this Agreement.
XT: Xenotech, L.P.
322 Lakeside Drive
Foster City, California 94404
Attn: Chief Financial Officer
Japan Tobacco Inc.: Japan Tobacco Inc.
JT Building
2-1 Toranomon 2-chome
Minato-ku, Tokyo 105
Japan
Attn: Vice President
Pharmaceutical Division
with a copy to: JT America Inc.
1825 South Grant Street, Suite 220
San Mateo, CA 94402
Attn: President
and to: Gilbert, Segall and Young LLP
430 Park Avenue
New York, NY 10022
Attn: Neal N. Beaton, Esq.
Abgenix, Inc.: Abgenix, Inc.
7601 Dumbarton Circle
Fremont, California 94555
Attn: President
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with a copy to: Wilson Sonsini Goodrich & Rosati, P.C.
650 Page Mill Road
Palo Alto, California 94304
Attn: Kenneth A. Clark, Esq.
14.8 Export Laws. Notwithstanding anything to the contrary contained
herein, all obligations of XT and Licensee are subject to prior compliance with
United States [and Japanese]** export regulations and such other United States
[and Japanese]** laws and regulations as may be applicable, and to obtaining all
necessary approvals required by the applicable agencies of the government of the
United States [and Japan].** Licensee shall use efforts consistent with prudent
business judgment to obtain such approvals. XT shall cooperate with Licensee and
shall provide assistance to Licensee as reasonably necessary to obtain any
required approvals.
14.9 Severability. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision and the parties shall discuss in good faith appropriate
revised arrangements.
14.10 Force Majeure. Nonperformance of any party (except for payment
obligations) shall be excused to the extent that performance is rendered
impossible by strike, fire, earthquake, flood, governmental acts or orders or
restrictions, failure of suppliers, or any other reason where failure to
perform, is beyond the reasonable control and not caused by the negligence,
intentional conduct or misconduct of the nonperforming party.
14.11 No Consequential Damages. IN NO EVENT SHALL ANY PARTY HERETO BE
LIABLE FOR SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF THIS
AGREEMENT OR THE EXERCISE OF RIGHTS HEREUNDER.
14.12 Dispute Resolution; Arbitration. The parties will attempt to
resolve any dispute under this Agreement by mutual agreement, and, if required,
there shall be a face-to-face meeting between senior executives of the parties.
Any dispute under this Agreement which is not settled after such meeting, shall
be finally settled by binding arbitration, conducted in accordance with the
Rules of Arbitration of the International Chamber of Commerce by three
arbitrators appointed in accordance with said rules. The arbitration proceedings
and all pleadings and written evidence shall be in the English language. Any
written evidence originally in a language other than English shall be submitted
in English translation accompanied by the original or a true copy thereof. The
costs of the arbitration, including administrative and arbitrators' fees, shall
be shared equally by the parties. Each party shall bear its own costs and
attorneys' and witness' fees. The prevailing party in any arbitration, as
determined by the arbitration panel, shall be entitled to an award against the
other party in the amount of the prevailing party's costs and reasonable
attorneys, fees. The arbitration shall be held in [San Francisco, California]*
[Tokyo, Japan, if initiated by XT against Licensee and in San Francisco,
California, if initiated by Licensee against XT].** A disputed performance or
suspended performances pending the resolution of the arbitration must be
completed
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within thirty days following the final decision of the arbitrators. Any
arbitration shall be completed within six months from the filing of notice of a
request for such arbitration.
14.13 Complete Agreement. It is understood and agreed between XT and
Licensee that this Agreement constitutes the entire agreement, both written and
oral, between the parties with respect to the subject matter hereof, and that
all prior agreements respecting the subject matter hereof, either written or
oral, expressed or implied, shall be abrogated, canceled, and are null and void
and of no effect. No amendment or change hereof or addition hereto shall be
effective or binding on either of the parties hereto unless reduced to writing
and executed by the respective duly authorized representatives of XT and
Licensee.
14.14 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original and both together shall be
deemed to be one and the same agreement.
14.15 Headings. The captions to the several Articles and Sections
hereof are not a part of this Agreement, but are included merely for convenience
of reference only and shall not affect its meaning or interpretation.
14.16 Nondisclosure. Except as provided in Article 10, each of the
parties hereto agrees not to disclose to any third party the terms of this
Agreement without the prior written consent of each other party hereto, except
to advisors, investors, licensees, sublicensees and others on a need to know
basis under circumstances that reasonably ensure the confidentiality thereof, or
to the extent required by law; provided, however, that the royalty rate
specified in Section 4.1 of this executed Product License shall be redacted
before the terms of this executed Product License are disclosed to potential
licensees and sublicensees. Without limitation upon any provision of this
Agreement, each of the parties hereto shall be responsible for the observance by
its employees, consultants and contractors of the foregoing confidentiality
obligations.
14.17 Conformity with GenPharm Cross-License. The rights and licenses
granted to Licensee hereunder shall be subject to the GenPharm Cross License,
and to the extent that this Agreement purports to grant greater rights to
Licensee than is permitted under the GenPharm Cross License, such rights shall
be granted only to the extent permitted under the GenPharm Cross License, and
the terms of the GenPharm Cross License shall control.
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IN WITNESS WHEREOF, the parties have executed this Agreement, through their
respective officers hereunto duly authorized, as of the day and year first above
written.
XENOTECH, INC. (as General LICENSEE
Partner of XENOTECH, L.P.)
By: By:
--------------------------------- ------------------------------------
Name: Name:
------------------------------- ----------------------------------
Title: Title:
------------------------------ ---------------------------------
Schedule 1: Patents [***] Technology"
Schedule 2: Patents [***] Technology"
Schedule 3: Payments Due to Third Parties
Schedule 4: XT In-Licenses
- ----------
* If ABX is Licensee.
** If JTI is Licensee.
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
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RESTATED EXHIBIT B
FORM OF EXCLUSIVE QUALIFIED WORLDWIDE PRODUCT LICENSE
THIS PRODUCT LICENSE AGREEMENT (the "Agreement") effective the ____ day of
____________, _____, is made by and between XENOTECH, L.P., a California limited
partnership ("XT"), and [ABGENIX, INC., a Delaware corporation ("ABX")]* [JAPAN
TOBACCO INC., a Japanese corporation ("JTI")] ** ("Licensee").
RECITALS
XT desires to grant to Licensee and Licensee desires to acquire from XT an
exclusive license or sublicense, as the case may be, in the [ABX]* [JTI]**
Territory and the Rest of the World under the Licensed Technology to
commercialize Products, on the terms and conditions herein.
NOW, THEREFORE, for and in consideration of the covenants, conditions, and
undertakings hereinafter set forth, it is agreed by and between the parties as
follows:
1. DEFINITIONS.
For purposes of this Agreement, the terms set forth in this Article shall
have the meanings set forth below.
1.1 "ABX" shall mean Abgenix, Inc.
1.2 "ABX Territory" shall mean the United States of America and its
territories and possessions, Canada and Mexico.
1.3 "Affiliate" shall mean any entity which controls, is controlled by
or is under common control with any one of ABX, JTI or XT. An entity shall be
regarded as in control of another entity if it owns or controls at least fifty
percent (50%) of the shares of the subject entity entitled to vote in the
election of directors (or, in the case of an entity that is not a corporation,
for the election of the corresponding managing authority); provided, however, XT
shall not be an Affiliate of ABX or JTI under this Agreement and XT shall not be
considered controlled by ABX or JTI for purposes of determining Affiliates of
ABX or JTI.
1.4 "Antibody" shall mean a composition comprising a whole antibody or
a fragment thereof, said antibody or fragment having been derived from the
Licensed Technology and/or generated from the Mice or the Future Generation Mice
or having been derived from nucleotide sequences encoding, or amino acid
sequences of, such an antibody or fragment.
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1.5 "Antibody Product" shall mean any product comprising an Antibody
or Genetic Material encoding an Antibody wherein, in respect of each Antibody
Product, said Genetic Material does not encode multiple Antibodies.
1.6 "Antibody-Secreting Cell" shall mean a cell that secretes an
Antibody, except where such cell is part of a mammal.
1.7 "[***] Technology" shall mean (i) all U.S. patent applications and
patents listed on Schedule 1 and patents issuing on such patent applications
owned by or licensed to XT which relate to the [***], in each case to the extent
XT has the right to license or sublicense the same; (ii) any continuations,
divisionals, reexaminations, reissues or extensions of any of (i) above; (iii)
any foreign counterparts issued or issuing on any of (i) or (ii) above; and (iv)
[***] as set forth in Schedule 1.
1.8 "CGI" shall mean Cell Genesys, Inc.
1.9 "Effective Date" shall mean the date this Agreement is executed
by XT and Licensee.
1.10 "Future Generation Mice" shall have the meaning defined in the
Master Research License and Option Agreement, as amended.
1.11 "Genetic Material" shall mean a nucleotide sequence, including
DNA, RNA, and complementary and reverse complementary nucleotide sequences
thereto, whether coding or noncoding and whether intact or a fragment.
1.12 "GenPharm Cross License" shall mean that certain Cross License
Agreement, effective as of March 26, 1997, entered into by and among the
parties, GenPharm International, Inc. ("GenPharm") and the other parties named
therein, as the same may be amended from time to time.
1.13 "IND" shall mean an Investigational New Drug Exemption for a
Product, as defined in the U.S. Food, Drug and Cosmetic Act and the regulations
promulgated thereunder, or its non-U.S. equivalent.
1.14 "JTI" shall mean Japan Tobacco Inc.
1.15 "JTI Territory" shall mean Japan, Taiwan and South Korea
(including the territory comprising North Korea if it should be reunited with
South Korea).
1.16 "License Fee" shall have the meaning set forth in Article 3
hereof.
1.17 "Licensed Field" shall mean [***].
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
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1.18 "Licensed Technology" shall mean the [***] Technology, the [***]
Technology, and XT-Controlled Rights.
1.19 "Master Research License and Option Agreement" shall mean that
certain Master Research License and Option Agreement entered into by CGI, JTI
and XT as of June 28, 1996 (and subsequently assigned by CGI to ABX), as it may
be amended.
1.20 "Mice" shall have the meaning defined in the Master Research
License and Option Agreement, as amended.
1.21 "Net Sales" shall mean the [***] charged by Licensee or its
Affiliates and Sublicensees for sales of Product to non-Affiliate customers,
[***], with respect to such sales, and [***], as reflected in [***] of Licensee
and its Affiliates or Sublicensees, to the extent [***]. "Net Sales" for [***]
shall mean [***], where [***] shall mean the [***]. Notwithstanding the
foregoing, [***] shall include [***], but notwithstanding any of the foregoing,
shall not include [***]. Notwithstanding the foregoing, "Net Sales" for [***]
shall be [***].
1.22 "Product" and "Products" shall mean one or more Antibody Products
which incorporate (i) an Antibody which binds to the Product Antigen or (ii)
Genetic Material encoding such an Antibody wherein said Genetic Material does
not encode multiple antibodies.
1.23 "Product Antigen" shall mean ____________________.
1.24 "Rest of the World" shall mean all parts of the world not
included in ABX Territory or the JTI Territory.
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
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1.25 "Sublicensee" shall mean a third party that is not an Affiliate
(provided, however, that CGI may be a Sublicensee of ABX, whether or not CGI is
an Affiliate of ABX) to whom Licensee has granted a sublicense under the
Licensed Technology to make, use and/or sell Products to the extent of the
rights of Licensee therein. "Sublicensee" shall also include a third party to
whom Licensee has granted the right to distribute Products under the Licensed
Technology to the extent of the rights of Licensee therein, provided that such
third party is responsible for the marketing and promotion of Products within
the applicable country.
1.26 "Territory" shall mean those countries of the world in which
Licensee has license rights pursuant to this Agreement.
1.27 "Transgenic Product" shall mean any product constituting (i) Mice
or Future Generation Mice, (ii) Genetic Material from Mice or Future Generation
Mice, or (iii) an Antibody-Secreting Cell.
1.28 "Universal Receptor Product" shall mean a substance that is
developed utilizing [***] Universal Receptor Technology.
1.29 "Universal Receptor Technology" shall mean technology for
universal receptors [***]. As used herein: (i) "universal receptor" shall mean a
receptor [***].
1.30 "Valid Claim" shall mean a claim of a pending or issued, and
unexpired patent included within the Licensed Technology, which has not been
held unenforceable, unpatentable or invalid by a court or other governmental
agency of competent jurisdiction, and which has not been admitted to be invalid
or unenforceable through reissue, disclaimer or otherwise.
1.31 "[***] Technology" shall mean (i) all U.S. patent applications
and patents listed on Schedule 2 and patents issuing on such applications; (ii)
any continuations, divisionals, reexaminations, reissues or extensions of any of
(i) above; (iii) any foreign counterparts
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with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
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issued or issuing on any of (i) or (ii) above; and (iv) the Mice (as such term
is defined in the Master Research License and Option Agreement) and [***] as set
forth on Schedule 2.
1.32 "XT-Controlled Rights" shall mean all rights to patents or
technology that are licensed to XT pursuant to the agreements listed on Schedule
4 or any other license or similar agreement granting XT rights to patents or
technology (each such agreement an "XT In-License"), to the extent that XT has
the right under the terms of the applicable XT In-License to further license or
sublicense such rights during the Term of this Agreement.
1.33 "XT In-License" shall have the meaning set forth in Section 1.32,
above.
2. LICENSE GRANT; USE OF MICE BY THIRD PARTIES.
2.1 Subject to the terms and conditions of this Agreement, XT hereby
grants to Licensee an exclusive license or sublicense, as the case may be, under
the Licensed Technology, to make and have made Products anywhere in the world
and to use, sell, lease, offer to sell or lease, import, export, otherwise
transfer physical possession of or otherwise transfer title to such Products in
the [ABX]* [JTI]** Territory and the Rest of the World in the Licensed Field.
Such license or sublicense shall be exclusive even as to XT, and shall include
the exclusive right to grant and authorize sublicenses for exploitation in the
Territory; provided, however, that Licensee may not, under this license, grant
sublicenses to any rights to the Mice except as provided in Section 2.2 of this
Agreement.
2.2 In connection with the grant of a sublicense under this Agreement
to a third party, and notwithstanding any provision to the contrary in the
Master Research License and Option Agreement or any Material Transfer Agreement
entered into between the parties under Sections 2.1, 2.2 or 2.3 of the Master
Research License and Option Agreement, Licensee shall have the right to grant a
sublicense to use Mice and Future Generation Mice transferred to the third party
pursuant to the terms of Section 2.7 of the Master Research License and Option
Agreement, and Transgenic Products other then Mice or Future Generation Mice, to
research, develop, make, have made, use, import, export, sell, lease, offer to
sell or lease or otherwise distribute or commercialize Products, with the
proviso that the sublicense described in this Section 2.2 shall not exceed the
Licensee's rights conferred in accordance with the Master Research License and
Option Agreement or this Product License.
2.3 It is understood and agreed that, as to all XT-Controlled Rights,
the grant of rights under this Article 2 shall be subject in all respects to the
applicable XT In-License(s) pursuant to which such XT-Controlled Rights were
granted to XT.
3. LICENSE FEE.
Licensee shall pay to XT within thirty days of the Effective Date a license
fee of [***].
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
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4. ROYALTIES.
4.1 Royalty Rates. In consideration for the license and rights granted
herein, Licensee agrees to pay to XT royalties of [***] of Net Sales of Products
by it and its Affiliates and Sublicensees.
4.2 Royalty Offsets. In the event that (i) Licensee, its Affiliate or
Sublicensee is required to pay [***], or (ii) any reimbursement payments are due
to XT pursuant to Section 5.1 below, then Licensee may deduct the aggregate of
any such amounts from any royalty amount owing to XT for the sale of such
Products pursuant to Section 4.1 above; provided, however, that payments from
Licensee to a third party that is an Affiliate, or was an Affiliate at any time
within two (2) years prior to the Effective Date, may not be offset under this
Section 4.2. Notwithstanding the foregoing provisions of this Section 4.2, in no
event shall the royalties due to XT pursuant to Section 4.1 above be so reduced
to less than [***] of the amount that would otherwise be due to XT thereunder.
[***]
4.3 Single Royalty; Non-Royalty Sales. Only one royalty shall be
payable with respect to any Product, regardless of how many claims or patents
within the Licensed Technology cover such Product. In addition, no royalty shall
be payable under this Article 4 with respect to sales of Products among Licensee
and its Affiliates and/or Sublicensees and their Affiliates or for use in
research and/or development or clinical trials.
4.4 No Patent Protection. Royalties shall be payable at the rates
specified in Section 4.1 or 4.2 above only with respect to sales of Products
that would infringe a Valid Claim in the country in which such Products are
sold. In the event that such Products are not covered by a Valid Claim in such
country, XT shall be paid a royalty on such sales in accordance with this
Article 4, [***].
4.5 Combination Products. In the event that a Product is sold in
combination as a single product with another product or component, Net Sales
from such combination sales for purposes of calculating the amounts due under
this Article 4 shall be [***]. In the event that no such separate sales are made
in the same quarter by Licensee, Net Sales for royalty determination shall be
[***].
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
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4.6 Termination of Royalties. Royalties under Section 4.1, 4.2, or 4.4
will be due until the later of (i) ten years from the first commercial sale of
Products in any country or (ii) on a country-by-country basis, the expiration of
the last-to-expire patent within the Licensed Technology covering the Products
in such country.
5. THIRD PARTY ROYALTIES.
5.1 Royalties Payable by XT. XT will be responsible for the payment of
any royalties, license fees and milestone and/or other payments due to third
parties under licenses or similar agreements entered into by XT necessary to
allow the manufacture, use or sale of Products. Licensee shall reimburse XT for
any royalties paid by XT to third parties under licenses or similar agreements
covering Products necessary to allow the manufacture, use or sale or other
exploitation of Products in accordance with this Agreement. Licensee shall
continue any such reimbursement payments to XT until XT's obligation to pay
royalties to a third party under any license covering Products expires or
terminates. XT agrees not to enter into any license or similar agreement after
the Effective Date which would obligate Licensee to make any payments under this
Section 5.1 without the prior written consent of Licensee.
5.2 Royalties Payable by Licensee. Xenotech shall have no
responsibility under the terms of this Agreement for the payment of any
royalties, license fees or milestone or other payments due to third parties
under licenses or similar agreements entered into by Licensee, its Affiliates,
or its Sublicensees to allow the manufacture, use or sale of Products.
6. ACCOUNTING AND RECORDS.
6.1 Royalty Reports and Payments. After the first commercial sale of
Products on which royalties are required, Licensee agrees to make quarterly
written reports to XT within eighty days after the end of each calendar quarter,
stating in each such report the number, description, and aggregate Net Sales of
Products sold during the calendar quarter upon which a royalty is payable under
Article 4 above. Concurrently with the making of such reports, Licensee shall
pay to XT royalties at the applicable rate specified in Section 4.1, 4.2 or 4.4
above and all royalties payable pursuant to Section 5.1 above, and any
adjustment to Net Sales for a prior period in accordance with the definition of
Net Sales in Section 1.21 hereof. All payments to XT hereunder shall be made in
U.S. Dollars to a bank account designated by XT.
6.2 Early Third Party License Payments. If XT is obligated to pay
royalties to a third party prior to ninety days after the end of the calendar
quarter, XT shall so notify Licensee and Licensee shall provide the reports and
payments set forth in Section 6.1 above not later than ten days before the date
such payments are due to the third party. Up to thirty-five days before such
payments are due, XT may provide Licensee with an invoice by facsimile setting
forth the royalties XT must pay third parties with respect to Licensee's
activities in the Territory in the preceding quarter, and Licensee shall pay
such invoices within thirty days of receipt of such invoice.
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6.3 Records; Inspection. Licensee shall keep (and cause its Affiliates
and Sublicensees to keep) complete, true and accurate books of account and
records for the purpose of determining the royalty amounts payable to XT under
this Agreement. Such books and records shall be kept at the principal place of
business of Licensee or its Affiliates or Sublicensees, as the case may be, for
at least three years following the end of the calendar quarter to which they
pertain. Such records of Licensee or its Affiliates will be open for inspection
during such three-year period by a representative of XT for the purpose of
verifying the royalty statements. Licensee shall require each of its
Sublicensees to maintain similar books and records and to open such records for
inspection during the same three-year period by a representative of Licensee
reasonably satisfactory to XT on behalf of, and as required by, XT for the
purpose of verifying the royalty statements. All such inspections may be made no
more than once each calendar year, at reasonable times mutually agreed by XT and
Licensee. The XT representative will be obliged to execute a reasonable
confidentiality agreement prior to commencing any such inspection. Inspections
conducted under this Section 6.3 shall be at the expense of XT, unless a
variation or error producing an increase exceeding [***] of the amount stated
for the period covered by the inspection is established in the course of any
such inspection, whereupon all costs relating thereto will be paid by Licensee.
Upon the expiration of three years following the end of any fiscal year, the
calculation of royalties payable with respect to such year shall be binding and
conclusive, and Licensee shall be released from any liability or accountability
with respect to royalties for such year.
6.4 Currency Conversion. If any currency conversion shall be required
in connection with the calculation of royalties hereunder, such conversion shall
be made using the selling exchange rate for conversion of the foreign currency
into U.S. Dollars, quoted for current transactions reported in The Wall Street
Journal for the last business day of the calendar quarter to which such payment
pertains.
6.5 Late Payments. Any payments due from Licensee that are not paid on
the date such payments are due under this Agreement shall bear interest to the
extent permitted by applicable law at [***], calculated on the number of days
such payment is delinquent. This Section 6.5 shall in no way limit any other
remedies available to any party.
6.6 Withholding Taxes.
6.6.1 Unless immediately reimbursable under Section 6.6.2 below,
all payments required to be made pursuant to Articles 3, 4 and 5 hereof shall be
without deduction or withholding for or on account of any taxes (other than
taxes imposed on or measured by net income) or similar governmental charge
imposed by a jurisdiction. Such taxes are referred to herein as "Withholding
Taxes" and such Withholding Taxes shall be the sole responsibility of the
withholding party. The withholding party shall provide a certificate evidencing
payment of any Withholding Taxes hereunder.
6.6.2 XT agrees to elect to claim a tax credit for Withholding
Taxes with respect to which it is entitled so to elect, and further agrees not
to amend such election for the full
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respect to the omitted portions.
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carry-forward period with respect to such credit. At the time that XT realizes a
reduction in U.S. tax liability by actually utilizing the Withholding Taxes as a
credit against regular U.S. tax liability (determined on a "first-in-first-out"
basis pro rata with other available foreign tax credits), then the amount of
such reduction attributable to such credit shall immediately be reimbursed to
the withholding party. For these purposes, a reduction in U.S. tax liability
shall include both a direct reduction in XT's own tax liability and a reduction
in the U.S. tax liability of any of its partners.
6.7 Tax Indemnity. Except as provided in Section 6.6, each party
(the "Tax Indemnitor") shall indemnify and hold harmless the other party hereto
(each a "Tax Indemnitee") from and against any tax or similar governmental
charge assessed solely because of this Agreement with respect to and directly
attributable to the income or the assets of the Tax Indemnitor. In the event
that any governmental agency shall make a claim against a party hereto which
could give rise to an indemnity hereunder, such potential Tax Indemnitee shall
give reasonably prompt notice to the potential Tax Indemnitor of the assertion
of such claim. If the transmission of such notice is unreasonably deferred and
has a material, adverse affect on the ability of the potential Tax Indemnitor to
challenge such claim, such potential Tax Indemnitor shall be released from
liability hereunder. The Tax Indemnitor alone shall (at its own expense) control
the defense or compromise of any such claim. The Tax Indemnitee shall execute
any documents required to enable Tax Indemnitor to defend such claim, provide
any information necessary therefor, and cooperate with Tax Indemnitor in such
defense.
6.8 XT Tax Indemnity. XT shall indemnify and hold harmless Licensee and
its Affiliates from and against any increase to its country of incorporation
income tax liability directly attributable to a positive adjustment to the
amount of gross receipts (an "Adjustment") reported or reportable by such party
from the income, including the royalty income, received from Licensee on Covered
Products. The amount payable hereunder shall be equal to the difference between
(a) the product of (i) the amount of the Adjustment, and (ii) the highest
combined marginal corporate tax rate in the country of incorporation in effect
for the taxable year for which such Adjustment is made, and (b) the reduction in
the party's foreign tax liability, which for purposes of this Agreement shall be
equal to the product of (i) the amount of any correlative adjustment to its
foreign taxable income, and (ii) the highest combined marginal foreign corporate
tax rate in effect for the taxable year for which the correlative adjustment is
made. No indemnification payment shall be required hereunder until comprehensive
efforts to obtain a correlative adjustment to Licensee's or its Affiliates', as
the case may be, taxable income in a foreign state (which may include, for
example invoking competent authority provisions under the U.S. Japanese Income
Tax Treaty (if applicable) or other applicable bilateral tax treaty) have, to
the extent reasonable to do so, been exhausted.
7. RESEARCH AND DEVELOPMENT.
7.1 Funding and Conduct. Licensee shall independently furnish and be
responsible for funding and conducting all of its preclinical and clinical
research and development of Products, at its own expense.
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7.2 Biomaterials. In the case of Previously Selected Antigens as
defined in the Master Research License and Option Agreement, at the reasonable
request of Licensee, XT shall make available as part of the license granted
hereunder to Licensee [***] thus made available will be used only by Licensee
and its Affiliates and Sublicensees and manufacturing subcontractors.
8. SHARING OF CLINICAL DATA.
As long as their development projects remain on similar timelines, or
as otherwise mutually agreed, Licensee will consider bilateral sharing of its
and its Sublicensees' relevant Product development information and clinical data
with [JTI]* [ABX]**. However, there shall not be, unless otherwise agreed by the
parties, any obligation for sharing data developed independently, by or on
behalf of either of them.
9. DUE DILIGENCE.
9.1 [***].
9.1.1 Licensee agrees to [***] as may be agreed upon by the
parties [***] from the Effective Date.
9.1.2 Notwithstanding the foregoing, Licensee shall be [***].
After [***], shall be [***] in the United States or Japan.
9.2 Failure to Meet Due Diligence Obligation.
9.2.1 If the diligence requirements set forth in Section 9.1 are
not met by Licensee (or its Affiliates or Sublicensees) in [the United States]*
[Japan]**, Licensee's rights hereunder shall terminate upon written notice by XT
to Licensee and subject to Sections 9.3, 9.4 and 14.3 below.
9.2.2 Notwithstanding Section 9.2.1, the license granted
hereunder to Licensee shall not terminate by reason of a delay [***], to the
extent that prudent business judgment, based on circumstances outside of
Licensee's reasonable control, reasonably justifies such delay.
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
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9.3 Dispute Resolution. In the event that a dispute arises whether the
diligence requirements in Article 9 have been met or circumstances exist which
Licensee believes justifies a failure on its part to meet such obligation, the
parties will attempt to resolve any dispute by mutual agreement during a period
of 30 days following Licensee's receipt of the notice under Section 9.2.1.
9.4 Arbitration. In the event that the parties are unable to resolve
such dispute pursuant to Section 9.3 above, such dispute shall be settled
between XT and Licensee by binding arbitration as set forth in Section 15.12. If
the arbitrator determines that the party acted in good faith, but failed to meet
its obligations under Section 9.1 above, the license granted to such party shall
not terminate unless the nonperforming party fails to cure such non-performance
within a reasonable period of time, as determined by the arbitrator.
10. PATENTS.
10.1 [***] Technology.
(a) XT or its licensor, as they may agree, shall have
responsibility for preparing, filing, prosecuting and maintaining patents and
patent applications worldwide relating to the [***] Technology and conducting
any interferences, oppositions, reexaminations, or requesting reissues or patent
term extensions with respect to the [***] Technology. XT shall keep Licensee
reasonably informed as to the status of such patent matters in the Territory,
including without limitation, by providing Licensee the opportunity to review
and comment on any substantive documents which will be filed in any patent
office, and providing Licensee copies of any substantive documents received by
XT from such patent offices including notice of all interferences,
reexaminations, oppositions or requests for patent term extensions. Licensee
shall cooperate with and assist XT in connection with such activities, at XT's
request and expense.
(b) In the event that Licensee becomes aware that any [***]
Technology necessary for the practice of the license granted herein is infringed
or misappropriated by a third party or is subject to a declaratory judgment
action arising from such infringement, Licensee shall promptly notify XT and XT
shall thereafter promptly notify the owner of such intellectual property. XT or
its licensor, as they may agree, shall have the exclusive right to enforce, or
defend any declaratory judgment action, at its expense, involving any [***]
Technology. In such event, XT shall keep Licensee reasonably informed of the
progress of any such claim, suit or proceeding in the Territory. Any recovery
received by XT as a result of any such claim, suit or proceeding shall be used
first to reimburse XT for all expenses (including attorneys, and professional
fees) incurred in connection with such claim, suit or proceeding, [***].
10.2 [***] Technology.
10.2.1 XT shall have the initial worldwide responsibility for
preparing, filing, prosecuting and maintaining patent applications and
conducting any interferences, oppositions, reexaminations, or requesting
reissues or patent term extensions with respect to [***] Technology.
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
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XT shall give Licensee the opportunity to review the status of all such pending
patent applications and actions in the Territory and shall keep Licensee fully
informed of the progress of such applications and actions, including, without
limitation, by promptly providing Licensee with copies of all substantive
correspondence sent to and received from patent offices, and providing notice of
all interferences, reexaminations, oppositions or requests for patent term
extensions. Expenses related to such patent and patent applications shall be
divided 66-2/3% -- 33-1/3% on a worldwide basis, between Licensee and XT. In the
event that XT declines or fails to prepare, file, prosecute or maintain such
patent applications or patents or take such other actions, relating to the
Products in the Territory, it shall promptly and in no event later than ninety
days prior to any filing deadline, provide notice to Licensee. Licensee shall
have the right to assume such responsibilities at its own expense, using counsel
of its choice.
10.2.2 In the event that Licensee becomes aware that any [***]
Technology is infringed or misappropriated by a third party in the Territory, or
is subject to a declaratory judgment action arising from such infringement in
such country, Licensee shall promptly notify XT and XT shall thereafter promptly
notify the owner of such intellectual property. Licensee shall have the
exclusive right to enforce, or defend any declaratory judgment action, in the
Territory, at its expense, involving any Antigen Technology. In such event,
Licensee shall keep XT reasonably informed of the progress of any such claim,
suit or proceeding. Any recovery by Licensee received as a result of any such
claim, suit or proceeding shall be used first to reimburse Licensee for all
expenses (including attorneys, and professional fees) incurred in connection
with such claim, suit or proceeding, [***].
10.3 Infringement Claims. If the production, sale or use of Products
pursuant to this Agreement results in any claim, suit or proceeding alleging
patent infringement against Licensee (or its Affiliates or Sublicensees),
Licensee shall promptly notify XT thereof in writing setting forth the facts of
such claim in reasonable detail. [***], Licensee shall have the exclusive right
to defend and control the defense of any such claim, suit or proceeding, at its
own expense, using counsel of its choice. Licensee shall keep XT reasonably
informed of all material developments in connection with any such claim, suit or
proceeding as it relates to the Licensed Technology, Licensee shall have the
right to deduct any damages and expenses (including attorneys' and professional
fees) against any amounts due, or which may become due, to XT pursuant to this
Agreement. Notwithstanding the above, Licensee shall not be able to settle any
such claim, suit or proceeding that impinges upon the rights of [JTI]* [ABX]**,
including without limitation, involving any admission of the invalidity of the
Licensed Technology or rights to Product Antigen outside the Territory without
the prior approval of XT.
10.4 Patent Marking. Licensee agrees to mark and have its Affiliates and
Sublicensees mark all Products sold pursuant to this Agreement in accordance
with the applicable statutes or regulations in the country or countries of
manufacture and sale thereof.
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with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
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11. CONFIDENTIALITY.
11.1 Confidential Information. Except as expressly provided herein,
the parties agree that, for the term of this Agreement and for five years
thereafter, the receiving party shall keep completely confidential and shall not
publish or otherwise disclose and shall not use for any purpose any information
furnished to it by another party hereto pursuant to this Agreement except to the
extent that it can be established by the receiving party by competent proof that
such information:
(a) was already known to the receiving party, other than under an
obligation of confidentiality, at the time of disclosure;
(b) was generally available to the public or otherwise part of
the public domain at the time of its disclosure to the receiving party;
(c) became generally available to the public or otherwise part of
the public domain after its disclosure and other than through any act or
omission of the receiving party in breach of this Agreement; or
(d) was subsequently lawfully disclosed to the receiving party by
a person other than a party or developed by the receiving party without
reference to any information or materials disclosed by the disclosing party.
11.2 Permitted Disclosures. Notwithstanding Sections 11.1 above and
15.16 below, each party hereto may disclose the other party's information to the
extent such disclosure is reasonably necessary in filing or prosecuting patent
applications, prosecuting or defending litigation, complying with applicable
governmental regulations or otherwise submitting information to tax or other
governmental authorities, making a permitted sublicense or other exercise of its
rights hereunder or conducting clinical trials, provided that if a party is
required to make any such disclosure of the other party's secret or confidential
information, other than pursuant to a confidentiality agreement, it will give
reasonable advance notice to the latter party of such disclosure requirement
and, save to the extent inappropriate in the case of patent applications, will
use efforts consistent with prudent business judgment to secure confidential
treatment of such information prior to its disclosure (whether through
protective orders or otherwise). Notwithstanding the foregoing, XT shall not
disclose to third parties, clinical data or regulatory filings received from
Licensee except as agreed in writing by Licensee.
12. SUBLICENSES.
Pursuant to Article 2 herein, Licensee will have the right to grant and
authorize sublicenses to third parties; provided, however, the Licensee shall
remain responsible for any payments due XT for Net Sales of Products by any
Sublicensee. [***]. Any sublicense granted by Licensee pursuant to this
Agreement shall provide that the Sublicensee will be subject to
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with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
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the applicable terms of this Agreement. Licensee shall provide XT with a copy of
relevant portions of each sublicense agreement, as reasonably required by XT.
13. REPRESENTATIONS AND WARRANTIES.
13.1 XT. XT represents and warrants that:
(i) it has the full right and authority to enter into this
Agreement and grant the rights and licenses granted herein;
(ii) it has not previously granted and will not grant any rights
inconsistent or in conflict with the rights and licenses granted to Licensee
herein;
(iii) there are no existing or threatened actions, suits or
claims pending against XT with respect to the Licensed Technology or the right
of XT to enter into and perform its obligations under this Agreement;
(iv) it has not previously granted, and will not grant during the
term of this Agreement, any right, license or interest in and to the Licensed
Technology, or any portion thereof, with respect to the Products, or their
manufacture or use;
(v) Schedule 3 hereto sets forth all royalties, license fees,
milestone payments and similar payments due to third parties for which Licensee
is obligated to reimburse XT under Section 5.1 above as of the Effective Date;
and
(vi) the Licensed Technology is all the technology owned by or
licensed to XT as of the Effective Date.
13.2 Licensee. Licensee represents and warrants that:
(i) it has the full right and authority to enter into this
Agreement,
(ii) to its knowledge, there are no existing or threatened
actions, suits or claims pending with respect to the subject matter hereof or
the right of Licensee to enter into and perform its obligations under this
Agreement; and
(iii) it has not entered and during the term of this Agreement
will not enter any other agreement inconsistent or in conflict with this
Agreement.
13.3 Disclaimer. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS
AGREEMENT, XT MAKES NO REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND,
EITHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND VALIDITY OF LICENSED
TECHNOLOGY CLAIMS, ISSUED OR PENDING.
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13.4 Effect of Representations and Warranties. It is understood that
if the representations and warranties under this Article 13 are not true and
accurate and a party incurs liabilities, costs or other expenses as a result of
such falsity, the party at fault shall indemnify, defend and hold the injured
party harmless from and against any such liabilities, costs or expenses
incurred, provided that the party at fault receives prompt notice of any claim
against the injured party resulting from or related to such falsity and the sole
right to control the defense or settlement thereof.
14. TERM AND TERMINATION.
14.1 Effectiveness. This Agreement shall become effective as of the
Effective Date and the license rights granted by XT under Article 2 above shall
be in full force and effect as of such date.
14.2 Term. Unless earlier terminated pursuant to the other provisions
of this Article 14, this Agreement shall continue in full force and effect until
the later of
(i) the expiration of the last to expire patent within the
Licensed Technology claiming Products; or
(ii) the twentieth anniversary of the Effective Date.
The licenses granted under Article 2 shall survive the expiration (but not an
earlier termination) of this Agreement; provided that such licenses shall in
such event become nonexclusive.
14.3 Termination for Breach. Either party to this Agreement may
terminate this Agreement in the event the other party shall have materially
breached or defaulted in the performance of any of its material obligations
hereunder, and such shall have continued for sixty days after written notice
thereof was provided to the breaching party by the nonbreaching party that
terminates the Agreement as to such party. Any termination shall become
effective at the end of such sixty day period unless the breaching party has
cured any such breach or default prior to the expiration of the sixty day
period. However, if the party alleged to be in breach of this Agreement disputes
such breach within such sixty day period, the non-breaching party shall not have
the right to terminate this Agreement unless it has been determined by an
arbitration proceeding in accordance with Section 15.12 below that this
Agreement was materially breached, and the breaching party fails to cure such
breach within thirty days following the final decision of the arbitrators or
such other time as directed by the arbitrators.
14.4 Other Termination Rights. Licensee may terminate this Agreement
and the license granted herein, in its entirety or as to any particular patent
within the Licensed Technology in a particular country, at any time, by
providing XT ninety-days written notice. In the event of termination as to a
particular country, the subject patent in such country shall cease to be within
the Licensed Technology for all purposes of this Agreement.
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14.5 Effect of Termination.
14.5.1 Termination of this Agreement for any reason shall not
release either party hereto from any liability which at the time of such
termination has already accrued to the other party or which is attributable to a
period prior to such termination.
14.5.2 In the event this Agreement is terminated for any reason,
Licensee and its Affiliates and Sublicensees shall have the right to sell or
otherwise dispose of the stock of any Products subject to this Agreement then on
hand. Upon termination of this Agreement by XT for any reason, any sublicense
granted by Licensee hereunder shall survive, provided that upon request by XT,
such Sublicensee promptly agrees in writing to be bound by the applicable terms
of this Agreement.
14.5.3 This Agreement, including, without limitation, any
licenses or sublicenses granted pursuant to this Agreement, shall survive any
dissolution, liquidation or acquisition of XT. Such licenses shall remain in
full force and effect even after any distribution, following dissolution, of the
intellectual property owned or licensed to XT, to any entity. Any transfer of
such intellectual property prior to or following dissolution shall be subject to
the licenses granted herein.
14.5.4 This Agreement, including the license granted in Article
2, is independent of, and shall not be affected by, any breach or termination of
the Master Research License and Option Agreement or any other agreement between
the parties or their Affiliates. In the event of the termination of the Master
Research License and Option Agreement, the rights and obligations of the parties
hereto under Article 12 thereof shall be deemed to be part of this Agreement.
14.5.5 Sections 6.3, 6.5, 6.6, 6.7 and 6.8 and Articles 11, 13,
14 and 15 shall survive the expiration and any termination of this Agreement for
any reason.
15. MISCELLANEOUS.
15.1 Governing Laws. This Agreement shall be interpreted and construed
in accordance with the laws of the State of California, without regard to
conflicts of law principles.
15.2 Waiver. It is agreed that no waiver by any party hereto of any
breach or default of any of the covenants or agreements herein set forth shall
be deemed a waiver as to any subsequent and/or similar breach or default.
15.3 Assignment. This Agreement and the license granted hereunder may
not be assigned by Licensee to any third party without the written consent of
XT, and XT may not assign this Agreement to a third party without the consent of
Licensee; except any party may assign this Agreement without such consent to (a)
an Affiliate (provided that such Affiliate is two-thirds or greater owned
directly or indirectly) or (b) an entity that acquires substantially all of the
assets of the monoclonal antibody business segment of the assigning party. The
terms and conditions of this
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Agreement shall be binding on and inure to the benefit of the permitted
successors and assigns of the parties.
15.4 Independent Contractors. The relationship of the parties hereto
is that of independent contractors. The parties hereto are not deemed to be
agents, partners or joint venturers of the others for any purpose as a result of
this Agreement or the transactions contemplated thereby.
15.5 Compliance with Laws. In exercising their rights under this
license, the parties shall fully comply with the requirements of any and all
applicable laws, regulations, rules and orders of any governmental body having
jurisdiction over the exercise of rights under this license.
15.6 No Implied Obligations. Except as expressly provided in Article 9
above, nothing in this Agreement shall be deemed to require Licensee to exploit
the Licensed Technology nor to prevent Licensee from commercializing products
similar to or competitive with any Products, in addition to or in lieu of such
Products.
15.7 Notices. Any notice required or permitted to be given to the
parties hereto shall be given in writing and shall be deemed to have been
properly given if delivered in person or when received if mailed by first class
certified mail to the other party at the appropriate address as set forth below
or to such other addresses as may be designated in writing by the parties from
time to time during the term of this Agreement.
XT: Xenotech, L.P.
322 Lakeside Drive
Foster City, California 94404
Attn: Chief Financial Officer
Japan Tobacco Inc.: Japan Tobacco Inc.
JT Building
2-1 Toranomon 2-chome
Minato-ku, Tokyo 105
Japan
Attn: Vice President
Pharmaceutical Division
with a copy to: JT America Inc.
1825 South Grant Street, Suite 220
San Mateo, CA 94402
Attn: President
and to: Gilbert, Segall and Young LLP
430 Park Avenue
New York, NY 10022
Attn: Neal N. Beaton, Esq.
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Abgenix, Inc.: Abgenix, Inc.
7601 Dumbarton Circle
Fremont, California 94555
Attn: President
with a copy to: Wilson Sonsini Goodrich & Rosati, P.C.
650 Page Mill Road
Palo Alto, California 94304
Attn: Kenneth A. Clark, Esq.
15.8 Export Laws. Notwithstanding anything to the contrary contained
herein, all obligations of XT and Licensee are subject to prior compliance with
United States [and Japanese]** export regulations and such other United States
[and Japanese]** laws and regulations as may be applicable, and to obtaining all
necessary approvals required by the applicable agencies of the government of the
United States [and Japan].** Licensee shall use efforts consistent with prudent
business judgment to obtain such approvals. XT shall cooperate with Licensee and
shall provide assistance to Licensee as reasonably necessary to obtain any
required approvals.
15.9 Severability. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision and the parties shall discuss in good faith appropriate
revised arrangements.
15.10 Force Majeure. Nonperformance of any party (except for payment
obligations) shall be excused to the extent that performance is rendered
impossible by strike, fire, earthquake, flood, governmental acts or orders or
restrictions, failure of suppliers, or any other reason where failure to
perform, is beyond the reasonable control and not caused by the negligence,
intentional conduct or misconduct of the nonperforming party.
15.11 No Consequential Damages. IN NO EVENT SHALL ANY PARTY HERETO BE
LIABLE FOR SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF THIS
AGREEMENT OR THE EXERCISE OF RIGHTS HEREUNDER.
15.12 Dispute Resolution; Arbitration. The parties will attempt to
resolve any dispute under this Agreement by mutual agreement, and, if required,
there shall be a face-to-face meeting between senior executives of the parties.
Any dispute under this Agreement which is not settled after such meeting, shall
be finally settled by binding arbitration, conducted in accordance with the
Rules of Arbitration of the International Chamber of Commerce by three
arbitrators appointed in accordance with said rules. The arbitration proceedings
and all pleadings and written evidence shall be in the English language. Any
written evidence originally in a language other than English shall be submitted
in English translation accompanied by the original or a true copy thereof. The
costs of the arbitration, including administrative and arbitrators' fees, shall
be shared equally by the parties. Each party shall bear its own costs and
attorneys' and witness' fees. The prevailing party in any arbitration, as
determined by the arbitration panel, shall be entitled to an award against the
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other party in the amount of the prevailing party's costs and reasonable
attorneys, fees. The arbitration shall be held in [San Francisco, California]*
[Tokyo, Japan, if initiated by XT against Licensee and in San Francisco,
California, if initiated by Licensee against XT].** A disputed performance or
suspended performances pending the resolution of the arbitration must be
completed within thirty days following the final decision of the arbitrators.
Any arbitration shall be completed within six months from the filing of notice
of a request for such arbitration.
15.13 Complete Agreement. It is understood and agreed between XT and
Licensee that this Agreement constitutes the entire agreement, both written and
oral, between the parties with respect to the subject matter hereof, and that
all prior agreements respecting the subject matter hereof, either written or
oral, expressed or implied, shall be abrogated, canceled, and are null and void
and of no effect. No amendment or change hereof or addition hereto shall be
effective or binding on either of the parties hereto unless reduced to writing
and executed by the respective duly authorized representatives of XT and
Licensee.
15.14 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original and both together shall be
deemed to be one and the same agreement.
15.15 Headings. The captions to the several Articles and Sections
hereof are not a part of this Agreement, but are included merely for convenience
of reference only and shall not affect its meaning or interpretation.
15.16 Nondisclosure. Except as provided in Article 11, each of the
parties hereto agrees not to disclose to any third party the terms of this
Agreement without the prior written consent of each other party hereto, except
to advisors, investors, licensees, sublicensees and others on a need to know
basis under circumstances that reasonably ensure the confidentiality thereof, or
to the extent required by law; provided, however, that the royalty rate
specified in Section 4.1 of this executed Product License shall be redacted
before the terms of this executed Product License are disclosed to potential
licensees and sublicensees. Without limitation upon any provision of this
Agreement, each of the parties hereto shall be responsible for the observance by
its employees, consultants and contractors of the foregoing confidentiality
obligations.
15.17 Conformity with GenPharm Cross-License. The rights and licenses
granted to Licensee hereunder shall be subject to the GenPharm Cross License,
and to the extent that this Agreement purports to grant greater rights to
Licensee than is permitted under the GenPharm Cross License, such rights shall
be granted only to the extent permitted under the GenPharm Cross License, and
the terms of the GenPharm Cross License shall control.
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IN WITNESS WHEREOF, the parties have executed this Agreement, through their
respective officers hereunto duly authorized, as of the day and year first above
written.
XENOTECH, INC. (as General LICENSEE
Partner of XENOTECH, L.P.)
By: By:
---------------------------------- -------------------------------------
Name: Name:
-------------------------------- -----------------------------------
Title: Title:
------------------------------- ----------------------------------
Schedule 1: Patents [***] Technology"
Schedule 2: Patents [***] Technology"
Schedule 3: Payments Due to Third Parties
Schedule 4: XT In-Licenses
- ------------
* If ABX is Licensee.
** If JTI is Licensee.
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
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RESTATED EXHIBIT C
FORM OF EXCLUSIVE HOME TERRITORY PRODUCT LICENSE
THIS PRODUCT LICENSE AGREEMENT (the "Agreement") effective the ____ day of
____________, _____, is made by and between XENOTECH, L.P., a California limited
partnership ("XT"), and [ABGENIX, INC., a Delaware corporation ("ABX")]* [JAPAN
TOBACCO INC., a Japanese corporation ("JTI")] ** ("Licensee").
RECITALS
XT desires to grant to Licensee and Licensee desires to acquire from XT an
exclusive license or sublicense, as the case may be, in the [ABX]* [JTI]**
Territory under the Licensed Technology to commercialize Products, on the terms
and conditions herein.
NOW, THEREFORE, for and in consideration of the covenants, conditions, and
undertakings hereinafter set forth, it is agreed by and between the parties as
follows:
1. DEFINITIONS.
For purposes of this Agreement, the terms set forth in this Article shall
have the meanings set forth below.
1.1 "ABX" shall mean Abgenix, Inc.
1.2 "ABX Territory" shall mean the United States of America and its
territories and possessions, Canada and Mexico.
1.3 "Affiliate" shall mean any entity which controls, is controlled by
or is under common control with any one of ABX, JTI or XT. An entity shall be
regarded as in control of another entity if it owns or controls at least fifty
percent (50%) of the shares of the subject entity entitled to vote in the
election of directors (or, in the case of an entity that is not a corporation,
for the election of the corresponding managing authority); provided, however, XT
shall not be an Affiliate of ABX or JTI under this Agreement and XT shall not be
considered controlled by ABX or JTI for purposes of determining Affiliates of
ABX or JTI.
1.4 "Antibody" shall mean a composition comprising a whole antibody or
a fragment thereof, said antibody or fragment having been derived from the
Licensed Technology and/or generated from the Mice or the Future Generation Mice
or having been derived from nucleotide sequences encoding, or amino acid
sequences of, such an antibody or fragment.
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1.5 "Antibody Product" shall mean any product comprising an Antibody
or Genetic Material encoding an Antibody wherein, in respect of each Antibody
Product, said Genetic Material does not encode multiple Antibodies.
1.6 "Antibody-Secreting Cell" shall mean a cell that secretes an
Antibody, except where such cell is part of a mammal.
1.7 "[***] Technology" shall mean (i) all U.S. patent applications and
patents listed on Schedule 1 and patents issuing on such patent applications
owned by or licensed to XT which relate to the [***], in each case to the extent
XT has the right to license or sublicense the same; (ii) any continuations,
divisionals, reexaminations, reissues or extensions of any of (i) above; (iii)
any foreign counterparts issued or issuing on any of (i) or (ii) above; and (iv)
[***] as set forth in Schedule 1.
1.8 "CGI" shall mean Cell Genesys, Inc.
1.9 "Effective Date" shall mean the date this Agreement is executed by
XT and Licensee.
1.10 "Future Generation Mice" shall have the meaning defined in the
Master Research License and Option Agreement, as amended.
1.11 "Genetic Material" shall mean a nucleotide sequence, including
DNA, RNA, and complementary and reverse complementary nucleotide sequences
thereto, whether coding or noncoding and whether intact or a fragment.
1.12 "GenPharm Cross License" shall mean that certain Cross License
Agreement, effective as of March 26, 1997, entered into by and among the
parties, GenPharm International, Inc. ("GenPharm") and the other parties named
therein, as the same may be amended from time to time.
1.13 "IND" shall mean an Investigational New Drug Exemption for a
Product, as defined in the U.S. Food, Drug and Cosmetic Act and the regulations
promulgated thereunder, or its non-U.S. equivalent.
1.14 "JTI" shall mean Japan Tobacco Inc.
1.15 "JTI Territory" shall mean Japan, Taiwan and South Korea
(including the territory comprising North Korea if it should be reunited with
South Korea).
1.16 "License Fee" shall have the meaning set forth in Article 3
hereof.
1.17 "Licensed Field" shall mean [***].
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
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1.18 "Licensed Technology" shall mean the [***] Technology, the [***]
Technology, and XT-Controlled Rights.
1.19 "Master Research License and Option Agreement" shall mean that
certain Master Research License and Option Agreement entered into by CGI, JTI
and XT as of June 28, 1996 (and subsequently assigned by CGI to ABX), as it may
be amended.
1.20 "Mice" shall have the meaning defined in the Master Research
License and Option Agreement, as amended.
1.21 "Net Sales" shall mean the [***] charged by Licensee or its
Affiliates and Sublicensees for sales of Product to non-Affiliate customers,
[***], with respect to such sales, and [***], as reflected in [***] of Licensee
and its Affiliates or Sublicensees, to the extent [***]. "Net Sales" for [***]
shall mean [***], where [***] shall mean the [***]. Notwithstanding the
foregoing, [***] shall include [***], but notwithstanding any of the foregoing,
shall not include [***]. Notwithstanding the foregoing, "Net Sales" for [***]
shall be [***].
1.22 "Product" and "Products" shall mean one or more Antibody Products
which incorporate (i) an Antibody which binds to the Product Antigen or (ii)
Genetic Material encoding such an Antibody wherein said Genetic Material does
not encode multiple antibodies.
1.23 "Product Antigen" shall mean ____________________.
1.24 "Sublicensee" shall mean a third party that is not an Affiliate
(provided, however, that CGI may be a Sublicensee of ABX, whether or not CGI is
an Affiliate of ABX) to whom Licensee has granted a sublicense under the
Licensed Technology to make, use and/or sell Products to the extent of the
rights of Licensee therein. "Sublicensee" shall also include a third party
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
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to whom Licensee has granted the right to distribute Products under the Licensed
Technology to the extent of the rights of Licensee therein, provided that such
third party is responsible for the marketing and promotion of Products within
the applicable country.
1.25 "Territory" shall mean those countries of the world in which
Licensee has license rights pursuant to this Agreement.
1.26 "Transgenic Product" shall mean any product constituting (i) Mice
or Future Generation Mice, (ii) Genetic Material from Mice or Future Generation
Mice, or (iii) an Antibody-Secreting Cell.
1.27 "Universal Receptor Product" shall mean a substance that is
developed utilizing [***] Universal Receptor Technology.
1.28 "Universal Receptor Technology" shall mean technology for
universal receptors [***]. As used herein: (i) "universal receptor" shall mean a
receptor [***].
1.29 "Valid Claim" shall mean a claim of a pending or issued, and
unexpired patent included within the Licensed Technology, which has not been
held unenforceable, unpatentable or invalid by a court or other governmental
agency of competent jurisdiction, and which has not been admitted to be invalid
or unenforceable through reissue, disclaimer or otherwise.
1.30 "[***] Technology" shall mean (i) all U.S. patent applications
and patents listed on Schedule 2 and patents issuing on such applications; (ii)
any continuations, divisionals, reexaminations, reissues or extensions of any of
(i) above; (iii) any foreign counterparts issued or issuing on any of (i) or
(ii) above; and (iv) the Mice (as such term is defined in the Master Research
License and Option Agreement) and [***] as set forth on Schedule 2.
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
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1.31 "XT-Controlled Rights" shall mean all rights to patents or
technology that are licensed to XT pursuant to the agreements listed on Schedule
4 or any other license or similar agreement granting XT rights to patents or
technology (each such agreement an "XT In-License"), to the extent that XT has
the right under the terms of the applicable XT In-License to further license or
sublicense such rights during the Term of this Agreement.
1.32 "XT In-License" shall have the meaning set forth in Section 1.31,
above.
2. LICENSE GRANT; USE OF MICE BY THIRD PARTIES.
2.1 Subject to the terms and conditions of this Agreement, XT hereby
grants to Licensee an exclusive license or sublicense, as the case may be, under
the Licensed Technology, to make and have made Products anywhere in the world
and to use, sell, lease, offer to sell or lease, import, export, otherwise
transfer physical possession of or otherwise transfer title to such Products in
the [ABX]* [JTI]** Territory in the Licensed Field. Such license or sublicense
shall be exclusive even as to XT, and shall include the exclusive right to grant
and authorize sublicenses for exploitation in the [ABX]* [JTI]** Territory;
provided, however, that Licensee may not, under this license, grant sublicenses
to any rights to the Mice except as provided in Section 2.2 of this Agreement.
2.2 In connection with the grant of a sublicense under this Agreement
to a third party, and notwithstanding any provision to the contrary in the
Master Research License and Option Agreement or any Material Transfer Agreement
entered into between the parties under Sections 2.1, 2.2 or 2.3 of the Master
Research License and Option Agreement, Licensee shall have the right to grant a
sublicense to use Mice and Future Generation Mice transferred to the third party
pursuant to the terms of Section 2.7 of the Master Research License and Option
Agreement, and Transgenic Products other then Mice or Future Generation Mice, to
research, develop, make, have made, use, import, export, sell, lease, offer to
sell or lease or otherwise distribute or commercialize Products, with the
proviso that the sublicense described in this Section 2.2 shall not exceed the
Licensee's rights conferred in accordance with the Master Research License and
Option Agreement or this Product License.
2.3 It is understood and agreed that, as to all XT-Controlled Rights,
the grant of rights under this Article 2 shall be subject in all respects to the
applicable XT In-License(s) pursuant to which such XT-Controlled Rights were
granted to XT.
3. LICENSE FEE.
Licensee shall pay to XT within thirty days of the Effective Date a license
fee of [***].
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
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4. ROYALTIES.
4.1 Royalty Rates. In consideration for the license and rights granted
herein, Licensee agrees to pay to XT royalties of [***] of Net Sales of Products
by it and its Affiliates and Sublicensees.
4.2 Royalty Offsets. In the event that (i) Licensee, its Affiliate or
Sublicensee is required to pay [***], or (ii) any reimbursement payments are due
to XT pursuant to Section 5.1 below, then Licensee may deduct the aggregate of
any such amounts from any royalty amount owing to XT for the sale of such
Products pursuant to Section 4.1 above; provided, however, that payments from
Licensee to a third party that is an Affiliate, or was an Affiliate at any time
within two (2) years prior to the Effective Date, may not be offset under this
Section 4.2. Notwithstanding the foregoing provisions of this Section 4.2, in no
event shall the royalties due to XT pursuant to Section 4.1 above be so reduced
to less than [***] of the amount that would otherwise be due to XT thereunder.
[***].
4.3 Single Royalty; Non-Royalty Sales. Only one royalty shall be
payable with respect to any Product, regardless of how many claims or patents
within the Licensed Technology cover such Product. In addition, no royalty shall
be payable under this Article 4 with respect to sales of Products among Licensee
and its Affiliates and/or Sublicensees and their Affiliates or for use in
research and/or development or clinical trials.
4.4 No Patent Protection. Royalties shall be payable at the rates
specified in Section 4.1 or 4.2 above only with respect to sales of Products
that would infringe a Valid Claim in the country in which such Products are
sold. In the event that such Products are not covered by a Valid Claim in such
country, XT shall be paid a royalty on such sales in accordance with this
Article 4, [***].
4.5 Combination Products. In the event that a Product is sold in
combination as a single product with another product or component, Net Sales
from such combination sales for purposes of calculating the amounts due under
this Article 4 shall be [***]. In the event that no such separate sales are made
in the same quarter by Licensee, Net Sales for royalty determination shall be
[***].
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
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4.6 Termination of Royalties. Royalties under Section 4.1, 4.2, or 4.4
will be due until the later of (i) ten years from the first commercial sale of
Products in any country or (ii) on a country-by-country basis, the expiration of
the last-to-expire patent within the Licensed Technology covering the Products
in such country.
5. THIRD PARTY ROYALTIES.
5.1 Royalties Payable by XT. XT will be responsible for the payment of
any royalties, license fees and milestone and/or other payments due to third
parties under licenses or similar agreements entered into by XT necessary to
allow the manufacture, use or sale of Products. Licensee shall reimburse XT for
any royalties paid by XT to third parties under licenses or similar agreements
covering Products necessary to allow the manufacture, use or sale or other
exploitation of Products in accordance with this Agreement. Licensee shall
continue any such reimbursement payments to XT until XT's obligation to pay
royalties to a third party under any license covering Products expires or
terminates. XT agrees not to enter into any license or similar agreement after
the Effective Date which would obligate Licensee to make any payments under this
Section 5.1 without the prior written consent of Licensee.
5.2 Royalties Payable by Licensee. Xenotech shall have no
responsibility under the terms of this Agreement for the payment of any
royalties, license fees or milestone or other payments due to third parties
under licenses or similar agreements entered into by Licensee, its Affiliates,
or its Sublicensees to allow the manufacture, use or sale of Products.
6. ACCOUNTING AND RECORDS.
6.1 Royalty Reports and Payments. After the first commercial sale of
Products on which royalties are required, Licensee agrees to make quarterly
written reports to XT within eighty days after the end of each calendar quarter,
stating in each such report the number, description, and aggregate Net Sales of
Products sold during the calendar quarter upon which a royalty is payable under
Article 4 above. Concurrently with the making of such reports, Licensee shall
pay to XT royalties at the applicable rate specified in Section 4.1, 4.2 or 4.4
above and all royalties payable pursuant to Section 5.1 above, and any
adjustment to Net Sales for a prior period in accordance with the definition of
Net Sales in Section 1.21 hereof. All payments to XT hereunder shall be made in
U.S. Dollars to a bank account designated by XT.
6.2 Early Third Party License Payments. If XT is obligated to pay
royalties to a third party prior to ninety days after the end of the calendar
quarter, XT shall so notify Licensee and Licensee shall provide the reports and
payments set forth in Section 6.1 above not later than ten days before the date
such payments are due to the third party. Up to thirty-five days before such
payments are due, XT may provide Licensee with an invoice by facsimile setting
forth the royalties XT must pay third parties with respect to Licensee's
activities in the Territory in the preceding quarter, and Licensee shall pay
such invoices within thirty days of receipt of such invoice.
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6.3 Records; Inspection. Licensee shall keep (and cause its Affiliates
and Sublicensees to keep) complete, true and accurate books of account and
records for the purpose of determining the royalty amounts payable to XT under
this Agreement. Such books and records shall be kept at the principal place of
business of Licensee or its Affiliates or Sublicensees, as the case may be, for
at least three years following the end of the calendar quarter to which they
pertain. Such records of Licensee or its Affiliates will be open for inspection
during such three-year period by a representative of XT for the purpose of
verifying the royalty statements. Licensee shall require each of its
Sublicensees to maintain similar books and records and to open such records for
inspection during the same three-year period by a representative of Licensee
reasonably satisfactory to XT on behalf of, and as required by, XT for the
purpose of verifying the royalty statements. All such inspections may be made no
more than once each calendar year, at reasonable times mutually agreed by XT and
Licensee. The XT representative will be obliged to execute a reasonable
confidentiality agreement prior to commencing any such inspection. Inspections
conducted under this Section 6.3 shall be at the expense of XT, unless a
variation or error producing an increase exceeding [***] of the amount stated
for the period covered by the inspection is established in the course of any
such inspection, whereupon all costs relating thereto will be paid by Licensee.
Upon the expiration of three years following the end of any fiscal year, the
calculation of royalties payable with respect to such year shall be binding and
conclusive, and Licensee shall be released from any liability or accountability
with respect to royalties for such year.
6.4 Currency Conversion. If any currency conversion shall be required
in connection with the calculation of royalties hereunder, such conversion shall
be made using the selling exchange rate for conversion of the foreign currency
into U.S. Dollars, quoted for current transactions reported in The Wall Street
Journal for the last business day of the calendar quarter to which such payment
pertains.
6.5 Late Payments. Any payments due from Licensee that are not paid on
the date such payments are due under this Agreement shall bear interest to the
extent permitted by applicable law at [***], calculated on the number of days
such payment is delinquent. This Section 6.5 shall in no way limit any other
remedies available to any party.
6.6 Withholding Taxes.
6.6.1 Unless immediately reimbursable under Section 6.6.2 below,
all payments required to be made pursuant to Articles 3, 4 and 5 hereof shall be
without deduction or withholding for or on account of any taxes (other than
taxes imposed on or measured by net income) or similar governmental charge
imposed by a jurisdiction. Such taxes are referred to herein as "Withholding
Taxes" and such Withholding Taxes shall be the sole responsibility of the
withholding party. The withholding party shall provide a certificate evidencing
payment of any Withholding Taxes hereunder.
6.6.2 XT agrees to elect to claim a tax credit for Withholding
Taxes with respect to which it is entitled so to elect, and further agrees not
to amend such election for the full
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
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carry-forward period with respect to such credit. At the time that XT realizes
a reduction in U.S. tax liability by actually utilizing the Withholding Taxes as
a credit against regular U.S. tax liability (determined on a "first-in-
first-out" basis pro rata with other available foreign tax credits), then the
amount of such reduction attributable to such credit shall immediately be
reimbursed to the withholding party. For these purposes, a reduction in U.S. tax
liability shall include both a direct reduction in XT's own tax liability and a
reduction in the U.S. tax liability of any of its partners.
6.7 Tax Indemnity. Except as provided in Section 6.6, each party (the
"Tax Indemnitor") shall indemnify and hold harmless the other party hereto (each
a "Tax Indemnitee") from and against any tax or similar governmental charge
assessed solely because of this Agreement with respect to and directly
attributable to the income or the assets of the Tax Indemnitor. In the event
that any governmental agency shall make a claim against a party hereto which
could give rise to an indemnity hereunder, such potential Tax Indemnitee shall
give reasonably prompt notice to the potential Tax Indemnitor of the assertion
of such claim. If the transmission of such notice is unreasonably deferred and
has a material, adverse affect on the ability of the potential Tax Indemnitor to
challenge such claim, such potential Tax Indemnitor shall be released from
liability hereunder. The Tax Indemnitor alone shall (at its own expense) control
the defense or compromise of any such claim. The Tax Indemnitee shall execute
any documents required to enable Tax Indemnitor to defend such claim, provide
any information necessary therefor, and cooperate with Tax Indemnitor in such
defense.
6.8 XT Tax Indemnity. XT shall indemnify and hold harmless Licensee and
its Affiliates from and against any increase to its country of incorporation
income tax liability directly attributable to a positive adjustment to the
amount of gross receipts (an "Adjustment") reported or reportable by such party
from the income, including the royalty income, received from Licensee on Covered
Products. The amount payable hereunder shall be equal to the difference between
(a) the product of (i) the amount of the Adjustment, and (ii) the highest
combined marginal corporate tax rate in the country of incorporation in effect
for the taxable year for which such Adjustment is made, and (b) the reduction in
the party's foreign tax liability, which for purposes of this Agreement shall be
equal to the product of (i) the amount of any correlative adjustment to its
foreign taxable income, and (ii) the highest combined marginal foreign corporate
tax rate in effect for the taxable year for which the correlative adjustment is
made. No indemnification payment shall be required hereunder until comprehensive
efforts to obtain a correlative adjustment to Licensee's or its Affiliates', as
the case may be, taxable income in a foreign state (which may include, for
example invoking competent authority provisions under the U.S. Japanese Income
Tax Treaty (if applicable) or other applicable bilateral tax treaty) have, to
the extent reasonable to do so, been exhausted.
7. RESEARCH AND DEVELOPMENT.
7.1 Funding and Conduct. Licensee shall independently furnish and be
responsible for funding and conducting all of its preclinical and clinical
research and development of Products, at its own expense.
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7.2 Biomaterials. In the case of Previously Selected Antigens as
defined in the Master Research License and Option Agreement, at the reasonable
request of Licensee, XT shall make available as part of the license granted
hereunder to Licensee [***] thus made available will be used only by Licensee
and its Affiliates and Sublicensees and manufacturing subcontractors.
8. SHARING OF CLINICAL DATA.
As long as their development projects remain on similar timelines, or
as otherwise mutually agreed, Licensee will consider bilateral sharing of its
and its Sublicensees' relevant Product development information and clinical data
with [JTI]* [ABX]**. However, there shall not be, unless otherwise agreed by the
parties, any obligation for sharing data developed independently, by or on
behalf of either of them.
9. DUE DILIGENCE.
9.1 [***].
9.1.1 Licensee agrees [***] as may be agreed upon by the parties
[***] the Effective Date.
9.1.2 Notwithstanding the foregoing, Licensee shall be [***],
shall be [***] in the United States or Japan.
9.2 Failure to Meet Due Diligence Obligation.
9.2.1 If the diligence requirements set forth in Section 9.1 are
not met by Licensee (or its Affiliates or Sublicensees) [in the United States]*
[in Japan]**, Licensee's rights hereunder shall terminate upon written notice by
XT to Licensee and subject to Sections 9.3, 9.4 and 14.3 below.
9.2.2 Notwithstanding Section 9.2.1, the license granted
hereunder to Licensee shall not terminate by reason of a delay [***], to the
extent that prudent business judgment, based on circumstances outside of
Licensee's reasonable control, reasonably justifies such delay.
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
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9.3 Dispute Resolution. In the event that a dispute arises whether the
diligence requirements in Article 9 have been met or circumstances exist which
Licensee believes justifies a failure on its part to meet such obligation, the
parties will attempt to resolve any dispute by mutual agreement during a period
of 30 days following Licensee's receipt of the notice under Section 9.2.1.
9.4 Arbitration. In the event that the parties are unable to resolve
such dispute pursuant to Section 9.3 above, such dispute shall be settled
between XT and Licensee by binding arbitration as set forth in Section 15.12. If
the arbitrator determines that the party acted in good faith, but failed to meet
its obligations under Section 9.1 above, the license granted to such party shall
not terminate unless the nonperforming party fails to cure such non-performance
within a reasonable period of time, as determined by the arbitrator.
10. PATENTS.
10.1 [***] Technology.
(a) XT or its licensor, as they may agree, shall have
responsibility for preparing, filing, prosecuting and maintaining patents and
patent applications worldwide relating to the [***] Technology and conducting
any interferences, oppositions, reexaminations, or requesting reissues or patent
term extensions with respect to the [***] Technology. XT shall keep Licensee
reasonably informed as to the status of such patent matters in the Territory,
including without limitation, by providing Licensee the opportunity to review
and comment on any substantive documents which will be filed in any patent
office, and providing Licensee copies of any substantive documents received by
XT from such patent offices including notice of all interferences,
reexaminations, oppositions or requests for patent term extensions. Licensee
shall cooperate with and assist XT in connection with such activities, at XT's
request and expense.
(b) In the event that Licensee becomes aware that any [***]
Technology necessary for the practice of the license granted herein is infringed
or misappropriated by a third party or is subject to a declaratory judgment
action arising from such infringement, Licensee shall promptly notify XT and XT
shall thereafter promptly notify the owner of such intellectual property. XT or
its licensor, as they may agree, shall have the exclusive right to enforce, or
defend any declaratory judgment action, at its expense, involving any [***]
Technology. In such event, XT shall keep Licensee reasonably informed of the
progress of any such claim, suit or proceeding in the Territory. Any recovery
received by XT as a result of any such claim, suit or proceeding shall be used
first to reimburse XT for all expenses (including attorneys, and professional
fees) incurred in connection with such claim, suit or proceeding, [***].
10.2 [***] Technology.
10.2.1 XT shall have the initial worldwide responsibility for
preparing, filing, prosecuting and maintaining patent applications and
conducting any interferences, oppositions, reexaminations, or requesting
reissues or patent term extensions with respect to [***] Technology.
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
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XT shall give Licensee the opportunity to review the status of all such pending
patent applications and actions in the Territory and shall keep Licensee fully
informed of the progress of such applications and actions, including, without
limitation, by promptly providing Licensee with copies of all substantive
correspondence sent to and received from patent offices, and providing notice of
all interferences, reexaminations, oppositions or requests for patent term
extensions. [***]. In the event that XT declines or fails to prepare, file,
prosecute or maintain such patent applications or patents or take such other
actions, relating to the Products in the Territory, it shall promptly and in no
event later than ninety days prior to any filing deadline, provide notice to
Licensee. Licensee shall have the right to assume such responsibilities at its
own expense, using counsel of its choice.
10.2.2 In the event that Licensee becomes aware that any [***]
Technology is infringed or misappropriated by a third party in the Territory, or
is subject to a declaratory judgment action arising from such infringement in
such country, Licensee shall promptly notify XT and XT shall thereafter promptly
notify the owner of such intellectual property. Licensee shall have the
exclusive right to enforce, or defend any declaratory judgment action, in the
Territory, at its expense, involving any [***] Technology. In such event,
Licensee shall keep XT reasonably informed of the progress of any such claim,
suit or proceeding. Any recovery by Licensee received as a result of any such
claim, suit or proceeding shall be used first to reimburse Licensee for all
expenses (including attorneys, and professional fees) incurred in connection
with such claim, suit or proceeding, [***].
10.3 Infringement Claims. If the production, sale or use of Products
pursuant to this Agreement results in any claim, suit or proceeding alleging
patent infringement against Licensee (or its Affiliates or Sublicensees),
Licensee shall promptly notify XT thereof in writing setting forth the facts of
such claim in reasonable detail. [***], Licensee shall have the exclusive right
to defend and control the defense of any such claim, suit or proceeding, at its
own expense, using counsel of its choice. Licensee shall keep XT reasonably
informed of all material developments in connection with any such claim, suit or
proceeding as it relates to the Licensed Technology, Licensee shall have the
right to deduct any damages and expenses (including attorneys' and professional
fees) against any amounts due, or which may become due, to XT pursuant to this
Agreement. Notwithstanding the above, Licensee shall not be able to settle any
such claim, suit or proceeding that impinges upon the rights of [JTI]* [ABX]**,
including without limitation, involving any admission of the invalidity of the
Licensed Technology or rights to Product Antigen outside the Territory without
the prior approval of XT.
10.4 Patent Marking. Licensee agrees to mark and have its Affiliates
and Sublicensees mark all Products sold pursuant to this Agreement in accordance
with the applicable statutes or regulations in the country or countries of
manufacture and sale thereof.
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
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11. CONFIDENTIALITY.
11.1 Confidential Information. Except as expressly provided herein,
the parties agree that, for the term of this Agreement and for five years
thereafter, the receiving party shall keep completely confidential and shall not
publish or otherwise disclose and shall not use for any purpose any information
furnished to it by another party hereto pursuant to this Agreement except to the
extent that it can be established by the receiving party by competent proof that
such information:
(a) was already known to the receiving party, other than under an
obligation of confidentiality, at the time of disclosure;
(b) was generally available to the public or otherwise part of
the public domain at the time of its disclosure to the receiving party;
(c) became generally available to the public or otherwise part of
the public domain after its disclosure and other than through any act or
omission of the receiving party in breach of this Agreement; or
(d) was subsequently lawfully disclosed to the receiving party by
a person other than a party or developed by the receiving party without
reference to any information or materials disclosed by the disclosing party.
11.2 Permitted Disclosures. Notwithstanding Sections 11.1 above and
15.16 below, each party hereto may disclose the other party's information to the
extent such disclosure is reasonably necessary in filing or prosecuting patent
applications, prosecuting or defending litigation, complying with applicable
governmental regulations or otherwise submitting information to tax or other
governmental authorities, making a permitted sublicense or other exercise of its
rights hereunder or conducting clinical trials, provided that if a party is
required to make any such disclosure of the other party's secret or confidential
information, other than pursuant to a confidentiality agreement, it will give
reasonable advance notice to the latter party of such disclosure requirement
and, save to the extent inappropriate in the case of patent applications, will
use efforts consistent with prudent business judgment to secure confidential
treatment of such information prior to its disclosure (whether through
protective orders or otherwise). Notwithstanding the foregoing, XT shall not
disclose to third parties, clinical data or regulatory filings received from
Licensee except as agreed in writing by Licensee.
12. SUBLICENSES.
Pursuant to Article 2 herein, Licensee will have the right to grant and
authorize sublicenses to third parties; provided, however, the Licensee shall
remain responsible for any payments due XT for Net Sales of Products by any
Sublicensee. [***]. Any sublicense granted by Licensee pursuant to this
Agreement shall provide that the Sublicensee will be subject to
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
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the applicable terms of this Agreement. Licensee shall provide XT with a copy
of relevant portions of each sublicense agreement, as reasonably required by XT.
13. REPRESENTATIONS AND WARRANTIES.
13.1 XT. XT represents and warrants that:
(i) it has the full right and authority to enter into this
Agreement and grant the rights and licenses granted herein;
(ii) it has not previously granted and will not grant any rights
inconsistent or in conflict with the rights and licenses granted to Licensee
herein;
(iii) there are no existing or threatened actions, suits or
claims pending against XT with respect to the Licensed Technology or the right
of XT to enter into and perform its obligations under this Agreement;
(iv) it has not previously granted, and will not grant during the
term of this Agreement, any right, license or interest in and to the Licensed
Technology, or any portion thereof, with respect to the Products, or their
manufacture or use;
(v) Schedule 3 hereto sets forth all royalties, license fees,
milestone payments and similar payments due to third parties for which Licensee
is obligated to reimburse XT under Section 5.1 above as of the Effective Date;
and
(vi) the Licensed Technology is all the technology owned by or
licensed to XT as of the Effective Date.
13.2 Licensee. Licensee represents and warrants that:
(i) it has the full right and authority to enter into this
Agreement,
(ii) to its knowledge, there are no existing or threatened
actions, suits or claims pending with respect to the subject matter hereof or
the right of Licensee to enter into and perform its obligations under this
Agreement; and
(iii) it has not entered and during the term of this Agreement
will not enter any other agreement inconsistent or in conflict with this
Agreement.
13.3 Disclaimer. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS
AGREEMENT, XT MAKES NO REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND,
EITHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND VALIDITY OF LICENSED
TECHNOLOGY CLAIMS, ISSUED OR PENDING.
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13.4 Effect of Representations and Warranties. It is understood that
if the representations and warranties under this Article 13 are not true and
accurate and a party incurs liabilities, costs or other expenses as a result of
such falsity, the party at fault shall indemnify, defend and hold the injured
party harmless from and against any such liabilities, costs or expenses
incurred, provided that the party at fault receives prompt notice of any claim
against the injured party resulting from or related to such falsity and the sole
right to control the defense or settlement thereof.
14. TERM AND TERMINATION.
14.1 Effectiveness. This Agreement shall become effective as of the
Effective Date and the license rights granted by XT under Article 2 above shall
be in full force and effect as of such date.
14.2 Term. Unless earlier terminated pursuant to the other provisions
of this Article 14, this Agreement shall continue in full force and effect until
the later of
(i) the expiration of the last to expire patent within the
Licensed Technology claiming Products; or
(ii) the twentieth anniversary of the Effective Date.
The licenses granted under Article 2 shall survive the expiration (but not an
earlier termination) of this Agreement; provided that such licenses shall in
such event become nonexclusive.
14.3 Termination for Breach. Either party to this Agreement may
terminate this Agreement in the event the other party shall have materially
breached or defaulted in the performance of any of its material obligations
hereunder, and such shall have continued for sixty days after written notice
thereof was provided to the breaching party by the nonbreaching party that
terminates the Agreement as to such party. Any termination shall become
effective at the end of such sixty day period unless the breaching party has
cured any such breach or default prior to the expiration of the sixty day
period. However, if the party alleged to be in breach of this Agreement disputes
such breach within such sixty day period, the non-breaching party shall not have
the right to terminate this Agreement unless it has been determined by an
arbitration proceeding in accordance with Section 15.12 below that this
Agreement was materially breached, and the breaching party fails to cure such
breach within thirty days following the final decision of the arbitrators or
such other time as directed by the arbitrators.
14.4 Other Termination Rights. Licensee may terminate this Agreement
and the license granted herein, in its entirety or as to any particular patent
within the Licensed Technology in a particular country, at any time, by
providing XT ninety-days written notice. In the event of termination as to a
particular country, the subject patent in such country shall cease to be within
the Licensed Technology for all purposes of this Agreement.
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14.5 Effect of Termination.
14.5.1 Termination of this Agreement for any reason shall not
release either party hereto from any liability which at the time of such
termination has already accrued to the other party or which is attributable to a
period prior to such termination.
14.5.2 In the event this Agreement is terminated for any reason,
Licensee and its Affiliates and Sublicensees shall have the right to sell or
otherwise dispose of the stock of any Products subject to this Agreement then on
hand. Upon termination of this Agreement by XT for any reason, any sublicense
granted by Licensee hereunder shall survive, provided that upon request by XT,
such Sublicensee promptly agrees in writing to be bound by the applicable terms
of this Agreement.
14.5.3 This Agreement, including, without limitation, any
licenses or sublicenses granted pursuant to this Agreement, shall survive any
dissolution, liquidation or acquisition of XT. Such licenses shall remain in
full force and effect even after any distribution, following dissolution, of the
intellectual property owned or licensed to XT, to any entity. Any transfer of
such intellectual property prior to or following dissolution shall be subject to
the licenses granted herein.
14.5.4 This Agreement, including the license granted in Article
2, is independent of, and shall not be affected by, any breach or termination of
the Master Research License and Option Agreement or any other agreement between
the parties or their Affiliates. In the event of the termination of the Master
Research License and Option Agreement, the rights and obligations of the parties
hereto under Article 12 thereof shall be deemed to be part of this Agreement.
14.5.5 Sections 6.3, 6.5, 6.6, 6.7 and 6.8 and Articles 11, 13,
14 and 15 shall survive the expiration and any termination of this Agreement for
any reason.
15. MISCELLANEOUS.
15.1 Governing Laws. This Agreement shall be interpreted and construed
in accordance with the laws of the State of California, without regard to
conflicts of law principles.
15.2 Waiver. It is agreed that no waiver by any party hereto of any
breach or default of any of the covenants or agreements herein set forth shall
be deemed a waiver as to any subsequent and/or similar breach or default.
15.3 Assignment. This Agreement and the license granted hereunder may
not be assigned by Licensee to any third party without the written consent of
XT, and XT may not assign this Agreement to a third party without the consent of
Licensee; except any party may assign this Agreement without such consent to (a)
an Affiliate (provided that such Affiliate is two-thirds or greater owned
directly or indirectly) or (b) an entity that acquires substantially all of the
assets of the monoclonal antibody business segment of the assigning party. The
terms and conditions of this
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Agreement shall be binding on and inure to the benefit of the permitted
successors and assigns of the parties.
15.4 Independent Contractors. The relationship of the parties hereto
is that of independent contractors. The parties hereto are not deemed to be
agents, partners or joint venturers of the others for any purpose as a result of
this Agreement or the transactions contemplated thereby.
15.5 Compliance with Laws. In exercising their rights under this
license, the parties shall fully comply with the requirements of any and all
applicable laws, regulations, rules and orders of any governmental body having
jurisdiction over the exercise of rights under this license.
15.6 No Implied Obligations. Except as expressly provided in Article 9
above, nothing in this Agreement shall be deemed to require Licensee to exploit
the Licensed Technology nor to prevent Licensee from commercializing products
similar to or competitive with any Products, in addition to or in lieu of such
Products.
15.7 Notices. Any notice required or permitted to be given to the
parties hereto shall be given in writing and shall be deemed to have been
properly given if delivered in person or when received if mailed by first class
certified mail to the other party at the appropriate address as set forth below
or to such other addresses as may be designated in writing by the parties from
time to time during the term of this Agreement.
XT: Xenotech, L.P.
322 Lakeside Drive
Foster City, California 94404
Attn: Chief Financial Officer
Japan Tobacco Inc.: Japan Tobacco Inc.
JT Building
2-1 Toranomon 2-chome
Minato-ku, Tokyo 105
Japan
Attn: Vice President
Pharmaceutical Division
with a copy to: JT America Inc.
1825 South Grant Street, Suite 220
San Mateo, CA 94402
Attn: President
and to: Gilbert, Segall and Young LLP
430 Park Avenue
New York, NY 10022
Attn: Neal N. Beaton, Esq.
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Abgenix, Inc.: Abgenix, Inc.
7601 Dumbarton Circle
Fremont, California 94555
Attn: President
with a copy to: Wilson Sonsini Goodrich & Rosati, P.C.
650 Page Mill Road
Palo Alto, California 94304
Attn: Kenneth A. Clark, Esq.
15.8 Export Laws. Notwithstanding anything to the contrary contained
herein, all obligations of XT and Licensee are subject to prior compliance with
United States [and Japanese]** export regulations and such other United States
[and Japanese]** laws and regulations as may be applicable, and to obtaining all
necessary approvals required by the applicable agencies of the government of the
United States [and Japan]**. Licensee shall use efforts consistent with prudent
business judgment to obtain such approvals. XT shall cooperate with Licensee and
shall provide assistance to Licensee as reasonably necessary to obtain any
required approvals.
15.9 Severability. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision and the parties shall discuss in good faith appropriate
revised arrangements.
15.10 Force Majeure. Nonperformance of any party (except for payment
obligations) shall be excused to the extent that performance is rendered
impossible by strike, fire, earthquake, flood, governmental acts or orders or
restrictions, failure of suppliers, or any other reason where failure to
perform, is beyond the reasonable control and not caused by the negligence,
intentional conduct or misconduct of the nonperforming party.
15.11 No Consequential Damages. IN NO EVENT SHALL ANY PARTY HERETO BE
LIABLE FOR SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF THIS
AGREEMENT OR THE EXERCISE OF RIGHTS HEREUNDER.
15.12 Dispute Resolution; Arbitration. The parties will attempt to
resolve any dispute under this Agreement by mutual agreement, and, if required,
there shall be a face-to-face meeting between senior executives of the parties.
Any dispute under this Agreement which is not settled after such meeting, shall
be finally settled by binding arbitration, conducted in accordance with the
Rules of Arbitration of the International Chamber of Commerce by three
arbitrators appointed in accordance with said rules. The arbitration proceedings
and all pleadings and written evidence shall be in the English language. Any
written evidence originally in a language other than English shall be submitted
in English translation accompanied by the original or a true copy thereof. The
costs of the arbitration, including administrative and arbitrators' fees, shall
be shared equally by the parties. Each party shall bear its own costs and
attorneys' and witness' fees. The prevailing party in any arbitration, as
determined by the arbitration panel, shall be entitled to an award against the
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other party in the amount of the prevailing party's costs and reasonable
attorneys, fees. The arbitration shall be held in [San Francisco, California]*
[Tokyo, Japan, if initiated by XT against Licensee and in San Francisco,
California, if initiated by Licensee against XT]**. A disputed performance or
suspended performances pending the resolution of the arbitration must be
completed within thirty days following the final decision of the arbitrators.
Any arbitration shall be completed within six months from the filing of notice
of a request for such arbitration.
15.13 Complete Agreement. It is understood and agreed between XT and
Licensee that this Agreement constitutes the entire agreement, both written and
oral, between the parties with respect to the subject matter hereof, and that
all prior agreements respecting the subject matter hereof, either written or
oral, expressed or implied, shall be abrogated, canceled, and are null and void
and of no effect. No amendment or change hereof or addition hereto shall be
effective or binding on either of the parties hereto unless reduced to writing
and executed by the respective duly authorized representatives of XT and
Licensee.
15.14 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original and both together shall be
deemed to be one and the same agreement.
15.15 Headings. The captions to the several Articles and Sections
hereof are not a part of this Agreement, but are included merely for convenience
of reference only and shall not affect its meaning or interpretation.
15.16 Nondisclosure. Except as provided in Article 11, each of the
parties hereto agrees not to disclose to any third party the terms of this
Agreement without the prior written consent of each other party hereto, except
to advisors, investors, licensees, sublicensees and others on a need to know
basis under circumstances that reasonably ensure the confidentiality thereof, or
to the extent required by law; provided, however, that the royalty rate
specified in Section 4.1 of this executed Product License shall be redacted
before the terms of this executed Product License are disclosed to potential
licensees and sublicensees. Without limitation upon any provision of this
Agreement, each of the parties hereto shall be responsible for the observance by
its employees, consultants and contractors of the foregoing confidentiality
obligations.
15.17 Conformity with GenPharm Cross-License. The rights and licenses
granted to Licensee hereunder shall be subject to the GenPharm Cross License,
and to the extent that this Agreement purports to grant greater rights to
Licensee than is permitted under the GenPharm Cross License, such rights shall
be granted only to the extent permitted under the GenPharm Cross License, and
the terms of the GenPharm Cross License shall control.
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IN WITNESS WHEREOF, the parties have executed this Agreement, through their
respective officers hereunto duly authorized, as of the day and year first above
written.
XENOTECH, INC. (as General LICENSEE
Partner of XENOTECH, L.P.)
By: By:
----------------------------------- -------------------------------------
Name: Name:
--------------------------------- -----------------------------------
Title: Title:
-------------------------------- ----------------------------------
Schedule 1: Patents [***] Technology"
Schedule 2: Patents [***] Technology"
Schedule 3: Payments Due to Third Parties
Schedule 4: XT In-Licenses
- ----------
* If ABX is Licensee.
** If JTI is Licensee.
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
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RESTATED EXHIBIT D
FORM OF CO-EXCLUSIVE WORLDWIDE PRODUCT LICENSE
THIS PRODUCT LICENSE AGREEMENT (the "Agreement") effective the ____ day of
____________, _____, is made by and between XENOTECH, L.P., a California limited
partnership ("XT"), and each of ABGENIX, INC., a Delaware corporation ("ABX")
and JAPAN TOBACCO INC., a Japanese corporation ("JTI").
RECITALS
A. XT desires to grant JTI an exclusive license in the JTI Territory under the
Licensed Technology to commercialize Products, and JTI wishes to acquire such a
license, on the terms and conditions herein.
B. XT desires to grant ABX an exclusive license in the ABX Territory under the
Licensed Technology to commercialize Products, and ABX wishes to acquire such a
license, on the terms and conditions herein.
C. XT desires to grant to JTI and ABX a co-exclusive license in the Rest of the
World under the Licensed Technology to commercialize Products, and JTI and ABX
wish to acquire such license, on the terms and conditions herein.
NOW, THEREFORE, for and in consideration of the covenants, conditions, and
undertakings hereinafter set forth, it is agreed by and between the parties as
follows:
1. DEFINITIONS.
For purposes of this Agreement, the terms set forth in this Article shall
have the meanings set forth below.
1.1 "ABX" shall mean Abgenix, Inc.
1.2 "ABX Territory" shall mean the United States of America and its
territories and possessions, Canada and Mexico.
1.3 "Affiliate" shall mean any entity which controls, is controlled by
or is under common control with any one of ABX, JTI or XT. An entity shall be
regarded as in control of another entity if it owns or controls at least fifty
percent (50%) of the shares of the subject entity entitled to vote in the
election of directors (or, in the case of an entity that is not a corporation,
for the election of the corresponding managing authority); provided, however, XT
shall not be an Affiliate of ABX or JTI under this Agreement and XT shall not be
considered controlled by ABX or JTI for purposes of determining Affiliates of
ABX or JTI.
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1.4 "Antibody" shall mean a composition comprising a whole antibody or
a fragment thereof, said antibody or fragment having been derived from the
Licensed Technology and/or generated from the Mice or the Future Generation Mice
or having been derived from nucleotide sequences encoding, or amino acid
sequences of, such an antibody or fragment.
1.5 "Antibody Product" shall mean any product comprising an Antibody
or Genetic Material encoding an Antibody wherein, in respect of each Antibody
Product, said Genetic Material does not encode multiple Antibodies.
1.6 "Antibody-Secreting Cell" shall mean a cell that secretes an
Antibody, except where such cell is part of a mammal.
1.7 "[***] Technology" shall mean (i) all U.S. patent applications and
patents listed on Schedule 1 and patents issuing on such patent applications
owned by or licensed to XT which relate to the [***], in each case to the extent
XT has the right to license or sublicense the same; (ii) any continuations,
divisionals, reexaminations, reissues or extensions of any of (i) above; (iii)
any foreign counterparts issued or issuing on any of (i) or (ii) above; and (iv)
[***] as set forth in Schedule 1.
1.8 "CGI" shall mean Cell Genesys, Inc.
1.9 "Effective Date" shall mean the date this Agreement is executed by
XT, CGI and JTI.
1.10 "Future Generation Mice" shall have the meaning defined in the
Master Research License and Option Agreement, as amended.
1.11 "Genetic Material" shall mean a nucleotide sequence, including
DNA, RNA, and complementary and reverse complementary nucleotide sequences
thereto, whether coding or noncoding and whether intact or a fragment.
1.12 "GenPharm Cross License" shall mean that certain Cross License
Agreement, effective as of March 26, 1997, entered into by and among the
parties, GenPharm International, Inc. ("GenPharm") and the other parties named
therein, as the same may be amended from time to time.
1.13 "IND" shall mean an Investigational New Drug Exemption for a
Product, as defined in the U.S. Food, Drug and Cosmetic Act and the regulations
promulgated thereunder, or its non-U.S. equivalent.
1.14 "JTI" shall mean Japan Tobacco Inc.
1.15 "JTI Territory" shall mean Japan, Taiwan and South Korea
(including the territory comprising North Korea if it should be reunited with
South Korea).
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1.16 "License Fee" shall have the meaning set forth in Article 3
hereof.
1.17 "Licensed Field" shall mean [***].
1.18 "Licensed Technology" shall mean the [***] Technology, the [***]
Technology, and XT-Controlled Rights.
1.19 "Master Research License and Option Agreement" shall mean that
certain Master Research License and Option Agreement entered into by CGI, JTI
and XT as of June 28, 1996 (and subsequently assigned by CGI to ABX), as it may
be amended.
1.20 "Mice" shall have the meaning defined in the Master Research
License and Option Agreement, as amended.
1.21 "Net Sales" shall mean the [***] charged by ABX or JTI, as the
case may be, or its Affiliates and Sublicensees for sales of Product to
non-Affiliate customers, [***], with respect to such sales, and [***], as
reflected in [***] of ABX or JTI and its Affiliates or Sublicensees, to the
extent [***]. "Net Sales" for [***] shall mean [***], where [***] shall mean the
[***]. Notwithstanding the foregoing, [***] shall include [***]. Notwithstanding
the foregoing, "Net Sales" for [***] shall be [***].
1.22 "Product" and "Products" shall mean one or more Antibody Products
which incorporate (i) an Antibody which binds to the Product Antigen or (ii)
Genetic Material encoding such an Antibody wherein said Genetic Material does
not encode multiple antibodies.
1.23 "Product Antigen" shall mean ____________________.
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respect to the omitted portions.
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1.24 "Rest of the World" shall mean all parts of the world not
included in ABX Territory or the JTI Territory.
1.25 "Sublicensee" shall mean a third party that is not an Affiliate
(provided, however, that CGI may be a Sublicensee of ABX, whether or not CGI is
an Affiliate of ABX) to whom ABX or JTI, as the case may be, has granted a
sublicense under the Licensed Technology to make, use and/or sell Products to
the extent of the rights of ABX or JTI, as the case may be, therein.
"Sublicensee" shall also include a third party to whom ABX or JTI has granted
the right to distribute Products under the Licensed Technology to the extent of
the rights of ABX or JTI, as the case may be, therein, provided that such third
party is responsible for the marketing and promotion of Products within the
applicable country.
1.26 "Territory" shall mean those countries of the world in which ABX
or JTI, as the case may be, has exclusive or co-exclusive license rights
pursuant to this Agreement.
1.27 "Transgenic Product" shall mean any product constituting (i) Mice
or Future Generation Mice, (ii) Genetic Material from Mice or Future Generation
Mice, or (iii) an Antibody-Secreting Cell.
1.28 "Universal Receptor Product" shall mean a substance that is
developed utilizing [***] Universal Receptor Technology.
1.29 "Universal Receptor Technology" shall mean technology for
universal receptors or [***]. As used herein: (i) "universal receptor" shall
mean a receptor [***].
1.30 "Valid Claim" shall mean a claim of a pending or issued, and
unexpired patent included within the Licensed Technology, which has not been
held unenforceable, unpatentable or invalid by a court or other governmental
agency of competent jurisdiction, and which has not been admitted to be invalid
or unenforceable through reissue, disclaimer or otherwise.
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respect to the omitted portions.
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1.31 "[***] Technology" shall mean (i) all U.S. patent applications
and patents listed on Schedule 2 and patents issuing on such applications; (ii)
any continuations, divisionals, reexaminations, reissues or extensions of any of
(i) above; (iii) any foreign counterparts issued or issuing on any of (i) or
(ii) above; and (iv) the Mice (as such term is defined in the Master Research
License and Option Agreement) and [***] as set forth on Schedule 2.
1.32 "XT-Controlled Rights" shall mean all rights to patents or
technology that are licensed to XT pursuant to the agreements listed on Schedule
4 or any other license or similar agreement granting XT rights to patents or
technology (each such agreement an "XT In-License"), to the extent that XT has
the right under the terms of the applicable XT In-License to further license or
sublicense such rights during the Term of this Agreement.
1.33 "XT In-License" shall have the meaning set forth in Section 1.32,
above.
2. LICENSE GRANT; USE OF MICE BY THIRD PARTIES.
2.1 Grant to ABX. Subject to the terms and conditions of this
Agreement, XT hereby grants to ABX an exclusive license or sublicense, as the
case may be, under the Licensed Technology, to make and have made Products
anywhere in the world and to use, sell, lease, offer to sell or lease, import,
export, otherwise transfer physical possession of or otherwise transfer title to
such Products in the ABX Territory in the Licensed Field. Such license or
sublicense shall be exclusive even as to XT, and shall include the exclusive
right to grant and authorize sublicenses for exploitation within the ABX
Territory; provided, however, that ABX may not, under this license, grant
sublicenses to any rights to the Mice except as provided in Section 2.4 of this
Agreement.
2.2 Grant to JTI. Subject to the terms and conditions of this
Agreement, XT hereby grants to JTI an exclusive license or sublicense, as the
case may be, under the Licensed Technology, to make and have made Products
anywhere in the world and to use, sell, lease, offer to sell or lease, import,
export, otherwise transfer physical possession of or otherwise transfer title to
such Products in the JTI Territory in the Licensed Field. Such license or
sublicense shall be exclusive even as to XT, and shall include the exclusive
right to grant and authorize sublicenses for exploitation within the JTI
Territory; provided, however, that JTI may not, under this license, grant
sublicenses to any rights to the Mice except as provided in Section 2.4 of this
Agreement.
2.3 Rest of the World. Subject to the terms and conditions of this
Agreement, XT hereby grants to each ABX and JTI a co-exclusive license or
sublicense, as the case may be, under the Licensed Technology, to make and have
made Products anywhere in the world and to use, sell, lease, offer to sell or
lease, import, export, otherwise transfer physical possession of or otherwise
transfer title to such Products in the Rest of the World in the Licensed Field.
Such co-exclusive license or sublicense shall be co-exclusive even as to XT, and
shall include the co-exclusive right to grant and authorize sublicenses for
exploitation within the Rest of the World; provided, however, that ABX and JTI
may not, under this license, grant sublicenses to any rights to the Mice except
as provided in Section 2.4 of this Agreement.
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2.4 In connection with the grant of a sublicense under this Agreement
to a third party, and notwithstanding any provision to the contrary in the
Master Research License and Option Agreement or any Material Transfer Agreement
entered into between the parties under Sections 2.1, 2.2 or 2.3 of the Master
Research License and Option Agreement, ABX or JTI, as the case may be, shall
have the right to grant a sublicense to use Mice and Future Generation Mice
transferred to the third party pursuant to the terms of Section 2.7 of the
Master Research License and Option Agreement, and Transgenic Products other then
Mice or Future Generation Mice, to research, develop, make, have made, use,
import, export, sell, lease, offer to sell or lease or otherwise distribute or
commercialize Products, with the proviso that the sublicense described in this
Section 2.4 shall not exceed the Licensee's (ABX or JTI, as the case may be,)
rights conferred in accordance with the Master Research License and Option
Agreement or this Product License.
2.5 It is understood and agreed that, as to all XT-Controlled Rights,
the grant of rights under this Article 2 shall be subject in all respects to the
applicable XT In-License(s) pursuant to which such XT-Controlled Rights were
granted to XT.
3. LICENSE FEE.
ABX and JTI each shall pay to XT within thirty days of the Effective Date a
license fee of [***].
4. ROYALTIES.
4.1 Royalty Rates. In consideration for the license and rights granted
herein, ABX and JTI each agree to pay to XT royalties of [***] of Net Sales of
Products by it and its Affiliates and Sublicensees.
4.2 Royalty Offsets. In the event that (i) a Licensee (ABX or JTI, as
the case may be), its Affiliate or Sublicensee is required to pay [***], or (ii)
any reimbursement payments are due to XT pursuant to Section 5.1 below, then ABX
or JTI, as the case may be, may deduct the aggregate of any such amounts from
any royalty amount owing to XT for the sale of such Products pursuant to Section
4.1 above; provided, however, that payments from ABX or JTI, as the case may be,
to a third party that is an Affiliate, or was an Affiliate at any time within
two (2) years prior to the Effective Date, may not be offset under this Section
4.2. Notwithstanding the foregoing provisions of this Section 4.2, in no event
shall the royalties due to XT pursuant to Section 4.1 above be so reduced to
less than [***] of the amount that would otherwise be due to XT thereunder.
[***].
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4.3 Single Royalty; Non-Royalty Sales. Only one royalty shall be
payable with respect to any Product, regardless of how many claims or patents
within the Licensed Technology cover such Product. In addition, no royalty shall
be payable under this Article 4 with respect to sales of Products among ABX or
JTI, as the case may be, and its Affiliates and/or Sublicensees and their
Affiliates or for use in research and/or development or clinical trials.
4.4 No Patent Protection. Royalties shall be payable at the rates
specified in Section 4.1 or 4.2 above only with respect to sales of Products
that would infringe a Valid Claim in the country in which such Products are
sold. In the event that such Products are not covered by a Valid Claim in such
country, XT shall be paid a royalty on such sales in accordance with this
Article 4, [***].
4.5 Combination Products. In the event that a Product is sold in
combination as a single product with another product or component, Net Sales
from such combination sales for purposes of calculating the amounts due under
this Article 4 shall be [***]. In the event that no such separate sales are made
in the same quarter by ABX or JTI, as the case may be, Net Sales for royalty
determination shall be [***].
4.6 Termination of Royalties. Royalties under Section 4.1, 4.2, or 4.4
will be due until the later of (i) ten years from the first commercial sale of
Products in any country or (ii) on a country-by-country basis, the expiration of
the last-to-expire patent within the Licensed Technology covering the Products
in such country.
5. THIRD PARTY ROYALTIES.
5.1 Royalties Payable by XT. XT will be responsible for the payment of
any royalties, license fees and milestone and/or other payments due to third
parties under licenses or similar agreements entered into by XT necessary to
allow the manufacture, use or sale of Products. ABX and/or JTI, as the case may
be, shall reimburse XT for any royalties paid by XT to third parties under
licenses or similar agreements covering Products necessary to allow the
manufacture, use or sale or other exploitation of Products in accordance with
this Agreement. ABX and/or JTI shall continue any such reimbursement payments to
XT until XT's obligation to pay royalties to a third party under any license
covering Products expires or terminates. XT agrees not to enter into any license
or similar agreement after the Effective Date which would obligate ABX and/or
JTI, as the case may be, to make any payments under this Section 5.1 without the
prior written consent of ABX and/or JTI, as the case may be..
5.2 Royalties Payable by ABX or JTI. Xenotech shall have no
responsibility under the terms of this Agreement for the payment of any
royalties, license fees or milestone or other
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payments due to third parties under licenses or similar agreements entered into
by ABX or JTI, as the case may be, its Affiliates, or its Sublicensees to allow
the manufacture, use or sale of Products.
6. ACCOUNTING AND RECORDS.
6.1 Royalty Reports and Payments. After the first commercial sale of
Products on which royalties are required, ABX or JTI each agrees to make
quarterly written reports to XT within eighty days after the end of each
calendar quarter, stating in each such report the number, description, and
aggregate Net Sales of Products sold during the calendar quarter upon which a
royalty is payable under Article 4 above. Concurrently with the making of such
reports, ABX or JTI, as the case may be, shall pay to XT royalties at the
applicable rate specified in Section 4.1, 4.2 or 4.4 above and all royalties
payable pursuant to Section 5.1 above, and any adjustment to Net Sales for a
prior period in accordance with the definition of Net Sales in Section 1.21
hereof. All payments to XT hereunder shall be made in U.S. Dollars to a bank
account designated by XT.
6.2 Early Third Party License Payments. If XT is obligated to pay
royalties to a third party prior to ninety days after the end of the calendar
quarter, XT shall so notify ABX or JTI as the case may be, and such licensee
shall provide the reports and payments set forth in Section 6.1 above not later
than ten (10) days before the date such payments are due to the third party. Up
to thirty-five days before such payments are due, XT may provide ABX or JTI with
an invoice by facsimile setting forth the royalties XT must pay third parties
with respect to such licensee's activities in its Territory in the preceding
quarter, and such licensee shall pay such invoices within thirty days of receipt
of such invoice.
6.3 Records; Inspection. ABX and JTI shall each keep (and cause its
Affiliates and Sublicensees to keep) complete, true and accurate books of
account and records for the purpose of determining the royalty amounts payable
to XT under this Agreement. Such books and records shall be kept at the
principal place of business of ABX and JTI or its Affiliates or Sublicensees, as
the case may be, for at least three years following the end of the calendar
quarter to which they pertain. Such records of each licensee or its Affiliates
will be open for inspection during such three-year period by a representative of
XT for the purpose of verifying the royalty statements. ABX and JTI shall each
require each of its Sublicensees to maintain similar books and records and to
open such records for inspection during the same three-year period by a
representative of such licensee reasonably satisfactory to XT on behalf of, and
as required by, XT for the purpose of verifying the royalty statements. All such
inspections may be made no more than once each calendar year, at reasonable
times mutually agreed by XT and the particular licensee. The XT representative
will be obliged to execute a reasonable confidentiality agreement prior to
commencing any such inspection. Inspections conducted under this Section 6.3
shall be at the expense of XT, unless a variation or error of ABX or JTI, as the
case may be, producing an increase exceeding [***] of the amount stated for the
period covered by the inspection is established in the course of any such
inspection, whereupon all costs relating thereto will be paid by such licensee.
Upon the expiration of three years following the end of any fiscal year, the
calculation of royalties payable with respect to such year shall be binding and
conclusive, and ABX and JTI, as the case may be, shall be released from any
liability or accountability with respect to royalties for such year.
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6.4 Currency Conversion. If any currency conversion shall be required
in connection with the calculation of royalties hereunder, such conversion shall
be made using the selling exchange rate for conversion of the foreign currency
into U.S. Dollars, quoted for current transactions reported in The Wall Street
Journal for the last business day of the calendar quarter to which such payment
pertains.
6.5 Late Payments. Any payments due from Licensee that are not paid on
the date such payments are due under this Agreement shall bear interest to the
extent permitted by applicable law at [***], calculated on the number of days
such payment is delinquent. This Section 6.5 shall in no way limit any other
remedies available to any party.
6.6 Withholding Taxes.
6.6.1 Unless immediately reimbursable under Section 6.6.2 below,
all payments required to be made pursuant to Articles 3, 4 and 5 hereof shall be
without deduction or withholding for or on account of any taxes (other than
taxes imposed on or measured by net income) or similar governmental charge
imposed by a jurisdiction. Such taxes are referred to herein as "Withholding
Taxes" and such Withholding Taxes shall be the sole responsibility of the
withholding party. The withholding party shall provide a certificate evidencing
payment of any Withholding Taxes hereunder.
6.6.2 XT agrees to elect to claim a tax credit for Withholding
Taxes with respect to which it is entitled so to elect, and further agrees not
to amend such election for the full carry-forward period with respect to such
credit. At the time that XT realizes a reduction in U.S. tax liability by
actually utilizing the Withholding Taxes as a credit against regular U.S. tax
liability (determined on a "first-in-first-out" basis pro rata with other
available foreign tax credits), then the amount of such reduction attributable
to such credit shall immediately be reimbursed to the withholding party. For
these purposes, a reduction in U.S. tax liability shall include both a direct
reduction in XT's own tax liability and a reduction in the U.S. tax liability of
any of its partners.
6.7 Tax Indemnity. Except as provided in Section 6.6, each party (the
"Tax Indemnitor") shall indemnify and hold harmless the other party hereto (each
a "Tax Indemnitee") from and against any tax or similar governmental charge
assessed solely because of this Agreement with respect to and directly
attributable to the income or the assets of the Tax Indemnitor. In the event
that any governmental agency shall make a claim against a party hereto which
could give rise to an indemnity hereunder, such potential Tax Indemnitee shall
give reasonably prompt notice to the potential Tax Indemnitor of the assertion
of such claim. If the transmission of such notice is unreasonably deferred and
has a material, adverse affect on the ability of the potential Tax Indemnitor to
challenge such claim, such potential Tax Indemnitor shall be released from
liability hereunder. The Tax Indemnitor alone shall (at its own expense) control
the defense or compromise of any such claim. The Tax Indemnitee shall execute
any documents required to enable Tax Indemnitor to defend such claim, provide
any information necessary therefor, and cooperate with Tax Indemnitor in such
defense.
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respect to the omitted portions.
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6.8 XT Tax Indemnity. XT shall indemnify and hold harmless ABX and JTI
and their Affiliates from and against any increase to their respective country
of incorporation income tax liability directly attributable to a positive
adjustment to the amount of gross receipts (an "Adjustment") reported or
reportable by such party from the income, including the royalty income, received
from ABX or JTI on Covered Products. The amount payable hereunder shall be equal
to the difference between (a) the product of (i) the amount of the Adjustment,
and (ii) the highest combined marginal corporate tax rate in their respective
country of incorporation in effect for the taxable year for which such
Adjustment is made, and (b) the reduction in the party's foreign tax liability,
which for purposes of this Agreement shall be equal to the product of (i) the
amount of any correlative adjustment to its foreign taxable income, and (ii) the
highest combined marginal foreign corporate tax rate in effect for the taxable
year for which the correlative adjustment is made. No indemnification payment
shall be required hereunder until comprehensive efforts to obtain a correlative
adjustment to ABX's or JTI's, as the case may be, or its Affiliates' taxable
income in a foreign state (which may include, for example invoking competent
authority provisions under the U.S. Japanese Income Tax Treaty (if applicable)
or other applicable bilateral tax treaty) have, to the extent reasonable to do
so, been exhausted.
7. RESEARCH AND DEVELOPMENT.
7.1 Funding and Conduct. ABX and JTI shall each independently furnish
and be responsible for funding and conducting all of its preclinical and
clinical research and development of Products, at its own expense.
8. SHARING OF CLINICAL DATA
As long as their development projects remain on similar timelines, or
as otherwise mutually agreed, ABX and JTI will consider bilateral sharing of
their and their Sublicensees' relevant Product development information and
clinical data. However, there shall not be, unless otherwise agreed upon by the
parties, any obligation for sharing data developed independently, by or on
behalf of either of them.
9. DUE DILIGENCE.
9.1 [***].
9.1.1 ABX and JTI, as the case may be, agree to [***] as may be
agreed upon by the parties [***] the Effective Date.
9.1.2 Notwithstanding the foregoing, each of ABX and JTI shall be
[***]
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respect to the omitted portions.
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[***]. After [***], shall each be [***] in the United States or Japan.
9.2 Failure to Meet Due Diligence Obligation.
9.2.1 If the diligence requirements set forth in Section 9.1 are
not met by ABX (or its Affiliates or Sublicensees) in the United States or by
JTI (or its Affiliates or Sublicensees) in Japan, such licensee's rights
hereunder shall terminate upon written notice by XT to such licensee and subject
to Sections 9.3, 9.4 and 14.3 below.
9.2.2 Notwithstanding Section 9.2.1, the license granted
hereunder to ABX or JTI, as the case may be, shall not terminate by reason of a
delay [***], to the extent that prudent business judgment, based on
circumstances outside of such licensee's reasonable control, reasonably
justifies such delay.
9.3 Dispute Resolution. In the event that a dispute arises whether the
diligence requirements in Article 9 have been met or circumstances exist which
ABX or JTI, respectively, believes justifies a failure on its part to meet such
obligation, the parties will attempt to resolve any dispute by mutual agreement
and, if required, the Chief Executive Officer of ABX and the Vice President of
the Pharmaceutical Division of JTI shall meet personally and negotiate in good
faith to resolve such dispute during a period of thirty days following
licensee's receipt of the notice under Section 9.2.1.
9.4 Arbitration. In the event that the parties are unable to resolve
such dispute pursuant to Section 9.3 above, such dispute shall be settled
between XT and the other party by binding arbitration as set forth in Section
15.12. If the arbitrator determines that the party acted in good faith, but
failed to meet its obligations under Section 9.1 above, the license granted to
such party shall not terminate unless the nonperforming party fails to cure such
non-performance within a reasonable period of time, as determined by the
arbitrator.
10. PATENTS.
10.1 [***] Technology.
(a) XT or its licensor, as they may agree, shall have
responsibility for preparing, filing, prosecuting and maintaining patents and
patent applications worldwide relating to the [***] Technology and conducting
any interferences, oppositions, reexaminations, or requesting reissues or patent
term extensions with respect to the [***] Technology. XT shall keep ABX and JTI
each reasonably informed as to the status of such patent matters in its
Territory, including without limitation, by providing such licensee the
opportunity to review and comment on any substantive documents which will be
filed in any patent office, and providing such licensee copies of any
substantive documents received by XT from such patent offices including
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respect to the omitted portions.
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notice of all interferences, reexaminations, oppositions or requests for patent
term extensions. ABX and JTI shall cooperate with and assist XT in connection
with such activities, at XT's request and expense.
(b) In the event that either ABX or JTI, as the case may be,
becomes aware that any [***] Technology necessary for the practice of the
licenses granted herein is infringed or misappropriated by a third party or is
subject to a declaratory judgment action arising from such infringement, such
party shall promptly notify XT (and the other licensee) and XT shall thereafter
promptly notify the owner of such intellectual property. XT or its licensor, as
they may agree, shall have the exclusive right to enforce, or defend any
declaratory judgment action, at its expense, involving any [***] Technology. In
such event, XT shall keep ABX and/or JTI, as the case may be, reasonably
informed of the progress of any such claim, suit or proceeding in its Territory.
Any recovery received by XT as a result of any such claim, suit or proceeding
shall be used first to reimburse XT for all expenses (including attorneys, and
professional fees) incurred in connection with such claim, suit or proceeding,
[***].
10.2 [***] Technology.
10.2.1 XT shall have the initial worldwide responsibility for
preparing, filing, prosecuting and maintaining patent applications and
conducting any interferences, oppositions, reexaminations, or requesting
reissues or patent term extensions with respect to [***] Technology. XT shall
give ABX and JTI each the opportunity to review the status of all such pending
patent applications and actions in its Territory and shall keep ABX and/or JTI,
as the case may be, fully informed of the progress of such applications and
actions, including, without limitation, by promptly providing ABX and/or JTI
with copies of all substantive correspondence sent to and received from patent
offices, and providing notice of all interferences, reexaminations, oppositions
or requests for patent term extensions. [***]. If only either ABX or JTI should
be a licensee under this Agreement, such expenses shall be equally divided
between XT and such Licensee on a worldwide basis. In the event that XT declines
or fails to prepare, file, prosecute or maintain such patent applications or
patents or take such other actions, relating to the Products it shall promptly
and in no event later than ninety days prior to any filing deadline, provide
notice to ABX and JTI. ABX and JTI shall promptly discuss and agree on who
should assume such responsibilities and how the expenses related thereto should
be allocated.
10.2.2 In the event that a licensee becomes aware that any [***]
Technology necessary for the practice of the license granted herein is infringed
or misappropriated by a third party in any country in which ABX or JTI has
rights hereunder, or is subject to a declaratory judgment action arising from
such infringement in such country, ABX or JTI, as the case may be, shall
promptly notify XT and XT shall thereafter promptly notify the owner of such
intellectual property.
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10.2.3 ABX or JTI, as the case may be, shall have the exclusive
right to enforce, or defend any declaratory judgment action, in any country in
which it has exclusive rights hereunder, at its expense, involving [***]
Technology. In such event, the party involved in such claim , suit or
proceeding, shall keep XT and the other of ABX or JTI reasonably informed of the
progress of any such claim, suit or proceeding. Any recovery by such party
received as a result of any such claim, suit or proceeding shall be used first
to reimburse such party for all expenses (including attorneys, and professional
fees) incurred in connection with such claim, suit or proceeding, and [***].
10.2.4 ABX and JTI shall consult and agree whether, and if so,
how, to enforce the [***] Technology in a country in which ABX and JTI have
co-exclusive rights hereunder. However, [***] (except as otherwise provided
below). The party taking such action shall keep XT and the other of ABX or JTI
reasonably informed of the progress of any such claim, suit or proceeding. Any
recovery by such party received as a result of any such claim, suit or
proceeding shall be used first to reimburse such party for all expenses
(including attorneys' and professional fees) incurred in connection with such
claim, suit or proceeding, [***].
10.3 Infringement Claims. If the production, sale or use of Products
pursuant to this Agreement results in any claim, suit or proceeding alleging
patent infringement against ABX or JTI (or their respective Affiliates or
Sublicensees), ABX or JTI, as the case may be, shall promptly notify XT thereof
in writing setting forth the facts of such claim in reasonable detail. [***],
ABX or JTI, as the case may be, shall have the exclusive right to defend and
control the defense of any such claim, suit or proceeding, at its own expense,
using counsel of its choice. Such parties shall keep XT reasonably informed of
all material developments in connection with any such claim, suit or proceeding
as it relates to the Licensed Technology. The other of ABX or JTI may
participate in the defense of any such claim, suit or proceeding at its own
expense through counsel of its choice. ABX or JTI, as the case may be, [***]
pursuant to this Agreement. Notwithstanding the above, neither ABX nor JTI shall
be able to settle any such claim, suit or proceeding that impinges upon the
rights of ABX or JTI, as the case may be, including, without limitation,
involving any admission of the invalidity of the Licensed Technology or rights
to Product Antigen outside its Territory without the prior approval of XT.
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with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
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10.4 Patent Marking. ABX and JTI agree to mark and have its Affiliates
and Sublicensees mark all Products sold pursuant to this Agreement in accordance
with the applicable statutes or regulations in the country or countries of
manufacture and sale thereof.
11. CONFIDENTIALITY.
11.1 Confidential Information. Except as expressly provided herein,
the parties agree that, for the term of this Agreement and for five years
thereafter, the receiving party shall keep completely confidential and shall not
publish or otherwise disclose and shall not use for any purpose any information
furnished to it by another party hereto pursuant to this Agreement except to the
extent that it can be established by the receiving party by competent proof that
such information:
(a) was already known to the receiving party, other than under an
obligation of confidentiality, at the time of disclosure;
(b) was generally available to the public or otherwise part of
the public domain at the time of its disclosure to the receiving party;
(c) became generally available to the public or otherwise part of
the public domain after its disclosure and other than through any act or
omission of the receiving party in breach of this Agreement; or
(d) was subsequently lawfully disclosed to the receiving party by
a person other than a party or developed by the receiving party without
reference to any information or materials disclosed by the disclosing party.
11.2 Permitted Disclosures. Notwithstanding Sections 11.1 above and
15.16 below, each party hereto may disclose another party's information to the
extent such disclosure is reasonably necessary in filing or prosecuting patent
applications, prosecuting or defending litigation, complying with applicable
governmental regulations or otherwise submitting information to tax or other
governmental authorities, making a permitted sublicense or other exercise of its
rights hereunder or conducting clinical trials, provided that if a party is
required to make any such disclosure of the other party's secret or confidential
information, other than pursuant to a confidentiality agreement, it will give
reasonable advance notice to the latter party of such disclosure requirement
and, save to the extent inappropriate in the case of patent applications, will
use efforts consistent with prudent business judgment to secure confidential
treatment of such information prior to its disclosure (whether through
protective orders or otherwise). Notwithstanding the foregoing, XT shall not
disclose to third parties, clinical data or regulatory filings received from ABX
or JTI except as agreed in writing by such party.
12. SUBLICENSES.
Pursuant to Article 2 herein, ABX and JTI shall each have the
exclusive right in the ABX Territory and JTI Territory, respectively, and the
co-exclusive right in the Rest of the World to
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grant and authorize sublicenses to third parties; provided, however, such party
shall remain responsible for any payments due XT for Net Sales of Products by
any Sublicensee. [***]. Any sublicense granted by ABX or JTI pursuant to this
Agreement shall provide that the Sublicensee will be subject to the applicable
terms of this Agreement. ABX or JTI, as the case may be, shall provide XT with a
copy of relevant portions of each sublicense agreement, as reasonably required
by XT.
13. REPRESENTATIONS AND WARRANTIES.
13.1 XT. XT represents and warrants that:
(i) it has the full right and authority to enter into this
Agreement and grant the rights and licenses granted herein;
(ii) it has not previously granted and will not grant any rights
inconsistent or in conflict with the rights and licenses granted to ABX and JTI
herein;
(iii) there are no existing or threatened actions, suits or
claims pending against XT with respect to the Licensed Technology or the right
of XT to enter into and perform its obligations under this Agreement;
(iv) it has not previously granted, and will not grant during the
term of this Agreement, any right, license or interest in and to the Licensed
Technology, or any portion thereof, with respect to the Products, or their
manufacture or use;
(v) Schedule 3 hereto sets forth all royalties, license fees,
milestone payments and similar payments due to third parties for which ABX
and/or JTI is obligated to reimburse XT under Section 5.1 above as of the
Effective Date; and
(vi) the Licensed Technology is all the technology owned by or
licensed to XT as of the Effective Date.
13.2 ABX and JTI. Each of ABX and JTI represents and warrants that:
(i) it has the full right and authority to enter into this
Agreement,
(ii) to its knowledge, there are no existing or threatened
actions, suits or claims pending with respect to the subject matter hereof or
the right of it to enter into and perform its obligations under this Agreement;
and
(iii) it has not entered and during the term of this Agreement
will not enter any other agreement inconsistent or in conflict with this
Agreement.
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
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13.3 Disclaimer. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS
AGREEMENT, XT MAKES NO REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND,
EITHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND VALIDITY OF LICENSED
TECHNOLOGY CLAIMS, ISSUED OR PENDING.
13.4 Effect of Representations and Warranties. It is understood that
if the representations and warranties under this Article 13 are not true and
accurate and a party incurs liabilities, costs or other expenses as a result of
such falsity, the party at fault shall indemnify, defend and hold the injured
party harmless from and against any such liabilities, costs or expenses
incurred, provided that the party at fault receives prompt notice of any claim
against the injured party resulting from or related to such falsity and the sole
right to control the defense or settlement thereof.
14. TERM AND TERMINATION.
14.1 Effectiveness. This Agreement shall become effective as of the
Effective Date and the license rights granted by XT under Article 2 above shall
be in full force and effect as of such date.
14.2 Term. Unless earlier terminated pursuant to the other provisions
of this Article 14, this Agreement shall continue in full force and effect until
the later of
(i) the expiration of the last to expire patent within the
Licensed Technology claiming Products; or
(ii) the twentieth anniversary of the Effective Date.
The licenses granted under Article 2 shall survive the expiration (but not an
earlier termination) of this Agreement; provided that such licenses shall in
such event become nonexclusive.
14.3 Termination for Breach. Any party to this Agreement may terminate
this Agreement as to another party hereto in the event such other party shall
have materially breached or defaulted in the performance of any of its material
obligations hereunder, and such shall have continued for sixty days after
written notice thereof was provided to the breaching party by the nonbreaching
party that terminates the Agreement as to such party. Any termination shall
become effective at the end of such sixty day period unless the breaching party
has cured any such breach or default prior to the expiration of the sixty day
period. However, if the party alleged to be in breach of this Agreement disputes
such breach within such sixty day period, the non-breaching party shall not
have the right to terminate this Agreement unless it has been determined by an
arbitration proceeding in accordance with Section 15.12 below that this
Agreement was materially breached, and the breaching party fails to cure such
breach within thirty days following the final decision of the arbitrators or
such other time as directed by the arbitrators.
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14.4 Other Termination Rights. ABX or JTI may terminate this Agreement
and the license granted to such party herein, in its entirety or as to any
particular patent within the Licensed Technology in a particular country, at any
time, by providing XT ninety-days written notice. In the event of termination as
to a particular country, the subject patent in such country shall cease to be
within the Licensed Technology for all purposes of this Agreement that apply to
the terminating party.
14.5 Effect of Termination.
14.5.1 In the event that this Agreement (i) is terminated under
Section 14.3 above, by reason of a breach by ABX or JTI, this Agreement shall
terminate with respect to the breaching party only, and shall continue in effect
with respect to XT and the non-breaching party; (ii) is terminated by ABX or JTI
by reason of a breach by XT, this Agreement shall terminate as to XT and the
terminating party, and shall continue in effect with respect to XT and the other
of ABX and JTI; or (iii) is terminated by ABX or JTI under Section 14.4 above,
this Agreement shall terminate with respect to the party exercising its right to
terminate thereunder, and shall continue in effect in its entirety with respect
to XT and the non-terminating party. In each case, the non-breaching or non-
terminating licensee shall thereupon have the right to obtain an exclusive
license or sublicense, as the case may be, under the Licensed Technology, to
make and have made Product for use, sale or other distribution in the Licensed
Field throughout the world, on the terms and conditions set forth herein that
are applicable to it.
14.5.2 Termination of this Agreement for any reason shall not
release any party hereto from any liability which at the time of such
termination has already accrued to the other party or which is attributable to a
period prior to such termination.
14.5.3 In the event this Agreement is terminated with respect to
ABX or JTI for any reason, such licensee and its Affiliates and Sublicensees
shall have the right to sell or otherwise dispose of the stock of any Products
subject to this Agreement then on hand. Upon termination of this Agreement by XT
for any reason, any sublicense granted by a licensee hereunder shall survive,
provided that upon request by XT, such Sublicensee promptly agrees in writing to
be bound by the applicable terms of this Agreement.
14.5.4 This Agreement, including, without limitation, any
licenses or sublicenses granted pursuant to this Agreement, shall survive any
dissolution, liquidation or acquisition of XT. Such licenses shall remain in
full force and effect even after any distribution, following dissolution, of the
intellectual property owned or licensed to XT, to any entity. Any transfer of
such intellectual property prior to or following dissolution shall be subject to
the licenses granted herein.
14.5.5 This Agreement, including the licenses granted in Article
2, is independent of, and shall not be affected by, any breach or termination of
the Master Research License and Option Agreement or any other agreement between
the parties or their Affiliates. In the event of the termination of the Master
Research License and Option Agreement, the rights and obligations of the parties
hereto under Article 12 thereof shall be deemed to be part of this Agreement.
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14.5.6 Sections 6.3, 6.5, 6.6, 6.7 and 6.8 and Articles 11, 13,
14 and 15 shall survive the expiration and any termination of this Agreement for
any reason.
15. MISCELLANEOUS.
15.1 Governing Laws. This Agreement shall be interpreted and construed
in accordance with the laws of the State of California, without regard to
conflicts of law principles.
15.2 Waiver. It is agreed that no waiver by any party hereto of any
breach or default of any of the covenants or agreements herein set forth shall
be deemed a waiver as to any subsequent and/or similar breach or default.
15.3 Assignment. This Agreement and the licenses granted hereunder may
not be assigned by ABX or JTI to any third party without the written consent of
XT, and XT may not assign this Agreement to a third party without the consent of
both ABX and JTI; except any party may assign this Agreement without such
consent to (a) an Affiliate (provided that such Affiliate is two-thirds or
greater owned directly or indirectly) or (b) an entity that acquires
substantially all of the assets of the monoclonal antibody business segment of
the assigning party. The terms and conditions of this Agreement shall be binding
on and inure to the benefit of the permitted successors and assigns of the
parties.
15.4 Independent Contractors. The relationship of the parties hereto
is that of independent contractors. The parties hereto are not deemed to be
agents, partners or joint venturers of the others for any purpose as a result of
this Agreement or the transactions contemplated thereby.
15.5 Compliance with Laws. In exercising their rights under this
license, the parties shall fully comply with the requirements of any and all
applicable laws, regulations, rules and orders of any governmental body having
jurisdiction over the exercise of rights under this license.
15.6 No Implied Obligations. Except as expressly provided in Article 9
above, nothing in this Agreement shall be deemed to require ABX or JTI to
exploit the Licensed Technology nor to prevent ABX or JTI from commercializing
products similar to or competitive with any Products, in addition to or in lieu
of such Products.
15.7 Notices. Any notice required or permitted to be given to the
parties hereto shall be given in writing and shall be deemed to have been
properly given if delivered in person or when received if mailed by first class
certified mail to the other party at the appropriate address as set forth below
or to such other addresses as may be designated in writing by the parties from
time to time during the term of this Agreement.
XT: Xenotech, L.P.
322 Lakeside Drive
Foster City, California 94404
Attn: Chief Financial Officer
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Japan Tobacco Inc.: Japan Tobacco Inc.
JT Building
2-1 Toranomon 2-chome
Minato-ku, Tokyo 105
Japan
Attn: Vice President
Pharmaceutical Division
with a copy to: JT America Inc.
1825 South Grant Street, Suite 220
San Mateo, CA 94402
Attn: President
and to: Gilbert, Segall and Young LLP
430 Park Avenue
New York, NY 10022
Attn: Neal N. Beaton, Esq.
Abgenix, Inc.: Abgenix, Inc.
7601 Dumbarton Circle
Fremont, California 94555
Attn: President
with a copy to: Wilson Sonsini Goodrich & Rosati, P.C.
650 Page Mill Road
Palo Alto, California 94304
Attn: Kenneth A. Clark, Esq.
15.8 Export Laws. Notwithstanding anything to the contrary contained
herein, all obligations of XT, ABX and JTI are subject to prior compliance with
United States and Japanese export regulations and such other United States and
Japanese laws and regulations as may be applicable, and to obtaining all
necessary approvals required by the applicable agencies of the government of the
United States and Japan. ABX and JTI each shall use efforts consistent with
prudent business judgment to obtain such approvals. XT shall cooperate with ABX
and JTI and shall provide assistance to them as reasonably necessary to obtain
any required approvals.
15.9 Severability. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision and the parties shall discuss in good faith appropriate
revised arrangements.
15.10 Force Majeure. Nonperformance of any party (except for payment
obligations) shall be excused to the extent that performance is rendered
impossible by strike, fire, earthquake, flood, governmental acts or orders or
restrictions, failure of suppliers, or any other
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reason where failure to perform, is beyond the reasonable control and not caused
by the negligence, intentional conduct or misconduct of the nonperforming party.
15.11 No Consequential Damages. IN NO EVENT SHALL ANY PARTY HERETO BE
LIABLE FOR SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF THIS
AGREEMENT OR THE EXERCISE OF RIGHTS HEREUNDER.
15.12 Dispute Resolution; Arbitration. The parties will attempt to
resolve any dispute under this Agreement by mutual agreement, and, if required,
there shall be a face-to-face meeting between senior executives of the parties.
Any dispute under this Agreement which is not settled after such meeting, shall
be finally settled by binding arbitration, conducted in accordance with the
Rules of Arbitration of the International Chamber of Commerce by three
arbitrators appointed in accordance with said rules. The arbitration proceedings
and all pleadings and written evidence shall be in the English language. Any
written evidence originally in a language other than English shall be submitted
in English translation accompanied by the original or a true copy thereof. The
costs of the arbitration, including administrative and arbitrators' fees, shall
be shared equally by the parties. Each party shall bear its own costs and
attorneys' and witness' fees. The prevailing party in any arbitration, as
determined by the arbitration panel, shall be entitled to an award against the
other party in the amount of the prevailing party's costs and reasonable
attorneys, fees. The arbitration shall be held in San Francisco, California
unless initiated by XT or ABX against JTI, in which event it will be held in
Tokyo, Japan. A disputed performance or suspended performances pending the
resolution of the arbitration must be completed within thirty days following the
final decision of the arbitrators. Any arbitration shall be completed within six
months from the filing of notice of a request for such arbitration.
15.13 Complete Agreement. It is understood and agreed by the parties
that this Agreement constitutes the entire agreement, both written and oral,
among the parties with respect to the subject matter hereof, and that all prior
agreements respecting the subject matter hereof, either written or oral,
expressed or implied, shall be abrogated, canceled, and are null and void and of
no effect. No amendment or change hereof or addition hereto shall be effective
or binding on either of the parties hereto unless reduced to writing and
executed by the respective duly authorized representatives of XT, ABX and JTI.
15.14 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original and both together shall be
deemed to be one and the same agreement.
15.15 Headings. The captions to the several Articles and Sections
hereof are not a part of this Agreement, but are included merely for convenience
of reference only and shall not affect its meaning or interpretation.
15.16 Nondisclosure. Except as provided in Article 11, each of the
parties hereto agrees not to disclose to any third party the terms of this
Agreement without the prior written consent of each other party hereto, except
to advisors, investors, licensees, sublicensees and others on a need
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to know basis under circumstances that reasonably ensure the confidentiality
thereof, or to the extent required by law; provided, however, that the royalty
rate specified in Section 4.1 of this executed Product License shall be redacted
before the terms of this executed Product License are disclosed to potential
licensees and sublicensees. Without limitation upon any provision of this
Agreement, each of the parties hereto shall be responsible for the observance by
its employees, consultants and contractors of the foregoing confidentiality
obligations.
15.17 Conformity with GenPharm Cross-License. The rights and licenses
granted to Licensee hereunder shall be subject to the GenPharm Cross License,
and to the extent that this Agreement purports to grant greater rights to
Licensee than is permitted under the GenPharm Cross License, such rights shall
be granted only to the extent permitted under the GenPharm Cross License, and
the terms of the GenPharm Cross License shall control.
IN WITNESS WHEREOF, the parties have executed this Agreement in triplicate
originals, through their respective officers hereunto duly authorized, as of the
day and year first above written.
JAPAN TOBACCO INC. ABGENIX, INC.
By: By:
---------------------------------- -------------------------------------
Name: Name:
-------------------------------- -----------------------------------
Title: Title:
------------------------------- ----------------------------------
XENOTECH, INC. (as General Partner of
XENOTECH, L.P.)
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
Schedule 1: Patents [***] Technology"
Schedule 2: Patents [***] Technology"
Schedule 3: Payments Due to Third Parties
Schedule 4: XT In-Licenses
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
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EXHIBIT H
XENOTECH CONTROLLED RIGHTS
[***]
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
<PAGE> 1
EXHIBIT 10.14
CONFIDENTIAL TREATMENT REQUESTED BY ABGENIX, INC.
STOCK PURCHASE
and
TRANSFER-AGREEMENT
THIS AGREEMENT is made and entered into this 15th day of July, 1996, by and
between CELL GENESYS, INC. ("CG") and ABGENIX, INC. ("ABGENIX") .
CG is engaged, among other activities, in the Antibody Business as defined
in Article 1.
CG's Board of Directors has determined that CG will (a) transfer to ABGENIX
the assets of the Antibody Business and other specified assets and liabilities
related to the Antibody Business as set forth herein, (b) provide $10,000,000 in
cash to ABGENIX to fund its operations, (c) cause ABGENIX to issue to CG shares
of ABGENIX's Series A Senior and Series 1 Subordinated Convertible Preferred
Stock as set forth in Article 2, and (d) lend ABGENIX up to $4,000,000 in
exchange for a convertible promissory note.
The parties hereto have determined that it is necessary and desirable to
set forth in this Agreement and in the Transaction Agreements (as defined in
Section 3(h)) the principal corporate transactions determined by CG and ABGENIX
to be appropriate to effect the transfer of the Antibody Business to ABGENIX and
to set forth other agreements and undertakings by and between CG and ABGENIX.
Simultaneously with the execution of this Stock Purchase and Transfer
Agreement, CG and ABGENIX are entering into the Transaction Agreements.
<PAGE> 2
NOW, THEREFORE, in consideration of the promises and the mutual
representations, warranties, covenants and agreements, and upon the terms and
subject to the conditions hereinafter set forth, the parties do hereby agree as
follows:
1. Definitions.
"Antibody Business" shall mean the discovery, research, development,
manufacturing, marketing and use for any purpose of all products that contain
antibodies (excluding any Universal Receptor Product and any Gene Therapy
Product), from any source, and the discovery, creation, development and use of
transgenic mouse strains that make antibodies containing human variable regions.
"ABGENIX Biological Materials" shall mean, without limitation, all
cell lines, hybridomas, antibodies, YACs, vectors, mice and all other materials
that relate to the Antibody Business as set forth on Exhibit A-1 hereto (which
such Exhibit shall be updated and completed by mutual agreement of the parties
no later than September 15, 1996).
"CG Biological Materials" shall mean, without limitation, the
materials as set forth on Exhibit A-2 hereto (which such Exhibit shall be
updated and completed by mutual agreement of the parties no later than September
15, 1996).
"Closing" shall have the meaning given in Section 5.1.
"Collaboration Agreement" shall mean the Collaboration Agreement among
CG, JT Immunotech USA Inc. and Xenotech, L.P. effective June 12, 1991, as
amended.
"Gene Therapy Product" shall mean a product based on the transfer or
use of DNA, RNA, or hybrids thereof to treat or
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<PAGE> 3
prevent disease by means of ex vivo or in vivo gene delivery, including without
limitation the use of both viral and non-viral gene transfer systems.
"Joint Biological Materials" shall mean, without limitation, the materials
as set forth on Exhibit A-3 hereto (which such Exhibit shall be updated and
completed by mutual agreement of the parties no later than September 15, 1996).
"Know-How" shall mean, without limitation, all methods, prototypes,
techniques, processes, technical and other information, unpatented inventions,
trade secrets, concepts, ideas, data, experimental methods and results,
sequences, assays, descriptions, protocols, business or scientific plans,
correspondence, competitor information, depictions, supplier lists and any other
information that relates to or is useful in the Antibody Business.
"MRLOA" shall mean the Master Research License and Option Agreement
effective June 28, 1996, by and among CG, Japan Tobacco Inc., and Xenotech, L.P.
"Patent Rights" shall mean (i) all U.S. patents and patent applications
listed on Exhibit B hereto and patents issuing on such applications; (ii) any
continuations, continuations-in-part, divisionals, reexaminations, reissues or
extensions of any of (i) above and (iii) any foreign counterparts issued or
issuing on any of (i) or (ii) above.
"Note" shall mean the Convertible Promissory Note in the form of Exhibit I.
"Preferred Stock" shall have the meaning given in Section 2.1.
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"Transaction Agreements" shall mean the Services Agreement, the
Immunization Services Agreement, the Governance Agreement, the Tax Sharing
Agreement, the Gene Therapy Rights Agreement, the Voting Agreement, the Note,
and the Patent Assignment Agreement, each by and between CG and ABGENIX and of
even date herewith, attached hereto respectively, as Exhibits C, D, E, F, G, H,
I and J.
"Universal Receptor Product" shall have the meaning set forth in the MRLOA.
2. Purchase and Sale of Shares of Preferred Stock; Loan.
2.1 Subject to the terms and conditions hereof and in reliance upon
the representations, warranties, covenants and agreements hereinafter set forth,
ABGENIX shall issue and sell to CG, and CG shall subscribe for and purchase from
ABGENIX 1,691,667 shares of Series A Senior Convertible Preferred Stock and
2,058,333 shares of Series 1 Subordinated Convertible Preferred Stock of ABGENIX
(collectively, the "Preferred Stock"), having the designations, powers,
preferences and voting, conversion and other special rights and qualifications,
limitations and restrictions set forth in Exhibit K hereto for the consideration
specified in Section 5 hereof.
2.2 Subject to the terms and conditions hereof, CG agrees to make a
loan to ABGENIX in the principal amount of up to $4,000,000 in exchange for
which ABGENIX will execute the Note.
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3. Representations and Warranties of ABGENIX.
ABGENIX represents and warrants to CG that:
(a) Organization, Good Standing, Power, Etc. ABGENIX (i) is a
corporation duly incorporated; validly existing and in good standing under the
laws of Delaware; (ii) has not yet commenced to do business in any other
jurisdiction; and (iii) has all requisite corporate power and authority to (x)
own or lease and operate its properties and carry on its business as presently
being conducted and (y) execute, deliver and perform this Agreement and
consummate the transactions contemplated hereby.
(b) Articles of Incorporation and By-Laws. ABGENIX's Certificate of
Incorporation and By-Laws, copies of which are attached hereto as Exhibits L and
M, are in full force and effect and ABGENIX is not in violation of any of the
provisions thereof.
(c) Capitalization. The authorized capital stock of ABGENIX consists
as of the date hereof of 20,000,000 shares of Preferred Stock, par value $0.0001
per share, of which on the date hereof no shares are issued and outstanding, and
50,000,000 shares of Common Stock, par value $0.0001 per share, of which on the
date hereof, no shares are issued and outstanding.
(d) Outstanding Rights to Purchase Securities. ABGENIX does not have
outstanding any options, warrants, or other rights to purchase or to convert any
security or obligation into, any shares of its capital stock, nor has ABGENIX
agreed to issue or sell any shares of its capital stock; however, ABGENIX has
committed to adopt a stock plan covering 1,600,000 shares of its Common Stock
for grants of stock options and restricted stock to employees, consultants and
directors.
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<PAGE> 6
(e) Valid Issuance. The Preferred Stock, when issued, paid for and
delivered as contemplated by this Agreement, will be validly issued and fully
paid.
(f) Authorization of Agreement. This Agreement and the Transaction
Agreements have been duly and validly authorized, executed and delivered by
ABGENIX (and assuming due authorization, execution and delivery by CG)
constitute valid and binding obligations of ABGENIX.
(g) Effect of Agreement, Etc. The execution, delivery and performance
of this Agreement and consummation of the transactions contemplated hereby in
the manner contemplated herein will not, to the reasonable best knowledge of
ABGENIX, violate any material provisions of law, statute, rule or regulation to
which ABGENIX is subject.
(h) Government Consents. To the reasonable best knowledge of ABGENIX,
no consent; authorization, license, permit, registration or approval of, or
exemption or other action by, any governmental or public body or authority
except the Commissioner of Corporations of the State of California is required
in connection with (i) the execution, delivery, and performance by ABGENIX of
this Agreement; (ii) the issuance, sale and delivery of the Preferred Stock; and
(iii) the execution, delivery and performance in substantially the forms
attached hereto of the Transaction Agreements.
4. Representations and Warranties of CG.
CG represents and warrants to ABGENIX that:
(a) Organization, Good Standing, Power, Etc. CG (i) is a corporation
duly incorporated, validly existing and in
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good standing under the laws of the State of Delaware; (ii) is duly qualified to
do business and is in good standing in each United States jurisdiction in which
failure to do so would have a material adverse effect on its business; and (iii)
has all requisite power and authority to (x) own or lease and operate its
properties and carry on its business as presently being conducted and (y)
execute, deliver and perform this Agreement and consummate the transactions
contemplated hereby and thereby.
(b) Authorization of Agreements. This Agreement and the Transaction
Agreements have been duly and validly authorized, executed and delivered by CG
and (and assuming due authorization, execution and delivery by ABGENIX)
constitute the valid and binding obligations of CG;
(c) Government Consents. To the reasonable best knowledge of CG; no
consent, authorization, license, permit, registration or approval of, or
exemption or other action by, any governmental or public body or authority
except the Commissioner of Corporations of the State of California is required
in connection with (i) the execution, delivery and performance by CG of this
Agreement and (ii) the execution, delivery and performance of the Transaction
Agreements.
(d) Effect of Agreements, Etc. The execution, delivery and performance
of this Agreement, and the Transaction Agreements and consummation of the
transactions contemplated hereby and thereby in the manner contemplated herein
and therein will not, with or without the giving of notice or the lapse of time
or both, to the reasonable best knowledge of CG (i) violate any material
provisions of law, statute, rule or regulation to
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which CG is subject; (ii) violate any judgment, order, writ, injunction or
decree of any court applicable to CG; or (iii) result in the breach of, or
conflict with any material term, covenant, condition or provision of, require
the modification or termination of, constitute a default under, or result in the
creation or imposition of any material lien, pledge, mortgage, claim, charge or
any encumbrance whatsoever upon any of the properties or assets of CG pursuant
to any corporate charter, by-law, commitment, contract or other agreement or
instrument to which CG is a party or by which any of its assets or properties is
or may be bound or affected or from which CG derives material benefit.
(e) Investment Purposes. It is acquiring the Preferred Stock and Note
for its account as principal, for investment purposes only, and not with a view
to, or for, resale, distribution or fractionalization thereof, in whole or in
part, and no other person has a direct or indirect beneficial interest in the
Preferred Stock or Note.
(f) Private Placement. It acknowledges that the offering and sale of
the Preferred Stock and the Note are intended to be exempt from registration
under the Securities Act of 1933, as amended (the "Securities Act"), by virtue
of Section 4(2) of the Securities Act and the provisions of Regulation D
promulgated thereunder.
(g) Accredited Investor. It is capable of evaluating the merits and
risks of its investment in ABGENIX and has the capacity to protect its own
interests.
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5. Closing; Purchase Price.
5.1 Subject to the terms and conditions of this Agreement, the
issuance and sale of the Preferred Stock and consummation of the other
transactions contemplated hereby (the "Closing") shall take place at 3:0O P.M,
on July 19, 1996 or such other time or date as the parties may agree at the
offices of CG at 322 Lakeside Drive, Foster City, California.
5.2 Subject to the terms and condition of this Agreement, ABGENIX will
deliver to CG at the Closing:
5.2.1 Certificates for the shares of Preferred Stock registered
in the name of CG against payment therefor as set forth in Section 5.3 hereof;
5.2.2 duly executed copies of the Transaction Agreements; and
5.2.3 the Note; provided that if at the Closing a permit has not
been received from the California Department of Corporations for issuance of the
Note, the parties shall use good faith efforts to obtain such permit and the
Note shall be delivered upon its receipt.
5.3 Subject to the terms and conditions of this Agreement, CG will:
5.3.1 In exchange for the shares of Series A Senior Convertible
Preferred Stock, (a) deliver or transfer to the account of ABGENIX the sum of
$10 million in readily available funds and (b) assign the employee notes in the
aggregate principal amount of $150,000 listed on Exhibit N hereto;
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5.3.2 In exchange for the shares of Series 1 Subordinated
Preferred Stock, assign to ABGENIX all of its right, title and interest in and
to the assets of the Antibody Business including but not limited to (a) the
Patent Rights, (b) all Know-How that relates exclusively to the Antibody
Business and all Know-How as defined in the Collaboration Agreement (c) the
ABGENIX Biological Materials, (d) the equipment, furniture and fixtures leased
by CG and used in the Antibody Business as listed on Exhibit O hereto (which
such Exhibit shall be updated and completed by mutual agreement of the parties
no later than September 15, 1996), subject to the assumption by ABGENIX of the
remaining lease obligations for such capital equipment, (e) existing agreements
that relate to the Antibody Business including but not limited to the agreements
listed on Exhibit P hereto (which such Exhibit shall be updated and completed by
mutual agreement of the parties no later than September 15, 1996), subject to
the assumption by ABGENIX of and its agreement to perform any obligation
thereunder and the indemnification agreement of ABGENIX as set forth in Section
8.3, (f) CG's partnership interest in Xenotech, L.P., (g) all shares of capital
stock owned by CG in Xenotech, Inc., and (h) the Mice or rights to the Mice as
such term is defined in the MRLOA;
5.3.3 Grant to ABGENIX as further consideration (and CG hereby
makes such grant effective at the Closing) a worldwide, royalty-free, fully paid
up, perpetual, irrevocable license, with the right to sublicense, to use the
Joint Biological Materials and to practice any Know-How owned or controlled by
CG that relates both to the Antibody Business and
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to other businesses of CG, and to make, have made, sell or otherwise distribute
products incorporating the Joint Biological Materials and such Know-How, which
license shall be for use solely in the Antibody Business and the Expanded Field
(as such term is defined in the Collaboration Agreement), and which shall be
exclusive within such field of use;
5.3.4 Grant to ABGENIX as further consideration (and CG hereby
makes such grant effective at the Closing) a worldwide, royalty-free, fully paid
up, perpetual, irrevocable license, with the right to sublicense, to use the CG
Biological Materials, and to make, have made, sell or otherwise distribute
products incorporating the CG Biological Materials, which license shall be for
use solely in the Antibody Business, and which shall be exclusive within such
field of use;
5.3.5 Grant to ABGENIX as further consideration (And CG hereby
makes such grant effective at the Closing) a nonexclusive, worldwide,
royalty-free, fully paid up, perpetual, irrevocable license, with the right to
sublicense, to practice any Know-How and to use any reagents and other materials
owned or controlled by CG that may be unrelated to the Antibody Business, and to
make, have made, sell or otherwise distribute products incorporating such
Know-How and materials, to the extent required to practice the Patent Rights and
the Know-How assigned to ABGENIX pursuant to Section 5.3.2 or licensed under
Sections 5.3.3 or 5.3.4;
5.3.6 Deliver to ABGENIX duly executed copies of the Transaction
Agreements.
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5.4 Subject to the terms and conditions of this Agreement, ABGENIX
will grant to CG (and ABGENIX hereby makes such grant effective at the Closing),
a worldwide, royalty-free, fully paid up, perpetual, irrevocable license, with
the right to sublicense, under Patent Rights arising under patent docket number
Cell 22 (as set forth on Exhibit B), to make, have made, use, sell or otherwise
distribute products covered by such patent outside of the Antibody Business,
which license shall be exclusive in such field of use except for any rights of
JT Immunotech USA Inc., in the Expanded Field.
5.5 Notwithstanding the provisions of Section 5.3.2, no agreement
shall be assigned hereunder if such assignment would constitute a breach
thereof. If any agreement set forth above cannot be assigned by CG to ABGENIX
because, despite its reasonable best efforts, CG is unable to secure the
required consent of a third party to such assignment, CG, if intellectual
property is involved, will grant to ABGENIX an exclusive, worldwide,
royalty-free license with right of sublicense to the applicable intellectual
property rights to the extent it is legally permitted to do so and subject to
ABGENIX's agreement to be bound by and perform all the obligations of CG under
any such agreement.
6. Registration Rights; Legend.
6.1 Registration Rights.
6.1.1 Request for Registration.
(a) If ABGENIX shall receive, at any time after six months
following the initial public offering of Common Stock of ABGENIX (other than
pursuant to a registration statement
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relating either to the sale of securities to employees of ABGENIX pursuant to a
stock option, stock purchase or similar plan or an SEC Rule 145 transaction), a
written request from CG, that ABGENIX file an underwritten registration
statement under the Securities Act covering the registration of at least five
percent of the Registrable Securities held by CG (a "Demand Registration"),
ABGENIX shall, subject to the limitations set forth below, as soon as
practicable, use its reasonable best efforts to effect such registration under
the Securities Act. "Registrable Securities" shall mean all Common Stock of
ABGENIX issued or issuable upon conversion of the Series A Senior Convertible
Preferred Stock, Series 1 Subordinated Convertible Preferred Stock and the Note,
including Common Stock issued pursuant to stock splits, stock dividends and
similar distributions with respect to such shares.
(b) The underwriter shall be selected by CG but shall be
reasonably acceptable to ABGENIX. CG (together with ABGENIX) shall enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting.
(c) In addition, ABGENIX shall not be obligated to effect,
or to take any action to effect, any registration:
(1) Within 90 days after the effective date of any
registration statement effected by ABGENIX, whether for its own Account or for
the account of others; or
(2) On Form S-1 (or any comparable or successor form to
such form) after ABGENIX has effected one
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Demand Registration and such registration has been declared or ordered
effective. CG shall nevertheless have the continuing right to additional
registrations on Form S-3 (or any comparable successor form to such form) even
though it has already had an effective Demand Registration so long as the gross
proceeds of the offering are expected to be at least $500,000. Registrations on
Form S-3 need not be underwritten.
(d) ABGENIX shall use its reasonable best efforts to
register and qualify the securities covered by any such registration statement
under such other securities or Blue Sky laws of such jurisdictions in the United
States as shall be reasonably requested by CG; provided that ABGENIX shall not
be required in connection therewith or as a condition thereto to qualify to-do
business or to file a general consent to services of process in any such states
or jurisdictions, unless ABGENIX is already subject to service in such
jurisdiction and except as may be required by the Securities Act.
(e) ABGENIX shall cause all such securities registered
pursuant to any such registration to be listed on each U.S. securities exchange
or quotation system on which similar securities issued by ABGENIX are then
listed.
6.1.2 Piggyback Registration.
(a) In the event ABGENIX decides to register any of its
Common Stock (either for its own account or the account of a security holder or
holders exercising their respective demand registration rights) on a form that
would be suitable for a registration involving solely Common Stock held by CG,
ABGENIX will promptly give CG written notice thereof (which
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shall include a list of the jurisdictions in which ABGENIX intends to attempt to
qualify such securities under the applicable Blue Sky or other state securities
laws). Upon the written request of CG delivered to ABGENIX within 14 days after
delivery of such written notice from ABGENIX, ABGENIX shall, subject to the
limitations set forth below, include in such registration, all Registrable
Securities (as defined above) that CG has requested to be so registered.
(b) If the registration of which ABGENIX gives notice is for
a registered public offering involving an underwriting, ABGENIX shall so advise
CG as a part of the written notice given pursuant to Section 6.1.2(a) above. In
such event the right of CG to registration shall be conditioned upon such
underwriting and the inclusion of the Registrable Securities in such
underwriting to the extent provided in this section. CG shall (together with
ABGENIX and the other holders distributing their securities through such
underwriting) enter into an underwriting agreement with the underwriter's
representative for such offering. CG shall have no right to participate in the
selection of the underwriters for an offering pursuant to this section.
(c) In the event the underwriter's representative advises CG
in writing that market factors (including, without limitation, the aggregate
number of shares of Common Stock requested to be registered, the general
condition of the market, and the status of the persons proposing to sell
securities pursuant to the registration require a limitation of
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the number of shares to be underwritten, the underwriter's representative may:
(1) in the case of ABGENIX's initial public offering,
exclude some or all Registrable Securities from such registration and
underwriting; and
(2) in the case of any registered public offering
subsequent to ABGENIX's initial public offering, limit the number of shares of
Registrable Securities to be included in such registration and underwriting;
provided, however, that the total number of shares of Registrable Securities CG
to be included in such registration shall not be less than one-third of the
total number of shares included in such registration. In such event, the
underwriter's representative shall so advise CG and the number of shares of
Registrable Securities that may be included in the registration and underwriting
(if any) shall be allocated (consistent with the preceding sentence) as follows:
among CG and holders of other securities requesting and legally entitled to
include shares of Common Stock in such registrations, in proportion, as nearly
as practicable, to the respective amounts of securities (including Registrable
Securities) requesting and entitled to inclusion in such registration held by CG
and such other holders at the time of filing of the registration statement. No
Registrable Securities or other securities excluded from the underwriting by
reason of this section shall be included in such registration statement.
(3) If CG disapproves of the terms of any such
underwriting, CG may elect to withdraw therefrom by
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written notice to ABGENIX and the underwriter delivered at least seven days
prior to the effective date of the registration statement. Any Registrable
Securities or other securities excluded or withdrawn from such underwriting
shall be withdrawn from such registration.
(d) In the event of any registration of Registrable
Securities pursuant to this Section 6.1.2, ABGENIX will exercise its best
efforts to register and qualify the securities covered by the registration
statement under such other securities or Blue Sky laws of such jurisdictions as
CG shall reasonably request and as shall be reasonably appropriate for the
distribution of such securities; provided, however, that ABGENIX shall not be
required to qualify to do business or to file a general consent to service of
process in any such states or jurisdictions.
6.1.3 Expenses. All expenses incurred by ABGENIX in complying
with Section 6 of this Agreement (including, without limitation, all federal and
state registration, qualification, and filing fees, printing expenses, fees and
disbursements of counsel for ABGENIX and one special counsel for CG (if
different from counsel for ABGENIX), blue sky fees and expenses, and the expense
of any special audits incident to or required by any such registration) shall be
borne by ABGENIX; provided, nonetheless, that all such expenses incurred in
connection with any registration that is solely for the benefit of CG shall be
paid by CG. Notwithstanding the above, ABGENIX shall not be required to pay for
any expenses of any registration proceeding begun pursuant to Section 6 if the
registration request is subsequently
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withdrawn at the request of CG; provided, however, that if at the time of such
withdrawal, CG shall have learned of a material adverse event with respect to
the condition, business, or prospects of ABGENIX not known to CG at the time of
its request, then ABGENIX shall be required to pay such expenses. All
underwriting discounts and selling commissions applicable to the sale of
Registrable Securities pursuant to this Agreement shall be borne by the holders
of the securities registered pro rata on the basis of the number of shares
registered.
6.1.4 Indemnification.
(a) To the extent permitted by law, ABGENIX will indemnify
CG, each of its officers, directors and each person controlling CG, and each
underwriter, if any, and each person who controls any underwriter against all
claims, losses, damages or liabilities (or actions in respect thereof) to the
extent such claims, losses, damages or liabilities arise out of or are based
upon any untrue statement (or alleged untrue statement) of a material fact
contained in any prospectus or other document (including any related
Registration Statement) incident to any such registration, qualification or
compliance, or are 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 ABGENIX of the Securities Act, the
Securities Exchange Act of 1934, as amended (the "1934 Act"), or any state
securities law, or any rule or regulation promulgated under the Securities Act,
the 1934 Act or any state securities law, applicable to ABGENIX and relating to
action or inaction required
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of ABGENIX in connection with any such registration, qualification or
compliance; and ABGENIX will reimburse CG, each of its officers, directors, and
legal counsel, each such underwriter, and each person who controls CG or such
underwriter, for any legal and any other expenses reasonably incurred, as
incurred, in connection with investigating or defending any such claim, loss,
damage, liability or action; provided, however, that the indemnity contained in
this section shall not apply to amounts paid in settlement of any such claim,
loss, damage, liability or action if settlement is effected without the consent
of ABGENIX (which consent shall not unreasonably be withheld); and provided,
further, that ABGENIX 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 upon
any untrue statement or omission based upon written information furnished to
ABGENIX by CG, its officers, directors, or legal counsel, underwriter, or
controlling person and stated to be specifically for use in connection with the
offering of securities of ABGENIX.
(b) To the extent permitted by law, CG will, if Registrable
Securities are included in the securities as to which such registration,
qualification or compliance is being effected pursuant to this Agreement,
indemnify ABGENIX, each of its directors and officers, each underwriter, if any,
of ABGENIX's securities covered by such a registration statement, each person
who controls ABGENIX or such underwriter within the meaning of the Securities
Act, against all claims, losses, damages and liabilities (or actions in respect
thereof) arising out of or based upon any untrue statement (or alleged untrue
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statement) of a material fact contained in any such registration statement,
prospectus, offering circular or other document (including any related
registration statement) incident to any such registration, qualification or
compliance, or 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 CG of the Securities Act, the 1934 Act or
any state securities law, or any rule or regulation promulgated under the
Securities Act, the 1934 Act or any state securities law, applicable to CG and
relating to action or inaction required of CG in connection with any such
registration, qualification or compliance; and will reimburse ABGENIX, such
directors, officers, partners, persons, law and accounting firms, underwriters
or control persons for any legal and any other expenses reasonably incurred, as
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 ABGENIX by CG and stated to be specifically for use in connection
with the offering of securities of ABGENIX, provided, however, that CG's
liability under this section shall not exceed CG's proceeds from the offering of
securities made in connection with such registration; and provided, further,
that the indemnity contained in this section shall not apply to amounts paid in
settlement of any such claim, loss, damage,
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liability or action if settlement is effected without the consent of CG (which
consent shall not unreasonably be withheld).
(c) Promptly after receipt by an indemnified party under
this section of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against an indemnifying party
under this section, notify the indemnifying party in writing of the commencement
thereof and generally summarize such action. The indemnifying party shall have
the right to participate in and to assume the defense of such claim, jointly
with any other indemnifying party similarly noticed; provided, however, that the
indemnifying party shall be entitled to select counsel for the defense of such
claim with the approval of any parties entitled to indemnification, which
approval shall not be unreasonably withheld; provided further, however, that if
either party reasonably determines that there may be a conflict between the
position of ABGENIX and CG in conducting the defense of such action, suit or
proceeding by reason of recognized claims for indemnity under this section, then
counsel for such party shall be entitled to conduct the defense to the extent
reasonably determined by such counsel to be necessary to protect the interest of
such party. The failure to notify an indemnifying party promptly of the
commencement of any such action, if prejudicial to the ability of the
indemnifying party to defend such action, shall relieve such indemnifying party,
to the extent so prejudiced, of any liability to the indemnified party under
this section, but the omission so to notify the indemnifying party will not
relieve such party of any liability that such
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party may have to any indemnified party otherwise other than under this Section
6.1.4.
6.1.5 Limitations on Registration Rights Granted to Other
Security Holders. ABGENIX shall not enter into any; agreement with any holder or
prospective holder of any securities of ABGENIX providing for the granting to
such holder of any registration rights, except that, with the consent of
ABGENIX, additional holders of ABGENIX securities may be granted registration
rights on a pari passu basis with CG with regard to any or all securities of
ABGENIX held by them.
6.1.6 Transfer of Rights. The registration rights granted by
ABGENIX to CG under this Agreement may be assigned to a transferee or assignee
of at least 250,000 shares of Common Stock, Series A Senior Convertible
Preferred Stock or Series 1 Subordinated Convertible Preferred Stock of ABGENIX
held by CG, including shares issued pursuant to stock splits, stock dividends
and similar distributions with respect to such shares, other than shares that
are sold to the public; provided that (a) ABGENIX is given written notice of
such transfer or assignment, stating the name and address of the transferee or
assignee and identifying the securities with respect to which such registration
rights are being assigned, and (b) the transferee or assignee of such rights is
not a person deemed by the Board of Directors of ABGENIX, in its best judgment,
to be a competitor of ABGENIX.
6.2 Legend. Each certificate representing (i) the Preferred Stock and
(ii) any other securities issued in respect of the Preferred Stock or upon any
stock split, stock dividend,
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recapitalization, merger, conversion, consolidation or similar event relating to
the Preferred Stock, shall be stamped or otherwise imprinted with a legend in
the following form (in addition to any legend or legends required under
applicable state securities laws):
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF, AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. SUCH SHARES MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS THE COMPANY
RECEIVES AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY
STATING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT."
7. Inventions.
It is contemplated that the parties may continue to share facilities
for a period of six months after the Closing, and possibly longer by mutual
agreement. During such time employees of CG and ABGENIX may continue to exchange
ideas and concepts. Accordingly, the parties agree that:
(a) Any inventions made solely by CG employees shall be the property
of CG and any inventions made solely by employees of ABGENIX shall be the
property of ABGENIX, and the respective owner shall be responsible for filing,
prosecuting, maintaining, enforcing and defending any patent applications or
issued patents with respect thereto.
(b) Any inventions made jointly by employees of CG and employees of
ABGENIX shall be jointly owned by the parties, and the parties shall mutually
agree on how to share the responsibility and expense of filing, prosecuting,
maintaining,
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enforcing and defending any patent applications or issued patents with respect
thereto.
(c) Notwithstanding the foregoing, CG hereby agrees to grant to
ABGENIX an exclusive, worldwide, royalty-free license with right to sublicense
to practice in the Antibody Business CG's rights to any such jointly-owned
invention, whether or not patented, that is made during the period that the
parties jointly share facilities under the Services Agreement and for six months
thereafter, and ABGENIX hereby agrees to grant to CG an exclusive, worldwide,
royalty-free license with right of sublicense to practice outside the Antibody
Business ABGENIX's rights to any such jointly owned invention, whether or not
patented, that is made during the period of joint sharing of facilities under
the Services Agreement and for six months thereafter.
8. Certain Particular Agreements of CG and ABGENIX.
8.1 Except as expressly provided herein, ABGENIX and CG agree that
thereafter, the receiving party shall keep completely confidential and shall not
publish or otherwise disclose and shall not use for any purpose any information
furnished to it by the other party pursuant to this Agreement (including,
without limitation, know-how), except to the extent that it can be established
by the receiving party by competent proof that such information:
(a) was already known to the receiving party, other than under an
obligation of confidentiality, at the time of disclosure; provided, however,
that this exception shall not
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apply to information assigned or licensed exclusively by it to the other
hereunder;
(b) was generally available to the public or otherwise part of the
public domain at the time of its disclosure to the receiving party;
(c) became generally available to the public or otherwise part of the
public domain after its disclosure and other than through any act or omission of
the receiving party in breach of this Agreement;
(d) was subsequently lawfully disclosed to the receiving party by a
person other than the disclosing party; or
(e) was developed by the receiving party without reference to any
information or materials disclosed by the disclosing party.
Notwithstanding the foregoing, a party hereto may nevertheless
disclose the other party's information to the extent such disclosure is
reasonably necessary in filing or prosecuting patent applications, prosecuting
or defending litigation, complying with applicable governmental regulations or
otherwise submitting information to tax or other governmental authorities,
making a permitted sublicense or other exercise of its rights hereunder or
conducting clinical trials, provided that if a party is required to make any
such disclosure of another party's secret or confidential information, other
than pursuant to a confidentiality agreement, it will give reasonable advance
notice to the other party of such disclosure requirement and, save to the extent
inappropriate in the case of patent applications, will use efforts consistent
with prudent business judgment to secure
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confidential treatment of such information prior to its disclosure (whether
through protective orders or confidentiality agreements or otherwise).
8.2 Effective at the Closing, ABGENIX assumes and agrees to discharge
when due all obligations of the Business, including without limitation all
obligations of CG under the agreements, contracts and other obligations
transferred under this Agreement. In addition, effective at the Closing, ABGENIX
agrees to assume liability for the accrued vacation time of those CG employees
transferred to ABGENIX.
8.3 To the extent permitted by law, ABGENIX shall indemnify CG, each
of its officers, directors, agents, and each person controlling CG, if any,
against all claims, losses, damages or liabilities (or actions in respect
thereof) to the extent such claims, losses, damages or liabilities arise out of
or are based upon (a) the breach or alleged breach by ABGENIX of any agreement,
contract or other obligation transferred to ABGENIX under this Agreement, (b)
claims relating to products manufactured and/or sold by or through ABGENIX, (c)
claims made by persons who immediately prior to the Closing were employees of CG
and who immediately after the Closing become employees of ABGENIX, and (d)
operation of the Business after the Closing; and ABGENIX agrees to reimburse
each indemnified person for any legal and other expenses reasonably incurred, as
incurred, in connection with investigating or defending any such claim, loss,
damage, liability or action; provided, that the indemnity contained in this
section shall not apply to amounts paid in settlement of any such claim, loss,
damage, liability or action
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if settlement is effected without the consent of ABGENIX (which consent shall
not unreasonably be withheld); and provided, further, that the indemnity
contained in this section shall not apply to any amounts covered by CG's
insurance.
8.4 Right of First Refusal.
(a) ABGENIX hereby grants to CG the right of first refusal to purchase
up to its Pro Rata Share of New Securities (as defined below) which ABGENIX may,
from time to time, propose to sell and issue so long as CG's Pro Rata Share is
at least fifty percent. CG may purchase said New Securities on the same terms
and at the same price at which ABGENIX proposes to sell the New Securities. The
"Pro Rata Share" of CG for purposes of this right of first refusal, is the ratio
of (i) the total number of shares of Common Stock held by CG (including any
shares of Common Stock into which shares of any convertible securities held by
CG are convertible) to (ii) the total number of shares of Common Stock and
Common Stock options outstanding immediately prior to the issuance of the New
Securities (including any shares of Common Stock into which outstanding shares
of convertible securities are convertible).
(b) "New Securities" shall mean any capital stock of ABGENIX, whether
authorized or not, and any rights, options, or warrants to purchase said capital
stock, and securities of any type whatsoever that are, or may become,
convertible into said capital stock; provided that "New Securities" does not
include (i) convertible securities issued by ABGENIX in the first private
financing concluded within one year after the date of this Agreement; (ii)
securities offered pursuant to a registration
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statement filed under the Securities Act; (iii) securities issued pursuant to
the acquisition of another corporation by ABGENIX by merger, purchase of
substantially all of the assets, or other reorganization, if approved by
ABGENIX's Board of Directors; (iv) shares issued or issuable to employees
pursuant to a plan or arrangement approved by ABGENIX's Board of Directors
(except to the extent that such shares would cause an adjustment to the
conversion rate of any of ABGENIX's convertible securities); (v) shares issued
without consideration pursuant to a stock dividend, stock split, or similar
transaction; and (vi) warrants, and shares issuable upon exercise of such
warrants, issued in connection with equipment leasing or facility financing
transactions approved by ABGENIX's Board of Directors.
(c) In the event ABGENIX proposes to undertake an issuance of New
Securities, it shall give CG written notice (the "Notice") of its intention,
describing the type of New Securities, the price, the terms upon which ABGENIX
proposes to issue the same the number of shares which CG is entitled to
purchase, and a statement that CG shall have 20 days to respond to such Notice.
CG shall have 20 days from the date of receipt of the Notice to agree to
purchase any or all of its Pro Rata Share of the New Securities for the price
and upon the terms specified in the Notice by giving written notice to ABGENIX
and stating therein the quantity of New Securities to be purchased and
forwarding payment for such New Securities to the Company if immediate payment
is required by such terms.
(d) In the event that CG fails to exercise in full the right of first
refusal within said 20 day period, ABGENIX shall
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have 90 days thereafter to sell or enter into an agreement (pursuant to which
the sale of New Securities covered thereby shall, be closed, if at all, within
60 days from date of said agreement) to sell the New Securities respecting which
CG's rights were not exercised, at a price and upon general terms no more
favorable to the purchaser thereof than specified in the Notice. In the event
ABGENIX has not sold the New Securities within said 90 day period (or sold and
issued New Securities in accordance with the foregoing within 60 days from the
date of said agreement), ABGENIX shall not thereafter issue or sell any New
Securities without first offering such securities to CG in the manner provided
above.
(e) The right of first refusal granted under this Section 8.4 shall
expire upon:
(i) The effective date of a Registration Statement filed by
ABGENIX in connection with a bona fide firm commitment underwritten public
offering of ABGENIX's Common Stock; or
(ii) The registration of ABGENIX's Common Stock under the 1934
Act.
(f) The right of first refusal granted under this Section 8.3 is
assignable by CG to any transferee of a minimum of 250,000 shares of Common
Stock (including any shares of Common Stock into which shares of convertible
securities then held by it are convertible).
8.5 Notwithstanding any other provisions of this Agreement, neither
party shall be required to take any action hereunder if such action would
constitute a breach of any
-29-
<PAGE> 30
contract to which it is a party, including without limitation the MRLOA.
9. GenPharm Litigation.
ABGENIX agrees to cooperate with CG in connection with the pending
litigation between CG and GenPharm International, Inc., styled as Cell Genesys,
Inc. v. GenPharm International, Inc. and Related Cross-Action (Santa Clara
Superior Court Case No. CV 738041) and GenPharm International, Inc. v. Japan
Tobacco, Inc., et al. (N. Dist. California Federal District Court Case No. C
96-0487 CW) (collectively the "GenPharm Litigation"). Without limiting the
foregoing, ABGENIX shall (a) identify, designate and make ABGENIX employees and
consultants available to serve as witnesses to testify on behalf of CG for
corporate depositions; (b) assist litigation counsel to comply with CG's
discovery obligations, including, without limitation, responding to written
discovery requests; and (c) perform such other ministerial and administrative
functions that may be necessary and appropriate to ensure that the GenPharm
Litigation is prosecuted and/or defended as efficiently as possible to obtain
results most favorable to CG under the circumstances. All out-of-pocket expenses
(i.e., expenses paid to third parties, other than compensation paid to ABGENIX
employees) incurred by ABGENIX in the performance of the foregoing obligations
shall be paid or reimbursed by CG and CG shall be solely responsible for the
payment of any settlement, judgment and costs incurred in the GenPharm
litigation.
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<PAGE> 31
10. Miscellaneous.
10.1 Entire Agreement. This Agreement, together with the Transaction
Agreements, constitutes the entire understanding of the parties with respect to
the matters provided for herein and supersedes any previous agreements and
understanding between the parties with respect to the subject matter hereof and
thereof. No amendment, modification or alteration of the terms or provisions of
this Agreement shall be binding unless the same shall be in writing and duly
executed by the party against whom such amendment, modification or alteration is
asserted.
10.2 Assignment. Except as set forth in Sections 6 and 8.3(d), neither
party shall delegate duties of performance or in whole or in part, rights or
obligations under this without the prior written consent of the other party,
except either party may assign this Agreement without such consent to an entity
that acquires all or substantially all of the assets or business of such party,
whether by sale, merger or otherwise. The terms and conditions of this Agreement
shall be binding on and inure to benefit of the permitted successors and Assigns
of the parties.
10.3 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
and all of which shall constitute the same instrument.
10.4 Headings. The headings of this Agreement are included for
convenience only and shall not be deemed to constitute part of this Agreement or
to affect the construction hereof.
-31-
<PAGE> 32
10.5 Modifications and Waivers. Any of the terms or conditions of this
Agreement may be waived in writing at any time by the party which is entitled to
the benefits thereof. No waiver of any of the provisions of this Agreement shall
be deemed to or shall constitute a waiver of any other provisions hereof
(whether or not similar) or of the same provision in respect of a subsequent
event.
10.6 Notices. All notices required or permitted to be given under this
Agreement shall be in writing and shall be sent by facsimile transmission or
mailed by registered or certified mail addressed to the party to whom such
notice is required or permitted to be given. All notices shall be deemed to have
been given when transmitted if given by facsimile and confirmation of receipt is
received or, if mailed, forty-eight hours after mailed as evidenced by the
postmark at the point of mailing.
All notices to CG shall be addressed as follows:
Cell Genesys, Inc.
322 Lakeside Drive
Foster City, CA 94404
Attention: President
Facsimile: (415) 358-9316
All notices to ABGENIX shall be addressed as follows:
Abgenix, Inc.
324 Lakeside Drive
Foster City, CA 94404
Attention: President
Facsimile: (415) 358-0318
Either party may, by written notice to the other, designate a new address or
number to which notices to the party giving the notice shall thereafter be
mailed or sent.
10.7 Governing Law. This Agreement shall be construed in accordance
with and governed by the laws of the State of
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<PAGE> 33
California applicable to agreements made and to be performed in such
jurisdiction.
10.8 Further Action. At any time or from time to time after the date
hereof, either party shall, at the request of the other party and at such other
party's expense, execute and deliver any further instruments or documents and
take all such further action as such party reasonably may request in order to
consummate and make effective the transaction contemplated by this Agreement.
10.9 Severability. If any provisions hereof shall be held by any court
of competent jurisdiction to be illegal, void or unenforceable, such provision
shall be thereafter amended by the parties hereto such that it is thereafter
legal, valid and enforceable and gives effect to the intention of the parties,
but in any event the illegality or unenforceability of such provision shall have
no effect upon and shall not impair the enforceability of any other provision of
this Agreement.
10.10 No Third-Party Beneficiaries. The provisions of this Agreement
are for the sole benefit of the parties of this Agreement and are not for the
benefit of any third party.
10.11 Disputes. If disagreement should arise between the parties with
respect to any provision of this Agreement or the Transaction Agreements, the
parties will use reasonable efforts to resolve such dispute through mediation.
If the parties are unable to do so within 60 days, either party may submit the
matter to binding arbitration before a panel of three arbitrators in accordance
with the Commercial Arbitration Rules of the American Arbitration Association.
Any such arbitration
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<PAGE> 34
shall be completed within 180 days following the date a party submits such
matter to arbitration. No punitive damages may be awarded in any such
arbitration, and enforcement of any award may be made by any court having
jurisdiction over the parties.
IN WITNESS WHEREOF, the undersigned have caused this Stock Purchase
and Transfer Agreement to be executed as of the date first above written.
CELL GENESYS, INC.
By: /s/ Stephen A. Sherwin
-------------------------------------
Stephen A. Sherwin
President and Chief Executive Officer
ABGENIX, Inc.
By: /s/ R. Scott Greer
-------------------------------------
R. Scott Greer
President and Chief Executive Officer
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<PAGE> 35
Exhibit List
<TABLE>
<S> <C>
EXHIBIT A-1 ABGENIX Biological Materials
EXHIBIT A-2 CG Biological Materials
EXHIBIT A-3 Joint Biological Materials
EXHIBIT B Patents and Patent Applications
EXHIBIT C Services Agreement
EXHIBIT D Immunization Services Agreement
EXHIBIT E Governance Agreement
EXHIBIT F Tax Sharing Agreement
EXHIBIT G Gene Therapy Rights Agreement
EXHIBIT H Voting Agreement
EXHIBIT I Convertible Promissory Note
EXHIBIT J Patent Assignment Agreement
EXHIBIT K Certificate of Designations
EXHIBIT L Certificate of Incorporation
EXHIBIT M Bylaws
EXHIBIT N Employee Notes
EXHIBIT 0 Equipment, Furniture and Fixtures
EXHIBIT P Antibody Business Agreements
</TABLE>
-35-
<PAGE> 36
Exhibit A-1
ABGENIX Biological Materials
[***]
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
<PAGE> 37
Exhibit A-1
ABGENIX Biological Materials
(CONTINUED)
[***]
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
<PAGE> 38
Exhibit A-1
ABGENIX Biological Materials
(CONTINUED)
[***]
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
<PAGE> 39
Exhibit A-1
ABGENIX Biological Materials
(CONTINUED)
[***]
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
<PAGE> 40
Exhibit A-2
CG Biological Materials
[***]
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
<PAGE> 41
Exhibit A-3
Joint Biological Materials
[***]
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
<PAGE> 42
Exhibit B
DOCKET NO. FILING DATE SERIAL NO. TITLE INVENTORS
[***]
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
<PAGE> 43
Exhibit B
(CONTINUED)
DOCKET NO. FILING DATE SERIAL NO. TITLE INVENTORS
[***]
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
<PAGE> 44
Exhibit C
Services Agreement
[OMITTED]
-38-
<PAGE> 45
Exhibit D
Immunization Services Agreement
[OMITTED]
-39-
<PAGE> 46
Exhibit E
Governance Agreement
[OMITTED -- SEE EXHIBIT 10.15]
-40-
<PAGE> 47
Exhibit F
Tax Sharing Agreement
[OMITTED -- SEE EXHIBIT 10.16]
-41-
<PAGE> 48
Exhibit G
Gene Therapy Rights Agreement
[OMITTED -- SEE EXHIBIT 10.17]
-42-
<PAGE> 49
Exhibit H
Voting Agreement
[OMITTED]
-43-
<PAGE> 50
Exhibit I
Convertible Promissory Note
[OMITTED]
-44-
<PAGE> 51
Exhibit J
Patent Assignment Agreement
[OMITTED - SEE EXHIBIT 10.18]
-45-
<PAGE> 52
Exhibit K
Certificate of Designations
[OMITTED -- SEE EXHIBIT 3.2]
-46-
<PAGE> 53
Exhibit L
Certificate of Incorporation
[OMITTED -- SEE EXHIBIT 3.1]
-47-
<PAGE> 54
Exhibit M
By Laws
[OMITTED -- SEE EXHIBIT 3.4]
-48-
<PAGE> 55
Exhibit N
Employee Notes
None.
-49-
<PAGE> 56
Exhibit 0
Equipment, Furniture and Fixtures and Lease Obligations Assumed
[OMITTED]
-50-
<PAGE> 57
Exhibit P
Antibody Business Agreements
[***]
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
-51-
<PAGE> 1
EXHIBIT 10.15
GOVERNANCE AGREEMENT
IT IS HEREBY AGREED between Abgenix, Inc. ("Abgenix"} and CELL GENESYS,
INC. ("Cell Genesys") that the following provisions with respect to the
relationship between the parties shall be binding obligations on each of them.
Guiding Principles
1. It is the mutual interest of the parties that Abgenix be
independently financeable at this time and ultimately financeable as a public
company.
2. It is the mutual interest of the parties that Abgenix have
entrepreneurial independent management and access to collaborative partners
other than Cell Genesys, although Cell Genesys is a preferred collaborator in
areas of interest to Cell Genesys.
THE PARTIES THEREFORE AGREE as follows:
1. Directors.
1.1 For so long as Cell Genesys or any of its subsidiaries
(collectively, "CG") owns 80% or more of the outstanding Abgenix Voting Stock
other than shares held by employees and directors and former employees and
directors of Abgenix, then CG shall be entitled to nominate three out of five
directors (one of whom shall be an officer of Cell Genesys, who shall serve as
chairman of the Board of Abgenix), the chief executive officer ("CEO") of
Abgenix shall be nominated as the fourth director, and CG shall nominate a fifth
director with the approval of the CEO of Abgenix.
1.2 So long as CG owns, or is part of a group that owns, (i) a
majority of the outstanding Abgenix Voting Stock CG (or such group) will have
the right to nominate three out of five Abgenix directors, (ii) less than a
majority but greater than 25% of the outstanding Abgenix Voting Stock, CG (or
such group) will have the right to nominate two out of five Abgenix directors,
UV) less than 25% but greater than 15% of the outstanding Abgenix Voting Stock,
CG (or such group) will have the right to designate one out of five Abgenix
directors. To the extent that Abgenix shall increase or decrease the authorized
number of Directors, the foregoing numbers shall be proportionately adjusted and
rounded to the nearest whole number. Directors not nominated by CG shall be
nominated by the Independent Directors as part of the management slate to be
presented to the stockholders for election.
<PAGE> 2
1.3 CG and each officer and director of Abgenix who owns Voting Stock
shall agree to vote for the persons nominated in accordance with this Section.
1.4 If necessary in order to make this provision enforceable under
applicable state law, CG will enter into a voting trust agreement, and, in such
event, it shall be a requirement for each Abgenix officer and director who
wishes to acquire stock in Abgenix to enter into the same voting trust
agreement.
2. Change of Control in Cell Genesys. It is the intent of the
parties that, for so long as CG owns or controls at least a majority of the
Abgenix Voting Stock, upon the closing of a merger of Cell Genesys with or into
another corporation in which Cell Genesys is not the surviving corporation (or
if Abgenix is merged with or into Cell Genesys in anticipation of such merger,
then upon the closing of the merger of Abgenix with or into Cell Genesys),
unless the acquiring corporation and Abgenix enter into a governance agreement
acceptable to a majority of the Independent Directors of Abgenix, then each
share of Abgenix Voting Stock held by a director or employee of Abgenix or Cell
Genesys shall immediately become fully vested, and each option to acquire a
share of Abgenix Voting Stock held by a director or employee of Abgenix or Cell
Genesys shall immediately become exercisable in full and remain exercisable for
a period of at least 30 days after the date of notice to the option holder. The
parties agree to use their reasonable best efforts to effectuate this intent,
including without limitation in pursuing a permit from the California Department
of Corporations.
3. Market Standoff. Conditioned upon similar agreements for the same
period of time entered into by other significant shareholders and key officers
and directors, as reasonably requested by the lead underwriter in an IPO or
subsequent registered offering of Abgenix, CG will not sell, directly or
indirectly, in the public market any Abgenix shares without the written consent
of Abgenix and the lead underwriter in the offering for a period of up to six
months after the offering.
4. Transactions between the Parties. For so long as CG owns or
controls at least a majority of Abgenix Voting Stock, material transactions
between Cell Genesys and Abgenix will be approved by a majority of the
Independent Directors of Abgenix or otherwise will be on terms that are fair to
Abgenix (the burden of proof being on Cell Genesys to demonstrate fairness).
5. Third Party Financing. The parties shall use reasonable efforts
to conclude a third party private financing for Abgenix with proceeds of
approximately $10 million within one year of the date of this Agreement.
6. Publicity. The parties acknowledge that it is their mutual
interest to coordinate, as appropriate, public relation and investor relation
communications. Cell Genesys acknowledges
-2-
<PAGE> 3
the importance of allowing Abgenix to build name recognition among investment
and other publics. Cell Genesys agrees that it will allow Abgenix to issue press
releases in its own name or jointly with Cell Genesys, as provided below.
Abgenix acknowledges that Cell Genesys, as a public company, has obligations
regarding public disclosure. In recognition of the above, and for as long as CG
owns or controls at least a majority of the Abgenix Voting Stock, Abgenix agrees
not to issue any press releases or make any public disclosures (including at
scientific or other conferences) without the consent of Cell Genesys. Cell
Genesys' consent to press releases or public disclosures shall be granted or
withheld in the sole discretion of tell Genesys. Cell Genesys will make
reasonable efforts to allow Abgenix to review all Cell Genesys press releases
and public disclosures that relate to Abgenix. If Abgenix objects to a proposed
public disclosure by Cell Genesys that is not required by law or stock exchange
regulation, the parties shall discuss the matter in good faith. Notwithstanding
the foregoing, the parties shall readdress publicity by Abgenix in the event
that Abgenix registers a class of Voting Stock under the Securities Exchange Act
of 1934, as amended (the "Exchange Act") while the provisions of this Section 6
remain in effect.
7. Certain Definitions. As used in this Agreement.
(a) The term "Independent Directors of Abgenix" means the CEO
of Abgenix and those directors of Abgenix who are not also directors, officers
or employees of Cell Genesys.
(b) The term "group" shall have the meaning comprehended by
Section 13-3(d)(3) of the Exchange Act and the rules and regulations promulgated
thereunder.
(c) The term "person" shall mean any person, individual,
corporation, partnership, trust or other nongovernmental entity or any
governmental agency, court, authority or other body (whether foreign, federal,
state, local or otherwise).
(d) The term "Voting Stock" means the Common Stock, Preferred
Stock and any other securities issued by Abgenix having the ordinary power to
vote in the election of directors of Abgenix (other than securities having such
power only upon the happening of a contingency).
8. Miscellaneous.
8.1 Successors and Assigns. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
permitted successors and assigns of the parties. Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
-3-
<PAGE> 4
8.2 Governing Law. This Agreement shall be construed in accordance
with and governed by the laws of the State of California applicable to
agreements made and to be performed in such jurisdiction.
8.3 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
and all of which shall constitute the same instrument.
8.4 Headings. The headings of this Agreement are included for
convenience only and shall not be deemed to constitute part of this Agreement or
to affect the construction hereof.
8.5 Notices. All notices required or permitted to be given under this
Agreement shall be in writing and shall be sent by facsimile transmission or
mailed by registered or certified mail addressed to the party to whom such
notice is required or permitted to be given. All notices shall be deemed to have
been given when transmitted if given by facsimile and confirmation of receipt is
received or, if mailed, forty-eight hours after mailed as evidenced by the
postmark at the point of mailing.
All notices to Cell Genesys shall be addressed as follows:
Cell Genesys, Inc.
322 Lakeside Drive
Foster City, CA 94404
Attention: President
Facsimile: (415) 358-9316
All notices to the Abgenix shall be addressed as follows:
Abgenix, Inc.
324 Lakeside Drive
Foster City, CA 94404
Attention: President
Facsimile: (415) 358-0318
Either party may, by written notice to the other, designate a new address or
number to which notices to the party giving the notice shall thereafter be
mailed or sent.
8.6 Amendment and Waivers. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively), only
with the written consent of Abgenix and Cell Genesys.
8.7 Severability. If any provisions hereof shall be held by any court
of competent jurisdiction to be illegal, void or unenforceable, such provision
shall be thereafter amended by the parties hereto such that it is thereafter
legal, valid and enforceable and gives effect to the intention of the parties,
but in any event the illegality or unenforceability of such provision
-4-
<PAGE> 5
shall have no effect upon and shall not impair the enforceability of any other
provision of this Agreement.
8.8 Aggregation of Stock. All shares of Voting Stock held or acquired
by affiliated entities or persons shall be aggregated together for the purpose
of determining the availability of any rights under this Agreement.
8.9 Affiliates and Subsidiaries. The terms and conditions of this
Agreement shall be binding upon Cell Genesys' affiliates and subsidiaries.
8.10 Saturdays, Sundays, Holidays, etc. If the last or appointed day
for the taking or any action or the expiration of any right required to be
granted herein shall be a Saturday or a Sunday or shall be a legal holiday, then
such action may be taken or such right may be exercised on the next succeeding
day not a legal holiday.
IN WITNESS WHEREOF, the parties hereto have executed this Governance
Agreement as of the date first above written.
ABGENIX, INC.
/s/ R. Scott Greer
R. Scott Greer
President and Chief Executive Officer
CELL GENESYS, INC.
[SIG]
Stephen A. Sherwin
President and Chief Executive Officer
-5-
<PAGE> 1
EXHIBIT 10.15A
AMENDMENT TO
GOVERNANCE AGREEMENT
THIS AGREEMENT is entered into this 13th day of October 1997, by and
between Abgenix, Inc. ("Abgenix") and CELL GENESYS, INC. ("Cell Genesys").
WHEREAS the parties entered into the GOVERNANCE AGREEMENT (the "Original
Agreement").
WHEREAS the parties enter this Agreement to amend Sections 1, 2 and 6 of
the Original Agreement as set forth below.
NOW THEREFORE, the parties agree as follows:
1. Section 1. Section 1 of the Original Agreement shall be amended to add
a new Section 1.5 as follows:
"1.5 As to matters relating to nomination of directors by Cell Genesys
as provided in Section 1 of this Agreement Abgenix shall be entitled
to rely on the decisions of the Cell Genesys representatives on the
Abgenix Board of Directors at the time of such decision or in the
event there is no Cell Genesys representative serving as a director at
such time, then on the decision set forth in writing from the Chief
Executive Officer of Cell Genesys."
2. Section 2. Section 2 of the Original Agreement shall be amended in its
entirety to read as follows:
2. Change of Control of Cell Genesys.
2.1 It is the intent of the parties that, for so long as Cell Genesys
owns or controls at least a majority of the Abgenix Voting Stock, upon a Change
of Control of Cell Genesys (as defined in Section 2.3) (or if Abgenix is merged
with or into Cell Genesys in anticipation of such Change of Control of Cell
Genesys, then upon the closing of the merger of Abgenix with or into Cell
Genesys), then each share of Abgenix Voting Stock held by a director or employee
of Abgenix shall become subject to the provisions of Section 2.2, and each
option to acquire a share of Abgenix Voting Stock held by a director or employee
of Abgenix shall become subject to the provisions of Section 2.2. The parties
agree to use their reasonable best efforts to effectuate this intent, including
without limitation in pursuing a permit from the California Department of
Corporations, if necessary. The provisions of Section 2 shall terminate after
Cell Genesys ceases to own or control at least a majority of the Abgenix Voting
Stock.
2.2 If an employee or director of Abgenix holding shares or options
issued at any time under the Abgenix stock plans has served as an employee or
director of Abgenix for one year or more as of the date of a
<PAGE> 2
Change of Control of Cell Genesys and following such Change of Control of Cell
Genesys the employee's or director's Continuous Status as an Employee or
Consultant (as defined in the Abgenix stock plans) terminates as a result of an
Involuntary Termination other than for Cause (as such terms are defined below in
Section 2.3) at any time within 24 months following such Change of Control of
Cell Genesys, then 100% of such employee's or director's shares and options
shall automatically be accelerated in full so as to become completely vested and
fully exercisable.
2.3 For purposes of Section 2 the terms set forth below shall have
the following definitions:
(a) "Change of Control" means the occurrence of any of the
following events:
(i) Any "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of Cell Genesys representing 50% or more of the total
voting power represented by Cell Genesys' then outstanding voting securities; or
(ii) A change in the composition of the Board of Directors of
Cell Genesys as a result of which fewer than a majority of the directors are
"Incumbent Directors." "Incumbent Directors" shall mean directors who either (A)
are directors of Cell Genesys as of the date hereof, or (B) are elected, or
nominated for election, to the Board of Directors with the affirmative votes
(either by a specific vote or by approval of the proxy statement of Cell Genesys
in which such person is named as a nominee for election as a director without
objection to such nomination) of at least three-quarters of the Incumbent
Directors at the time of such election or nomination; or
(iii) The stockholders of Cell Genesys approve (x) a merger
or consolidation of Cell Genesys with any other corporation, other than a merger
or consolidation which would result in the voting securities of Cell Genesys
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity or the entity that controls Cell Genesys or controls such
surviving entity) at least fifty percent (50%) of the total voting power
represented by the voting securities of Cell Genesys, such surviving entity or
the entity that controls Cell Genesys or controls such surviving entity
outstanding immediately after such merger or consolidation, or (y) the
stockholders of Cell Genesys approve a plan of complete liquidation of Cell
Genesys or an agreement for the sale or disposition by Cell Genesys of all or
substantially all Cell Genesys' assets.
(b) "Involuntary Termination" means (i) the elimination of an
employee's job position or a material reduction of the employee's job position
or a material reduction of the employee's duties, authority or responsibilities,
relative to the employee's job position or duties, authority or responsibilities
as in effect immediately prior to such reduction; (ii) a reduction by the
Company in the base salary of the employee as in effect immediately prior to
such reduction; (iii) the relocation of the employee to a facility or a location
more than 50 miles from the employee's then present location; or (iv) any other
involuntary termination of the employee's employment without cause except in the
event of disability.
<PAGE> 3
"Cause" means (i) any act of personal dishonesty, fraud or
misrepresentation taken by an employee in connection with his responsibilities
as an employee and intended to result in substantial gain or personal enrichment
of the employee at the expense of the Company; (ii) the employee's conviction of
a felony; (iii) improper disclosure of the Company's confidential or proprietary
information by the employee; or (iv) the employee's continued failure to
substantially perform his principal duties in a reasonable period of time after
receipt of written notice from the Company.
3. Section 6. Section 6 of the Original Agreement shall be amended and
restated automatically upon the effectiveness of a registration statement under
the Securities Act of 1933 for a public offering of Common Stock of Abgenix (an
"Initial Public Offering") in its entirety to read as follows:
6. Publicity. The parties acknowledge that it is their mutual interest
to coordinate, as appropriate, public relation and investor relation
communications. Each party further acknowledges that they have, or in
the future may have public company disclosure obligations. In
recognition of the above, and for so long as Cell Genesys owns or
controls at least a majority of the Abgenix Voting Stock, the
disclosing party will make reasonable efforts to allow the
nondisclosing party to review all disclosing party press releases and
public disclosures that relate to the nondisclosing party. If the
nondisclosing party objects to a proposed public disclosure by the
disclosing party that is not required by law or stock exchange
regulation, the parties shall discuss the matter in good faith.
Until an Initial Public Offering, Section 6 shall remain as set forth
in the Original Agreement.
4. Original Agreement. Except as set forth above, the remainder of the
Original Agreement shall remain in full force and effect and shall be binding on
all parties thereto.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
day and year first set forth above.
ABGENIX, INC. CELL GENESYS, INC.
By: [SIG] By: [SIG]
--------------------------------- ------------------------------------
Title: Title:
------------------------------ --------------------------------
<PAGE> 1
EXHIBIT 10.15B
AMENDMENT #2 TO
GOVERNANCE AGREEMENT
THIS AGREEMENT is entered into this 22nd day of December 1997, by and among
Abgenix, Inc. ("Abgenix") and Cell Genesys, Inc. ("Cell Genesys").
WHEREAS the parties entered into the GOVERNANCE AGREEMENT (the "Original
Agreement").
WHEREAS the parties entered into AMENDMENT #1 TO THE GOVERNANCE AGREEMENT
(the "First Amendment").
WHEREAS, it is a condition to the closing of Abgenix's sale and issuance of
shares of Series B Preferred Stock pursuant to the Series B Preferred Stock
Purchase Agreement of even date herewith to the individuals and entities listed
on Exhibit A thereto that the parties hereto enter into this Agreement.
WHEREAS the parties enter this Agreement to amend Sections 1 of the
Original Agreement as set forth below.
NOW THEREFORE, the parties agree as follows:
1. Section 1. Section 1 of the Original Agreement shall be amended to
add a new Section 1.6 as follows:
"1.6. (a) Cell Genesys shall commit that its nominees serving on Abgenix's
Board of Directors shall vote in favor of any proposal to authorize
Abgenix to undertake a firmly underwritten public offering of shares
of Common Stock of the Company at a per share price not less than
$11.00 per share (as adjusted for any stock dividends, combinations,
splits, recapitalizations and the like with respect to such shares)
and with aggregate proceeds to the Company of not less than $15.0
million (after deduction of underwriters commissions and expenses)
provided that the other members of the Company's Board of Directors
that are not nominees of Cell Genesys also have voted in favor of
such proposal."
(b) This Section 1.6 may be waived (either generally or in a
particular instance and either retroactively or prospectively), only
with the written consent of the Company, Cell Genesys, Inc. and the
holders of at least a majority of the outstanding shares of Series B
Preferred Stock (or the Common Stock issued or issuable upon
conversion of the Series B Preferred).
2. Original Agreement. Except as set forth above, the remainder of the
Original Agreement shall remain in full force and effect and shall be binding on
all parties thereto.
<PAGE> 2
3. First Amendment. The First Amendment shall remain in full force and
effect and shall be binding on all parties thereto.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
day and year first set forth above.
ABGENIX, INC. CELL GENESYS, INC.
By: [SIG] By: [SIG]
--------------------------------- ------------------------------------
Title: Title:
------------------------------ --------------------------------
<PAGE> 3
IN WITNESS WHEREOF, the directors of Abgenix, Inc. have duly executed this
Agreement as of the day and year first set forth above.
[SIG] [SIG]
- ------------------------------------- ----------------------------------------
R. Scott Greer Raju S. Kucherlapati, Ph.D.
[SIG] [SIG]
- ------------------------------------- ----------------------------------------
Joseph E. Maroun Stephen A. Sherwin, Ph.D.
[SIG]
- -------------------------------------
Mark Logan
<PAGE> 1
EXHIBIT 10.16
TAX SHARING AGREEMENT
THIS AGREEMENT is made and entered into as of July 15, 1996 by and between
CELL GENESYS, INC. ("CGI"), a Delaware corporation and ABGENIX, INC.
("Abgenix"), a Delaware corporation.
B A C K G R 0 U N D
1. CGI owns all of the outstanding capital stock of Abgenix and expects to
own at least 80 percent of such stock for an extended period. In consequence,
CGI and Abgenix are members of an affiliated group (the "Affiliated Group")
within the meaning of Section 1504(1) of the Internal Revenue Code that is
eligible to file United States federal income tax returns on a consolidated
basis.
2. CGI intends to elect on behalf of itself and Abgenix to file
consolidated federal income tax returns and intends to file corresponding state
franchise and income tax returns on a consolidated or combined basis.
3. This Agreement is intended to provide for the allocation of federal and
state tax liabilities between CGI and Abgenix and to provide for the
reimbursement of Abgenix for tax benefits used by CGI under applicable tax
rules.
A G R E E M E N T
ACCORDINGLY, the parties agree as follows:
1. Consolidated Return Election. At CGI's election, CGI and Abgenix will
join in -- the filing of consolidated federal income tax returns and/or state
combined franchise or income tax returns, beginning with such tax year or years
as CGI may properly select. Abgenix agrees to file such consents, elections, and
other documents and to take such other action as may be necessary or appropriate
to carry out the purpose of this Section 1. Any period for which Abgenix is
included in a consolidated federal income tax return or a combined state
franchise or income tax return is referred to in this Agreement as a
"Consolidated Return Year."
2. Abgenix Liability to CGI for Consolidated Return Years. Within 30 days
after the end of each Consolidated Return Year, Abgenix shall pay to CGI the
amount of the federal and state income and franchise tax liability, reduced by
all available tax credits of Abgenix (to the extent such credits are used in
consolidation or combination) that Abgenix records as its annual current tax
provision as if it were filing a separate federal or state consolidated or
combined income or franchise tax return for such Consolidated Return Year.
<PAGE> 2
3. CBI Liability to Abgenix for Consolidated Return Years. If for any
Consolidated Return Year, Abgenix realizes a loss or credit that reduces the
consolidated tax liability of CGI and or any other members of the consolidated
or combined group below the amount that would have been payable if Abgenix had
not realized such loss or credit, then CGI shall pay the amount of the reduction
so computed to Abgenix within 30 days after the end of such year.
4. Interim Estimated Payments. Before the end of any Consolidated Return
Year, Abgenix shall advance to CGI (by such tine as estimated tax payments would
otherwise be due if separate estimated tax payments were required to be paid by
Abgenix) amounts necessary to reimburse CGI for that portion of any estimated
federal and state income and franchise tax payments attributable to the
inclusion of Abgenix in the consolidated or combined filing group of CGI., Any
amounts so paid in any Consolidated Return Year shall reduce the amount payable
to CGI pursuant to Section 2.
5. Audits and Adjustments. In the event of any adjustment of the tax
liability of the Affiliated Group by reason of an amended return, claim for
refund, or audit by the Internal Revenue Service or any state tax authority, the
liability of CGI and Abgenix to each other and to the Internal Revenue Service
for any period covered by this Agreement shall be redetermined after giving full
effect to any such adjustments as if such adjustments had been made as part of
the original return of such period. Payments or' credits between CGI and Abgenix
shall be made at the time of any payment of tax or receipt of refund or credit
to or from the Internal Revenue Service or state tax authority with respect to
such adjustments, and such payments or credits shall include any interest
attributable to such adjustments,,. If any penalties (including penalties for
failure to pay estimated taxes) are asserted with respect to the filing of any
consolidated return, the penalty shall be shared appropriately between CGI and
Abgenix based upon whose action or inaction (such as understating taxable
income) contributed to the penalty. CGI and Abgenix shall indemnify each other
against any claim by the Internal Revenue Service or state tax authority of tax
due from the Affiliated Group that exceeds the separately computed tax liability
of either.
6. Governing Law. This Agreement is governed by the laws of the State of
California.
7. Successors. This Agreement shall be binding upon and inure to the
benefit of any successors to any of the parties hereto. In the event any
corporation subsequently becomes an includible corporation of the Affiliated
Group, the parties agree to use their best efforts to cause such corporation to
become a party to this Agreement and to be subject to all the terms and
conditions hereof.
8. Duration. This Agreement shall remain in effect with respect to any
taxable year hereof for which consolidated or confined returns are filed by CGI
as a common parent coporation and such party is an includible corporation in
such consolidated return.
2
<PAGE> 3
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
that appears in its first paragraph.
CELL GENESYS, INC. ABGENIX, INC.
By: /s/ Stephen A. Sherwin By: /s/ R. Scott Greer
- ------------------------------------- ------------------------------------
Stephen A. Sherwin R. Scott Greer
President and President and
Chief Executive Officer Chief Executive Officer
3
<PAGE> 1
EXHIBIT 10.17
CONFIDENTIAL TREATMENT REQUESTED BY ABGENIX, INC.
GENE THERAPY RIGHTS AGREEMENT
This Gene Therapy Rights Agreement (the "Agreement"), effective as of
November 1, 1997 (the "Effective Date") is made by and among Cell Genesys, Inc.,
a Delaware corporation ("CGI") and Abgenix, Inc., a Delaware corporation
("ABX").
RECITALS
A. Xenotech, L.P. ("XT") is a limited partnership formed in June 1991 by JT
Immunotech USA Inc. ("JT Immunotech"), a wholly-owned indirect subsidiary of
Japan Tobacco, Inc. ("JTI"), and CGI to research, create and develop transgenic
mice that make human antibodies when immunized with antigens (as defined below,
"Mice").
B. Pursuant to that certain Stock Purchase and Transfer Agreement effective
July 15, 1996, CGI assigned to ABX certain of its rights in and to XT, including
rights relating to the use and commercialization of the Mice pursuant to the
terms of the MRLOA (as that term is defined below).
C. CGI and ABX have entered into certain other agreements which relate to
ABX's interest in XT and the use and exploitation of the Mice and products
generated from the Mice, including without limitation the Gene Therapy Rights
Agreement effective as of July 15, 1996, the Voting Agreement effective as of
July 15, 1996, and the Immunization Services Agreement effective as of July 15,
1996.
D. CGI has also entered into the Universal Receptor License Option
Agreement with XT, effective June 28, 1996 (the "URLOA"), which grants CGI the
option to enter into license agreements with XT regarding the use of the Mice
for generation of antibodies for use in universal receptor products.
E. CGI and ABX now desire to restructure the agreements existing between
them and certain agreements with XT.
NOW THEREFORE, for and in consideration of the covenants, conditions, and
undertakings hereinafter set forth, it is agreed by and between the parties as
follows:
1. DEFINITIONS
For purposes of this Agreement, the terms set forth in this Article shall
have the meanings set forth below:
1.1 "ABX-Controlled Rights" shall mean all rights to patents or technology
(including biological materials) that are licensed to ABX pursuant to (i) the
MRLOA, (ii) Product Licenses
<PAGE> 2
from XT for Covered Products related to CGI Antigens, or (iii) any other license
or similar agreement granting ABX rights to patents or technology to the extent,
and only to the extent, that such patent or technology is reasonably necessary
to exercise the rights in (i) and (ii) to make, have made, use, sell, offer to
sell, or import Covered Products in the field of Gene Therapy (each such
agreement being referred to as an "ABX In-License"), in each case to the extent
that ABX has the right under the terms of the applicable ABX In-License to
further license or sublicense such rights during the term of this Agreement;
provided, however, that "ABX-Controlled Rights" shall not include Antigen
Specific Technology. Exhibit D lists the ABX- Controlled Rights as of the
Effective Date.
1.2 "ABX Proprietary Antigen" shall mean a specifically identified Antigen
for which an issued patent, or a pending patent application being prosecuted in
good faith in the United States or Europe, which patent or application is owned
or controlled by ABX prior to CGI's exercise of its Option with respect to such
Antigen in accordance with Article 2 below, contains claims to the following:
(i) the composition of such specifically identified Antigen or Genetic Material
encoding the Antigen, (ii) a method of therapeutic use of an Antibody or other
moiety which binds to such specifically identified Antigen, or (iii) the
composition of an antibody to such Antigen (excluding compositions of antibodies
resulting from immunization services under Article 3 of this Agreement).
1.3 "ABX Territory" shall mean the United States and its territories, and
Canada and Mexico.
1.4 "Affiliate" shall mean any entity which controls, is controlled by or
is under common control with ABX, CGI or a Sublicensee. An entity shall be
regarded as in control of another entity if it owns or controls at least fifty
percent (50%) of the shares of the subject entity entitled to vote in the
election of directors (or, in the case of an entity that is not a corporation,
for the election of the corresponding managing authority). As used herein, a
"Wholly-Owned Subsidiary" shall mean an Affiliate in which ABX owns or controls
one hundred percent (100%) of such shares in such Affiliate. Notwithstanding the
foregoing, neither ABX, CGI, JTI nor XT shall be considered to control, be
controlled by, be under common control with, or be an Affiliate of the other for
purposes of this Agreement.
1.5 "Antibody" shall mean a composition comprising a whole antibody or
fragment thereof, said antibody or fragment having been generated from the Mice
or Future Generation Mice or having been derived from nucleotide sequences
encoding, or amino acid sequences of, such an antibody or fragment.
1.6 "Antibody Product" shall mean any product comprising an Antibody or
Genetic Material encoding an Antibody wherein, in respect of each Antibody
Product, said Genetic Material does not encode multiple Antibodies.
1.7 "Antigen" shall have the meaning set forth in the MRLOA.
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<PAGE> 3
1.8 "Antigen Invention" shall mean intellectual property rights in and to
patentable inventions (including patent and patent applications) which both (i)
include claims to the following:
(A) the composition of matter of Antigens, or Genetic Materials (if
any) encoding such Antigens (or fragments, hybrids, or homologues
of such Genetic Materials or such Antigens);
(B) the composition of matter of Antibodies which bind to the
Antigen, or Genetic Materials encoding such Antibodies (or
fragments, hybrids or homologues of such Genetic Materials or
such Antibodies), and cells that express or secrete such
Antibodies;
(C) methods of treatment of humans using antibodies that bind to the
Antigen or Genetic Materials encoding such antibodies; or
(D) antibodies that bind to the Antigen, or Genetic Materials
encoding such antibodies (or any uses of such antibodies or
Genetic Material);
and (ii) wherein, but for a license thereto, such claims would be
infringed by the manufacture, use, sale, offer for sale, or import of
Antibody Products to such Antigen.
1.9 "Antigen-Specific Technology" shall mean any intellectual property or
technology or other proprietary rights of ABX in or to ABX Proprietary Antigens,
including: (i) compositions of such Antigens and Genetic Materials encoding such
Antigens; (ii) uses of such Antigens; (iii) antibodies that bind to such
Antigens and Genetic Materials encoding such antibodies, and cells that express
or secrete such antibodies; and (iv) uses of antibodies to such Antigens;
provided, however, that Antigen-Specific Technology shall not include rights in
and to such intellectual property created in connection with the performance of
services for CGI under Article 3 of this Agreement to the extent such
intellectual property is reasonably necessary for CGI to make, use, sell, or
otherwise exploit Covered Products in accordance with a CGI Product Sublicense.
Antigen-Specific Technology shall also include methods to discover novel
Antigens and methods of using Antigens other than to create Antibodies pursuant
to this Agreement.
1.10 "Buy-In Right" shall mean the right of ABX or JTI under the terms of
the MRLOA to obtain an option for an Exclusive Home Territory Product License
with respect to an Antigen that has been Selected by the other.
1.11 "CGI Antigen" shall mean an Antigen which ABX has Selected upon the
request of CGI as provided in Section 2.2 below or for which ABX has exercised
its Buy-In Rights upon the request of CGI as provided in Section 2.3 below.
1.12 "CGI Product Sublicense" shall mean a sublicense, in the form attached
hereto as Exhibit B, to be granted by ABX to CGI pursuant to Section 2.6 of this
Agreement.
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<PAGE> 4
1.13 "CGI Proprietary Antigen" shall mean a specifically identified Antigen
for which an issued patent, or a pending patent application being prosecuted in
good faith in the United States or Europe, which patent or application is owned
or controlled by CGI prior to CGI's exercise of its Option with respect to such
Antigen in accordance with Article 2 below, contains claims to the following:
(i) the composition of such specifically identified Antigen or Genetic Material
encoding the Antigen, (ii) a method of therapeutic use of an antibody or other
moiety which binds to such specifically identified Antigen, or (iii) the
composition of an antibody to such Antigen (excluding compositions of antibodies
resulting from immunization services under Article 3 of this Agreement).
1.14 "Covered Product" shall mean any Antibody Product which incorporates
(i) an Antibody which binds to a particular Antigen or (ii) Genetic Material
encoding such an Antibody wherein said Genetic Material does not encode multiple
Antibodies. If ABX acquires the right to sell (and the right to sublicense the
right to sell) any other product derived through immunization of Mice or Future
Generation Mice, whether by amendment of the MRLOA or otherwise, such products
shall be included in the definition of Covered Product under this Agreement and
shall be incorporated in the definition of Product under CGI Product Sublicenses
entered into pursuant to this Agreement.
1.15 "Future Generation Mice" shall have the meaning set forth in the
MRLOA.
1.16 "Genetic Material" shall mean a nucleotide sequence, including DNA,
RNA, and complementary and reverse complementary nucleotide sequences thereto,
whether coding or noncoding and whether intact or a fragment.
1.17 "Gene Therapy" shall mean the treatment or prevention of a disease by
means of [***].
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1.18 "GenPharm Cross License" shall mean that certain Cross License entered
into by and between ABX, CGI, JTI, XT, and GenPharm International, Inc.
effective as of March 26, 1997, as the same may be amended from time to time.
1.19 "Home Territory" shall mean either the JTI Territory or the ABX
Territory, as the case may be.
1.20 "IND" shall mean an Investigational New Drug Application to the U.S.
Food and Drug Administration, or its non-U.S. equivalent.
1.21 "JTI Territory" shall mean Japan, Taiwan, and South Korea (including
the territory now comprising North Korea, if reunited with South Korea after the
date hereof).
1.22 "Licensed Technology" shall mean:
(i) the ABX-Controlled Rights;
(ii) subject matter (including patentable inventions, information,
biological materials and other intellectual property, and including all patent-
and other intellectual property rights therein) created by ABX in performing
immunization services at the request of CGI under Article 3 of this Agreement,
in each case to the extent such subject matter is reasonably necessary for CGI
to make, use, sell or otherwise exploit Covered Products in accordance with a
CGI Product Sublicense.
(iii) all other subject matter (including patentable inventions,
information, biological materials and other intellectual property, and including
all patent- and other intellectual property rights therein) owned by ABX, in
each case to the extent that ABX has the right, under the terms of the
applicable agreement(s), if any, pursuant to which ABX acquired such rights, to
license or sublicense such rights to CGI hereunder during the term of this
Agreement, and in each case only to the extent such subject matter is reasonably
necessary to make, use, sell or otherwise exploit Covered Products in accordance
with a CGI Product Sublicense; provided, however, that Antigen Specific
Technology shall be excluded from Licensed Technology.
1.23 "Mice" shall have the meaning set forth in the MRLOA.
1.24 "MRLOA" and "Master Research License and Option Agreement" shall mean
that certain Master Research License and Option Agreement entered into by and
among XT, JTI and CGI effective as of June 28, 1996, as amended from time to
time. As used herein, "MRLOA" shall also mean and include any agreement which
supersedes the MRLOA.
1.25 "Net Sublicense Revenues" shall mean (i) the amount of [***] received
by ABX or its Wholly-Owned Subsidiary in respect of a Sublicense, less (ii)[***]
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as a result of such Sublicense with respect to such Antigen by reason of the
grant or exercise of such Sublicense, and less (iii) [***] by reason of ABX's
acquiring or exercising (directly or through third parties) the Product License,
or other rights under the Licensed Technology, for such Antigen. In determining
Net Sublicense Revenue:
1.25.1 For purposes of clarification, it is understood and agreed that
Net Sublicense Revenues shall (A) not include amounts paid to ABX [***], and (B)
shall be [***] payments that ABX otherwise would be required to make.
1.25.2 For purposes of this Agreement, [***] shall mean the amount by
which cash amounts received by ABX or its Wholly-Owned Subsidiary [***].
1.25.3 In the event that ABX or its Wholly-Owned Subsidiary grants a
Sublicense to an entity that is not a Wholly-Owned Subsidiary of ABX, and [***].
It is understood that if ABX grants a Sublicense to a Wholly-Owned Subsidiary,
any consideration received by ABX from such Wholly-Owned Subsidiary in respect
of such Sublicense shall not be
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included within the definition of Net Sublicense Revenues; however, if following
such grant of a Sublicense, the entity ceases to be a Wholly-Owned Subsidiary of
ABX, any cash payment that ABX receives thereafter (including in the transaction
in which such entity ceases to be a Wholly-Owned Affiliate) shall be deemed
within Net Sublicense Revenues to the extent the same is attributable to the
Sublicense.
1.26 "Product License" shall mean a license granted from XT to ABX pursuant
to the terms of the MRLOA (including without limitation Sections 4.2, 5.2, 5.5,
5.6, 6.2, or 7.1 thereof) permitting ABX to commercialize certain Antibody
Products. Product Licenses shall include Exclusive Worldwide Product Licenses,
Exclusive Qualified Worldwide Product Licenses, Co-Exclusive Worldwide Product
Licenses, and Exclusive Home Territory Product Licenses, as such terms are
defined in the MRLOA.
1.27 "Rest of the World" shall mean all countries of the world other than
the countries in the ABX Territory and the JTI Territory.
1.28 "Selecting" an Antigen or to "Select" an Antigen or similar phrases
shall refer to the process described in Article 4 of the MRLOA whereby JTI or
ABX obtains an option to acquire a Product License related to a particular
Antigen, and shall also include (i) the process of obtaining a Product License
pursuant to Section 7.1 of the MRLOA and (ii) any other process by which ABX may
have the right to obtain a license to make use and sell Covered Products related
to Antigens chosen by ABX.
1.29 "Selection Slot" shall mean the right of ABX to Select an Antigen
pursuant to the terms and procedures set forth in the MRLOA.
1.30 "Six-Month Period" shall mean the first six (6) months of each Year
(i.e., the six-month period ending on June 30) and the last six (6) months of
each Year (i.e., the six-month period ending on December 31).
1.31 "Sublicensee" shall mean a third party that is not an Affiliate to
whom ABX has, granted a sublicense under the Licensed Technology to both make
and sell a particular Covered Product. "Sublicensee" shall also include a third
party to whom ABX has granted the right to distribute Covered Product, provided
that such third party is responsible for marketing and promotion of such Covered
Product. It is understood that CGI is not a Sublicensee of ABX for purposes of
this Agreement. As used in this Agreement, "Sublicense" shall mean an agreement
or arrangement pursuant to which such a sublicense or distribution right has
been granted.
1.32 "Transgenic Product" shall have the meaning set forth in the GenPharm
Cross License.
1.33 "Year" shall mean each calendar year.
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1.34 Terminology Regarding Antibody Products, Covered Products, and
Licenses. For purposes of clarification, it is understood and agreed that (i)
references to Antibody Products or Covered Products "to X," "for X," "related to
X," and "with respect to X" and similar references, where "X" is an Antigen
(including without limitation any Product Antigen or Sublicense Product
Antigen), shall mean Antibody Products or Covered Products which incorporate (A)
an Antibody which binds to such Antigen or (B) Genetic Material encoding such an
Antibody wherein said Genetic Material does not encode multiple Antibodies, and
(ii) references to a license or sublicense (including without limitation any
Product License, CGI Product Sublicense, or Direct Third Party Sublicense) "to
X," "for X," "related to X," and "with respect to X" and similar references,
where "X" is an Antigen, shall mean such licenses or sublicenses conveying
rights to Antibody Products for such Antigen.
2. OPTION FOR ANTIGEN SELECTION AND CGI PRODUCT SUBLICENSES
2.1 Option to Acquire CGI Product Sublicenses.
2.1.1 Option. Pursuant to the terms and conditions set forth in this
Agreement, ABX hereby grants to CGI an option (the "Option") to enter into CGI
Product Sublicenses during the term of this Agreement, which Option may be
exercised by CGI with respect to two (2) Antigens per Year, [***], all pursuant
to the procedures set forth in this Article 2.
2.1.2 Loss of Unexercised Slot. If CGI does not exercise the Option
with respect to the full number of Antigens for which CGI has the right to
exercise the Option for any given Six-Month Period, then the unexercised Option
shall expire with respect to that number of Antigens for which it was not
exercised (i.e., so that unexercised Options may not be carried over by CGI to
any subsequent Six-Month Period). However, in the event that ABX obtains the
right to carry Selection Slots forward from the first Six- Month Period in a
Year and exercise them in the second Six-Month Period in that same Year, then
CGI shall also have the same right to the same extent to so carry forward a
proportional number of Selection Slots, in accordance with procedures to be
reasonably agreed by CGI and ABX, and in the event that ABX obtains the right to
carry Selection Slots forward from one Year to the next, ABX and CGI shall
negotiate in good faith whether, and if so the manner in which, the benefit of
such carry-forward will be made available to CGI; provided, however, that in no
event shall CGI be entitled to carry forward more Selection Slots than ABX is
permitted to carry forward and in no event shall CGI be entitled to carry any
Slot forward more than [***].
2.2 Selection of CGI Antigens. To exercise the Option with respect to
an Antigen, CGI must notify ABX in writing (each such notice an "Exercise
Notice") that CGI desires ABX to Select an Antigen for CGI for a given Six-Month
Period and identify the Antigen. A Form of Exercise Notice is attached hereto as
Exhibit E. An Exercise Notice with respect to an Antigen for a given Six-Month
Period must be given during the Six-Month Period immediately preceding the
Six-Month Period for which the Exercise Notice is given, it being understood
that if CGI has not, for each Selection Slot available to CGI for a given
Six-Month Period, provided the first Exercise Notice for
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such Selection Slot on or before the last day of the preceding Six-Month Period
(i.e., on or before December 31st or June 30th), CGI shall be deemed not to have
exercised its Option for such Selection Slots. Notwithstanding the foregoing,
the Exercise Notice with respect to the Option for the Six-Month Period ending
on December 31, 1997 may be given by CGI at any time prior to December 1, 1997,
and the Exercise Notice with respect to the Option for the Six-Month Period
beginning on January 1, 1998 may be given by CGI at any time prior to January
31, 1998. CGI may also, in cases in which Section 7.1 of the MRLOA applies
(i.e., those cases in which CGI has proprietary rights in the Antigen), request
in the Exercise Notice that ABX Select the Antigen pursuant to Section 7.1 of
the MRLOA; provided, however, that CGI shall provide to ABX for disclosure to
JTI the basis for claiming that Section 7.1 of the MRLOA applies. Following
receipt of such Exercise Notice:
(a) ABX shall promptly and in good faith determine whether, at the
time ABX received CGI's Exercise Notice, any of the following conditions (each,
an "Impediment") existed:
(i) the Antigen so identified by CGI was not then available,
under the terms of the MRLOA, for Selection by ABX because (A) ABX or JTI then
has in effect a Product License with respect to such Antigen, or has previously
Selected such Antigen and has the continuing right to acquire a Product License
with respect to such Antigen by reason of such Selection; (B) XT is obligated to
grant to a third party other than ABX or JTI exclusive rights to sell one or
more Covered Products to such Antigen (or has granted such rights to such third
parties, which rights are then in effect), or (C) XT otherwise does not have the
authority to grant ABX rights to Covered Products to such Antigen;
(ii) ABX was contractually obligated to Select such Antigen for a
third party, or has granted to a third party a contractual right (including,
without limitation, an option) to require ABX to Select such Antigen on such
third party's behalf, it being understood that the Antigen must be specifically
identified as part of such obligation or right;
(iii) the Antigen so identified by CGI is an ABX Proprietary
Antigen;
(iv) ABX is actively and in good faith engaged in negotiations
with a third party regarding the grant to such third party of a license under
the Licensed Technology to commercialize Covered Products related to such
Antigen; or
(v) ABX has performed research on its own behalf regarding such
Antigen and has reached a point equivalent to completion of Item No. 11 of the
attached Exhibit A [***] of Mice or Future Generation Mice with such Antigen.
ABX shall, within thirty (30) days after receiving the Exercise Notice, notify
CGI in writing of any such Impediment and, unless contractually prohibited from
doing so, provide reasonable documentation of the existence of such Impediment;
provided, that at ABX's election ABX may provide such documentation under
circumstances reasonably calculated to ensure the confidentiality
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thereof, which circumstances may include disclosure of such documentation to a
third party, chosen by CGI and reasonably acceptable to ABX, under terms of a
confidentiality agreement. If such an Impediment exists and ABX so notifies CGI
during such period, then ABX shall not be obligated to Select such Antigen or
grant to CGI a CGI Product Sublicense with respect to such Antigen; provided,
however, that nothing herein shall preclude CGI from later attempting again to
exercise the Option with respect to such Antigen in accordance with this Article
2. In the event that CGI has exercised the Option with respect to an Antigen,
but has been unable to have ABX Select such Antigen by reason of an Impediment
(as set forth in this Section 2.2), then CGI may again exercise such Option for
a different Antigen, as provided in Section 2.2(b) below.
(b) Subject to paragraph 2.2(a) above, ABX shall Select such Antigen
at the first [***], or at the next other opportunity at which ABX may make such
selection, whichever occurs first. If requested to do so by CGI in an
appropriate case, ABX shall Select such Antigen pursuant to Section 7.1 of the
MRLOA. ABX agrees to keep available for Selection at CGI's request in accordance
with this Section 2.2 during each Six-Month Period the number of Selection Slots
with respect to which CGI has the right to exercise the Option for such
Six-Month Period, it being understood, however, that if CGI does not exercise
the Option during the time permitted under this Section 2.2, ABX shall have the
right to use such Selection Slot for its own account or for the benefit of a
third party, subject to Section 5.1 below. It is understood that if CGI
exercises its Option with a timely Exercise Notice but an Impediment exists with
respect to the Antigen requested by CGI, ABX shall, unless the parties otherwise
mutually agree, be required to keep the Selection Slot available for CGI to
exercise the Option with respect to an alternative Antigen until the midpoint of
the Six-Month Period during which the Selection Slot was to be exercised on
behalf of CGI (i.e., March 31st or Sept 30th of such Six-Month Period, as the
case may be). CGI may exercise the Option with respect to such alternative
Antigen by sending a new Exercise Notice naming such alternative Antigen;
provided, however, that if ABX receives such an Exercise Notice naming an
alternative Antigen less than thirty (30) days before the first quarterly
meeting within the Six-Month Period, then ABX may, in its discretion, [***]
within the Six-Month Period or the next available opportunity, whichever is
sooner. If CGI has not provided an Exercise Notice naming an alternative Antigen
that is free of Impediments prior to the midpoint of the Six-Month Period, then
(i) ABX shall not be obligated to Select an Antigen for CGI using that Selection
Slot during such Six-Month Period but (ii) ABX shall not, without CGI's written
consent, be entitled to Select another Antigen on behalf of itself or a third
party using such Selection Slot.
(c) CGI shall be responsible for the payment of all amounts that ABX
may owe to XT under the MRLOA by reason of ABX's Selection of an Antigen on
behalf of CGI. Upon ABX's Selection of an Antigen identified by CGI under this
Section 2.2, such Antigen shall become a "CGI Antigen." ABX shall promptly
notify CGI of its Selection of an Antigen requested by CGI and shall inform CGI
of the deadline for ABX to exercise its option under the MRLOA to obtain a
Product License resulting from Selection of the Antigen.
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(d) Coordination with Selection Under MRLOA.
(i) With the Exercise Notice for each CGI Antigen, CGI shall
propose a definition of such CGI Antigen and shall provide a summary of the
scientific background for Selection of such CGI Antigen at least sufficient for
ABX to comply with its minimum disclosure obligations under Section 4.2(i)(a) of
the MRLOA.
(ii) In the event a dispute arises between CGI and ABX as to
whether the definition proposed by CGI indicates a substance that is
sufficiently characterized to be within the definition of Antigen set forth in
the MRLOA, the issue shall be resolved by binding arbitration by one arbitrator
reasonably acceptable to the parties who is experienced in the pharmaceutical
industry and in biological research and development. If the parties are unable
to agree on an arbitrator, the arbitrator shall be an independent expert as
described in the preceding sentence selected by the chief executive of the San
Francisco office of the American Arbitration Association. The arbitrator shall
in a written opinion state whether the selected substance is an Antigen. The
arbitration shall be conducted in English and shall be held in San Francisco,
California. Each party shall pay its own costs in connection with such
arbitration and share equally the other expenses associated with the
arbitration. Any arbitration subject to this Section 2.2(d) shall be completed
within sixty (60) days from the filing of notice of a request for such
arbitration.
(iii) ABX agrees to use reasonable efforts to obtain JTI's
agreement to the CGI Antigen definition proposed by CGI to the extent that such
proposed definition is consistent with the definition of "Antigen" under the
MRLOA, and CGI agrees to provide reasonable cooperation to ABX in support of
such efforts. Prior to Selection of the Antigen by ABX, CGI and ABX agree, at
the request of either party, to discuss in good faith the definition of the CGI
Antigen proposed by CGI and any proposed changes to such definition.
Notwithstanding any other provision of this Agreement, it is understood that the
rights granted to CGI under this Agreement (and any CGI Product Sublicense
entered into under this Agreement) shall be subject to the definition for each
CGI Antigen that is established in accordance with the terms of the MRLOA.
2.3 Buy-In Rights.
2.3.1 Notice. ABX may, at its sole election, from time to time
describe to CGI one or more Buy-In Rights that ABX may be entitled to exercise
in respect of Antigens Selected by JTI, as well as the deadline for exercising
such Buy-In Rights, and offer to exercise such Buy-In Rights as to an Antigen at
the request of CGI in lieu of CGI's exercising its Option [***] for that
Six-Month Period or, if the parties mutually agree, for any following Six-Month
Period. It is understood that the parties may need to reach additional
agreements regarding disclosure and licensing of Antigen Inventions regarding
such Antigen before agreeing to have ABX exercise its Buy-In Right for such
Antigen as described in this Section 2.3.
2.3.2 Request by CGI. If, in response to a proposal under Section
2.3.1 and after the parties have negotiated the terms of such a proposal
(including without limitation the rights to disclose or license Antigen
Inventions pursuant to the terms of the MRLOA), CGI requests that ABX
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exercise its Buy-In Right related to an Antigen, ABX shall, to the extent it has
the right to do so, exercise its Buy-In Right related to such Antigen promptly
following the request by CGI.
2.3.3 Payment; Exercise. CGI shall be responsible for the payment of
all amounts that ABX may owe to XT under the MRLOA by reason of ABX's exercising
a Buy-In Right related to an Antigen on behalf of CGI under this Section 2.3.
Upon ABX's exercise under the MRLOA of a Buy-In Right related to an Antigen as
requested by CGI under this Section 2.3, the Antigen to which the Buy-In Right
relates shall be a "CGI Antigen." ABX shall promptly notify CGI of its exercise
of a Buy-In Right requested by CGI and shall inform CGI of the deadline for ABX
to exercise its option under the MRLOA to obtain a Product License resulting
from the exercise of the Buy-In Right. In the event that CGI so requests ABX to
exercise its Buy-In Right with respect to an Antigen, and ABX exercises such
Buy-In Right under the MRLOA with respect to such Antigen pursuant to such
Buy-In Right, then CGI shall be deemed to have exercised its Option [***] in the
Six-Month Period in which CGI requested ABX to exercise such Buy-In Right;
provided, however, that if ABX does not exercise its Buy-In Right, then CGI
shall not be deemed to have exercised its Option [***] by reason of requesting
ABX to exercise such Buy-In Right.
2.4 Obtaining Product Licenses from XT to ABX for CGI Antigens.
2.4.1 Notice. Following Selection of a CGI Antigen, or exercise of a
Buy-In Right for a CGI Antigen, (i) ABX shall (subject to Section 4.1.2 below)
exercise its rights under the MRLOA and obtain a Product License for such CGI
Antigen from XT, (ii) CGI shall be responsible for payment of any amounts due to
XT pursuant to the terms of the MRLOA by reason of such exercise, and (iii) ABX
and CGI shall enter into a CGI Product Sublicense pursuant to the terms of
Section 2.6 of this Agreement with respect to such CGI Antigen. Notwithstanding
the foregoing, in the event that CGI provides written notice to ABX, no later
than thirty (30) days prior to the deadline for ABX to enter into a Product
License for a CGI Antigen, instructing ABX not to exercise its rights to obtain
a Product License for that CGI Antigen on behalf of CGI (each such notice an
"Abandonment Notice"), then (i) CGI shall not be obligated to pay amounts due to
XT pursuant to the terms of the MRLOA for such Product License, (ii) ABX shall
not be obligated to obtain such Product License, and (iii) ABX shall not be
obligated to enter a CGI Product Sublicense for such Antigen. If CGI sends such
an Abandonment Notice with respect to an Antigen, then that Antigen shall cease
to be a CGI Antigen for purposes of this Agreement; however, it is understood
that CGI shall nonetheless continue to be considered to have exercised the
Option for purposes of determining the number of Antigens for which CGI is
entitled to exercise the Option under Section 2.1 above.
2.4.2 Use by ABX. It is understood that if ABX has Selected a CGI
Antigen or exercised a Buy-In Right for a CGI Antigen and CGI thereafter gives
ABX an Abandonment Notice regarding that CGI Antigen as provided in Section
2.4.1, ABX shall be entitled, in its sole discretion, to exercise ABX's option
and enter into the Product License related to that Antigen on its own behalf and
shall not be obligated to enter into the corresponding CGI Product Sublicense,
and shall not be obligated to make the payments to CGI provided under Section
5.1 of this Agreement (although ABX will remain obligated to make the payments,
if any, required under Section 6.3); provided,
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however, that in such event CGI shall not be responsible to pay any further
amounts due from ABX to XT with respect to such Product License.
2.5 Research License. Following Selection of each CGI Antigen (or exercise
of a Buy-In Right for each CGI Antigen) and subject to the terms and conditions
of this Agreement, ABX agrees to grant, and hereby grants, to CGI a nonexclusive
sublicense under the Licensed Technology to develop, make, have made, use,
import or export or otherwise transfer physical possession of (but not to sell,
lease, offer to sell or lease, or otherwise transfer title to) Covered Products
related to such CGI Antigen and cells that express or secrete Antibodies to such
CGI Antigen, in each case solely for purposes relating to or in connection with
research or development (i) of Covered Products for use in the field of Gene
Therapy or (ii) involving Genetic Material when used with viral or nonviral gene
transfer systems. CGI shall have the right to sublicense the rights granted
under this Section 2.5 upon the approval of ABX, which approval shall not be
unreasonably withheld. In the event that ABX refuses to approve such a
sublicense, ABX shall, to the extent that ABX has the right to do so, grant at
CGI's request a nonexclusive sublicense of such rights directly to a
non-Affiliate third party designated by CGI on terms and conditions
substantially identical to the applicable terms and conditions of this
Agreement. The sublicense granted by ABX under this Section 2.5 with respect to
a CGI Antigen (and the further sublicenses, if any, granted by CGI under this
Section 2.5 with respect to such CGI Antigen) shall terminate at such time as
(A) CGI sends ABX an Abandonment Notice pursuant to Section 2.4.1 above
regarding such CGI Antigen or (B) CGI enters into a CGI Product Sublicense
related to such CGI Antigen; provided, however, that termination of a sublicense
under this Section 2.5 with respect to a CGI Antigen pursuant to (B) above shall
not affect the duration or survival of a grant of similar rights or sublicense
under the CGI Product Sublicense with respect to such CGI Antigen, which rights
or sublicense shall terminate or expire only in accordance with the terms of
such CGI Product Sublicense. In the event that ABX enters into a Product
Sublicense with respect to a CGI Antigen and CGI has not within six (6) months
thereafter entered into a CGI Product Sublicense with respect to such CGI
Antigen, the sublicense granted under this Section 2.5 with respect to such CGI
Antigen shall terminate. It is understood and agreed that (x) as to
ABX-Controlled Rights, the grant of rights under this Section 2.5 shall be
subject to and limited in all respects by the terms of the applicable ABX
In-License(s) pursuant to which such ABX-Controlled Rights were granted to ABX
and (y) the rights and sublicenses granted to CGI under this Section 2.5 or any
other provision of this Agreement shall be subject in all respects to the
GenPharm Cross License.
2.6 Terms of CGI Product Sublicense. At such time as ABX enters into a
Product License with XT with respect to a CGI Antigen pursuant to Section 2.4.1,
CGI and ABX shall promptly execute a CGI Product Sublicense granting CGI rights
corresponding to such CGI Antigen in the Gene Therapy field, all as set forth in
the form of CGI Product Sublicense attached as Exhibit B hereto. During such
time as CGI is an Affiliate of ABX (as the term "Affiliate" is defined in the
GenPharm Cross License), CGI shall have a direct sublicense from XT under the
GenPharm Cross License for Covered Products related to that CGI Antigen, as set
forth in the Direct Sublicense of GenPharm Rights entered into by and between XT
and CGI effective as of October ___, 1997 (the "Direct Sublicense of GenPharm
Rights"). ABX shall arrange for Product Licenses entered into by ABX for CGI
Antigens during such time as CGI is an Affiliate of ABX (as the term "Affiliate
is
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defined in the GenPharm Cross License) to contain provisions specifying that
rights under the GenPharm Cross License conveyed to ABX under such Product
Licenses are subordinate to the rights conveyed to CGI under the Direct
Sublicense of GenPharm Rights.
2.6.1 Coordination With Direct Sublicense of GenPharm Rights.
(a) To the extent (and only to the extent) that the grant of
sublicenses and rights to CGI, or third parties, under the Direct Sublicense of
GenPharm Rights precludes, under the terms of the GenPharm Cross License, the
grant of any sublicense or rights under the GenPharm Cross License related to
the same Antigen to ABX (whether by Product License or otherwise), ABX agrees
that rights granted to ABX by XT, including the sublicense of rights under the
GenPharm Cross License under the Product License related to that Antigen, shall
be subordinate to the sublicenses and rights granted to CGI under the Direct
Sublicense of GenPharm Rights.
(b) For purposes of further clarification, it is understood that,
to the extent that one or more sublicenses granted to CGI, or third parties,
under the Direct Sublicense of GenPharm Rights terminate or expire for any
reason (including without limitation any termination or expiration pursuant to
Article 9 of the Direct Sublicense of GenPharm Rights), the rights granted to
ABX under the Product Licenses related to the same CGI Product Antigens as the
terminated or expired sublicenses shall no longer be subject to the rights
granted to CGI under the Direct Sublicense of GenPharm Rights; and, accordingly,
in such event the rights granted to CGI or third parties under the Direct
Sublicense of GenPharm Rights may become part of the rights granted under the
Product License from XT to ABX related to that Antigen (and from ABX to CGI in
any corresponding CGI Product Sublicense), in each case to the extent so
provided in the applicable Product License (or CGI Product Sublicense,
respectively).
2.6.2 Territory and Exclusivity. The Territory and exclusivity
provided in a given CGI Product Sublicense shall be the same as the Territory
and exclusivity granted to ABX under the Product License from XT to ABX related
to the same Antigen. Accordingly, for example, (i) if ABX obtains a Co-
Exclusive Worldwide Product License related to the CGI Antigen, the terms of the
CGI Product Sublicense shall provide for a Territory which is the Home Territory
of ABX and the Rest of the World and will provide that the rights granted
therein are exclusive in the Home Territory of ABX and co-exclusive with JTI or
its assignee or sublicensee in the Rest of the World, (ii) if ABX obtains an
Exclusive Home Territory Product License related to the CGI Antigen, the terms
of the CGI Product Sublicense shall provide for a Territory which is the Home
Territory of ABX and will provide that the rights granted are exclusive in that
Home Territory, (iii) if ABX obtains an Exclusive Qualified Worldwide Product
License related to the CGI Antigen, the terms of the CGI Product Sublicense will
provide for a Territory which is the Home Territory of ABX and the Rest of the
World, and will provide that the rights granted are exclusive in that territory,
and (iv) if ABX obtains an Exclusive Worldwide Product License related to the
CGI Antigen, the terms of the CGI Product Sublicense will provide for a
Territory which is worldwide and will provide that the rights granted are
exclusive in that territory.
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2.6.3 Financial Terms. [***]. This Section 2.6.3 shall not be deemed
to limit ABX's obligations under Section 11.1(v) below.
2.6.4 Rights to Antigens. Notwithstanding any other provision of this
Agreement, it is understood and agreed that neither this Agreement nor the CGI
Product Sublicenses convey to CGI any rights ABX may have (whether by patentable
invention, license, or otherwise) in or to Antigen Specific Technology, nor does
the CGI Product Sublicense or this Agreement convey to ABX any rights that CGI
may have (whether by patentable invention, license, or otherwise) in or to any
technology of CGI whatsoever (other than the right to use Antigen provided by
CGI for the purpose of conducting the immunization services set forth in Article
3 of this Agreement), unless the parties expressly agree otherwise in writing.
2.6.5 Residual Rights. For purposes of clarification, it is understood
that the license granted to CGI under a CGI Product Sublicense shall be for
Covered Products in the Gene Therapy field, and that ABX shall retain all rights
under the corresponding Product Licenses outside of the Gene Therapy field,
subject to Section 5.2 below.
3. IMMUNIZATION SERVICES
3.1 Services. Following CGI's exercise of its Option with respect to an
Antigen pursuant to Section 2.2 or exercise of a Buy-In Right to a CGI Antigen
pursuant to Section 2.3, and upon request from CGI, ABX agrees to provide to CGI
reasonable immunization services as described in Exhibit A hereto with respect
to such CGI Antigen, [***]. Unless the parties agree otherwise in writing, ABX
shall perform such immunization services with a number of Mice (or Future
Generation Mice) as specified in Exhibit A and shall use a level of effort
calculated to complete the tasks set forth in Exhibit A within six (6) months
after the time CGI requests such services and provides to ABX both reasonably
sufficient quantities of the Antigen and the primary and secondary screening
assays as set forth in Exhibit A unless, with diligent efforts, ABX is unable to
complete such services in such time, in which case ABX shall complete such
services as soon as practicable; provided, that in no event shall ABX use
efforts less than the efforts ABX uses for similar activities with respect to
its own Antibody Products. CGI may direct ABX to use one or more types of Mice
or Future Generation Mice from such colonies as ABX makes available for such use
by third parties, provided that ABX shall not be obligated to use a total number
of Mice and Future Generation Mice exceeding the number set forth in Exhibit A.
It is understood that ABX shall have no obligation to provide immunization
services related to an Antigen if an Impediment exists with respect to such
Antigen (as described in Section 2.2 above) or ABX has not exercised its Buy-In
Right with respect to such Antigen.
3.2 Improvements; Disclosure and Cooperation. On CGI's request, ABX shall
make reasonably available for use in connection with performance of immunization
services pursuant to
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this Article 3, such improvements and new technologies (including without
limitation immunization methodologies, hybridoma technologies, and the use of
different strains of, or improvements in, Mice or Future Generation Mice for
immunization) as may become available to ABX for use in performing such
immunization services and are generally offered to be made similarly available
by ABX to third parties. To the extent that ABX may make such improvements or
new technologies available for use on behalf of CGI without incurring
substantial incremental expenses, over the cost of performing immunization
services using technologies available as of the Effective Date, ABX shall make
such improvements or new technologies available to CGI at no cost to CGI, and if
there is such substantial incremental expense, ABX shall notify CGI in advance
and shall use such improvements or new technologies for immunization services
under this Article 3 if CGI agrees in advance to pay such additional expenses.
ABX agrees to keep CGI reasonably informed of any such improvements or new
technologies and agrees to provide, on CGI's request, reasonable cooperation and
assistance in helping CGI to understand the nature of the improvements or new
technology and determine whether CGI should choose to request the use of such
improvements or new technologies in performance of immunization services under
this Agreement.
3.3 Ownership of Materials and Intellectual Property. Except as otherwise
provided in Section 8.1 of this Agreement, ABX shall retain all right, title and
interest in any biological materials, information, technical data, ideas,
discoveries, works of authorship, patentable and unpatentable inventions,
know-how, engineering drawings, and equipment made by ABX (and its employees,
agents, or representatives) in the course of performing immunization services
under this Agreement.
3.4 Supply of Hybridomas; Terms of Material Transfer. ABX agrees to use
reasonable efforts to provide quantities of the hybridoma clones supplied in
accordance with Exhibit A to CGI as reasonably requested by CGI. All hybridomas
derived from Mice or Future Generation Mice provided from ABX to CGI shall
remain the property of ABX, and the transfer of physical possession of any
Transgenic Products to CGI shall not be construed as a sale, lease, offer to
sell or lease, or other transfer of title. All Antibody Products transferred
from ABX to CGI shall remain the property of ABX, and the transfer of physical
possession to CGI, and/or possession or use by CGI, of such Antibody Products
shall not be (nor be construed as) a sale, lease, offer to sell or lease, or
other transfer of title to such Antibody Products. It is understood and agreed
that transfer of hybridomas to CGI pursuant to Article 3 of this Agreement shall
not convey to CGI any implied rights or sublicenses, and that CGI shall only be
authorized regarding the manufacture, use, and other exploitation of such
hybridomas pursuant to (and to the extent of) rights and sublicenses conveyed to
CGI under a CGI Product Sublicense (and any corresponding sublicense directly to
CGI from XT under the GenPharm Cross License, it being understood that all
rights and sublicenses under the GenPharm Cross License are subject to the
limitations set forth therein). CGI shall only use such hybridomas in compliance
with all applicable national, state, and local laws and regulations, including
all applicable National Institutes of Health guidelines and agrees that such
hybridomas will not be used in humans, except in accordance with all applicable
regulations and laws. CGI acknowledges that such hybridomas are experimental in
nature and may have unknown characteristics and therefore agrees to use prudence
and reasonable care in the use, handling, storage, transportation, disposition
and containment of such hybridomas and all derivatives thereof.
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3.5 Supply of CGI Antigen; Terms of Material Transfer. CGI Antigen
materials, and primary and secondary screening assay materials, provided by CGI
to ABX for performance of the immunization services shall remain the property of
CGI, and the transfer of physical possession of such materials to ABX shall not
be construed as a sale, lease, offer to sell or lease, or other transfer of
title. It is understood and agreed that transfer of such materials to ABX
pursuant to Article 3 of this Agreement shall not convey any implied right,
license or sublicense to ABX regarding such materials except to the extent (and
only to the extent) necessary to perform the immunization services set forth in
this Article 3. ABX shall only use such materials for performing immunization
services pursuant to Article 3 as set forth in Exhibit A. ABX shall only use
such CGI Antigen materials in compliance with all applicable national, state,
and local laws and regulations, including all applicable National Institutes of
Health guidelines and agrees that such materials will not be used in humans,
except in accordance with all applicable regulations and laws. ABX acknowledges
that such CGI Antigen materials are experimental in nature and may have unknown
characteristics and therefore agrees to use prudence and reasonable care in the
use, handling, storage, transportation, disposition and containment of such
materials and all derivatives thereof. ABX shall not disclose to any third
party, or license to any third party, any Antigen Inventions for CGI Proprietary
Antigens made by ABX using materials provided by CGI.
4. LIMITATIONS ON LICENSES AND SELECTION; RIGHT TO EXCLUSIVE
WORLDWIDE LICENSE.
4.1 Limitation on Licenses and Selection of Antigens.
4.1.1 "[***] Product License." For purposes of this Section 4.1, a
Product License for a CGI Antigen shall be a "[***] Product License" from the
time that ABX and XT enter into such Product License for such CGI Antigen until
the earlier of (i) the time a Covered Product [***]or (ii) the time the CGI
Product Sublicense for such CGI Antigen and all sublicenses thereunder are
terminated or expire (or is disclaimed by CGI in writing prior to execution of
the CGI Product Sublicense).
4.1.2 Limitation on CGI Pre-IND Product Licenses. Notwithstanding any
other provision of this Agreement, ABX shall not be obligated to enter into a
Product License for a CGI Antigen if entering into such Product License would
bring the total number of [***].
4.2 Right to Exclusive Worldwide Product License. In the event that ABX has
obtained a Product License for Covered Products related to a CGI Antigen which
is a Co-Exclusive Worldwide Product License, Exclusive Qualified Worldwide
Product License, Exclusive Home Territory Product License, or other license
conveying lesser rights than would be conveyed under an Exclusive Worldwide
Product License, and thereafter acquires the right under the MRLOA to obtain
additional rights relating to such Covered Products (including without
limitation an Exclusive Worldwide Product License for such Covered Products),
ABX shall notify CGI and provide a description to CGI of such additional rights.
If CGI requests ABX to exercise its right to obtain such broader rights
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prior to the deadline, if any, for ABX to exercise such right, ABX shall
exercise its right under the MRLOA to obtain such broader rights and revise the
corresponding CGI Product Sublicense to match the Territory and exclusivity
available to ABX after obtaining such broader rights; provided, however, that
CGI shall be responsible for paying any additional license fees paid by ABX to
XT therefor and CGI shall not have the right to obtain rights broader than those
contained in the form of CGI Product Sublicense attached hereto as Exhibit B.
ABX shall not be obligated to give notice or exercise its right to obtain
additional rights as provided in this Section 4.2, unless a CGI Product
Sublicense related to such CGI Antigen is then in effect. ABX shall have the
right, at its own expense, to exercise its right to obtain such broader rights
at any time prior to request by CGI under this Section 4.2.
5. EXPLOITATION OF RESIDUAL RIGHTS BY ABX
5.1 Use of the CGI Selection Slot by ABX. If for any given Six-Month Period
CGI does not exercise its Option (and is not deemed to have exercised its Option
under Section 2.3 above) with respect to the full number of Antigens for which
CGI has the right to do so under Section 2.1, then that Selection Slot will be
available for ABX to select an Antigen (for its own account or for the benefit
of a third party). In the event that ABX Selects an Antigen using such Selection
Slot, ABX shall promptly notify CGI which Antigen was Selected using the CGI
Selection Slot. If ABX or its Wholly-Owned Subsidiary thereafter grants to a
third party a Sublicense under ABX's Product License related to such Antigen,
then ABX shall pay to CGI [***].
5.2 Use of Residual Rights Related to CGI Antigen. In the event that ABX
grants a Sublicense to a third party with respect to non-Gene Therapy
applications of Covered Products related to a CGI Antigen, then ABX shall pay to
CGI [***] from such Sublicense. If such residual rights exercised by ABX were
obtained as a result of CGI requesting ABX to exercise a Buy-In Right as set
forth under Section 2.3, then ABX shall also reimburse CGI for [***] paid by CGI
pursuant to Section 2.3.3.
5.3 No Implied Obligation. Nothing in the Agreement shall obligate ABX to
use the Selection Slot reserved for CGI in the manner set forth in Section 5.1
or to exploit the residual rights for non-Gene Therapy applications of Covered
Products related to a CGI Antigen as set forth in Section 5.2, nor shall ABX
have any implied obligation or duty to Sublicense any such rights to a third
party.
6. ADDITIONAL OBLIGATIONS REGARDING NON-CGI ANTIGENS
6.1 Sale of Covered Products for Gene Therapy. ABX shall not itself market
or sell any Covered Product solely or primarily for use in Gene Therapy.
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6.2 Gene Therapy Sublicenses. ABX shall not enter into any Sublicense
agreement with a third party granting rights to make, have made, use, sell or
offer to sell Covered Products (i) solely for use in the Gene Therapy or (ii)
where ABX knows, at the time the Sublicense is granted, that the third party's
objective is primarily to sell the Covered Products for use in Gene Therapy.
Notwithstanding the foregoing, the parties acknowledge and agree that if a
Sublicensee's stated intention (in writing) at any time prior to obtaining the
Sublicense is to commercialize a Covered Product pursuant to such Sublicense for
an application other than Gene Therapy before commercializing a Covered Product
pursuant to such Sublicense for a Gene Therapy Application, such Sublicensee's
primary objective shall be deemed not to be to sell Covered Products for use in
Gene Therapy, even if such Sublicensee also intends to develop and sell Covered
Products for use in Gene Therapy, and even if such Gene Therapy application is
ultimately commercialized before Covered Products for non-Gene Therapy
applications are commercialized.
6.3 Permitted Sublicenses Including Gene Therapy.
(a) Subject to Section 6.2, ABX may enter into a Sublicense agreement
with a third party granting rights to such third party with respect to Covered
Products for use in Gene Therapy; provided, however, that ABX shall pay to CGI
(i) [***] received by ABX from such third party under such Sublicense which are
triggered by Covered Products in the Gene Therapy field and (ii) [***]. For
purposes of determining the [***] described in the preceding sentence, (A) any
amounts that ABX is required to pay to third parties (other than amounts paid to
XT for XT's own account, as described in (B) below) as a result of the grant or
exercise of such Sublicense including without limitation any royalties owed by
ABX to such third parties in respect of Sublicensee Net Sales of such Covered
Products, and (B) [***] by reason of ABX's acquiring or exercising (directly or
through third parties) the Product license, or other rights under the Licensed
Technology for such Antigen, shall in each case be deducted from the amount of
[***] received by ABX or its Wholly-Owned Subsidiary in respect of such
Sublicense, before calculating CGI's share. For purposes of clarification, it is
understood and agreed that such "net" amounts shall (A) not include amounts paid
to ABX for [***], and (B) shall be net of any [***].
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[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
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(b) In the event that ABX performed research regarding an Antigen and
reached a point equivalent to completion of Item 11 on Exhibit A hereto with
respect to such Antigen prior to (i) granting to a third party a Sublicense with
respect to Covered Products related to that Antigen, or an option to obtain such
a Sublicense, or (ii) obtaining a contractual commitment from a third party to
reimburse the expenses of such research and development work in whole or part,
then the payments set forth in Section 6.3(a) shall not apply, and ABX shall not
be required to account to CGI for milestone and royalty payments related to such
Covered Products; provided, however, that the payments in Section 6.3(a) shall
apply in the case of Covered Products related to the [***].
(c) It is understood and agreed by the parties that the
obligations in this Section 6.3 shall not apply with respect to Covered Products
for Antigens (i) that were Selected by ABX prior to the Effective Date, (ii) for
which ABX exercised a Buy-In Right prior to the Effective Date, or (iii) with
respect to which ABX entered into a license to make, use and sell Covered
Product prior to the Effective Date; provided, however, that the provisions of
this Section 6.3 shall apply to Covered Products for the [***].
6.4 [***]. ABX agrees that it will [***], and ABX agrees to [***].
6.5 No Implied Obligations. Nothing in this Agreement shall be deemed to
obligate CGI to (i) request ABX to Select CGI Antigens, (ii) request ABX to
exercise Buy-In Rights for CGI Antigens, or (iii) request ABX to obtain a
Product License for Covered Products related to a CGI Antigen; provided,
however, that CGI's diligence obligations under each CGI Product Sublicense
shall be as set forth in that CGI Product Sublicense. Subject to the terms of
any CGI Product Sublicense entered into between CGI and ABX, nothing in this
Agreement shall prevent CGI from commercializing products similar to or
competitive with Covered Products, in addition to or in lieu of such Covered
Products. Nor shall anything in this Agreement be deemed to obligate ABX to act
in a manner to generate or maximize the amounts payable to CGI under Sections
5.1, 5.2, or 6.3 of this Agreement.
7. PAYMENTS; ACCOUNTING AND REPORTS
7.1 Amounts Due to ABX From CGI. ABX shall invoice CGI for all amounts due
to ABX from CGI hereunder (including without limitation any amounts that ABX
owes XT for Selection of a CGI Antigen or for execution of a Product License
with respect to a CGI Antigen), and CGI shall pay such amounts within thirty
(30) days of receiving such invoice. Payments due to ABX from CGI under CGI
Product Sublicenses shall be made as set forth therein.
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[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
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7.2 Revenue Sharing Reports and Payments. After the first commercial sale
of Product on which amounts are required to be paid by ABX to CGI under Sections
5.1, 5.2, or 6.3 above, ABX agrees to make quarterly written reports to CGI
within sixty (60) days after the end of each calendar quarter, stating in each
such report the source, basis, and payments, and aggregate amounts of, amounts
received by ABX from Sublicensees during the calendar quarter upon which
payments are due to CGI under Sections 5.1, 5.2 and 6.3 above. Concurrently with
the making of such reports, ABX shall pay to CGI all amounts payable pursuant to
Sections 5.1, 5.2, and 6.3 above. All payments to CGI hereunder shall be made in
U.S. Dollars to a bank account designated by CGI.
7.3 Records; Inspection. ABX shall keep (and cause its Wholly-Owned
Subsidiaries to keep) complete, true and accurate books of account and records
for the purpose of determining the amounts payable to CGI under Sections 5.1,
5.2, and 6.3 this Agreement. Such books and records shall be kept at the
principal place of business of ABX or its Wholly-Owned Subsidiaries, as the case
may be, for at least three years following the end of the calendar quarter to
which they pertain. Such records of ABX or its WhollyOwned Subsidiaries will be
open for inspection during such three-year period by a representative of CGI for
the purpose of verifying the statements. ABX shall require each of its
Sublicensees to maintain similar books and records and to open such records for
inspection during the same three-year period by a representative of ABX
reasonably satisfactory to CGI on behalf of, and as required by, CGI for the
purpose of verifying the revenue sharing statements. All such inspections may be
made no more than once each calendar year, at reasonable times mutually agreed
by CGI and ABX. The representative of CGI will be obliged to execute a
reasonable confidentiality agreement prior to commencing any such inspection.
Inspections conducted under this Section 7.3 shall be at the expense of CGI,
unless a variation or error producing an increase exceeding ten percent of the
amount stated for the period covered by the inspection is established in the
course of any such inspection, whereupon all costs relating thereto will be paid
by ABX. Upon the expiration of three years following the end of any fiscal year,
the calculation of revenues to be shared with respect to such year shall be
binding and conclusive, and ABX shall be released from any liability or
accountability with respect to royalties for such year.
7.4 Currency Conversion. If any currency conversion shall be required in
connection with the calculation of royalties or other payments hereunder, such
conversion shall be made using the selling exchange rate for conversion of the
foreign currency into U.S. Dollars, quoted for current transactions reported in
The Wall Street Journal for the last business day of the calendar quarter to
which such payment pertains.
7.5 Late Payments. Any payments due under this Agreement from either party
that are not paid on the date such payments are due under this Agreement shall
bear interest to the extent permitted by applicable law at the prime rate as
reported by the Bank of America in San Francisco, California on the date such
payment is due, plus an additional two percent, calculated on the number of days
such payment is delinquent. This Section 7.5 shall in no way limit any other
remedies available to any party.
7.6 Withholding Taxes. All payments required to be made pursuant to this
Agreement shall be without deduction or withholding for or on account of any
taxes (other than taxes
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imposed on or measured by net income) or similar governmental charge imposed by
a jurisdiction, such taxes referred to herein as "Withholding Taxes." Such
Withholding Taxes shall be the sole responsibility of the withholding party. The
withholding party shall provide a certificate evidencing payment of any
Withholding Taxes hereunder.
8. INTELLECTUAL PROPERTY
8.1 Ownership of Inventions. Title to all inventions and other intellectual
property made solely by an ABX employee in connection with this Agreement shall
be owned by ABX. Title to all inventions and other intellectual property made
solely by an CGI employee in connection with this Agreement shall be owned by
CGI. Title to all inventions and other intellectual property made jointly by
employees of ABX and CGI in connection with this Agreement shall be jointly
owned by CGI and ABX. Notwithstanding the foregoing, as to CGI Proprietary
Antigens, CGI shall own all intellectual property rights, and other proprietary
rights, in and to inventions comprising: (i) compositions of such Antigens and
Genetic Materials encoding such Antigens; (ii) antibodies that bind to such
Antigens, Genetic Materials encoding such antibodies, and cells that express or
secrete such antibodies (it being understood that ownership of such intellectual
property by CGI shall not be, nor be construed as, a sale, lease, offer to sell
or lease, or other transfer of title of any physical materials, including
without limitation materials comprising Transgenic Products); and (iii) uses of
antibodies to such Antigens; in each case which inventions are made in the
course of performing services under Article 3 of this Agreement. Except as
expressly provided in this Agreement, it is understood that neither party shall
have any obligation to account to the other for profits, or to obtain any
approval of the other party to license or exploit jointly owned intellectual
property. In addition, except as may be expressly provided under a CGI Product
Sublicense actually entered into between the parties, this Agreement shall not
be deemed to grant to either CGI or ABX any right to prosecute, enforce or
defend any patent or other intellectual property right owned or controlled by
the other party.
8.2 Disclosure of Inventions. Each party shall promptly disclose to the
other any patentable invention related to a CGI Antigen or an Antibody Product
for such CGI Antigen, using the inventions disclosure form attached as Exhibit C
hereto. All inventions disclosed under this Section 8.2 shall be treated as
"Confidential Information" of the disclosing party under Article 9 of this
Agreement. Nothing herein shall affect a party's ownership of any invention
disclosed to the other party.
8.2.1 Disclosure and Licensing to JTI. It is understood and agreed
that if an Antigen does not qualify for Selection by ABX pursuant to Section 7.1
of the MRLOA and ABX makes Antibody Inventions for such Antigen other than
through use of materials supplied by CGI pursuant [***]. Unless otherwise agreed
in writing by CGI, ABX shall be entitled to disclose and license such Antigen
Inventions to JTI to the extent (and only to the extent) required under the
MRLOA.
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
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9. CONFIDENTIALITY
9.1 Confidentiality. Except as expressly provided herein, CGI and ABX each
agree that, for the term of this Agreement and for five years thereafter, the
receiving party shall keep completely confidential and shall not publish or
otherwise disclose and shall not use for any purpose any information furnished
to it by the other party pursuant to this Agreement (including, without
limitation, knowhow), except to the extent that it can be established by the
receiving party by competent proof that such information:
(a) was already known to the receiving party, other than under an
obligation of confidentiality, at the time of disclosure;
(b) was generally available to the public or otherwise part of the
public domain at the time of its disclosure to the receiving party;
(c) became generally available to the public or otherwise part of the
public domain after its disclosure and other than through any act or omission of
the receiving party in breach of this Agreement; or
(d) was subsequently lawfully disclosed to the receiving party by a
third party or independently developed by the receiving party without reference
to any information or materials disclosed by the disclosing party.
9.2 Permitted Disclosure. Notwithstanding Section 9.1 above and Section
13.16 below, each party may nevertheless disclose the other party's information
to the extent such disclosure is reasonably necessary in exercise of its rights
or performing its obligations hereunder or as required by law, provided that if
a party is required by law to make any such disclosure of the other party's
secret or confidential information, other than pursuant to a confidentiality
agreement, it will give reasonable advance notice to the other party of such
disclosure requirement and will use efforts consistent with prudent business
judgment to secure confidential treatment of such information prior to its
disclosure (whether through protective orders or confidentiality agreements or
otherwise).
10. INDEMNIFICATION
10.1 CGI. CGI agrees to indemnify and hold ABX and its directors, officers,
employees and agents harmless from and against any claims, damages, liabilities
or actions (including reasonable attorneys' fees and court and other expenses of
litigation) (collectively, the "Liabilities") suffered or incurred in connection
with third party (i) claims relating to or arising from the making, having made,
use, offer for sale, or sale of any Covered Product manufactured, used, sold or
otherwise distributed by CGI and its Affiliates or Sublicensees, (ii) claims
arising from the negligence or willful misconduct of CGI or the breach of CGI's
warranties under this Agreement or any derivatives thereof, or (iii) claims of
infringement to the extent such infringement is caused solely by ABX's use of an
Antigen provided by CGI or at the request of CGI, or ABX's production of
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antibodies to such an Antigen, in performing the immunization services and other
obligations under this Agreement; provided, however, that CGI shall not be
obligated to indemnify or hold harmless ABX or its directors, officers,
employees or agents for such Liabilities to the extent that such Liabilities
arise from the negligence or willful misconduct of ABX.
10.2 ABX. ABX agrees to indemnify and hold CGI and its directors, officers,
employees and agents harmless from and against any claims, damages, liabilities
or actions (including reasonable attorneys' fees and court and other expenses of
litigation) (collectively, the "Liabilities") suffered or incurred in connection
with third party claims relating to negligence or willful misconduct of ABX or
the breach of ABX's warranties under this Agreement; provided, however, that ABX
shall not be obligated to indemnify or hold harmless CGI or its directors,
officers, employees or agents for such Liabilities to the extent that such
Liabilities arise from the negligence or willful misconduct of CGI.
10.3 Procedure. If a party (an "Indemnitee") intends to claim
indemnification under this Article 10, it shall promptly notify the indemnifying
party (the "Indemnitor") in writing of any loss, claim, damage, liability or
action in respect of which the Indemnitee or its directors, officers, employees
or agents intend to claim such indemnification, and the Indemnitor shall have
the right to participate in, and, to the extent the Indemnitor so desires, to
assume the defense thereof with counsel mutually satisfactory to the parties;
provided, however, that an Indemnitee shall have the right to retain its own
counsel, with the fees and expenses to be paid by the Indemnitor, if
representation of such Indemnitee by the counsel retained by the Indemnitor
would be inappropriate due to actual or potential differing interests between
such Indemnitee and any other party represented by such counsel in such
proceeding. The indemnity agreement in this Article 10 shall not apply to
amounts paid in settlement of any loss, claim, damage, liability or action if
such settlement is effected without the consent of the Indemnitor, which consent
shall not be withheld or delayed unreasonably. The failure to deliver written
notice to the Indemnitor within a reasonable time after the commencement of any
such action, if prejudicial to its ability to defend such action, shall relieve
such Indemnitor of any liability to the Indemnitee under this Article 10, but
the omission so to deliver written notice to the Indemnitor shall not relieve it
of any liability that it may have to any party claiming indemnification
otherwise than under this Article 10. The party claiming indemnification under
this Article 10, its employees and agents, shall cooperate fully with the
Indemnitor and its legal representatives in the investigation of any action,
claim or liability covered by this indemnification.
11. REPRESENTATIONS AND WARRANTIES
11.1 ABX. ABX represents and warrants that: (i) it has the full right and
authority to enter into this Agreement; (ii) to the knowledge of ABX, there are
no existing or threatened actions, suits or claims pending with respect to the
subject matter hereof or the right of ABX to enter into and perform its
obligations under this Agreement; (iii) it has not entered and during the term
of this Agreement will not enter any other agreement inconsistent or in conflict
with this Agreement; (iv) it will not take any action that will cause a breach
of the GenPharm Cross License, the MRLOA or a
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Product License, which in any such case would adversely affect the rights of CGI
hereunder or under a CGI Product Sublicense; (v) Exhibit D hereto lists the
ABX-Controlled rights as of the Effective Date; and (vi) ABX will not, without
CGI's prior consent, amend the MRLOA or a Product License for a CGI Antigen or
the GenPharm Cross License in any manner that impairs CGI's rights under this
Agreement.
11.2 CGI. CGI represents and warrants that: (i) it has the full right and
authority to enter into this Agreement; (ii) to the knowledge of CGI, there are
no existing or threatened actions, suits or claims pending with respect to the
subject matter hereof or the right of CGI to enter into and perform its
obligations under this Agreement; (iii) it has not entered and during the term
of this Agreement will not enter any other agreement inconsistent or in conflict
with this Agreement; and (iv) it will not take any action, or fail to take any
action, under this Agreement or a CGI Product Sublicense that will cause a
breach of the GenPharm Cross License, the MRLOA or a Product License.
11.3 Disclaimer. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT,
ABX AND CGI MAKE NO REPRESENTATIONS AND EXTEND NO WARRANTIES OF ANY KIND
REGARDING COVERED PRODUCTS OR THE LICENSED TECHNOLOGY, EITHER EXPRESS OR
IMPLIED, INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF MERCHANTABILITY, FITNESS
FOR A PARTICULAR PURPOSE, NONINFRINGEMENT, AND VALIDITY OF TECHNOLOGY OR PATENT
CLAIMS, ISSUED OR PENDING. ALL HYBRIDOMAS PROVIDED TO CGI UNDER ARTICLE 3 OF
THIS AGREEMENT ARE PROVIDED "AS IS," AND ABX SPECIFICALLY DISCLAIMS ANY IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT
TO SUCH HYBRIDOMAS OR ANY IMMUNIZATION SERVICES PROVIDED PURSUANT TO ARTICLE 3
OF THIS AGREEMENT.
12. TERM; TERMINATION
12.1 Term. This Agreement shall commence on the Effective Date and, unless
earlier terminated pursuant to the other provisions of this Article 12, shall
continue in effect until June 28, 2016 and, thereafter, until the earlier of (i)
the date the MRLOA is no longer in effect or (ii) the twentieth anniversary of
the Effective Date.
12.2 Termination by CGI. CGI may terminate this Agreement at any time upon
sixty (60) days written notice to ABX.
12.3 Breach. If a party to this Agreement believes that another party to
this Agreement shall have committed a material breach hereunder, and such breach
shall have continued for sixty days after written notice thereof was provided to
the allegedly breaching party, unless the allegedly breaching party has cured
any such material breach or it has been waived by the notifying party prior to
the expiration of the sixty-day period, the party alleging the material breach
shall have the right to initiate an arbitration proceeding in accordance with
Section 13.12 below. If the arbitrators determine in such proceeding that a
material breach has occurred, they shall also determine an
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appropriate remedy, which may include termination of this Agreement, and if the
arbitrators do not order termination of the Agreement, the breaching party shall
cure such breach within thirty days following the final decision of the
arbitrators or such other time as directed by the arbitrators.
12.4 Effect of Termination; Accrued Rights and Survival of Terms.
Termination, relinquishment or expiration of this Agreement for any reason shall
be without prejudice to any rights which shall have accrued to the benefit of a
party prior to such termination, or expiration. Such termination, relinquishment
or expiration shall not relieve a party from obligations which are expressly
indicated to survive termination or expiration of this Agreement. Without
limiting the foregoing, Articles 3, 7, 8, 9, 10, 11, and 13 and Sections 2.6.1,
2.6.4, 2.6.5, 4.2, 5.3, and 6.5, and the payment obligations set forth in
Sections 2.2(c), 5.1 and 5.2 of this Agreement shall survive any expiration or
termination of this Agreement. As to those Covered Products (and only as to
those Covered Products) for which Abgenix has both (i) entered into a
contractual licensing obligation with a third party and (ii) also Selected the
corresponding Antigen (or identified such Antigen as an Antigen to be Selected
for the third party), the payment obligations set forth in Section 6.3 of this
Agreement shall survive expiration or termination of this Agreement. It is
understood that each CGI Product Sublicense executed prior to any expiration or
termination of this Agreement shall remain in effect in accordance with its
terms.
13. MISCELLANEOUS PROVISIONS
13.1 Governing Laws. This Agreement shall be interpreted and construed in
accordance with the laws of the State of California, without regard to conflicts
of law principles.
13.2 Waiver. It is agreed that no waiver by a party hereto of any breach or
default of any of the covenants or agreements herein set forth shall be deemed a
waiver as to any subsequent and/or similar breach or default.
13.3 Assignments. Neither this Agreement nor any right or obligation
hereunder may be assigned or delegated, in whole or part, by either party
without the prior written consent of the other, which consent shall not be
unreasonably withheld; provided, however, that either party may, without the
written consent of the other, assign its rights and delegate its obligations
hereunder to (i) any entity to which it has acquired all or substantially all of
the business or assets of the assigning party related to the subject matter of
this Agreement, or (ii) any successor corporation resulting from any merger or
consolidation with another corporation; provided, however, that ABX shall not
sell or transfer all or substantially all of its business or assets related to
the subject matter of this Agreement unless the assignee or transferee agrees in
writing to be bound by the terms of this Agreement. The terms and conditions of
this Agreement shall be binding on and inure to the benefit of the permitted
successors and assigns of the parties.
13.4 Independent Contractors. The relationship of the parties hereto is
that of independent contractors. The parties hereto are not deemed to be agents,
partners or joint venturers of the others for any purpose as a result of this
Agreement or the transactions contemplated thereby.
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13.5 Compliance with Laws. In exercising their rights under this Agreement,
the parties shall fully comply with the requirements of any and all applicable
laws, regulations, rules and orders of any governmental body having jurisdiction
over the exercise of rights under this Agreement.
13.6 Further Actions. Each party agrees to execute, acknowledge and deliver
such further instruments and to do all such other acts as may be necessary or
appropriate in order to carry out the purposes and intent of this Agreement.
13.7 Notices. Any notice required or permitted to be given to the parties
hereto shall be given in writing and shall be deemed to have been properly given
if delivered in person or when received if mailed by first class certified mail
to the other parties at the appropriate address as set forth below or to such
other addresses as may be designated in writing by the parties from time to time
during the term of this Agreement.
Cell Genesys, Inc.: Cell Genesys, Inc.
342 Lakeside Drive
Foster City, California 94404
Attn: President
Abgenix, Inc.: Abgenix, Inc.
7601 Dumbarton Circle
Fremont, California 94555
Attn: President
13.8 Export Laws. Notwithstanding anything to the contrary contained
herein, all obligations of the parties are subject to prior compliance with the
export regulations of the United States and such other United States laws and
regulations as may be applicable, and to obtaining all necessary approvals
required by the applicable agencies of the government of the United States. CGI
shall use efforts consistent with prudent business judgment to obtain such
approvals.
13.9 Severability. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision and the parties shall discuss in good faith appropriate
revised arrangements.
13.10 Force Majeure. Nonperformance of a party (except nonperformance of
payment obligations) shall be excused to the extent that performance is rendered
impossible by strike, fire, earthquake, flood, governmental acts or orders or
restrictions, failure of suppliers, or any other reason where failure to perform
is beyond the reasonable control and not caused by the negligence, intentional
conduct or misconduct of the nonperforming party.
13.11 No Consequential Damages. IN NO EVENT SHALL A PARTY HERETO BE LIABLE
FOR SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF THIS AGREEMENT
OR THE EXERCISE OF ITS RIGHTS HEREUNDER, INCLUDING
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WITHOUT LIMITATION LOST PROFITS ARISING FROM OR RELATING TO ANY BREACH OF THIS
AGREEMENT, REGARDLESS OF ANY NOTICE OF SUCH DAMAGES. NOTHING IN THIS SECTION
13.11 IS INTENDED TO LIMIT OR RESTRICT THE INDEMNIFICATION RIGHTS OR OBLIGATIONS
OF EITHER PARTY.
13.12 Dispute Resolution; Arbitration. The parties will attempt to resolve
any dispute under this Agreement by mutual agreement, and, if required, there
shall be a face-to-face meeting between the Chief Executive Officer of CGI and
the Chief Executive Officer of ABX. Any dispute under this Agreement which is
not settled after such meeting, shall be finally settled by binding arbitration,
conducted in accordance with the Commercial Arbitration Rules of the American
Arbitration Association, by three arbitrators appointed in accordance with said
rules. The costs of the arbitration, including administrative and arbitrators'
fees, shall be shared equally by the parties to the arbitration. Each party
shall bear its own costs and attorneys' and witness' fees. The prevailing party
in any arbitration, as determined by the arbitration panel, shall be entitled to
an award against the other party in the amount of the prevailing party's costs
and reasonable attorneys, fees. The arbitration shall be held in San Francisco,
California. A disputed performance or suspended performances pending the
resolution of the arbitration must be completed within thirty days following the
final decision of the arbitrators. Any arbitration subject to this Section 13.12
shall be completed within six months from the filing of notice of a request for
such arbitration.
13.13 Complete Agreement. It is understood and agreed by the parties that
this Agreement constitutes the entire agreement, both written and oral, among
the parties with respect to the subject matter hereof, and that all prior
agreements respecting the subject matter hereof, either written or oral,
expressed or implied, shall be abrogated, canceled, and are null and void and of
no effect. No amendment or change hereof or addition hereto shall be effective
or binding on the parties hereto unless reduced to writing and executed by the
respective duly authorized representatives of the parties.
13.14 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original and together shall be deemed to be one
and the same agreement.
13.15 Headings. The captions to the several Articles and Sections hereof
are not a part of this Agreement, but are included merely for convenience of
reference only and shall not affect its meaning or interpretation.
13.16 Nondisclosure. Except as set forth in Article 9 hereof, each of the
parties hereto agrees not to disclose to any third person the terms of this
Agreement without the prior written consent of the other parties hereto, except
to advisors, investors, licensees, sublicensees and others on a need to know
basis under circumstances that reasonably ensure the confidentiality thereof, or
to the extent required by law. Without limitation upon any provision of this
Agreement, each of the parties hereto shall be responsible for the observance by
its employees, consultants and contractors of the foregoing confidentiality
obligations.
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13.17 GenPharm Cross License. All rights and licenses granted hereunder
shall be subject to the GenPharm Cross-License, and to the extent that this
Agreement (or any license or CGI Product Sublicense granted or permitted under
this Agreement) purports to grant greater rights to any Grantee or third party
than is permitted under the GenPharm Cross License, such rights shall be granted
only to the extent permitted under the GenPharm Cross License, and the terms of
the GenPharm Cross License shall control.
13.18 Termination of Certain Agreements. The existing (i) Voting Agreement,
(ii) Immunization Services Agreement, and (iii) Gene Therapy Rights Agreement
between CGI and ABX, all effective as of July 15, 1996, shall be terminated and
hereby are terminated. Notwithstanding that any provisions of such Agreements
may be stated therein to survive, no provision of any such Agreement shall
survive such termination; provided, however, that any information received by
either party from the other required to be treated as confidential information
of the disclosing party pursuant to Article 5 of such Voting Agreement, Article
7 of such Immunization Services Agreement, or Article 8 of such Gene Therapy
Rights Agreement shall be treated as confidential information of the disclosing
party pursuant to Article 10 of this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective duly authorized officers as of the day and year first above
written, each copy of which shall for all purposes be deemed to be an original.
ABGENIX, INC. CELL GENESYS, INC.
By: /s/ R. Scott Greer By: /s/ Stephen A. Sherwin
--------------------------------- ------------------------------------
Printed Name: R. Scott Greer Printed Name: Stephen A. Sherwin
Title: President and CEO Title: Chairman and CEO
Date: Date:
------------------------------- ---------------------------------
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EXHIBIT A
[***]
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
<PAGE> 31
EXHIBIT B
FORM OF CGI PRODUCT SUBLICENSE
THIS PRODUCT SUBLICENSE AGREEMENT (the "Agreement") effective the ____ day
of ___________, ____, (the "Effective Date") is made by and between ABGENIX,
INC., a Delaware corporation ("ABX"), and CELL GENESYS, INC., a Delaware
Corporation (hereinafter "CGI").
RECITALS
CGI and ABX have entered into that certain Gene Therapy Rights Agreement
dated as of November__, 1997 (the "Gene Therapy Rights Agreement"), pursuant to
which CGI has certain rights to acquire a license under the Licensed Technology;
CGI has exercised its rights under the Gene Therapy Rights Agreement to acquire
from ABX a license or sublicense, as the case may be, under the Licensed
Technology to commercialize Products in the field of Gene Therapy, as set forth
below and on the terms and conditions herein.
NOW, THEREFORE, for and in consideration of the covenants, conditions, and
undertakings hereinafter set forth, it is agreed by and between the parties as
follows:
1. DEFINITIONS.
For purposes of this Agreement, the terms set forth in this Article shall
have the meanings set forth below.
1.1 "ABX-Controlled Rights" shall mean all rights to patents or
technology (including biological materials) that are licensed to ABX pursuant to
(i) the MRLOA, (ii) Product Licenses from XT for Covered Products related to the
Product Antigen, or (iii) any other license or similar agreement granting ABX
rights to patents or technology to the extent, and only to the extent, that such
patent or technology is reasonably necessary to exercise the rights in (i) and
(ii) to make, have made, use, sell, offer to sell, or import Products in the
field of Gene Therapy (each such agreement being referred to as an "ABX
In-License"), in each case to the extent that ABX has the right under the terms
of the applicable ABX In-License to further license or sublicense such rights
during the term of this Agreement; provided, however, that "ABX- Controlled
Rights" shall not include Antigen Specific Technology. Attachment D lists the
ABX-Controlled Rights as of the Effective Date.
1.2 "ABX Proprietary Antigen" shall mean a specifically identified
Antigen for which an issued patent, or a pending patent application being
prosecuted in good faith in the United States or Europe, which patent or
application is owned or controlled by ABX prior to CGI's exercise of its Option
with respect to such Antigen in accordance with the Gene Therapy Rights
Agreement, contains claims to the following: (i) the composition of such
specifically identified Antigen or Genetic Material encoding such Antigen, (ii)
a method of therapeutic use of an antibody or other
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moiety which binds to such specifically identified Antigen, or (iii) the
composition of an antibody to such Antigen (excluding compositions of antibodies
resulting from immunization services under Article 3 of this Agreement).
1.3 "ABX Home Territory" shall mean the United States and its
territories, and Canada and Mexico.
1.4 "Affiliate" shall mean any entity which controls, is controlled by
or is under common control with ABX, CGI or a Sublicensee. An entity shall be
regarded as in control of another entity if it owns or controls at least fifty
percent (50%) of the shares of the subject entity entitled to vote in the
election of directors (or, in the case of an entity that is not a corporation,
for the election of the corresponding managing authority). Notwithstanding the
foregoing, neither ABX, CGI, JTI nor XT shall be considered to control, be
controlled by, be under common control with, or be an Affiliate of the other for
purposes of this Agreement.
1.5 "Antibody" shall mean a composition comprising a whole antibody or
fragment thereof, said antibody or fragment having been generated from the Mice
or Future Generation Mice or having been derived from nucleotide sequences
encoding, or amino acid sequences of, such an antibody or fragment.
1.6 "Antibody Product" shall mean any product comprising an Antibody
or Genetic Material encoding an Antibody wherein, in respect of each Antibody
Product, said Genetic Material does not encode multiple Antibodies.
1.7 "Antigen" shall have the meaning set forth in the Gene Therapy
Rights Agreement.
1.8 "Antigen-Specific Technology" shall mean any intellectual property
or technology or other proprietary rights of ABX in or to ABX Proprietary
Antigens, including: (i) compositions of such Antigens and Genetic Materials
encoding such Antigens; (ii) uses of such Antigens; (iii) antibodies that bind
to such Antigens and Genetic Materials encoding such antibodies, and cells that
express or secrete such antibodies; and (iv) uses of antibodies to such
Antigens; provided, however, that Antigen-Specific Technology shall not include
rights in and to such intellectual property created in connection with the
performance of services for CGI under Article 3 of the Gene Therapy Rights
Agreement to the extent such intellectual property is reasonably necessary for
CGI to make, use, sell, or otherwise exploit Covered Products in accordance with
a CGI Product Sublicense. Antigen-Specific Technology shall also include methods
to discover novel Antigens and methods of using Antigens other than to create
Antibodies pursuant to the Gene Therapy Rights Agreement.
1.9 "Future Generation Mice" shall have the meaning set forth in the
Gene Therapy Rights Agreement.
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1.10 "Genetic Material" shall mean a nucleotide sequence, including
DNA, RNA, and complementary and reverse complementary nucleotide sequences
thereto, whether coding or noncoding and whether intact or a fragment.
1.11 "Gene Therapy" shall mean the treatment or prevention of a
disease by means of [***].
1.12 "GenPharm Cross License" shall mean that certain Cross License
Agreement entered into by and between ABX, CGI, JTI, XT, and GenPharm
International, Inc. effective as of March 26, 1997, as the same may be amended
from time to time.
1.13 "GenPharm Rights" shall mean the rights granted to XT under the
GenPharm Cross License and sublicensed to ABX, to the extent that ABX has the
right under the terms of the GenPharm Cross License to further sublicense such
rights.
1.14 "IND" shall mean an Investigational New Drug Exemption for a
Product, as defined in the U.S. Food, Drug and Cosmetic Act and the regulations
promulgated thereunder, or its non-U.S. equivalent.
1.15 "JTI" shall mean Japan Tobacco Inc.
1.16 "JTI Home Territory" shall mean Japan, Taiwan, and South Korea
(including the territory now comprising North Korea, if reunited with South
Korea after the date hereof).
1.17 "License Fee" shall have the meaning set forth in Article 3 of
the Product License.
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1.18 "Licensed Technology" shall mean:
(i) the ABX-Controlled Rights;
(ii) subject matter (including patentable inventions,
information, biological materials and other intellectual property, and including
all patent- and other intellectual property rights therein) created by ABX in
performing immunization services with respect to the Product Antigen at the
request of CGI under Article 3 of the Gene Therapy Rights Agreement, in each
case to the extent such subject matter is reasonably necessary for CGI to make,
use, sell, offer to sell, or otherwise exploit Products in accordance with this
Agreement; and
(iii) all other subject matter (including patentable inventions,
information, biological materials and other intellectual property, and including
all patent- and other intellectual property rights therein) owned by ABX, in
each case to the extent that ABX has the right, under the terms of the
applicable agreement(s), if any, pursuant to which ABX acquired such rights, to
license or sublicense such rights to CGI hereunder during the term of this
Agreement, and in each case only to the extent such subject matter is reasonably
necessary to make, use, sell or otherwise exploit Products in accordance with
this Agreement; provided, however, that Antigen Specific Technology shall be
excluded from Licensed Technology.
1.19 "Master Research License and Option Agreement" or "MRLOA" shall
mean that certain Master Research License and Option Agreement entered into by
CGI, JTI and XT as of June 28, 1996 (and subsequently assigned by CGI to ABX),
as amended from time to time.
1.20 "Mice" shall have the meaning set forth in the Gene Therapy
Rights Agreement.
1.21 "Net Sales" shall mean the [***] charged by CGI or its Affiliates
and Sublicensees for sales of Product to non-Affiliate customers, less [***],
with respect to such sales, and [***], as reflected in [***] of CGI and its
Affiliates or Sublicensees, [***]; provided, however, that in the case of [***]
"Net Sales" shall mean [***]. "Net Sales" shall not include [***]. In the case
of [***] "Net Sales" shall include [***] but notwithstanding any of the
foregoing, shall not include [***]. Notwithstanding the foregoing, "Net Sales"
for [***] shall be [***].
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[***]
1.22 "Product" shall mean any Antibody Product which incorporates (i)
an Antibody which binds to the Product Antigen or (ii) Genetic Material encoding
such an Antibody wherein said Genetic Material does not encode multiple
Antibodies. If ABX acquires the right to sell (and the right to sublicense the
right to sell) any other product derived through immunization of Mice or Future
Generation Mice with the Product Antigen, whether by amendment of the MRLOA, the
GenPharm Cross License, or otherwise, such products shall be included in the
definition of Product under this Agreement.
1.23 "Product Antigen" shall mean ____________________.
1.24 "Product License" shall mean a license granted from XT to ABX
pursuant to the terms of the MRLOA (including without limitation Sections 4.2,
5.2, 5.5, 5.6, 6.2, or 7.1 thereof) permitting ABX to commercialize certain
Antibody Products to the Product Antigen. Product Licenses shall include
Exclusive Worldwide Product Licenses, Exclusive Qualified Worldwide Product
Licenses, Co-Exclusive Worldwide Product Licenses, and Exclusive Home Territory
Product Licenses, as such terms are defined in the MRLOA. A true and correct
copy of the applicable Product License(s) related to the Product Antigen are
attached hereto as Attachment(s) ____, and any modifications or substitutions
thereto shall promptly be provided to CGI and added as Attachments hereto.
1.25 "Rest of the World" shall mean all countries of the world other
than the countries in the ABX Home Territory and JTI Home Territory.
1.26 "Sublicensee" shall mean a third party that is not an Affiliate
to whom CGI has granted a sublicense under the Licensed Technology to both make
and sell Products. "Sublicensee" shall also include a third party to whom CGI
has granted the right to distribute Product, provided that such third party is
responsible for marketing and promotion of Product within the applicable
territory. As used herein, a "Sublicense" shall mean an agreement or arrangement
pursuant to which such a sublicense or distribution right has been granted.
1.27 "Territory" shall mean [all the countries of the world]* [the ABX
Home Territory and the Rest of the World]** [the ABX Home Territory and the Rest
of the World]*** [the ABX Home Territory]****.
1.28 "Transgenic Product" shall have the meaning set forth in the
GenPharm Cross License.
1.29 "Universal Donor Cell Product" shall mean a Universal Receptor
Product that is also entirely a Universal Donor Cell (as that term is defined in
Section 1.31 below).
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1.30 "Universal Receptor Product" shall mean a substance that is
developed utilizing both (i) an Antibody and (ii) Universal Receptor Technology.
1.31 "Universal Receptor Technology" shall mean technology for
universal receptors [***]. As used herein: (i) "universal receptor" shall mean a
receptor [***].
1.32 "XT" shall mean Xenotech, L.P., a California limited partnership.
1.33 Terminology Regarding Antibody Products, Products, and Licenses.
For purposes of clarification, it is understood and agreed that (i) references
to Antibody Products or Products "to X," "for X," "related to X," and "with
respect to X" and similar references, where "X" is an Antigen (including without
limitation any Product Antigen or Sublicense Product Antigen), shall mean
Antibody Products or Products which incorporate (A) an Antibody which binds to
such Antigen or (B) Genetic Material encoding such an Antibody wherein said
Genetic Material does not encode multiple Antibodies, and (ii) references to a
license or sublicense (including without limitation any Product License, CGI
Product Sublicense, or Direct Third Party Sublicense) "to X," "for X," "related
to X," and "with respect to X" and similar references, where "X" is an Antigen,
shall mean such licenses or sublicenses conveying rights to Antibody Products
for such Antigen.
2. LICENSE GRANT
2.1 Grant under Product License. Subject to the terms and conditions of
this Agreement, ABX hereby grants to CGI [an exclusive license or sublicense, as
the case may be, under the Licensed Technology, to make and have made Product
anywhere in the world and to use, sell, lease, offer to sell or lease, import,
export, otherwise transfer physical possession of or otherwise transfer title to
Product in the field of Gene Therapy in the Territory]* [(i) a nonexclusive
license or sublicense, as the case may be, under the Licensed Technology, to
make and have made Product anywhere in the world and (ii) an exclusive license
under the Licensed Technology to use,
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sell, lease, offer to sell or lease, import, export, otherwise transfer physical
possession of or otherwise transfer title to Product in the field of Gene
Therapy in the Territory]** [(i) a nonexclusive license or sublicense, as the
case may be, under the Licensed Technology, to make and have made Product
anywhere in the world and (ii) an exclusive license under the Licensed
Technology and to use, sell, lease, offer to sell or lease, import, export,
otherwise transfer physical possession of or otherwise transfer title to Product
in the field of Gene Therapy in the Territory]*** [(i) a nonexclusive license or
sublicense, as the case may be, under the Licensed Technology, to make and have
made Product anywhere in the world and (ii) a license under the Licensed
Technology and to use, sell, lease, offer to sell or lease, import, export,
otherwise transfer physical possession of or otherwise transfer title to Product
in the field of Gene Therapy exclusively in the ABX Home Territory and
co-exclusively with JTI (or its Affiliates or Sublicensees and their Affiliates)
in the Rest of the World]****. To the extent such license or sublicense is
exclusive or co-exclusive, such license or sublicense shall be exclusive even as
to ABX, and whether non-exclusive, exclusive or co-exclusive, shall include the
right to grant and authorize sublicenses for exploitation worldwide; provided,
however, that CGI may not, under this license, grant sublicenses to any rights
to the Mice.
2.2 Grant Under Research License. Subject to the terms and conditions of
this Agreement, ABX hereby grants to CGI a nonexclusive sublicense under the
Licensed Technology to develop, make, have made, use, import or export or
otherwise transfer physical possession of (but not to sell, lease, offer to sell
or lease, or otherwise transfer title to) Products and cells that express or
secrete Antibodies to the Product Antigen, in each case solely for purposes
relating to or in connection with research or development (i) of Products for
use in the field of Gene Therapy or (ii) involving Genetic Material when used
with viral or nonviral gene transfer systems. CGI shall have the right to
sublicense the rights granted under this Section 2.2 upon the approval of ABX,
which approval shall not be unreasonably withheld. In the event that ABX refuses
to approve such a sublicense, ABX shall, to the extent that ABX has the right to
do so, grant at CGI's request a nonexclusive sublicense of such rights directly
to a non-Affiliate third party designated by CGI on terms and conditions
substantially identical to the applicable terms and conditions of this
Agreement.
2.3 Third Party Rights. It is understood and agreed that, as to
ABX-Controlled Rights, the grant of rights under this Article 2 shall be subject
to and limited in all respects by the terms of the applicable ABX In-License(s)
pursuant to which such ABX-Controlled Rights were granted to ABX. It is further
understood and agreed that, without limiting the foregoing, the rights granted
to CGI hereunder, including without limitation any grant of "exclusive" rights,
shall be subject to the rights granted to or retained by GenPharm under the
GenPharm Cross-License. It is understood and agreed that the rights and
sublicenses granted to CGI under this Article 2 or any other provision of this
Agreement shall be subject in all respects to the GenPharm Cross License, and
that to the extent this Agreement purports to grant greater rights or
sublicenses to CGI than are permitted under the GenPharm Cross License, any
grant of rights or sublicenses to CGI hereunder shall be limited to the extent
that ABX may grant such rights and sublicenses pursuant to the GenPharm Cross
License.
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2.4 Direct Sublicenses to Partners.
(a) From time to time, CGI may request ABX to sublicense directly to a
third party part or all of the GenPharm Rights (and other ABX-Controlled Rights,
if any, which ABX cannot, pursuant to the terms of the applicable ABX
In-License, sublicense to CGI with the right to grant further sublicenses)
sublicensed under Section 2.1, and in such event ABX shall grant such sublicense
under the such rights with respect to the Product Antigen directly to the third
party on terms and conditions substantially identical to this Agreement except
as provided below (each such sublicense a "Direct Third Party Sublicense"). In
such event, CGI shall notify ABX in writing of the Products to be sublicensed to
such third party, as well as the field, territory, duration, and other
limitations of such Direct Third Party Sublicense; provided, however, that the
rights granted under any such Direct Third Party Sublicense for the Product
Antigen shall in no event exceed the scope of the rights granted to CGI under
this Agreement. If, at the time of the request, CGI is an Affiliate of ABX (as
the term Affiliate is defined in the GenPharm Cross License), then CGI shall
terminate certain of its rights under the Direct Sublicense of GenPharm Rights
entered into by and between CGI and XT effective as of November __, 1997 by
completing and delivering to XT the attached form Notice of Partial Termination
of Direct Sublicense attached hereto as Attachment C. For the removal of doubt,
it is understood that the Direct Third Party Sublicense shall include provisions
substantially identical to Articles 5, 6, 7, 9, 10, and 11 and Sections 3.3,
4.1, 4.3, and 8.2 of this Agreement and such modifications of Article 2 as are
appropriate to define the scope of the sublicense to be granted. Upon such a
request by CGI, ABX shall cooperate with CGI and the third party designated by
CGI to prepare and execute such Direct Third Party Sublicense in a prompt and
expeditious manner.
(b) CGI agrees that the sublicense granted to CGI under Section 2.1
above shall be subordinate in all respects to any Direct Third Party Sublicense
entered into in accordance with this Section 2.4 (i.e., the sublicense granted
to CGI under Section 2.1 shall be of no force or effect to the extent that the
GenPharm Cross License does not permit both the sublicense to CGI under Section
2.1 and the Direct Third Party Sublicense). If, following the grant of a Direct
Third Party Sublicense in accordance with this Section 2.4 to a third party
(such third party being referred to as an "Initial Direct Third Party
Sublicensee," and such sublicense being referred to as an "Initial Direct Third
Party Sublicense"), CGI requests ABX to grant to a different third party a
Direct Third Party Sublicense (a "Subsequent Direct Third Party Sublicense")
with respect to Products and/or other subject matter within the scope of the
Initial Third Party Direct Sublicense which is then in effect, ABX shall not be
obligated to grant such Subsequent Direct Third Party Sublicense unless the
Initial Direct Third Party Sublicensee signs and provides to ABX a Subordination
Statement in the form attached hereto as Attachment A. For purposes of
clarification, it is understood that, to the extent that any Direct Third Party
Sublicense terminates for any reason, for so long as this Agreement remains in
effect, the rights granted to CGI under this Agreement shall no longer be
subordinate to such Direct Third Party Sublicense.
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3. PAYMENTS.
3.1 Amounts Payable Under Product License. CGI shall reimburse ABX for
[***].
3.2 Third Party Royalties Payable by ABX. ABX will be responsible for the
payment of [***]. In addition to the payments otherwise due to ABX under this
Agreement, CGI shall reimburse ABX for [***]. CGI shall continue any such
reimbursement payments to ABX until [***]. In the event that ABX enters into any
license or similar agreement after the Effective Date which would be [***] , ABX
shall promptly notify CGI and provide to CGI a copy of all terms and conditions
of such license or agreement that would affect CGI hereunder; in such event, CGI
shall [***], unless CGI promptly after receiving CGI's notice and a copy of the
above described terms and conditions of such license or agreement notifies ABX
that CGI elects not to accept such terms, in which event the license or
agreement shall [***] for purposes of this Agreement.
3.3 Royalties Payable by CGI. CGI, its Affiliate, and/or its Sublicensee
shall be responsible for the payment of [***].
4. ACCOUNTING AND RECORDS.
4.1 Royalty Reports; Payments, Invoices. After the first commercial sale of
Product on which royalties are required to be paid by CGI under Article 3 above,
CGI agrees to make quarterly written reports to ABX within sixty (60) days after
the end of each calendar quarter, stating in each such report the number,
description, and aggregate Net Sales of Product sold during the calendar quarter
upon which a royalty is payable under Article 3 above. Concurrently with the
making of such reports, CGI shall pay to ABX all amounts payable pursuant to
Article 3 above which are based upon Net Sales of Product, including such
amounts (if any) due pursuant to Section 3.2 and amounts equal to the amounts
that ABX owes to XT for (i) royalties at the applicable rate specified in
Section 4.1, 4.2 or 4.4 of the Product License related to the Product Antigen,
and
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(ii) all royalties payable pursuant to Section 5.1 of such Product License. ABX
shall invoice CGI for all other amounts due under this Agreement, and CGI shall
pay such amounts to ABX within thirty (30) days of receiving such invoice. All
payments to ABX hereunder shall be made in U.S. Dollars to a bank account
designated by ABX.
4.2 Early Third Party License Payments. If ABX is obligated to pay
royalties to a third party prior to ninety days after the end of the calendar
quarter, ABX shall so notify CGI and CGI shall provide the reports and payments
set forth in Section 4.1 above with respect to such royalties not later than ten
days before the date such payments are due to the third party. ABX shall provide
CGI with an invoice setting forth the royalties ABX must pay third parties with
respect to CGI's activities in the Territory in the preceding quarter and the
date such payments are due the third parties, and CGI shall pay such invoices
within thirty days of receipt of such invoice; provided, however, that if ABX is
invoiced for such amounts by XT or another third party and must pay such amounts
less than forty (40) days after receiving such invoice, ABX shall invoice such
amounts to CGI within ten (10) days of receiving such invoice from the third
party, and CGI shall pay such amounts before the later of (i) 20 days after
receiving such invoice from ABX or (ii) five (5) days prior to the date such
amount is due to the third party from ABX.
4.3 Records; Inspection. CGI shall keep (and cause its Affiliates and
Sublicensees to keep) complete, true and accurate books of account and records
for the purpose of determining the royalty amounts payable to ABX under this
Agreement. Such books and records shall be kept at the principal place of
business of CGI or its Affiliates or Sublicensees, as the case may be, for at
least three years following the end of the calendar quarter to which they
pertain. Such records of CGI or its Affiliates will be open for inspection
during such three-year period by a representative of ABX for the purpose of
verifying the royalty statements. CGI shall require each of its Sublicensees to
maintain similar books and records and to open such records for inspection
during the same three-year period by a representative of CGI reasonably
satisfactory to ABX on behalf of, and as required by, ABX for the purpose of
verifying the royalty statements. All such inspections may be made no more than
once each calendar year, at reasonable times mutually agreed by CGI and ABX. The
representative of ABX will be obliged to execute a reasonable confidentiality
agreement prior to commencing any such inspection. Inspections conducted under
this Section 4.3 shall be at the expense of ABX, unless a variation or error
producing an increase exceeding [***] of the amount stated for the period
covered by the inspection is established in the course of any such inspection,
whereupon all costs relating thereto will be paid by CGI. Upon the expiration of
three years following the end of any fiscal year, the calculation of royalties
payable with respect to such year shall be binding and conclusive, and CGI shall
be released from any liability or accountability with respect to royalties for
such year.
4.4 Currency Conversion. If any currency conversion shall be required in
connection with the calculation of royalties hereunder, such conversion shall be
made using the selling exchange rate for conversion of the foreign currency into
U.S. Dollars, quoted for current transactions reported in The Wall Street
Journal for the last business day of the calendar quarter to which such payment
pertains.
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4.5 Late Payments. Any payments due from CGI that are not paid on the date
such payments are due under this Agreement shall bear interest to the extent
permitted by applicable law at the prime rate as reported by the Bank of America
in San Francisco, California on the date such payment is due, plus an additional
two percent, calculated on the number of days such payment is delinquent. This
Section 4.5 shall in no way limit any other remedies available to any party.
4.6 Withholding Taxes. All payments required to be made pursuant to Article
3 hereof shall be without deduction or withholding for or on account of any
taxes (other than taxes imposed on or measured by net income) or similar
governmental charge imposed by a jurisdiction, such taxes referred to herein as
"Withholding Taxes." Withholding Taxes shall be the sole responsibility of the
withholding party. The withholding party shall provide a certificate evidencing
payment of any Withholding Taxes hereunder.
5. DUE DILIGENCE.
5.1 [***].
5.1.1 CGI agrees to [***] as may be agreed upon by the parties [***]
from the Effective Date.
5.1.2 Notwithstanding the foregoing, CGI shall be [***].
5.2 Failure to Meet Due Diligence Obligation.
5.2.1 If the diligence requirements set forth in Section 5.1 are not
met by CGI (or its Affiliates or Sublicensees) in the United States or in Japan,
CGI's rights hereunder shall terminate upon written notice by ABX to CGI and
subject to Sections 5.3, 5.4 and 10.3 below.
5.2.2 Notwithstanding Section 5.2.1, the license granted hereunder to
CGI shall not terminate by reason of a delay in [***], to the extent that
prudent business judgment, based on circumstances outside of CGI's reasonable
control, reasonably justifies such delay.
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5.3 Dispute Resolution. In the event that a dispute arises whether the
diligence requirements in this Article 5 have been met or circumstances exist
which CGI believes justifies a failure on its part to meet such obligation, the
parties will attempt to resolve any dispute by mutual agreement during a period
of 30 days following CGI's receipt of the notice under Section 5.2.1.
5.4 Arbitration. In the event that the parties are unable to resolve such
dispute pursuant to Section 5.3 above, such dispute shall be settled between ABX
and CGI by binding arbitration as set forth in Section 11.12. If the arbitrator
determines that the party acted in good faith, but failed to meet its
obligations under Section 5.1 above, the license granted to such party shall not
terminate unless the nonperforming party fails to cure such non-performance
within a reasonable period of time, as determined by the arbitrator.
5.5 Funding and Conduct. Except for the immunization services described in
the Gene Therapy Rights Agreement, CGI shall independently furnish and be
responsible for funding and conducting all of its preclinical and clinical
research and development of Product, at its own expense.
6. INTELLECTUAL PROPERTY.
6.1 Prosecution. Subject to Section 6.5, ABX or its licensor, as they may
agree, shall have the right to control the preparing, filing, prosecuting and
maintaining of patents and patent applications worldwide within the Licensed
Technology and conducting any interferences, oppositions, reexaminations, or
requesting reissues or patent term extensions with respect to the Licensed
Technology. ABX shall keep CGI reasonably informed as to the status of such
patent matters where the patent or patent application contains one or more
compositions of matter claims covering (i) one or more Antibodies which binds to
the Product Antigen or (ii) Genetic Material encoding such Antibodies wherein
said Genetic Material does not encode multiple Antibodies (each such claim a
"Product Composition Claim"), including without limitation by providing CGI the
opportunity to review and comment on any substantive documents which will be
filed in any patent office, and providing CGI copies of any substantive
documents received by ABX from such patent offices including notice of all
interferences, reexaminations, oppositions or requests for patent term
extensions. CGI shall provide reasonable cooperation and assistance to ABX in
connection with such activities, at ABX's request and expense. If ABX has the
right to prepare, file, prosecute or maintain patents or patent applications
containing one or more Product Composition Claims and notifies CGI that is does
not desire to do so in any country in the Territory, then CGI may prepare, file,
prosecute or maintain such patent or patent application at CGI's expense on
ABX's behalf.
6.2 Enforcement. Subject to Section 6.5, in the event that CGI becomes
aware that any Licensed Technology necessary for the practice of the license
granted herein is infringed or misappropriated by a third party or is subject to
a declaratory judgment action arising from such infringement, CGI shall promptly
notify ABX and ABX shall thereafter promptly notify the owner of such
intellectual property. ABX or its licensor, as they may agree, shall have the
exclusive right at its expense to bring an enforcement proceeding, or defend any
declaratory judgment action, involving any Licensed Technology. ABX shall keep
CGI reasonably informed of the progress of
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<PAGE> 43
such claim, suit or proceeding involving enforcement or defense of the Licensed
Technology. Any recovery received by ABX as a result of any such claim, suit or
proceeding shall be used first to reimburse ABX for all expenses (including
attorneys, and professional fees) incurred in connection with such claim, suit
or proceeding, and the remaining amount (if any) retained by ABX after paying
amounts ABX is obligated to pay to third parties in respect of such amount
pursuant to agreements within the ABX-Controlled Rights divided, to the extent
that the recovery expressly represents lost profits on sales of Product within
the field of Gene Therapy because of the infringer, in equal shares between ABX
and CGI. Notwithstanding the foregoing, if ABX (i) has the right to bring an
enforcement proceeding, or defend a declaratory judgment action, involving a
Product Composition Claim and (ii) notifies CGI that it does not desire to
pursue or defend such an action, then CGI may at its expense bring or defend
such action in consultation with ABX; provided, however, that (i) ABX shall have
the right to join such proceeding at any time at its own expense, (ii) CGI shall
not admit the invalidity or unenforceability of any patent rights within the
Licensed Technology without ABX's prior written consent, and (iii) if ABX does
not join the action, any recovery obtained by CGI shall be used first to
reimburse CGI for all expenses (including attorneys, and professional fees)
incurred in connection with such claim, suit or proceeding, and the remaining
amount (if any) retained by CGI after paying amounts CGI is obligated to pay to
third parties in respect of such amount pursuant to agreements within the
ABX-Controlled Rights shall be retained by CGI; provided, however, such
remainder shall, to the extent that the recovery expressly represents lost
profits on sales of Product within the field of Gene Therapy because of the
infringer, be treated as Net Sales of Product by CGI for purposes of determining
royalties under this Agreement.
6.3 Infringement Claims. Subject to Section 6.5, if the production, sale or
use of Product pursuant to this Agreement results in any claim, suit or
proceeding alleging patent infringement against CGI (or its Affiliates or
Sublicensees), CGI shall promptly notify ABX thereof in writing setting forth
the facts of such claim in reasonable detail. CGI shall keep ABX reasonably
informed of all material developments in connection with any such claim, suit or
proceeding as it relates to the Licensed Technology. Notwithstanding the above,
CGI shall not be able to settle any such claim, suit or proceeding if such
settlement involves any admission of the invalidity of the Licensed Technology
without written consent from ABX.
6.4 Patent Marking. CGI agrees to mark and have its Affiliates and
Sublicensees mark all Products sold pursuant to this Agreement in accordance
with the applicable statutes or regulations in the country or countries of
manufacture and sale thereof.
6.5 Limitation. Notwithstanding any other provision in this Article 6, the
parties acknowledge and understand that (i) ABX shall not be obligated to
prepare, file, prosecute, and maintain patents and patent applications, or to
bring or pursue enforcement proceedings or defend declaratory judgement actions
regarding the Licensed Technology if, and to the extent that, ABX is not
entitled to do so under one or more agreements within the ABX-Controlled Rights,
and (ii) any rights conveyed under this Article 6 permitting CGI to prepare,
file, prosecute and maintain certain patents and patent applications, or to
bring and pursue enforcement proceedings, or defend declaratory judgment
actions, regarding the Licensed Technology, shall be subject to ABX's
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<PAGE> 44
agreements within the ABX-Controlled Rights, and are conveyed only to the extent
permitted under such agreements.
7. CONFIDENTIALITY.
7.1 Confidential Information. Except as expressly provided herein, CGI and
ABX each agree that, for the term of this Agreement and for five years
thereafter, the receiving party shall keep completely confidential and shall not
publish or otherwise disclose and shall not use for any purpose any information
furnished to it by the other party pursuant to this Agreement (including,
without limitation, knowhow) except to the extent that it can be established by
the receiving party by competent proof that such information:
(a) was already known to the receiving party, other than under an
obligation of confidentiality, at the time of disclosure;
(b) was generally available to the public or otherwise part of the
public domain at the time of its disclosure to the receiving party;
(c) became generally available to the public or otherwise part of the
public domain after its disclosure and other than through any act or omission of
the receiving party in breach of this Agreement; or
(d) was subsequently lawfully disclosed to the receiving party by a
third party or independently developed by the receiving party without reference
to any information or materials disclosed by the disclosing party.
7.2 Permitted Disclosures. Notwithstanding Sections 7.1 above and 11.16
below, each party may nevertheless disclose the other party's information to the
extent such disclosure is reasonably necessary in filing or prosecuting patent
applications, prosecuting or defending litigation, complying with applicable
governmental regulations (including without limitation any disclosure
requirements for publicly traded companies) or otherwise submitting information
to tax or other governmental authorities, making a permitted sublicense or other
exercise of its rights hereunder (including the grant of sublicenses) or
conducting clinical trials, provided that if a party is required by law to make
any such disclosure of the other party's secret or confidential information,
other than pursuant to a confidentiality agreement, it will give reasonable
advance notice to the other party of such disclosure requirement and will use
efforts consistent with prudent business judgment to secure confidential
treatment of such information prior to its disclosure (whether through
protective orders or otherwise). Notwithstanding the foregoing, ABX shall not,
except as required by law, disclose to third parties clinical data or regulatory
filings received from CGI except as agreed in writing by CGI.
8. SUBLICENSES; OBLIGATIONS UNDER XT PRODUCT LICENSE.
8.1 Sublicenses. Pursuant to Article 2 herein, CGI will have the right to
grant and authorize sublicenses to third parties; provided, however, the CGI
shall remain responsible for any
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<PAGE> 45
payments due ABX for Net Sales of Product by any Sublicensee. [***]. Any
sublicense granted by CGI pursuant to this Agreement shall provide that the
Sublicensee will be subject to the applicable terms of this Agreement. CGI shall
provide ABX with a copy of relevant portions of each sublicense agreement, as
reasonably required by ABX.
8.2 Obligations Under Agreements With Third Parties. The sublicenses
granted by ABX to CGI under the ABX-Controlled Rights will be subject to the
applicable terms of the agreements pursuant to which ABX acquired such
ABX-Controlled Rights, including without limitation the Product License. It is
understood that ABX may provide a copy of some or all of this Agreement to XT
and other parties to such agreements.
9. REPRESENTATIONS AND WARRANTIES.
9.1 ABX. ABX represents and warrants that:
(i) it has the full right and authority to enter into this Agreement
and grant the rights and licenses granted herein;
(ii) it has not previously granted and will not grant any rights
inconsistent or in conflict with the rights and licenses granted to CGI herein;
(iii) there are no existing or threatened actions, suits or claims
pending against ABX with respect to the Licensed Technology or the right of ABX
to enter into and perform its obligations under this Agreement;
(iv) it has not previously granted, and will not grant during the term
of this Agreement, any right, license or interest in and to the Licensed
Technology, or any portion thereof, with respect to the manufacture, sale, offer
for sale, use, or import of the Product in the Gene Therapy field; and
(v) Attachment B hereto sets forth all ABX-Controlled Rights as of the
Effective Date; ABX shall not terminate (or permit to be terminated), or alter
or amend, any of the ABX-Controlled Rights in a manner that adversely affects
or may adversely affect CGI, without CGI's prior written consent.
9.2 CGI. CGI represents and warrants that:
(i) it has the full right and authority to enter into this Agreement;
(ii) to its knowledge, there are no existing or threatened actions,
suits or claims pending with respect to the subject matter hereof or the right
of CGI to enter into and perform its obligations under this Agreement; and
- ----------
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
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<PAGE> 46
(iii) it has not entered and during the term of this Agreement will
not enter any other agreement inconsistent or in conflict with this Agreement.
9.3 Disclaimer. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT,
ABX MAKES NO REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND, EITHER
EXPRESS OR IMPLIED, REGARDING PRODUCTS OR THE LICENSED TECHNOLOGY, INCLUDING,
BUT NOT LIMITED TO, WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, NONINFRINGEMENT, AND VALIDITY OF LICENSED TECHNOLOGY CLAIMS, ISSUED OR
PENDING.
9.4 Effect of Representations and Warranties. It is understood that if the
representations and warranties under this Article 10 are not true and accurate
and a party incurs liabilities, costs or other expenses as a result of such
falsity, the party at fault shall indemnify, defend and hold the injured party
harmless from and against any such liabilities, costs or expenses incurred,
provided that the party at fault receives prompt notice of any claim against the
injured party resulting from or related to such falsity and the sole right to
control the defense or settlement thereof.
10. TERM AND TERMINATION.
10.1 Effectiveness. This Agreement shall become effective as of the
Effective Date and the license rights granted by ABX under Article 2 above shall
be in full force and effect as of such date.
10.2 Term. Unless earlier terminated pursuant to the other provisions of
this Article 10, this Agreement shall continue in full force and effect until
the later of
(i) the expiration of the last to expire patent within the Licensed
Technology claiming Product; or
(ii) the twentieth anniversary of the Effective Date.
The licenses granted under Article 2 shall survive the expiration (but, except
as expressly provided in Section 10.5 below, not an earlier termination) of this
Agreement; provided that such licenses shall in such event become nonexclusive.
10.3 Termination for Breach. Either party to this Agreement may terminate
this Agreement in the event the other party shall have materially breached or
defaulted in the performance of any of its material obligations hereunder, and
such shall have continued for sixty days after written notice thereof was
provided to the breaching party by the nonbreaching party that terminates the
Agreement as to such party. Any termination shall become effective at the end of
such sixty day period unless the breaching party has cured any such breach or
default prior to the expiration of the sixty day period. However, if the party
alleged to be in breach of this Agreement disputes such breach within such sixty
day period, the non-breaching party shall not have the right to terminate this
Agreement unless it has been determined by an arbitration proceeding in
accordance
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<PAGE> 47
with Section 11.12 below that this Agreement was materially breached, and the
breaching party fails to cure such breach within thirty days following the final
decision of the arbitrators or such other time as directed by the arbitrators.
10.4 Other Termination Rights. CGI may terminate this Agreement and the
license granted herein, in its entirety or as to any particular patent within
the Licensed Technology in a particular country, at any time, by providing ABX
ninety (90) days written notice. In the event of termination as to a particular
country, the subject patent in such country shall cease to be within the
Licensed Technology (and the ABX- Controlled Rights, if applicable) for all
purposes of this Agreement.
10.5 Effect of Termination.
10.5.1 Termination of this Agreement for any reason shall not release
either party hereto from any liability which at the time of such termination has
already accrued to the other party or which is attributable to a period prior to
such termination.
10.5.2 In the event this Agreement is terminated for any reason, CGI and
its Affiliates and Sublicensees shall have the right to sell or otherwise
dispose (consistent with all applicable regulations and law) of the stock of any
Product subject to this Agreement then on hand. Upon termination of this
Agreement by ABX for any reason, any sublicense granted by CGI hereunder shall
survive, provided that upon request by ABX, such Sublicensee promptly agrees in
writing to be bound by the applicable terms of this Agreement.
10.5.3 This Agreement, including the license granted in Article 2, is
independent of, and shall not be affected by, any breach or termination of the
Gene Therapy Rights Agreement or any other agreement between the parties or
their Affiliates. In the event of the termination of the Gene Therapy Rights
Agreement, the rights and obligations of the parties hereto under Article 10 of
that agreement (Indemnification) shall be deemed to be part of this Agreement.
10.5.4 Section 4.3 and Articles 7, 9, and 11 shall survive the expiration
and any termination of this Agreement for any reason.
11. MISCELLANEOUS.
11.1 Governing Laws. This Agreement shall be interpreted and construed in
accordance with the laws of the State of California, without regard to conflicts
of law principles.
11.2 Waiver. It is agreed that no waiver by any party hereto of any breach
or default of any of the covenants or agreements herein set forth shall be
deemed a waiver as to any subsequent and/or similar breach or default.
11.3 Assignment. Neither this Agreement nor any right or obligation
hereunder may be assigned or delegated, in whole or part, by either party
without the prior written consent of
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<PAGE> 48
the other, which consent shall not be unreasonably withheld; provided, however,
that either party may, without the written consent of the other, assign its
rights and delegate its obligations hereunder to (i) any entity to which it has
acquired all or substantially all of the business or assets of the assigning
party related to the subject matter of this Agreement, or (ii) any successor
corporation resulting from any merger or consolidation with another corporation;
provided, however, that neither party shall sell or transfer all or
substantially all of its business or assets related to the subject matter of
this Agreement unless the assignee or transferee agrees in writing to be bound
by the terms of this Agreement. The terms and conditions of this Agreement shall
be binding on and inure to the benefit of the permitted successors and assigns
of the parties.
11.4 Independent Contractors. The relationship of the parties hereto is
that of independent contractors. The parties hereto are not deemed to be agents,
partners or joint venturers of the others for any purpose as a result of this
Agreement or the transactions contemplated thereby.
11.5 Compliance with Laws. In exercising their rights under this Agreement,
the parties shall fully comply with the requirements of any and all applicable
laws, regulations, rules and orders of any governmental body having jurisdiction
over the exercise of rights under this Agreement.
11.6 No Implied Obligations. Except as expressly provided in Article 5
above, nothing in this Agreement shall be deemed to require CGI to exploit the
Licensed Technology nor to prevent CGI from commercializing products similar to
or competitive with any Product, in addition to or in lieu of such Product.
11.7 Notices. Any notice required or permitted to be given to the parties
hereto shall be given in writing and shall be deemed to have been properly given
if delivered in person or when received if mailed by first class certified mail
to the other party at the appropriate address as set forth below or to such
other addresses as may be designated in writing by the parties from time to time
during the term of this Agreement.
Cell Genesys, Inc.: Cell Genesys, Inc.
342 Lakeside Drive
Foster City, California 94404
Attn: President
Abgenix, Inc.: Abgenix, Inc.
7601 Dumbarton Circle
Fremont, California 94555
Attn: President
11.8 Export Laws. Notwithstanding anything to the contrary contained
herein, all obligations of ABX and CGI are subject to prior compliance with
United States export regulations and such other United States laws and
regulations as may be applicable, and to obtaining all necessary approvals
required by the applicable agencies of the government of the United States. CGI
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<PAGE> 49
shall use efforts consistent with prudent business judgment to obtain such
approvals. ABX shall cooperate with CGI and shall provide assistance to CGI as
reasonably necessary to obtain any required approvals.
11.9 Severability. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision and the parties shall discuss in good faith appropriate
revised arrangements.
11.10 Force Majeure. Nonperformance of a party (except nonperformance of
payment obligations) shall be excused to the extent that performance is rendered
impossible by strike, fire, earthquake, flood, governmental acts or orders or
restrictions, failure of suppliers, or any other reason where failure to
perform, is beyond the reasonable control and not caused by the negligence,
intentional conduct or misconduct of the nonperforming party.
11.11 No Consequential Damages. IN NO EVENT SHALL A PARTY HERETO BE LIABLE
FOR SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF THIS AGREEMENT
OR THE EXERCISE OF ITS RIGHTS HEREUNDER, INCLUDING WITHOUT LIMITATION LOST
PROFITS ARISING FROM OR RELATING TO ANY BREACH OF THIS AGREEMENT, REGARDLESS OF
ANY NOTICE OF SUCH DAMAGES. NOTHING IN THIS SECTION 11.11 IS INTENDED TO LIMIT
OR RESTRICT THE INDEMNIFICATION RIGHTS OR OBLIGATIONS OF EITHER PARTY.
11.12 Dispute Resolution; Arbitration. The parties will attempt to resolve
any dispute under this Agreement by mutual agreement, and, if required, there
shall be a face-to-face meeting between the Chief Executive Officer of CGI and
the Chief Executive Officer of ABX. Any dispute under this Agreement which is
not settled after such meeting, shall be finally settled by binding arbitration,
conducted in accordance with the Commercial Arbitration Rules of the American
Arbitration Association, by three arbitrators appointed in accordance with said
rules. The costs of the arbitration, including administrative and arbitrators'
fees, shall be shared equally by the parties to the arbitration. Each party
shall bear its own costs and attorneys' and witness' fees. The prevailing party
in any arbitration, as determined by the arbitration panel, shall be entitled to
an award against the other party in the amount of the prevailing party's costs
and reasonable attorneys' fees. The arbitration shall be held in San Francisco,
California. A disputed performance or suspended performances pending the
resolution of the arbitration must be completed within thirty days following the
final decision of the arbitrators. Any arbitration subject to this Section 11.12
shall be completed within six months from the filing of notice of a request for
such arbitration.
11.13 Complete Agreement. It is understood and agreed between ABX and CGI
that this Agreement constitutes the entire agreement, both written and oral,
between the parties with respect to the subject matter hereof, and that all
prior agreements respecting the subject matter hereof, either written or oral,
expressed or implied, shall be abrogated, canceled, and are null and void and of
no effect. No amendment or change hereof or addition hereto shall be effective
or
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<PAGE> 50
binding on either of the parties hereto unless reduced to writing and executed
by the respective duly authorized representatives of ABX and CGI.
11.14 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original and both together shall be deemed to be
one and the same agreement.
11.15 Headings. The captions to the several Articles and Sections hereof
are not a part of this Agreement, but are included merely for convenience of
reference only and shall not affect its meaning or interpretation.
11.16 Nondisclosure. Except as provided in Article 7, each of the parties
hereto agrees not to disclose to any third party the terms of this Agreement
without the prior written consent of each other party hereto, except to
advisors, investors, licensees, sublicensees and others on a need to know basis
under circumstances that reasonably ensure the confidentiality thereof, or to
the extent required by law. Without limitation upon any provision of this
Agreement, each of the parties hereto shall be responsible for the observance by
its employees, consultants and contractors of the foregoing confidentiality
obligations.
11.17 Indemnification. The indemnification obligations of the parties
hereunder shall be as set forth in the Gene Therapy Rights Agreement.
11.18 Conformity with GenPharm Cross-License. The rights and licenses
granted to CGI hereunder shall be subject to that certain Cross License
Agreement entered into by the parties and GenPharm International, Inc.,
effective as of March 26, 1997 (the "Cross License"), and to the extent that
this Agreement purports to grant greater rights to CGI than is permitted under
the Cross License, such rights shall be granted only to the extent permitted
under the Cross License, and the terms of the Cross License shall control.
IN WITNESS WHEREOF, the parties have executed this Agreement, through their
respective officers hereunto duly authorized, as of the day and year first above
written.
ABGENIX, INC. CELL GENESYS, INC.
By: By:
----------------------------------- -------------------------------------
Name: Name:
--------------------------------- -----------------------------------
Title: Title:
-------------------------------- ----------------------------------
* -- use if Product License is Exclusive Worldwide Product License
* -- use if Product License is Exclusive Qualified Worldwide Product License
*** -- use if Product License is Exclusive Home Territory Product License
**** -- use if Product License is Co-Exclusive Worldwide Product License
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<PAGE> 51
ATTACHMENT A
SUBORDINATION STATEMENT
[To Abgenix]
This notice is sent to Abgenix pursuant to Section 2.4(b) of the CGI
Product Sublicense with respect to _____________________ (the "Sublicense
Antigen") between Abgenix and Cell Genesys. The undersigned party (the
"Subordinating Third Party") agrees that the sublicense granted to the
Subordinating Third Party under its Direct Third Party Sublicense with Abgenix
with respect to the Sublicense Antigen shall be subordinate in all respects to
any Direct Third Party Sublicense with respect to the Sublicense Antigen entered
into between Abgenix and ________________________ (the "Subsequent Direct Third
Party Sublicensee") in accordance with Section 2.4 of the CGI Product Sublicense
for the Sublicense Antigen (i.e., the sublicense granted to the Subordinating
Third Party under its Direct Third Party Sublicense with Abgenix related to the
Sublicense Antigen shall be of no force or effect to the extent that the
GenPharm Cross license does not permit both that sublicense and the Direct Third
Party Sublicense to the Subsequent Direct Third Party Licensee related to the
Sublicense Antigen).
- --------------------------------------
(the Subordinating Third Party)
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
Date:
--------------------------------
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<PAGE> 52
ATTACHMENT B
PAYMENTS DUE TO THIRD PARTIES
[TO BE COMPLETED AT TIME OF EXECUTION]
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<PAGE> 53
ATTACHMENT C
NOTICE OF PARTIAL TERMINATION OF DIRECT SUBLICENSE
[To Xenotech]
This notice is sent to Xenotech pursuant to Section 9.3 of the Direct
Sublicense of GenPharm Rights entered into by and between Cell Genesys and
Xenotech effective as of November __, 1997.
Cell Genesys hereby terminates, effective as of __________________, its
rights under the Direct Sublicense of GenPharm Rights in the countries indicated
below with respect to the CGI Product Antigen indicated below.
CGI Product Antigen:_________________________________.
Countries: __________________________________.
Cell Genesys, Inc.
By:
-----------------------------------
Name:
Title:
Date:
cc: [Abgenix]
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<PAGE> 54
ATTACHMENT D
ABX-CONTROLLED RIGHTS
[TO BE COMPLETED AT TIME OF EXECUTION.]
[Note when completing: This Exhibit D will reflect the ABX-Controlled Rights as
of the effective date of each CGI Product Sublicense, and will include the
rights indicated in Exhibit D of the Gene Therapy Rights Agreement, taking into
account the changes, if any, in the ABX-Controlled Rights between the effective
date of the Gene Therapy Rights Agreement and the effective date of the CGI
Product Sublicense.]
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<PAGE> 55
EXHIBIT C
[SAME AS EXHIBIT G TO EXHIBIT 10.13]
<PAGE> 56
EXHIBIT D
[***]
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
<PAGE> 57
EXHIBIT E
EXERCISE NOTICE
[DATE]
[To Abgenix:]
Pursuant to Section 2.2 of the Gene Therapy Rights Agreement, Cell Genesys,
Inc. ("CGI") exercises its option for the Six-Month Period beginning on [January
1,_________] [July 1, _________] and requests that Abgenix, Inc. ("ABX") select
an Antigen on behalf of CGI.
ANTIGEN TO BE SELECTED:
(Attach additional pages if necessary.)
SCIENTIFIC BACKGROUND:
(Attach additional pages if necessary.)
By:
----------------------------------
Print Name:
-------------------------
_____MARK HERE if CGI desires ABX to select this Antigen pursuant to Section 7.1
of the 1996 Master Research License and Option Agreement, and ATTACH ADDITIONAL
INFORMATION to support selection of this Antigen under Section 7.1.
<PAGE> 1
EXHIBIT 10.18
CONFIDENTIAL TREATMENT REQUESTED BY ABGENIX, INC.
PATENT ASSIGNMENT
THIS PATENT ASSIGNMENT (the "Assignment") is made as of this 15th day of
July, 1996, by Cell Genesys, Inc., a Delaware corporation ("CG"), in favor of
Abgenix, Inc., a Delaware corporation ("ABGENIX").
RECITALS
A. CG and ABGENIX have entered into a Stock Purchase and Transfer
Agreement dated as of July 15, 1996 (the "Agreement"), pursuant to which CG
shall transfer to ABGENIX certain assets of CG related to the Antibody Business,
as defined therein.
B. For good and valuable consideration, the adequacy and receipt of
which is hereby acknowledged by CG, CG desires to give this Assignment for the
purpose of effecting such transfer pursuant to the provisions of the Agreement.
CG AGREES AS FOLLOWS:
1. Assignment of All of the Patents of CG:
CG does hereby sell, convey, assign, transfer, and deliver to
ABGENIX, its successors and assigns, all of-CG's right, title and interest in
and to the patents and patent applications set forth on Exhibit A hereto, and to
all continuations, continuations-in-part, divisionals, reexaminations, reissues
or extensions thereof.
2. Documentation.
CG agrees to execute, at the request of ABGENIX, all additional
documentation that may be reasonably required in order to perfect the foregoing
conveyance, assignment and transfer.
<PAGE> 2
3. No Rights in Third Parties.
Nothing expressed or implied in this Assignment is intended to
confer upon any person, other than the parties to the Agreement and their
respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Assignment.
4. Successors and Assignees.
This Assignment is executed pursuant to the Agreement and is entitled to
the benefits thereof and shall be binding upon and inure to the benefit of CG
and ABGENIX and their respective successors and assigns.
IN WITNESS WHEREOF, CG has executed this Assignment on the date first
above written.
CELL GENESYS, INC.
By: /s/ Stephen A. Sherwin
--------------------------------------
Stephen A. Sherwin
President and Chief Executive Officer
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<PAGE> 3
CORPORATE ACKNOWLEDGMENT
STATE OF California )
) ss.
COUNTY OF San Mateo )
On this 19th day of July, 1996, before me, Renee Lamantia, the
undersigned Notary Public, personally appeared Stephen A. Sherwin personaly
known to me (or proved to me on the basis of satisfactory evidence) to be the
person who executed the above and foregoing PATENT ASSIGNMENT as President and
CEO, on behalf of the corporation therein named, and acknowledged to me that the
corporation executed it.
WITNESS my hand and official seal.
[Seal Omitted] /s/ RENEE LAMANTIA
Notary Public in and for said State
-3-
<PAGE> 4
Exhibit A
<TABLE>
<CAPTION>
SERIAL NO. FILING DATE TITLE INVENTORS
<S> <C> <C> <C>
[***]
</TABLE>
[***] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE> 5
Exhibit A
<TABLE>
<CAPTION>
SERIAL NO. FILING DATE TITLE INVENTORS
<S> <C> <C> <C>
[***]
</TABLE>
[***] Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
<PAGE> 1
EXHIBIT 10.20
- --------------------------------------------------------------------------------
ABGENIX, INC.
LOAN AND SECURITY AGREEMENT
- --------------------------------------------------------------------------------
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
<S> <C>
1. DEFINITIONS AND CONSTRUCTION....................................................... 1
1.1 Definitions................................................................. 1
1.2 Accounting Terms............................................................ 7
2. ADVANCES AND TERMS OF PAYMENT...................................................... 7
2.1 Advances.................................................................... 7
2.2 Interest Rates, Payments, and Calculations.................................. 7
2.3 Crediting Payments.......................................................... 8
2.4 Fees........................................................................ 8
2.5 Additional Costs............................................................ 9
2.6 Term........................................................................ 9
3. CONDITIONS OF LOANS................................................................ 9
3.1 Conditions Precedent to Initial Advance..................................... 9
3.2 Conditions Precedent to all Advances........................................ 10
4. CREATION OF SECURITY INTEREST...................................................... 10
4.1 Grant of Security Interest.................................................. 10
4.2 Delivery of Additional Documentation Required............................... 10
5. REPRESENTATIONS AND WARRANTIES..................................................... 11
5.1 Due Organization and Qualification.......................................... 11
5.2 Due Authorization; No Conflict.............................................. 11
5.3 No Prior Encumbrances....................................................... 11
5.4 Name; Location of Chief Executive Office.................................... 11
5.5 Litigation.................................................................. 11
5.6 No Material Adverse Change in Financial Statements.......................... 11
5.7 Solvency.................................................................... 11
5.8 Regulatory Compliance....................................................... 11
5.9 Environmental Condition..................................................... 12
5.10 Taxes....................................................................... 12
5.11 Subsidiaries................................................................ 12
5.12 Government Consents......................................................... 12
5.13 Full Disclosure............................................................. 12
6. AFFIRMATIVE COVENANTS.............................................................. 12
6.1 Good Standing............................................................... 12
6.2 Government Compliance....................................................... 12
6.3 Financial Statements, Reports, Certificates................................. 13
6.4 Taxes....................................................................... 13
6.5 Insurance................................................................... 13
6.6 Debt-Net Worth Ratio........................................................ 14
6.7 Tangible Net Worth.......................................................... 14
6.8 Minimum Liquidity/Debt Service Coverage..................................... 14
6.9 Right to Inspect............................................................ 14
6.10 Principal Depository........................................................ 14
7. NEGATIVE COVENANTS................................................................. 14
7.1 Dispositions................................................................ 14
7.2 Change in Business.......................................................... 14
i
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C>
7.3 Mergers or Acquisitions..................................................... 14
7.4 Indebtedness................................................................ 15
7.5 Encumbrances................................................................ 15
7.6 Distributions............................................................... 15
7.7 Investments................................................................. 15
7.8 Transactions with Affiliates................................................ 15
7.9 Subordinated Debt........................................................... 15
7.10 Compliance.................................................................. 15
8. EVENTS OF DEFAULT.................................................................. 15
8.1 Payment Default............................................................. 15
8.2 Covenant Default............................................................ 15
8.3 Attachment.................................................................. 16
8.4 Insolvency.................................................................. 16
8.5 Other Agreements............................................................ 16
8.6 Judgments................................................................... 16
8.7 Guarantor................................................................... 16
8.8 Misrepresentations.......................................................... 16
9. BANK'S RIGHTS AND REMEDIES......................................................... 16
9.1 Rights and Remedies......................................................... 16
9.2 Power of Attorney........................................................... 17
9.3 Bank Expenses............................................................... 17
9.4 Bank's Liability for Collateral............................................. 17
9.5 Remedies Cumulative......................................................... 18
9.6 Demand; Protest............................................................. 18
10. NOTICES............................................................................ 18
11. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER......................................... 18
12. GENERAL PROVISIONS................................................................. 19
12.1 Successors and Assigns...................................................... 19
12.2 Indemnification............................................................. 20
12.3 Time of Essence............................................................. 20
12.4 Severability of Provisions.................................................. 20
12.5 Amendments in Writing, Integration.......................................... 20
12.6 Counterparts................................................................ 20
12.7 Survival.................................................................... 20
12.8 Confidentiality............................................................. 20
12.9 Guaranty.................................................................... 21
</TABLE>
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<PAGE> 4
This LOAN AND SECURITY AGREEMENT is entered into as of January 23, 1997,
by and between SILICON VALLEY BANK ("Bank") and ABGENIX, INC. ("Borrower").
RECITALS
Borrower wishes to obtain credit from time to time from Bank, and Bank
desires to extend credit to Borrower. This Agreement sets forth the terms on
which Bank will advance credit to Borrower, and Borrower will repay the amounts
owing to Bank.
AGREEMENT
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION
1.1 Definitions. As used in this Agreement, the following terms
shall have the following definitions:
"Advance" or "Advances" have the meaning set forth in
Section 2.1.
"Affiliate" means, with respect to any Person, any Person
that owns or controls directly or indirectly such Person, any Person that
controls or is controlled by or is under common control with such Person, and
each of such Person's senior executive officers, directors, and partners.
"Aggregate Obligations" means the aggregate outstanding
Obligations of Borrower, as defined in this Agreement, and the aggregate
outstanding Obligations of Guarantor, as defined in the Loan and Security
Agreement of even date with Bank.
"Availability Date" has the meaning set forth in Section
2.1.
"Bank Expenses" means all: reasonable costs or expenses
(including reasonable attorneys' fees and expenses) incurred in connection with
the preparation, negotiation, administration (including for example negotiation
of landlord waivers, and amendments and waivers to the Loan Documents, but not
including day to day administration of the Loan Documents) or, and enforcement
of the Loan Documents; and Bank's reasonable attorneys' fees and expenses
incurred in amending, enforcing or defending the Loan Documents, whether or not
suit is brought.
"Business Day" means any day that is not a Saturday, Sunday,
or other day on which banks in the State of California are authorized or
required to close.
"Cash Burn" means, as of the last day of any fiscal quarter
with respect to Borrower and Guarantor on a consolidated basis, the change in
cash balances (excluding changes in debt or equity or corporate milestone
payments) from the last day of the preceding quarter.
"Closing Date" means the date of this Agreement.
"Code" means the California Uniform Commercial Code.
"Collateral" means the property described on Exhibit A
attached hereto; provided that "Collateral" shall mean the property described on
Exhibit A-1 attached hereto upon the occurrence of a Conversion Event.
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<PAGE> 5
"Committed Line" means Four Million Three Hundred Thousand
Dollars ($4,300,000).
"Contingent Obligation" means, as applied to any Person, any
direct or indirect liability, contingent or otherwise, of that Person with
respect to (i) any indebtedness, lease, dividend, letter of credit or other
obligation of another, including, without limitation, any such obligation
directly or indirectly guaranteed, endorsed, co-made or discounted or sold with
recourse by that Person, or in respect of which that Person is otherwise
directly or indirectly liable; (ii) any obligations with respect to undrawn
letters of credit issued for the account of that Person; and (iii) all
obligations arising under any interest rate, currency or commodity swap
agreement, interest rate cap agreement, interest rate collar agreement, or other
agreement or arrangement designated to protect a Person against fluctuation in
interest rates, currency exchange rates or commodity prices; provided, however,
that the term "Contingent Obligation" shall not include endorsements for
collection or deposit in the ordinary course of business. The amount of any
Contingent Obligation shall be deemed to be an amount equal to the stated or
determined amount of the primary obligation in respect of which such Contingent
Obligation is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof as determined by such Person in good
faith; provided, however, that such amount shall not in any event exceed the
maximum amount of the obligations under the guarantee or other support
arrangement.
"Conversion Event" means the earlier of (i) the date that
the balance of the Liquidity is less than two and one half (2.5) times the
Aggregate Obligations, or (ii) the date that Cash Burn is less than twelve (12)
months.
"Daily Balance" means the amount of the Obligations owed at
the end of a given day.
"Debt Service Coverage" means, as of any date of
determination, with respect to Borrower and its Subsidiaries on a consolidated
basis, a ratio of (a) the sum of (i) earnings after tax plus (ii) interest and
non-cash expense to (b) the sum of (i) current portion of long term debt plus
(ii) interest expense.
"ERISA" means the Employment Retirement Income Security Act
of 1974, as amended, and the regulations thereunder.
"Equipment" means all equipment, machinery, fixtures,
vehicles (including motor vehicles and trailers), and all attachments,
accessories, accessions, replacements, substitutions, additions and improvements
to any of the foregoing, and all proceeds thereof.
"Facility" means the Advances provided to Borrower by Bank
pursuant to Section 2 hereof.
"GAAP" means generally accepted accounting principles as in
effect from time to time.
"Guarantor" means Cell Genesys, Inc.
"Guaranty" means an unconditional guaranty of Guarantor.
"Indebtedness" means (a) all indebtedness for borrowed money
or the deferred purchase price of property or services, including without
limitation reimbursement and other obligations with respect to surety bonds and
letters of credit, (b) all obligations evidenced by notes, bonds, debentures or
similar instruments, (c) all capital lease obligations and (d) all Contingent
Obligations.
"Insolvency Proceeding" means any proceeding commenced by or
against any person or entity under any provision of the United States Bankruptcy
Code, as amended, or under any other bankruptcy or insolvency law, including
assignments for the benefit of creditors, formal or informal moratoria,
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<PAGE> 6
compositions, extension generally with its creditors, or proceedings seeking
reorganization, arrangement, or other relief.
"Investment" means any beneficial ownership of (including
stock, partnership interest or other securities) any Person, or any loan,
advance or capital contribution to any Person.
"IRC" means the Internal Revenue Code of 1986, as amended,
and the regulations thereunder.
"Lien" means any mortgage, lien, deed of trust, charge,
pledge, security interest or other encumbrance. It is expressly agreed and
understood that licenses of intellectual property in the ordinary course of
business and licenses or similar arrangement entered into or Liens granted in
connection with joint ventures, collaborations and research and development
limited partnerships shall not be considered "Liens" for purpose of this
Agreement and shall not be restricted by any provision hereof.
"Liquidity" means, at any time of determination, the sum of
Borrower's and Guarantor's (i) cash balance of deposit accounts and investment
accounts, plus (ii) market value of all readily marketable securities
beneficially owned by Borrower or Guarantor, minus (iii) cash value of any
certificates of deposit or securities encumbered and/or restricted by Bank or
other Persons.
"Loan Documents" means, collectively, this Agreement, any
note or notes executed by Borrower, and any other agreement entered into between
Borrower and Bank in connection with this Agreement, all as amended or extended
from time to time.
"Material Adverse Effect" means a material adverse effect on
- -(i) the business operations or condition (financial or otherwise) of Borrower
and its Subsidiaries taken as a whole or (ii) the ability of Borrower to repay
the Obligations.
"Maturity Date" means January 22, 2001.
"Obligations" means all debt, principal, interest, Bank
Expenses and other amounts owed to Bank by Borrower pursuant to this Agreement
or any other agreement, whether absolute or contingent, due or to become due,
now existing or hereafter arising, including any interest that accrues after the
commencement of an Insolvency Proceeding and including any debt, liability, or
obligation owing from Borrower to others that Bank may have obtained by
assignment or otherwise.
"Periodic Payments" means all installments of principal or
interest that Borrower may now or hereafter become obligated to pay to Bank
pursuant to the terms and provisions of any instrument, or agreement now or
hereafter in existence between Borrower and Bank.
"Permitted Indebtedness" means:
(a) Indebtedness of Borrower in favor of Bank arising under
this Agreement or any other Loan Document;
(b) Indebtedness existing on the Closing Date and disclosed
in the Schedule;
(c) Subordinated Debt;
(d) Indebtedness to trade creditors incurred in the ordinary
course of business;
(e) Contingent Obligations of any Subsidiary with respect to
obligations of Borrower (provided that the primary obligations are not
prohibited hereby); provided that the incurrence of
3
<PAGE> 7
such Indebtedness or Contingent Obligations, as the case may be, does not result
in a violation of Section 7.7 as a consequence of the provisos set forth in
paragraph (d) of the definition of "Permitted Investments;"
(f) Indebtedness of Borrower to any Subsidiary and
Contingent Obligations of Borrower with respect to obligations of any Subsidiary
(provided that the primary obligations are not prohibited hereby), and
Indebtedness of any Subsidiary to any other Subsidiary and Contingent
Obligations of any Subsidiary with respect to obligations of any other
Subsidiary (provided that the primary obligations are not prohibited hereby);
(g) Indebtedness secured by Permitted Liens;
(h) Indebtedness by Borrower and its Subsidiaries consisting
of guarantees (and other credit support) of the obligations of vendors and
suppliers of Borrower or its Subsidiaries in respect of transactions entered
into in the ordinary course of business.
(i) Capital leases or indebtedness incurred solely to
purchase Equipment (excluding the Collateral) which is secured in accordance
with clause (c) of the definition of "Permitted Liens" and is not in excess of
the lesser of the purchase price of such Equipment or the fair market value of
such Equipment on the date of acquisition; and
(j) Extensions, refinancings, modifications, amendments and
restatements of any of items of Permitted Indebtedness (a) through (i) above,
provided that the principal amount thereof is not increased or the terms thereof
are not modified to impose more burdensome terms upon Borrower or its
Subsidiary, as the case may be.
"Permitted Investment" means:
(a) Investments existing on the Closing Date disclosed in
the Schedule;
(b) (i) marketable direct obligations issued or
unconditionally guaranteed by the United States of America or any agency or any
State thereof maturing within one (1) year from the date of acquisition thereof,
(ii) commercial paper maturing no more than one (1) year from the date of
creation thereof and currently having the highest rating obtainable from either
Standard & Poor's Corporation or Moody's Investors Service, Inc., (iii)
certificates of deposit maturing no more than one (1) year from the date of
investment therein issued by Bank, and (iv) other similar short term investments
made in accordance with an investment policy adopted by the Board of Directors
of Borrower, a true and correct copy of which will be delivered to Bank promptly
following the Closing Date and promptly following each change in such policy;
(c) Investments consisting of the endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of business;
(d) Investments (whether consisting of the purchase of
securities, loans, capital contributions, or otherwise) of Subsidiaries in or to
other Subsidiaries or in Borrower;
(e) Investments consisting of receivables owing to Borrower
or its Subsidiaries by Persons and advances to customers or suppliers, in each
case, if created, acquired or made in the ordinary course of business; provided
that this paragraph (f) shall not apply to Investments owing by Subsidiaries to
Borrower;
(f) Investments consisting of (i) compensation of employees,
officers and directors of Borrower or its Subsidiaries so long as the Board of
Directors of Borrower determines that such compensation is in the best interests
of Borrower, (ii) travel advances, employee relocation loans and other employee
loans and advances in the ordinary course of business; (iii) loans to employees,
officers or directors relating to the purchase of equity securities of Borrower
or its Subsidiaries;
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<PAGE> 8
(g) Investments pursuant to or arising under currency
agreements or interest rate agreements entered into in the ordinary course of
business for bona fide hedging purposes and not for speculation;
(h) Investments permitted under Section 7.3;
(i) Investments consisting of deposit accounts of Borrower
in which Bank has a Lien prior to any other Lien;
(j) Investments consisting of deposit accounts of any
Subsidiaries maintained in the ordinary course of business;
(k) Investments accepted in connection with Transfers
permitted by Section 7.1;
(l) Investments (including debt obligations) received in
connection with the bankruptcy or reorganization of customers or suppliers and
in settlement of delinquent obligations of, and other disputes with, customers
or suppliers arising in the ordinary course of business; and
(m) Investments consisting of notes receivable of, or
prepaid royalties and other credit extensions to, customers and suppliers who
are not Affiliates in the ordinary course of business.
"Permitted Liens" means the following:
(a) Any Liens existing on the Closing Date and disclosed in
the Schedule or arising under this Agreement or the other Loan Documents;
(b) Liens for taxes, fees, assessments or other governmental
charges or levies, either not delinquent or being contested in good faith by
appropriate proceedings, provided the same have no priority over any of Bank's
security interests;
(c) Liens (i) upon or in any Equipment (other than the
Collateral) acquired or held by Borrower or any of its Subsidiaries to secure
the purchase price of such Equipment or indebtedness incurred solely for the
purpose of financing the acquisition or leasing of such Equipment, or (ii)
existing on such Equipment at the time of its acquisition or lease, provided
that the Lien is confined solely to the Equipment so acquired or leased;
(d) Leases or subleases and license and sublicenses granted
to others in the ordinary course of Borrower's or its Subsidiaries' business not
interfering in any material respect with the business of Borrower and its
Subsidiaries taken as a whole, and any interest or title of a lessor, licensor
or under any lease or license;
(e) Liens on assets (including the proceeds thereof and
accessions thereto) that existed at the time such assets were acquired by
Borrower or any Subsidiary (including Liens on assets of any corporation that
existed at the time it became or becomes a Subsidiary);
(f) Liens on Equipment leased by Borrower or any Subsidiary
pursuant to an operating lease in the ordinary course of business incurred
solely for the purpose of financing the lease of such Equipment;
(g) Liens arising from judgments, decrees or attachments in
circumstances not constituting an Event of Default under Section 8.7;
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<PAGE> 9
(h) Easements, reservations, rights-of-way, restrictions,
minor defects or irregularities in title and other similar charges or
encumbrances affecting real property not interfering in any material respect
with the ordinary conduct of the business of Borrower and its Subsidiaries,
taken as a whole;
(i) Liens which constitute rights of set-off of a customary
nature or bankers' Liens with respect to amounts on deposit, whether arising by
operation of law or by contract, in connection with arrangements entered into
with banks in the ordinary course of business; provided that with respect to
Liens on amounts on deposit owned by Borrower, such Liens shall not be prior to
the Lien of Bank;
(j) Liens in favor of customs and revenue authorities
arising as a matter of law to secure payment of customs duties in connection
with the importation of goods;
(k) Liens on insurance proceeds in favor of insurance
companies granted solely as security for financed premiums; and
(l) Liens incurred in connection with the extension, renewal
or refinancing of the indebtedness secured by Liens of the type described in
clauses (a) through (c) above, provided that any extension, renewal or
replacement Lien shall be limited to the property encumbered by the existing
Lien and the principal amount of the indebtedness being extended, renewed or
refinanced does not increase.
"Person" means any individual, sole proprietorship,
partnership, limited liability company, joint venture, trust, unincorporated
organization, association, corporation, institution, public benefit corporation,
firm, joint stock company, estate, entity or governmental agency.
"Prime Rate" means the variable rate of interest, per annum,
most recently announced by Bank, as its "prime rate," whether or not such
announced rate is the lowest rate available from Bank.
"Responsible Officer" means each of the Chief Executive
Officer, the Chief Financial Officer and the Senior Director Finance of
Borrower.
"Schedule" means the schedule of exceptions attached hereto,
if any.
"Subordinated Debt" means any debt incurred by Borrower that
is subordinated to the debt owing by Borrower to Bank on terms acceptable to
Bank (and identified as being such by Borrower and Bank).
"Subsidiary" means any corporation or partnership in which
(i) any general partnership interest or (ii) more than 50% of the stock of which
by the terms thereof ordinary voting power to elect the Board of Directors,
managers or trustees of the entity shall, at the time as of which any
determination is being made, be owned by Borrower, either directly or through an
Affiliate.
"Tangible Net Worth" means at any date as of which the
amount thereof shall be determined, the consolidated total assets of Borrower
and its Subsidiaries minus, without duplication, (i) the sum of any amounts
attributable to (a) goodwill, (b) intangible items such as unamortized debt
discount and expense, patents, trade and service marks and names, copyrights and
research and development expenses except prepaid expenses, and (c) all reserves
not already deducted from assets, and (ii) Total Liabilities.
"Total Liabilities" means at any date as of which the amount
thereof shall be determined, all obligations that should, in accordance with
GAAP be classified as liabilities on the consolidated balance sheet of Borrower,
including in any event all Indebtedness, but specifically excluding Subordinated
Debt.
1.2 Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP and all calculations
made hereunder shall be made in accordance with GAAP. When used herein, the
terms "financial statements" shall include the notes and schedules thereto.
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<PAGE> 10
2. ADVANCES AND TERMS OF PAYMENT
2.1 Advances.
(a) At any time from the date hereof through July 22, 1997
(the "Availability Date"), Borrower may from time to time request advances (each
an "Advance" and, collectively, the "Advances") from Bank in an aggregate
principal amount of up to the Committed Line; provided, however, that there
shall be no more than five (5) Advances permitted hereunder; and provided,
further, that each Advance shall be in a minimum amount of One Hundred Thousand
Dollars ($100,000). The Advances shall be used only to pay up to 100% of the
costs of tenant improvements constructed and equipment acquired by Borrower.
(b) Interest shall accrue from the date of each Advance at
the rate specified in Section 2.2(a), and shall be payable monthly in arrears in
accordance with Section 2(d). The Advance or Advances that are outstanding on
the Availability Date will be payable in forty-two (42) equal monthly
installments of principal, beginning on July 25, 1997. All Advances, and all
other amounts outstanding hereunder, shall be paid in full on the Maturity Date.
(c) When Borrower desires to obtain an Advance, Borrower
shall notify Bank (which notice shall be irrevocable) by facsimile transmission
received no later than 3:00 p.m. California time one (1) Business Day before the
day on which the Advance is to be made. Such notice shall be in substantially
the form of Exhibit B. The notice shall be signed by a Responsible Officer and
include a copy of all documentation required by Bank to evidence the tenant
improvements or equipment to be financed. Bank shall be entitled to rely on any
telephonic notice given by a person who Bank reasonably believes to be a
Responsible Officer, and Borrower shall indemnify and hold Bank harmless for any
damages or losses suffered by Bank as a result of such reliance.
2.2 Interest Rates, Payments, and Calculations.
(a) Interest Rate. Except as set forth in Section 2.2(b) and
subject to the following sentence, all outstanding Advances shall bear interest
at a rate equal to one (1.0) percentage point above the Prime Rate. Except as
set forth in Section 2.2(b), Borrower shall have a one-time option, exercisable
by written notice to Bank on the Equipment Availability Date, to elect that all
outstanding Advances shall bear interest at a rate equal to three and one half
(3.5) percentage points above the forty-two (42) month Treasury Note Yield to
maturity for four (4) year treasury bills, as such rate is quoted by Bank. Such
fixed rate option, once elected, shall continue for the term of the Equipment
Facility.
(b) Default Rate. All Obligations shall bear interest, from
and after the occurrence of an Event of Default, at a rate equal to three (3)
percentage points above the interest rate applicable immediately prior to the
occurrence of the Event of Default.
(c) Payments. Interest hereunder shall be due and payable on
the twenty-second calendar day of each month during the term hereof. After the
occurrence and during the continuance of an Event of Default, Bank shall, at its
option, charge such interest, all Bank Expenses, and all Periodic Payments
against any of Borrower's deposit accounts. Any interest not paid when due shall
be compounded by becoming a part of the Obligations, and such interest shall
thereafter accrue interest at the rate then applicable hereunder.
(d) Prepayment. In the event Borrower prepays, in whole or in
part, any outstanding obligations hereunder, Borrower shall pay to Bank,
concurrently with such payment, a prepayment fee commensurate with interest rate
protection, as assessed by Bank, under the fixed rate option set forth in
Section 2.2(a). Borrower agrees that such fee is compensation to the Bank for
lost profits in connection with such prepayment and does not constitute a
penalty. Bank's determination of such amount shall be made by Bank in good
faith, in its sole discretion, and shall be deemed correct absent manifest
error.
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<PAGE> 11
(e) Computation. All interest chargeable under the Loan
Documents shall be computed on the basis of a three hundred sixty (360) day year
for the actual number of days elapsed. If the Facility at any time bears
interest based on the Prime Rate, then in the event the Prime Rate is changed
from time to time, the applicable rate of interest hereunder shall be increased
or decreased effective as of 12:01 a.m. on the day the Prime Rate is changed, by
an amount equal to such change in the Prime Rate.
2.3 Crediting Payments. Prior to the occurrence of an Event of
Default, Bank shall credit a wire transfer of funds, check or other item of
payment to such deposit account or Obligation as Borrower specifies. All
payments hereunder shall be made, without counterclaim or set off, by wire
transfer of immediately available funds or authorized debit of Borrower's
deposit account, prior to 2:00 p.m (California time) on the date when due. After
the occurrence of an Event of Default, the receipt by Bank of any wire transfer
of funds, check, or other item of payment shall be immediately applied to
conditionally reduce Obligations, but shall not be considered a payment on
account unless such payment is of immediately available federal funds or unless
and until such check or other item of payment is honored when presented for
payment. Notwithstanding anything to the contrary contained herein, any wire
transfer or payment received by Bank after 2:00 p.m. California time shall be
deemed to have been received by Bank as of the opening of business on the
immediately following Business Day. Whenever any payment to Bank under the Loan
Documents would otherwise be due (except by reason of acceleration) on a date
that is not a Business Day, such payment shall instead be due on the next
Business Day, and additional fees or interest, as the case may be, shall accrue
and be payable for the period of such extension.
2.4 Fees. Borrower shall pay to Bank the following:
(a) Facility Fee. A Facility Fee equal to Forty Three
Thousand Dollars ($43,000), which fee shall be due on the Closing Date and shall
be fully earned and nonrefundable; and
(b) Bank Expenses. Upon the date hereof, all Bank Expenses
incurred through the Closing Date, including reasonable attorneys' fees and
expenses not to exceed $10,000 for this Agreement and the Loan and Security
Agreement with Guarantor, and, after the date hereof, all Bank Expenses within
thirty (30) days after receiving an invoice therefor.
2.5 Additional Costs. In case any change in any law, regulation,
treaty or official directive or the interpretation or application thereof by any
court or any governmental authority charged with the administration thereof or
the compliance with any guideline or request of any central bank or other
governmental authority (whether or not having the force of law), in each case
occurring after the date hereof:
(a) subjects Bank to any tax with respect to payments of
principal or interest or any other amounts payable hereunder by Borrower or
otherwise with respect to the transactions contemplated hereby (except for taxes
on the overall net income of Bank imposed by the United States of America or any
political subdivision thereof);
(b) imposes, modifies or deems applicable any deposit
insurance, reserve, special deposit or similar requirement against assets held
by, or deposits in or for the account of, or loans by, Bank; or
(c) imposes upon Bank any other condition with respect to its
performance under this Agreement,
and the result of any of the foregoing is to increase the cost to Bank, reduce
the income receivable by Bank or impose any expense upon Bank with respect to
any loans, Bank shall notify Borrower thereof. Borrower agrees to pay to Bank
the amount of such increase in cost, reduction in income or additional expense
as and when such cost, reduction or expense is incurred or determined, upon
presentation by Bank of a statement of the amount and setting forth Bank's
calculation thereof, all in reasonable detail, which statement shall be deemed
true and correct absent manifest error; provided, however, that the Borrower
shall not be liable for any such amount attributable to any period prior to 180
day prior to the date of such certificate.
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<PAGE> 12
2.6 Term. This Agreement shall become effective on the Closing
Date and, subject to Section 12.7, shall continue in full force and effect for a
term ending on the Maturity Date. Notwithstanding the foregoing, Bank shall have
the right to terminate its obligation to make Advances under this Agreement
immediately and without notice upon the occurrence and during the continuance of
an Event of Default. Notwithstanding termination, Bank's Lien on the Collateral
shall remain in effect for so long as any Obligations (excluding Obligations
under Sections 2.5 and 12.2 to the extent they remain inchoate at the time
outstanding payment Obligations are paid in full) are outstanding.
3. CONDITIONS OF LOANS
3.1 Conditions Precedent to Initial Advance. The obligation of
Bank to make the initial Advance is subject to the condition precedent that Bank
shall have received, in form and substance satisfactory to Bank, the following:
(a) this Agreement;
(b) a certificate of the Secretary of Borrower attaching
thereto true and correct copies of Borrower's Certificate of Incorporation,
By-laws, board resolutions authorizing the execution and delivery of the Loan
Documents and certifying as to the incumbency of the officers executing the Loan
Documents;
(c) an amendment to financing statement (Form UCC-2);
(d) financing statements (Forms UCC-1) in form to be filed
with the Secretary of State of California and the San Mateo County Recorder;
(e) insurance certificate;
(f) payment of the fees and Bank Expenses then due
specified in Section 2.4 hereof; and
(g) such other documents, and completion of such other
matters, as Bank may reasonably deem necessary or appropriate.
3.2 Conditions Precedent to all Advances. The obligation of Bank
to make each Advance, including the initial Advance, is further subject to the
following conditions:
(a) timely receipt by Bank of the Payment/Advance Form and
related documentation as provided in Section 2.1; and
(b) the representations and warranties contained in
Section 5 shall be true and correct in all material respects on and as of the
date of such Payment/Advance Form and on the effective date of each Advance as
though made at and as of each such date (except to the extent they relate
specifically to any earlier date, in which case such representations and
warranties shall continue to have been true and accurate as of such date), and
no Event of Default shall have occurred and be continuing, or would result from
such Advance. The making of each Advance shall be deemed to be a representation
and warranty by Borrower on the date of such Advance as to the accuracy of the
facts referred to in this Section 3.2(b).
4. CREATION OF SECURITY INTEREST
4.1 Grant of Security Interest. Borrower grants and pledges to
Bank a continuing security interest in all presently existing and hereafter
acquired or arising Collateral in order to secure prompt repayment of any and
all Obligations and in order to secure prompt performance by Borrower of each of
its covenants and
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duties under the Loan Documents. Upon a Conversion Event, Bank may file the Form
UCC-2 with the California Secretary of State. Except as set forth in the
Schedule, such security interest constitutes a valid, first priority security
interest in the presently existing Collateral, and will constitute a valid,
first priority security interest in Collateral acquired after the date hereof,
in each case, to the extent that a security interest in such Collateral can be
perfected by the filing of a financing statement or, in the case of instruments,
documents, chattel paper or certificated securities, to the extent that Bank
takes possession of such Collateral. With respect to the balances in deposit
accounts at Bank, including all investments in such accounts, Borrower shall
have the right to continue to have access to and have the right to use all funds
and investments in such accounts, including having the right to withdraw all
funds in such accounts, subject only to the provisions of Article 9 of this
Agreement.
4.2 Delivery of Additional Documentation Required. Borrower shall
from time to time execute and deliver to Bank, at the request of Bank, all
financing statements and other documents that Bank may reasonably request, in
form satisfactory to Bank, to perfect and continue perfected Bank's security
interests in the Collateral and in order to fully consummate all of the
transactions contemplated under the Loan Documents.
5. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants as follows:
5.1 Due Organization and Qualification. Borrower and each
Subsidiary is a corporation duly existing and in good standing under the laws of
its state of incorporation and qualified and licensed to do business in, and is
in good standing in, any state in which the conduct of its business or its
ownership of property requires that it be so qualified, except for states as to
which any failure so to qualify could not reasonably be expected to have a
Material Adverse Effect.
5.2 Due Authorization; No Conflict. The execution, delivery, and
performance of the Loan Documents are within Borrower's powers, have been duly
authorized, and are not in conflict with nor constitute a breach of any
provision contained in Borrower's Articles of Incorporation or Bylaws, nor will
they constitute an event of default under any material agreement to which
Borrower is a party or by which Borrower is bound. Borrower is not in default
under any agreement to which it is a party or by which it is bound, which
default could reasonably be expected to have a Material Adverse Effect.
5.3 No Prior Encumbrances. Borrower has good and indefeasible
title to its assets, free and clear of Liens, except for Permitted Liens.
5.4 Name; Location of Chief Executive Office. Except as disclosed
in the Schedule, Borrower has not done business under any name other than that
specified on the signature page hereof. The chief executive office of Borrower
is located at the address indicated in Section 10 hereof.
5.5 Litigation. Except as set forth in the Schedule, there are no
actions or proceedings pending by or against Borrower or any Subsidiary before
any court or administrative agency in which an adverse decision could reasonably
be expected to have a Material Adverse Effect or a material adverse effect on
Borrower's interest or Bank's security interest in the Collateral. Borrower does
not have knowledge of any such pending or threatened actions or proceedings.
5.6 No Material Adverse Change in Financial Statements. All
consolidated financial statements related to Borrower and any Subsidiary that
have been delivered by Borrower to Bank fairly present in all material respects
Borrower's consolidated financial condition as of the date thereof and
Borrower's consolidated results of operations for the period then ended. There
has not been a material adverse change in the consolidated financial condition
of Borrower since the date of the most recent of such financial statements
submitted to Bank.
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5.7 Solvency. Borrower is solvent and able to pay its debts
(including trade debts) as they mature.
5.8 Regulatory Compliance. Borrower and each Subsidiary has met
the minimum funding requirements of ERISA with respect to any employee benefit
plans subject to ERISA. No event has occurred resulting from Borrower's failure
to comply with ERISA that is reasonably likely to result in Borrower's incurring
any liability that could reasonably be expected to have a Material Adverse
Effect. Borrower is not an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of 1940.
Borrower is not engaged principally, or as one of the important activities, in
the business of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulations G, T and U of the Board of
Governors of the Federal Reserve System). Borrower has complied with all the
provisions of the Federal Fair Labor Standards Act. Borrower has not violated
any statutes, laws, ordinances or rules applicable to it, violation of which
could have a Material Adverse Effect.
5.9 Environmental Condition. None of Borrower's or any
Subsidiary's properties or assets has ever been used by Borrower or any
Subsidiary or, to the best of Borrower's knowledge, by previous owners or
operators, in the disposal of, or to produce, store, handle, treat, release, or
transport, any hazardous waste or hazardous substance other than in accordance
with applicable law; to the best of Borrower's knowledge, none of Borrower's
properties or assets has ever been designated or identified in any manner
pursuant to any environmental protection statute as a hazardous waste or
hazardous substance disposal site, or a candidate for closure pursuant to any
environmental protection statute; no lien arising under any environmental
protection statute has attached to any revenues or to any real or personal
property owned by Borrower or any Subsidiary; and neither Borrower nor any
Subsidiary has received a summons, citation, notice, or directive from the
Environmental Protection Agency or any other federal, state or other
governmental agency concerning any action or omission by Borrower or any
Subsidiary resulting in the releasing, or otherwise disposing of hazardous waste
or hazardous substances into the environment.
5.10 Taxes. Borrower and each Subsidiary has filed or caused to
be filed all material tax returns required to be filed, and has paid, or has
made adequate provision for the payment of, all taxes reflected therein.
5.11 Subsidiaries. Borrower does not own any stock, partnership
interest or other equity securities of any Person, except for Permitted
Investments.
5.12 Government Consents. Borrower and each Subsidiary has
obtained all consents, approvals and authorizations of, made all declarations or
filings with, and given all notices to, all governmental authorities that are
necessary for the continued operation of Borrower's business as currently
conducted, except where the failure to obtain any such consent, approval or
authorization, to make any such declaration or filing or to given any such
notice would not reasonably be expected to have Material Adverse Effect.
5.13 Full Disclosure. No representation, warranty or other
statement made by Borrower in any certificate or written statement furnished to
Bank contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained in such
certificates or statements not misleading, (it being recognized by Bank that the
projections and forecasts provided by Borrower are not be viewed as facts and
that actual results during the period or periods covered by any such projections
and forecasts may differ from the projected or forecasted results).
6. AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, until payment in full of all
outstanding Obligations, and for so long as Bank may have any commitment to make
an Advance hereunder, Borrower shall do all of the following:
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6.1 Good Standing. Borrower shall maintain or cause to be
maintained its and each of its Subsidiaries' corporate existence and good
standing in its jurisdiction of incorporation and maintain qualification in each
jurisdiction in which the failure to so qualify could reasonably be expected to
have a Material Adverse Effect. Borrower shall maintain, and shall cause each of
its Subsidiaries to maintain, to the extent consistent with prudent management
of Borrower's business, in force all licenses, approvals and agreements, the
loss of which could reasonably be expected to have a Material Adverse Effect.
6.2 Government Compliance. Borrower shall meet, and shall cause
each Subsidiary to meet, the minimum funding requirements of ERISA with respect
to any employee benefit plans subject to ERISA. Borrower shall comply, and shall
cause each Subsidiary to comply, with all statutes, laws, ordinances and
government rules and regulations to which it is subject, noncompliance with
which could have a Material Adverse Effect or a material adverse effect on the
Collateral or the priority of Bank's Lien on the Collateral.
6.3 Financial Statements, Reports, Certificates. Borrower shall
deliver to Bank: (a) within forty-five (45) days after the end of each fiscal
quarter, a company prepared consolidated balance sheet and income statement
covering Borrower's consolidated operations during such period, certified by a
Responsible Officer, together with a Compliance Certificate signed by a
Responsible Officer in substantially the form of Exhibit C hereto; (b) within
ninety (90) days after the end of each fiscal year, audited consolidated
financial statements of Borrower prepared in accordance with GAAP, consistently
applied, together with an unqualified opinion on such financial statements of an
independent certified public accounting firm reasonably acceptable to Bank; (c)
within five (5) days of filing, all reports on Form 10-K and Form 10-Q of
Guarantor; (d) if Liquidity is at any time less than the greater of (i) three
(3.0) times the Aggregate Obligations or (ii) Cash Burn of twelve (12) months,
then as soon as available, but in any event within thirty (30) days after the
last day of each month, company-prepared balance sheet and income statement
covering Borrower's and Guarantor's consolidated operations during such period,
certified by a Responsible Officer; (e) promptly upon receipt of notice thereof,
a report of any legal actions pending or threatened against Borrower or any
Subsidiary that could reasonably be expected to result in damages or costs to
Borrower or any Subsidiary of Five Hundred Thousand Dollars ($500,000) or more;
and (f) such other financial information as Bank may reasonably request from
time to time.
6.4 Taxes. Borrower shall make, and shall cause each Subsidiary
to make, due and timely payment or deposit of all material federal, state, and
local taxes, assessments, or contributions required of it by law; and Borrower
will make, and will cause each Subsidiary to make, timely payment or deposit of
all material tax payments and withholding taxes required of it by applicable
laws, including, but not limited to, those laws concerning F.I.C.A., F.U.T.A.,
state disability, and local, state, and federal income taxes; provided that
Borrower or a Subsidiary need not make any payment if the amount or validity of
such payment is contested in good faith by appropriate proceedings and is
reserved against (to the extent required by GAAP) by Borrower.
6.5 Insurance.
(a) Borrower, at its expense, shall keep the Collateral
insured against loss or damage by fire, theft, explosion, sprinklers, and all
other hazards and risks, and in such amounts, as ordinarily insured against by
other owners in similar businesses conducted in the locations where Borrower's
business is conducted on the date hereof. Borrower shall also maintain insurance
relating to Borrower's ownership and use of the Collateral in amounts and of a
type that are customary to businesses similar to Borrower's.
(b) All such policies of insurance shall be in such form,
with such companies, and in such amounts as reasonably satisfactory to Bank. All
such policies of property insurance shall contain a lender's loss payable
endorsement, in a form satisfactory to Bank, showing Bank as an additional loss
payee thereof and all liability insurance policies shall show the Bank as an
additional insured, and shall specify that the insurer must give at least twenty
(20) days notice to Bank before canceling its policy for any reason. Upon Bank's
request, Borrower shall deliver to Bank certified copies of such policies of
insurance and evidence of the payments of all premiums therefor. So long as no
Event of Default has occurred and is continuing, Borrower shall have the option
of applying the proceeds of any casualty policy to the replacement or repair of
destroyed or damaged property; provided, that after the occurrence and during
the continuance of an Event of Default, all
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proceeds payable under any such policy shall, at the option of Bank, be payable
to Bank for application to the Obligations.
6.6 Debt-Net Worth Ratio. From and after the termination of the
Guaranty, Borrower shall maintain, as of the last day of each fiscal quarter, a
ratio of Total Liabilities less Subordinated Debt to Tangible Net Worth plus
Subordinated Debt of not more than 1.0 to 1.0.
6.7 Tangible Net Worth. From and after the termination of the
Guaranty, Borrower shall maintain, as of the last day of each fiscal quarter, a
Tangible Net Worth of not less than three (3.0) times the Obligations of
Borrower.
6.8 Minimum Liquidity/Debt Service Coverage. Subject to the
remainder of this Section, Borrower and Guarantor, on a consolidated basis,
shall maintain, as of the last day of each fiscal quarter Liquidity of at least
the greater of (a) two (2.0) times the Aggregate Obligations or (b) two (2.0)
quarters of Cash Burn; provided that from and after the termination of the
Guaranty, Borrower (without consolidation with Guarantor) shall comply with the
terms of this sentence. Notwithstanding the foregoing, from and after the time
Borrower and Guarantor, on a consolidated basis, achieve for four consecutive
fiscal quarters a Debt Service Coverage of at least 1.50 to 1.00, Borrower and
Guarantor shall not be subject to the Minimum Liquidity requirement set forth
above, but instead shall maintain, as of the last day of each fiscal quarter, a
Debt Service Coverage of at least 1.50 to 1.00; provided that from and after the
termination of the Guaranty, Borrower (without consolidation with Guarantor)
shall comply with the terms of this sentence.
6.9 Right to Inspect. Borrower authorizes Bank (through any of
its officers, employees, or agents), upon reasonable prior notice, from time to
time during Borrower's usual business hours, to inspect Borrower's financial
books and records and to make copies thereof and to verify Borrower's financial
condition.
6.10 Principal Depository. Borrower shall maintain its principal
depository and operating accounts with Bank.
7. NEGATIVE COVENANTS
Borrower covenants and agrees that, so long as any credit
hereunder shall be available and until payment in full of the outstanding
Obligations or for so long as Bank may have any commitment to make any Advances,
Borrower will not do any of the following:
7.1 Dispositions. Convey, sell, lease, transfer or otherwise
dispose of (collectively, a "Transfer"), or permit any of its Subsidiaries to
Transfer, all or any part of its business or property, other than: (i) Transfers
of inventory in the ordinary course of business; (ii) Transfers of non-exclusive
or exclusive licenses and similar arrangements for the use of the property of
Borrower or its Subsidiaries in the ordinary course of business; (iii) Transfers
of worn-out or obsolete Equipment; (iv) Transfers which constitute liquidation
of Investments permitted under Section 7.7; and (v) other Transfers in the
ordinary course of business (it is expressly agreed and understood that the
ordinary course of Borrower's business includes entering into agreements and
arrangements with third parties for research, development, manufacturing, sale
or marketing of products and the licensing of intellectual property in
connection with such agreements and arrangements.
7.2 Change in Business. Engage in any business, or permit any of
its Subsidiaries to engage in any business, other than the businesses currently
engaged in by Borrower and any business substantially similar or related thereto
(or incidental thereto). Borrower will not, without thirty (30) days prior
written notification to Bank, relocate its chief executive office.
7.3 Mergers or Acquisitions. Merge or consolidate, or permit any
of its Subsidiaries to merge or consolidate, with or into any other business
organization, or acquire, or permit any of its Subsidiaries to acquire, all or
substantially all of the capital stock or property of another Person; provided,
however, that this Section 7.3 shall not apply (i) to transactions among
Borrower and its Subsidiaries in which Borrower is the
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surviving entity or (ii) where an Event of Default, or event that with the
giving of notice or passage from time or both would constitute an Event of
Default, exists or would exist before or after the consummation of such
transaction.
7.4 Indebtedness. Create, incur, assume or be or remain liable
with respect to any Indebtedness, or permit any Subsidiary so to do, other than
Permitted Indebtedness.
7.5 Encumbrances. Create, incur, assume or suffer to exist any
Lien with respect to any of its property, or assign or otherwise convey any
right to receive income, including the sale of any accounts receivable, or
permit any of its Subsidiaries so to do, except for Permitted Liens.
7.6 Distributions. Declare or pay any dividends or make any other
distribution or payment on account of or in redemption, retirement or purchase
of any capital stock.
7.7 Investments. Directly or indirectly acquire or own, or make
any Investment in or to any Person, or permit any of its Subsidiaries so to do,
other than Permitted Investments.
7.8 Transactions with Affiliates. Directly or indirectly enter
into or permit to exist any material transaction with any Affiliate of Borrower
except for transactions that are in the ordinary course of Borrower's business,
upon fair and reasonable terms that are no less favorable to Borrower than would
be obtained in an arm's length transaction with a nonaffiliated Person and
except for transactions with a Subsidiary that are upon fair and reasonable
terms and transactions constituting Permitted Investments
7.9 Subordinated Debt. Make any payment in respect of any
Subordinated Debt, or permit any of its Subsidiaries to make any such payment,
except in compliance with the terms of such Subordinated Debt, or amend any
provision contained in any documentation relating to the Subordinated Debt which
could reasonably be expected to adversely affect Bank or the seniority of Bank's
debt, without Bank's prior written consent.
7.10 Compliance. Become an "investment company" controlled by an
"investment company," within the meaning of the Investment Company Act of 1940,
or become principally engaged in, or undertake as one of its important
activities, the business of extending credit for the purpose of purchasing or
carrying margin stock, or use the proceeds of any Advance for such purpose. Fail
to meet the minimum funding requirements of ERISA, permit a Reportable Event or
Prohibited Transaction, as defined in ERISA, to occur, fail to comply with the
Federal Fair Labor Standards Act or violate any law or regulation, which
violation could have a Material Adverse Effect or a material adverse effect on
the Collateral or the priority of Bank's Lien on the Collateral, or permit any
of its Subsidiaries to do any of the foregoing.
8. EVENTS OF DEFAULT
Any one or more of the following events shall constitute an Event
of Default by Borrower under this Agreement:
8.1 Payment Default. If Borrower fails to pay the principal of
any Advances when due and payable; or fails to pay any interest on any Advances
within three days of when due and payable; or fails to pay any portion of any
other Obligations not constituting such principal or interest, including without
limitation Bank Expenses, within thirty (30) days of receipt by Borrower of an
invoice for such other Obligations;
8.2 Covenant Default. If Borrower fails to perform any obligation
under Sections 6.6, 6.7 or 6.8 or violates any of the covenants contained in
Article 7 of this Agreement, or fails or neglects to perform, keep, or observe
any other material term, provision, condition, covenant, or agreement contained
in this Agreement, in any of the Loan Documents, or in any other present or
future agreement between Borrower and Bank and as to any default under such
other term, provision, condition, covenant or agreement that can be
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cured, has failed to cure such default within ten (10) days after Borrower
receives notice thereof or any officer of Borrower becomes aware thereof;
provided, however, that if the default cannot by its nature be cured within the
ten (10) day period or cannot after diligent attempts by Borrower be cured
within such ten (10) day period, and such default is likely to be cured within a
reasonable time, then Borrower shall have an additional reasonable period (which
shall not in any case exceed thirty (30) days) to attempt to cure such default,
and within such reasonable time period the failure to have cured such default
shall not be deemed an Event of Default (provided that no Advances will be
required to be made during such cure period);
8.3 Attachment. If any material portion of Borrower's assets is
attached, seized, subjected to a writ or distress warrant, or is levied upon, or
comes into the possession of any trustee, receiver or person acting in a similar
capacity and such attachment, seizure, writ or distress warrant or levy has not
been removed, discharged or rescinded within ten (10) days, or if Borrower is
enjoined, restrained, or in any way prevented by court order from continuing to
conduct all or any material part of its business affairs, or if a judgment or
other claim becomes a lien or encumbrance upon any material portion of
Borrower's assets, or if a notice of lien, levy, or assessment is filed of
record with respect to any of Borrower's assets by the United States Government,
or any department, agency, or instrumentality thereof, or by any state, county,
municipal, or governmental agency, and the same is not paid within ten (10) days
after Borrower receives notice thereof, provided that none of the foregoing
shall constitute an Event of Default where such action or event is stayed or an
adequate bond has been posted pending a good faith contest by Borrower (provided
that no Advances will be required to be made during such cure period);
8.4 Insolvency. If Borrower becomes insolvent, or if an
Insolvency Proceeding is commenced by Borrower, or if an Insolvency Proceeding
is commenced against Borrower and is not dismissed or stayed within thirty (30)
days (provided that no Advances will be made prior to the dismissal of such
Insolvency Proceeding);
8.5 Other Agreements. If there is a default in any agreement to
which Borrower is a party with a third party or parties resulting in a right by
such third party or parties, whether or not exercised, to accelerate the
maturity of any Indebtedness in an amount in excess of One Million Dollars
($1,000,000) or that could reasonably be expected have a Material Adverse
Effect;
8.6 Judgments. If a judgment or judgments for the payment of
money in an amount, individually or in the aggregate, of at least One Million
Dollars ($1,000,000) shall be rendered against Borrower and shall remain
unsatisfied and unstayed for a period of thirty (30) days (provided that no
Advances will be made prior to the satisfaction or stay of such judgment); or
8.7 Guarantor. If an Event of Default occurs under that certain
Loan and Security Agreement between Guarantor and Bank of even date herewith; or
8.8 Misrepresentations. If any material misrepresentation or
material misstatement exists now or hereafter in any warranty or representation
set forth herein or in any certificate delivered to Bank by any Responsible
Officer pursuant to this Agreement or to induce Bank to enter into this
Agreement or any other Loan Document.
9. BANK'S RIGHTS AND REMEDIES
9.1 Rights and Remedies. Upon the occurrence and during the
continuance of an Event of Default (and after the expiration of any applicable
cure period), Bank may, at its election, without notice of its election and
without demand, do any one or more of the following, all of which are authorized
by Borrower:
(a) Declare all Obligations, whether evidenced by this
Agreement, by any of the other Loan Documents, or otherwise, immediately due and
payable (provided that upon the occurrence of an Event of Default described in
Section 8.5 all Obligations shall become immediately due and payable without any
action by Bank);
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(b) Cease advancing money or extending credit to or for
the benefit of Borrower under this Agreement or under any other agreement
between Borrower and Bank;
(c) Without notice to or demand upon Borrower, make such
payments and do such acts as Bank considers necessary or reasonable to protect
its security interest in the Collateral. Borrower agrees to assemble the
Collateral if Bank so requires, and to make the Collateral available to Bank as
Bank may designate. Borrower authorizes Bank to enter the premises where the
Collateral is located, to take and maintain possession of the Collateral, or any
part of it, and to pay, purchase, contest, or compromise any encumbrance,
charge, or lien which in Bank's determination appears to be prior or superior to
its security interest and to pay all expenses incurred in connection therewith;
(d) Without notice to Borrower set off and apply to the
Obligations any and all (i) balances and deposits of Borrower held by Bank, or
(ii) indebtedness at any time owing to or for the credit or the account of
Borrower held by Bank;
(e) Ship, reclaim, recover, store, finish, maintain,
repair, prepare for sale, advertise for sale, and sell (in the manner provided
for herein) the Collateral;
(f) Sell the Collateral at either a public or private
sale, or both, by way of one or more contracts or transactions, for cash or on
terms, in such manner and at such places (including Borrower's premises) as Bank
determines is commercially reasonable;
(g) Bank may credit bid and purchase at any public sale;
and
(h) Any deficiency that exists after disposition of the
Collateral as provided above will be paid immediately by Borrower.
9.2 Power of Attorney. Effective only upon the occurrence and
during the continuance of an Event of Default, Borrower hereby irrevocably
appoints Bank (and any of Bank's designated officers, or employees) as
Borrower's true and lawful attorney to make, settle, and adjust all claims under
and decisions with respect to Borrower's policies of insurance insofar as they
relate to the Collateral. The appointment of Bank as Borrower's attorney in
fact, and each and every one of Bank's rights and powers, being coupled with an
interest, is irrevocable until all of the Obligations have been fully repaid and
performed and Bank's obligation to provide Advances hereunder is terminated.
9.3 Bank Expenses. If Borrower fails to pay any amounts as
required under the terms of this Agreement, then Bank may do any or all of the
following: (a) make payment of the same or any part thereof; (b) obtain and
maintain insurance policies of the type discussed in Section 6.6 of this
Agreement, and take any action with respect to such policies as Bank deems
prudent. Any amounts so paid or deposited by Bank shall constitute Bank
Expenses, shall be immediately due and payable, and shall bear interest at the
then applicable rate hereinabove provided, and shall be secured by the
Collateral. Any payments made by Bank shall not constitute an agreement by Bank
to make similar payments in the future or a waiver by Bank of any Event of
Default under this Agreement.
9.4 Bank's Liability for Collateral. So long as Bank complies
with Section 9207 of the Code and reasonable banking practices, Bank shall not
in any way or manner be liable or responsible for: (a) the safekeeping of the
Collateral; (b) any loss or damage thereto occurring or arising in any manner or
fashion from any cause; (c) any diminution in the value thereof; or (d) any act
or default of any carrier, warehouseman, bailee, forwarding agency, or other
person whomsoever. Subject to the foregoing, all risk of loss, damage or
destruction of the Collateral shall be borne by Borrower.
9.5 Remedies Cumulative. Bank's rights and remedies under this
Agreement, the Loan Documents, and all other agreements shall be cumulative.
Bank shall have all other rights and remedies not inconsistent herewith as
provided under the Code, by law, or in equity. No exercise by Bank of one right
or
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remedy shall be deemed an election, and no waiver by Bank of any Event of
Default on Borrower's part shall be deemed a continuing waiver. No delay by Bank
shall constitute a waiver, election, or acquiescence by it. No waiver by Bank
shall be effective unless made in a written document signed on behalf of Bank
and then shall be effective only in the specific instance and for the specific
purpose for which it was given.
9.6 Demand; Protest. Borrower waives demand, protest, notice of
protest, notice of default or dishonor, notice of payment and nonpayment, notice
of any default, nonpayment at maturity, release, compromise, settlement,
extension, or renewal of accounts, documents, instruments, chattel paper, and
guarantees at any time held by Bank on which Borrower may in any way be liable.
10. NOTICES
Unless otherwise provided in this Agreement, all notices or
demands by any party relating to this Agreement or any other agreement entered
into in connection herewith shall be in writing and (except for financial
statements and other informational documents which may be sent by first-class
mail, postage prepaid) shall be personally delivered or sent by a recognized
overnight delivery service, certified mail, postage prepaid, return receipt
requested, or by telefacsimile to Borrower or to Bank, as the case may be, at
its addresses set forth below:
If to Borrower: Abgenix, Inc.
7601 Dunbarton Circle
Fremont, CA 94555
Attn: President
FAX: (510) ___________________
If to Bank: Silicon Valley Bank
1731 Embarcadero Road, Suite 220
Palo Alto, CA 94303
Attn: Mr. Gary Reagan
FAX: (415) 812-0640
The parties hereto may change the address at which they are to receive
notices hereunder, by notice in writing in the foregoing manner given to the
other.
11. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER
This Agreement shall be governed by, and construed in accordance
with, the internal laws of the State of California, without regard to principles
of conflicts of law. Each of Borrower and Bank hereby submits to the exclusive
jurisdiction of the state and Federal courts located in the County of Santa
Clara, State of California. BORROWER AND BANK EACH HEREBY WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN,
INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER
COMMON LAW OR STATUTORY CLAIMS. EACH PARTY RECOGNIZES AND AGREES THAT THE
FOREGOING WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS
AGREEMENT. EACH PARTY REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER
WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
12. GENERAL PROVISIONS
12.1 Successors and Assigns.
17
<PAGE> 21
(a) This Agreement shall bind and inure to the benefit of
the respective successors and permitted assigns of each of the parties;
provided, however, that neither this Agreement nor any rights hereunder may be
assigned by Borrower without Bank's prior written consent, which consent may be
granted or withheld in Bank's sole discretion. Bank shall have the right without
the consent of or notice to Borrower to sell, transfer, negotiate, or grant
participations in all or any part of, or any interest in Bank's obligations,
rights and benefits hereunder.
(b) Bank may sell, negotiate or grant participations to
other financial institutions in all or part of the obligations of the Borrower
outstanding under the Loan Agreements, without the approval of Borrower, but
with prompt subsequent notice to Borrower; provided that any such sale,
negotiation or participation shall be in compliance with the applicable federal
and state securities laws and the other requirements of this Section 12.1.
Notwithstanding the sale, negotiation or grant of participations, Bank shall
remain solely responsible for the performance of its obligations under this
Agreement, Bank shall remain the holder of the Note for all purposes under this
Agreement and Borrower shall continue to deal solely and directly with Bank in
connection with this Agreement and the other Loan Documents.
(c) The grant of a participation interest shall be on such
terms as the Bank determines are appropriate, provided only that: (1) the holder
of such a participation interest shall not have any of the rights of Bank under
this Agreement except, if the participation agreement so provides, rights to
demand the payment of costs of the type described in Section 2.7, provided that
the aggregate amount that the Borrower shall be required to pay under Section
2.5 with respect to any ratable share of the Committed Line or any Advance
(including amounts paid to participants) shall not exceed the amount that
Borrower would have had to pay if no participation agreements had been entered
into; (2) the consent of the holder of such a participation interest shall not
be required for amendments or waivers of provisions of the Loan Agreement other
than those which (i) increase the amount of the Committed Line, (ii) extend the
term of this Agreement, (iii) decrease the rate of interest or the amount of any
fee or any other amount payable to Bank under this Agreement, (iv) reduce the
principal amount payable under this Agreement, or (v) extend the date fixed for
the payment of principal or interest or any other amount payable under this
Agreement; and (3) Borrower shall continue to deal solely and directly with Bank
in connection with Bank's rights and obligations under this Agreement.
(d) The Bank may assign, from time to time, all or any
portion of its pro rata share of the Committed Line to an Affiliate of the Bank
or (with prompt subsequent notice to Borrower) to any Federal Reserve Bank, or,
subject to the prior written approval of Borrower (which approval will not be
unreasonably withheld), to any other financial institution; provided, that with
respect to an assignment that is subject to the prior approval of Borrower (i)
the amount the Committed Line being assigned pursuant to each such assignment
shall in no event be less than $2,500,000 and shall be an integral multiple of
$500,000 and (ii) the parties to each such assignment shall execute and deliver
to Borrower an assignment agreement in a form reasonably acceptable to each.
Upon such execution and delivery, from and after the effective date specified in
such assignment agreement (x) the assignee thereunder shall be a party hereto
and, to the extent that rights and obligations hereunder have been assigned to
it pursuant to such assignment agreement, have the rights and obligations of a
Bank hereunder and (y) Bank shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such assignment agreement,
relinquish its rights and be released from its obligations under this Agreement
(other than pursuant to this Section 12.1(d)), and, in the case of an assignment
agreement covering all or the remaining portion of Bank's rights and obligations
under this Agreement, Bank shall cease to be a party hereto. In the event of an
assignment hereunder, the parties agree to amend this Agreement to the extent
necessary to reflect the mechanical changes which are necessary to document such
assignment and which are standard for a multi-bank credit facility. Each party
shall bear its own expenses (including, without limitation, attorneys' fees and
costs) with respect to such an amendment.
12.2 Indemnification. Borrower shall defend, indemnify and hold
harmless Bank and its officers, employees, and agents against: (a) all
obligations, demands, claims, and liabilities claimed or asserted by any other
party in connection with the transactions contemplated by this Agreement; and
(b) all losses or Bank Expenses in any way suffered, incurred, or paid by Bank
as a result of or in any way arising out of, following, or consequential to
transactions between Bank and Borrower whether under this Agreement, or
otherwise
18
<PAGE> 22
(including without limitation reasonable attorneys fees and expenses), except
for losses caused by Bank's gross negligence or willful misconduct.
12.3 Time of Essence. Time is of the essence for the performance
of all obligations set forth in this Agreement.
12.4 Severability of Provisions. Each provision of this Agreement
shall be severable from every other provision of this Agreement for the purpose
of determining the legal enforceability of any specific provision.
12.5 Amendments in Writing, Integration. This Agreement cannot be
amended or terminated orally. All prior agreements, understandings,
representations, warranties, and negotiations between the parties hereto with
respect to the subject matter of this Agreement, if any, are merged into this
Agreement and the Loan Documents.
12.6 Counterparts. This Agreement may be executed in any number
of counterparts and by different parties on separate counterparts, each of
which, when executed and delivered, shall be deemed to be an original, and all
of which, when taken together, shall constitute but one and the same Agreement.
12.7 Survival. All covenants, representations and warranties made
in this Agreement shall continue in full force and effect so long as any
Obligations (excluding Obligations under Sections 2.5 and 12.2 to the extent
they remain inchoate at the time outstanding payment Obligations are paid in
full) remain outstanding. The obligations of Borrower to indemnify Bank with
respect to the expenses, damages, losses, costs and liabilities described in
Section 12.2 shall survive until all applicable statute of limitations periods
with respect to actions that may be brought against Bank have run, provided that
so long as the obligations set forth in the first sentence of this Section 12.7
have been satisfied, and Bank has no commitment to make any Advances or to make
any other loans to Borrower, Bank shall release all security interests granted
hereunder and redeliver all Collateral held by it in accordance with applicable
law.
12.8 Confidentiality. In handling any confidential information
Bank shall exercise the same degree of care that it exercises with respect to
its own proprietary information of the same types to maintain the
confidentiality of any non-public information thereby received or received
pursuant to this Agreement except that disclosure of such information may be
made (i) to the subsidiaries or affiliates of Bank in connection with their
present or prospective business relations with Borrower, (ii) to prospective
transferees or purchasers of any interest in the Loans, provided that they have
entered into a comparable confidentiality agreement in favor of Borrower and
have delivered a copy to Borrower, (iii) as required by law, regulations, rule
or order, subpoena, judicial order or similar order and (iv) as may be required
in connection with the examination, audit or similar investigation of Bank.
Confidential information hereunder shall not include information that either:
(a) is in the public domain or in the knowledge or possession of Bank when
disclosed to Bank, or becomes part of the public domain after disclosure to Bank
through no fault of Bank; or (b) is disclosed to Bank by a third party, provided
Bank does not have actual knowledge that such third party is prohibited from
disclosing such information. Notwithstanding any provision of this Agreement to
the contrary, prior to the occurrence of an Event of Default neither Borrower
nor any of any of its Subsidiaries will be required to disclose, permit the
inspection, examination, copying or making extracts of, or discussions of, any
document, information or other matter that (i) constitutes non-financial trade
secrets, or (ii) in respect to which disclosure to Bank (or designated
representative) is then prohibited by (a) law, or (b) an agreement binding upon
Borrower or any Subsidiary that was not entered into by Borrower or such
Subsidiary for the primary purpose of concealing information from Bank.
12.9 Guaranty. The Guaranty shall terminate upon the date that
Borrower receives net proceeds of not less than Twenty Million Dollars
($20,000,000) from the sale of its equity securities under a registration
statement filed under the Securities Act of 1933, as amended, provided an Event
of Default does not exist before such date or would not exist after giving
effect to such termination.
19
<PAGE> 23
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
ABGENIX, INC.
By: /s/ R. Scott Greer
-------------------------------------
Title: President
----------------------------------
SILICON VALLEY BANK
By: /s/ [unreadable]
-------------------------------------
Title:
----------------------------------
20
<PAGE> 24
EXHIBIT A
The Collateral shall consist of all right, title and interest of
Borrower in and to the following:
(a) All personal property, goods, fixtures, equipment, inventory,
appliances, furniture and furnishings, building service equipment, building
materials, and all replacements thereof (the "Improvements"), which Improvements
resulted from that certain work performed pursuant to the following invoices:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Mo/Yr Vendor Ck No. Ck. Date Cost
----- ------ ------ -------- ----
</TABLE>
(b) Any and all proceeds of the foregoing.
21
<PAGE> 25
EXHIBIT A-1
The Collateral shall consist of all right, title and interest of
Borrower in and to the following:
(a) All goods and equipment now owned or hereafter acquired, including,
without limitation, all machinery, fixtures, vehicles (including motor vehicles
and trailers), and any interest in any of the foregoing, and all attachments,
accessories, accessions, replacements, substitutions, additions, and
improvements to any of the foregoing, wherever located;
(b) All inventory, now owned or hereafter acquired, including, without
limitation, all merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products including such
inventory as is temporarily out of Borrower's custody or possession or in
transit and including any returns upon any accounts or other proceeds, including
insurance proceeds, resulting from the sale or disposition of any of the
foregoing and any documents of title representing any of the above, and
Borrower's Books relating to any of the foregoing;
(c) All contract rights and general intangibles now owned or hereafter
acquired, including, without limitation, goodwill, trademarks, servicemarks,
trade styles, trade names, patents, patent applications, leases, license
agreements, franchise agreements, blueprints, drawings, purchase orders,
customer lists, route lists, infringements, claims, computer programs, computer
discs, computer tapes, literature, reports, catalogs, design rights, income tax
refunds, payments of insurance and rights to payment of any kind;
(d) All now existing and hereafter arising accounts, contract rights,
royalties, license rights and all other forms of obligations owing to Borrower
arising out of the sale or lease of goods, the licensing of technology or the
rendering of services by Borrower, whether or not earned by performance, and any
and all credit insurance, guaranties, and other security therefor, as well as
all merchandise returned to or reclaimed by Borrower and Borrower's Books
relating to any of the foregoing;
(e) All documents, cash, deposit accounts, securities, letters of
credit, certificates of deposit, instruments and chattel paper now owned or
hereafter acquired and Borrower's Books relating to the foregoing;
(f) All copyright rights, copyright applications, copyright
registrations and like protections in each work of authorship and derivative
work thereof, whether published or unpublished, now owned or hereafter acquired;
all trade secret rights, including all rights to unpatented inventions,
know-how, operating manuals, license rights and agreements and confidential
information, now owned or hereafter acquired; all mask work or similar rights
available for the protection of semiconductor chips, now owned or hereafter
acquired; all claims for damages by way of any past, present and future
infringement of any of the foregoing; and
(g) Any and all claims, rights and interests in any of the above and all
substitutions for, additions and accessions to and proceeds thereof.
22
<PAGE> 26
EXHIBIT B
LOAN PAYMENT/ADVANCE TELEPHONE REQUEST FORM
DEADLINE FOR SAME DAY PROCESSING IS 3:00 P.M., P.S.T.
TO: CENTRAL CLIENT SERVICE DIVISION DATE:_________________
FAX#: (408) 432-3249 TIME:_________________
================================================================================
FROM:
----------------------------------------------------------------------------
CLIENT NAME (BORROWER)
REQUESTED BY:
--------------------------------------------------------------------
AUTHORIZED SIGNER'S NAME
AUTHORIZED SIGNATURE:
------------------------------------------------------------
PHONE NUMBER:
--------------------------------------------------------------------
FROM ACCOUNT # TO ACCOUNT #
---------------------- ------------------------
REQUESTED TRANSACTION TYPE REQUEST DOLLAR AMOUNT
PRINCIPAL INCREASE (ADVANCE) $___________________________________
PRINCIPAL PAYMENT (ONLY) $___________________________________
INTEREST PAYMENT (ONLY) $___________________________________
PRINCIPAL AND INTEREST (PAYMENT) $___________________________________
OTHER INSTRUCTIONS:
--------------------------------------------------------------
- --------------------------------------------------------------------------------
All representations and warranties of Borrower stated in the Loan
Agreement are true, correct and complete in all material respects as of the date
of the telephone request for and Advance confirmed by this Borrowing
Certificate; provided, however, that those representations and warranties
expressly referring to another date shall be true, correct and complete in all
material respects as of such date.
================================================================================
================================================================================
BANK USE ONLY
TELEPHONE REQUEST:
The following person is authorized to request the loan payment transfer/loan
advance on the advance designated account and is known to me.
- ---------------------------------- --------------------------------------
Authorized Requester Phone #
- ---------------------------------- --------------------------------------
Received By (Bank) Phone #
------------------------------------------
Authorized Signature (Bank)
================================================================================
23
<PAGE> 27
EXHIBIT C
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK
FROM: ABGENIX, INC.
The undersigned authorized officer of Abgenix, Inc. hereby certifies that
in accordance with the terms and conditions of the Loan and Security Agreement
between Borrower and Bank (the "Agreement"), (i) Borrower is in complete
compliance for the period ending _______ with all required covenants except as
noted below and (ii) all representations and warranties of Borrower stated in
the Agreement are true and correct in all material respects as of the date
hereof. Attached hereto is a copy of Borrower's financial statements for such
period, which the undersigned officer further certifies are prepared in
accordance with Generally Accepted Accounting Principles as consistently applied
from one period to the next, except as explained in an accompanying letter or
footnotes.
PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER "COMPLIES" COLUMN.
<TABLE>
<CAPTION>
REPORTING COVENANT REQUIRED COMPLIES
<S> <C> <C> <C>
Quarterly Financials Quarterly within 45 days Yes No
Audited Annual Financials FYE within 90 days Yes No
10-Q (Guarantor) Quarterly within 5 days of filing Yes No
10-K (Guarantor) FYE within 5 days of filing Yes No
Monthly Financials See Agreement Yes No
FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES
Maintain:
Minimum Tangible Net Worth 3x Borrower's
Obligations(1) $________ Yes No
Maximum Debt/Tangible Net Worth 1.0:1.0(1) ______:1.0 Yes No
Minimum Liquidity/Minimum Debt Service
Coverage (2) _________ Yes No
</TABLE>
1 After Guaranty terminates.
2 Liquidity of greater of (i) 2x Aggregate Obligations or (ii) 2 quarters
of Cash Burn; covenant replaced by Debt Service Coverage when DSC>1.5
for 4 consecutive quarters. Applies to Guarantor and Borrower
(consolidated) before Guaranty terminates, and Borrower alone after
Guaranty terminates.
COMMENTS REGARDING EXCEPTIONS: See Attached. ================================
Sincerely, BANK USE ONLY
Received by:
- -------------------------------------------- --------------------
SIGNATURE AUTHORIZED SIGNER
Date:
- -------------------------------------------- ---------------------------
TITLE
Verified:
- -------------------------------------------- -----------------------
DATE AUTHORIZED SIGNER
Date:
---------------------------
Compliance Status: Yes No
================================
24
<PAGE> 28
DISBURSEMENT REQUEST AND AUTHORIZATION
Borrower: Abgenix, Inc. Bank: Silicon Valley Bank
================================================================================
LOAN TYPE. This is a Variable Rate, Term Loan of a principal amount up to
$4,300,000.
PRIMARY PURPOSE OF LOAN. The primary purpose of this loan is for business.
SPECIFIC PURPOSE. The specific purpose of this loan is: Tenant Improvements and
Equipment Acquisition.
DISBURSEMENT INSTRUCTIONS. Borrower understands that no loan proceeds will be
disbursed until all of Bank's conditions for making the loan have been
satisfied. Please disburse the loan proceeds as follows:
<TABLE>
<CAPTION>
Loan
----
<S> <C>
Amount paid to Borrower directly: $___
Undisbursed Funds $___
Principal $___
CHARGES PAID IN CASH. Borrower has paid or will pay in cash as
agreed the following charges:
Prepaid Finance Charges Paid in Cash: $___
$43,000 Loan Fee (Already Paid)
Other Charges Paid in Cash: $___
$___UCC Search Fees
$___UCC Filing Fees
$___Outside Counsel Fees and Expenses (Estimate)
Total Charges Paid in Cash $___
</TABLE>
AUTOMATIC PAYMENTS. Borrower hereby authorizes Bank automatically to deduct from
Borrower's account numbered _________________ the amount of any loan payment. If
the funds in the account are insufficient to cover any payment, Bank shall not
be obligated to advance funds to cover the payment.
FINANCIAL CONDITION. BY SIGNING THIS AUTHORIZATION, BORROWER REPRESENTS AND
WARRANTS TO BANK THAT THE INFORMATION PROVIDED ABOVE IS TRUE AND CORRECT AND
THAT THERE HAS BEEN NO ADVERSE CHANGE IN BORROWER'S FINANCIAL CONDITION AS
DISCLOSED IN BORROWER'S MOST RECENT FINANCIAL STATEMENT TO BANK. THIS
AUTHORIZATION IS DATED AS OF JANUARY 23, 1997.
BORROWER:
- --------------------------------------------
- --------------------------------------------
Authorized Officer
================================================================================
<PAGE> 29
AGREEMENT TO PROVIDE INSURANCE
GRANTOR: Abgenix, Inc. BANK: Silicon Valley Bank
================================================================================
INSURANCE REQUIREMENTS. Abgenix, Inc. ("Grantor") understands that
insurance coverage is required in connection with the extending of a loan or the
providing of other financial accommodations to Grantor by Bank. These
requirements are set forth in the Loan Documents. The following minimum
insurance coverages must be provided on the following described collateral (the
"Collateral"):
Collateral: All Inventory, Equipment and Fixtures.
Type: All risks, including fire, theft and liability.
Amount: Full insurable value.
Basis: Replacement value.
Endorsements: Loss payable clause to Bank with stipulation
that coverage will not be cancelled or
diminished without a minimum of twenty (20)
days' prior written notice to Bank.
INSURANCE COMPANY. Grantor may obtain insurance from any insurance company
Grantor may choose that is reasonably acceptable to Bank. Grantor understands
that credit may not be denied solely because insurance was not purchased through
Bank.
FAILURE TO PROVIDE INSURANCE. Grantor agrees to deliver to Bank, on or
before closing, evidence of the required insurance as provided above, with an
effective date of January 23, 1997, or earlier. Grantor acknowledges and agrees
that if Grantor fails to provide any required insurance or fails to continue
such insurance in force, Bank may do so at Grantor's expense as provided in the
Loan and Security Agreement. The cost of such insurance, at the option of Bank,
shall be payable on demand or shall be added to the indebtedness as provided in
the security document. GRANTOR ACKNOWLEDGES THAT IF BANK SO PURCHASES ANY SUCH
INSURANCE, THE INSURANCE WILL PROVIDE LIMITED PROTECTION AGAINST PHYSICAL DAMAGE
TO THE COLLATERAL, UP TO THE BALANCE OF THE LOAN; HOWEVER, GRANTOR'S EQUITY IN
THE COLLATERAL MAY NOT BE INSURED. IN ADDITION, THE INSURANCE MAY NOT PROVIDE
ANY PUBLIC LIABILITY OR PROPERTY DAMAGE INDEMNIFICATION AND MAY NOT MEET THE
REQUIREMENTS OF ANY FINANCIAL RESPONSIBILITY LAWS.
AUTHORIZATION. For purposes of insurance coverage on the Collateral,
Grantor authorizes Bank to provide to any person (including any insurance agent
or company) all information Bank deems appropriate, whether regarding the
Collateral, the loan or other financial accommodations, or both.
GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS AGREEMENT TO
PROVIDE INSURANCE AND AGREES TO ITS TERMS. THIS AGREEMENT IS DATED JANUARY 23,
1997.
GRANTOR:
Abgenix, Inc.
X /s/ R. Scott Greer
---------------------------------
Authorized Officer
================================================================================
FOR BANK USE ONLY
INSURANCE VERIFICATION
DATE: PHONE:
------------------- ---------------------------------
AGENT'S NAME:
--------------------------------------------------------------------
INSURANCE COMPANY:
---------------------------------------------------------------
POLICY NUMBER:
-------------------------------------------------------------------
EFFECTIVE DATES:
-----------------------------------------------------------------
COMMENTS:
------------------------------------------------------------------------
================================================================================
<PAGE> 30
CORPORATE RESOLUTIONS TO BORROW
================================================================================
BORROWER: Abgenix, Inc.
================================================================================
I, the undersigned Secretary or Assistant Secretary of Abgenix, Inc.
(the "Corporation"), HEREBY CERTIFY that the Corporation is organized and
existing under and by virtue of the laws of the State of Delaware.
I FURTHER CERTIFY that attached hereto are true, correct and complete
copies of the Corporation's Certificate of Incorporation and By-Laws, which are
in full force and effect as of the date hereof.
I FURTHER CERTIFY that at a meeting of the Directors of the Corporation
(or by other duly authorized corporate action in lieu of a meeting), duly called
and held, at which a quorum was present and voting, the following resolutions
were adopted.
BE IT RESOLVED, that ANY ONE (1) of the following named officers,
employees, or agents of this Corporation, whose actual signatures are shown
below:
NAMES POSITIONS ACTUAL SIGNATURES
------------------------------------------------------------------
- ----------------------------- ------------------------ --------------------
- ----------------------------- ------------------------ --------------------
- ----------------------------- ------------------------ --------------------
- ----------------------------- ------------------------ --------------------
- ----------------------------- ------------------------ --------------------
acting for an on behalf of this Corporation and as its act and deed be, and they
hereby are, authorized and empowered:
BORROW MONEY. To borrow from time to time from Silicon Valley Bank
("Bank"), on such terms as may be agreed upon between the officers, employees,
or agents and Bank, such sum or sums of money as in their judgment should be
borrowed, without limitation, including such sums as are specified in that
certain Loan and Security Agreement dated as of January 23, 1997 (the "Loan
Agreement").
GRANT SECURITY. To grant a security interest to Bank in the Collateral
described in the Loan Agreement, which security interest shall secure all of the
Corporation's Obligations, as described in the Loan Agreement.
NEGOTIATE ITEMS. To draw, endorse, and discount with Bank all drafts,
trade acceptances, promissory notes, or other evidences of indebtedness payable
to or belonging to the Corporation or in which the Corporation may have an
interest, and either to receive cash for the same or to cause such proceeds to
be credited to the account of the Corporation with Bank, or to cause such other
disposition of the proceeds derived therefrom as they may deem advisable.
FURTHER ACTS. In the case of lines of credit, to designate additional or
alternate individuals as being authorized to request advances thereunder, and in
all cases, to do and perform such other acts and things, to pay any and all fees
and costs, and to execute and deliver such other documents and agreements as
they may in their discretion deem reasonably necessary or proper in order to
carry into effect the provisions of these Resolutions.
1
<PAGE> 31
BE IT FURTHER RESOLVED, that any and all acts authorized pursuant to
these resolutions and performed prior to the passage of these resolutions are
hereby ratified and approved, that these Resolutions shall remain in full force
and effect and Bank may rely on these Resolutions until written notice of their
revocation shall have been delivered to and received by Bank. Any such notice
shall not affect any of the Corporation's agreements or commitments in effect at
the time notice is given.
I FURTHER CERTIFY that the officers, employees, and agents named above
are duly elected, appointed, or employed by or for the Corporation, as the case
may be, and occupy the positions set forth opposite their respective names; that
the foregoing Resolutions now stand of record on the books of the Corporation;
and that the Resolutions are in full force and effect and have not been modified
or revoked in any manner whatsoever.
IN WITNESS WHEREOF, I have hereunto set my hand on January 23, 1997 and
attest that the signatures set opposite the names listed above are their genuine
signatures.
CERTIFIED TO AND ATTESTED BY:
X
--------------------------------------------------
================================================================================
2
<PAGE> 1
EXHIBIT 10.21
MASTER LEASE AGREEMENT
Lessor: TRANSAMERICA BUSINESS CREDIT CORPORATION
RIVERWAY II
WEST OFFICE TOWER
9399 WEST HIGGINS ROAD
ROSEMONT, ILLINOIS 60018
Lessee: ABGENIX, INC.
324 LAKESIDE DRIVE
FOSTER CITY, CALIFORNIA 94404
The lessor pursuant to this Master Lease Agreement ("Agreement") dated as of
March 27, 1997, is Transamerica Business Credit Corporation ("Lessor"). All
equipment, together with all present and future additions, parts, accessories,
attachments, substitutions, repairs, improvements and replacements thereof or
thereto, which are the subject of a Lease (as defined in the next sentence)
shall be referred to as "Equipment." Simultaneous with the execution and
delivery of this Agreement, the parties are entering into one or more Lease
Schedules (each, a "Schedule") which refer to and incorporate by reference this
Agreement, each of which constitutes a lease (each, a "Lease") for the Equipment
specified therein. Additional details pertaining to each Lease are specified in
the applicable Schedule. Each Schedule that the parties hereafter enter into
shall constitute a Lease. Lessor has no obligation to enter into any additional
leases with, or extend any future financing to, Lessee.
1. LEASE. Subject to and upon all of the terms and conditions of this
Agreement and each Schedule, Lessor hereby agrees to lease to Lessee and Lessee
hereby agrees to lease from Lessor the Equipment for the Term (as defined in
Paragraph 2 below) thereof.
2. TERM. Each Lease shall be effective and the term of each Lease ("Term")
shall commence on the commencement date specified in the applicable Schedule
and, unless sooner terminated (as hereinafter provided), shall expire at the end
of the term specified in such Schedule; provided, however, that obligations due
to be performed by Lessee during the Term shall continue until they have been
performed in full. Schedules will only be executed after the delivery of the
Equipment to Lessee or upon completion of deliveries of items of such Equipment
with aggregate cost of not less than $50,000.
3. RENT. Lessee shall pay as rent to Lessor, for use of the Equipment
during the Term or Renewal Term (as defined in Paragraph 8), rental payments
equal to the sum of all rental payments including, without limitation, security
deposits, advance rents and interim rents payable in the amounts and on the
dates specified in the applicable Schedule ("Rent"). If any Rent or other amount
payable by Lessee is not paid within five days after the day on which it becomes
payable, Lessee will pay on demand, as a late charge, an amount equal to 5% of
such unpaid Rent or other amount but only to the extent permitted by applicable
law. All payments provided for herein shall be payable to Lessor at its address
specified above, or at any other place designated by Lessor.
4. LEASE NOT CANCELABLE; LESSEE'S OBLIGATIONS ABSOLUTE. No Lease may be
canceled or terminated except as expressly provided herein. Lessee's obligation
to pay all Rent due or to become due hereunder shall be absolute and
unconditional and shall not be subject to any delay, reduction, set-off,
defense, counterclaim or recoupment for any reason whatsoever, including any
failure of the Equipment or any representations by the manufacturer or the
vendor thereof. If the Equipment is unsatisfactory for any reason, Lessee
<PAGE> 2
shall make any claim solely against the manufacturer or the vendor thereof and
shall, nevertheless, pay Lessor all Rent payable hereunder.
5. SELECTION AND USE OF EQUIPMENT. Lessee agrees that it shall be
responsible for the selection, use of, and results obtained from, the Equipment
and any other associated equipment or services.
6. WARRANTIES. LESSOR MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, AS TO ANY MATTER WHATSOEVER, INCLUDING, WITHOUT LIMITATION, THE DESIGN
OR CONDITION OF THE EQUIPMENT OR ITS MERCHANTABILITY, SUITABILITY, QUALITY OR
FITNESS FOR A PARTICULAR PURPOSE, AND HEREBY DISCLAIMS ANY SUCH WARRANTY. LESSEE
SPECIFICALLY WAIVES ALL RIGHTS TO MAKE A CLAIM AGAINST LESSOR FOR BREACH OF ANY
WARRANTY WHATSOEVER. LESSEE LEASES THE EQUIPMENT "AS IS." IN NO EVENT SHALL
LESSOR HAVE ANY LIABILITY FOR, NOR SHALL LESSEE HAVE ANY REMEDY AGAINST LESSOR
FOR, ANY LIABILITY, CLAIM, LOSS, DAMAGE OR EXPENSE CAUSED DIRECTLY OR INDIRECTLY
BY THE EQUIPMENT OR ANY DEFICIENCY OR DEFECT THEREOF OR THE OPERATION,
MAINTENANCE OR REPAIR THEREOF OR ANY CONSEQUENTIAL DAMAGES AS THAT TERM IS USED
IN SECTION 2-719(3) OF THE MODEL UNIFORM COMMERCIAL CODE, AS AMENDED FROM TIME
TO TIME ("UCC"). Lessor grants to Lessee, for the sole purpose of prosecuting a
claim, the benefits of any and all warranties made available by the manufacturer
or the vendor of the Equipment to the extent assignable.
7. DELIVERY. Lessor hereby appoints Lessee as Lessor's agent for the sole
and limited purpose of accepting delivery of the Equipment from each vendor
thereof. Lessee shall pay any and all delivery and installation charges. Lessor
shall not be liable to Lessee for any delay in, or failure of, delivery of the
Equipment.
8. RENEWAL. So long as no Event of Default or event which, with the giving
of notice, the passage of time, or both, would constitute an Event of Default,
shall have occurred and be continuing, each Lease may be renewed for a term of
twelve months (the "Renewal Term"), on the terms and conditions of this
Agreement or as set forth in the applicable Schedule, by Lessee giving Lessor
not less than 45 days prior written notice of Lessee's intent to renew such
Lease; provided, however, that Obligations due to be performed by the Lessee
during the Renewal Term shall continue until they have been performed in full.
The monthly rental payments for the Renewal Term shall be equal to 1.0% of the
equipment cost plus any monthly sales or use tax. Any notice given under this
Paragraph 8 by Lessee shall be irrevocable.
9. PURCHASE OPTION. So long as no Event of Default or event which, with the
giving of notice, the passage of time, or both, would constitute an Event of
Default, shall have occurred and be continuing, if Lessee shall not have
exercised its renewal option under Paragraph 8 hereof, Lessee shall purchase
all, but not less than all, the Equipment covered by the applicable Lease on the
date specified therefor in the applicable Schedule ("Purchase Date"). The
purchase price for such Equipment shall be its fair market value on an
"In-place, In-use" basis, as mutually agreed by Lessor and Lessee, or, if they
cannot agree, as determined by an independent appraiser selected by Lessor and
approved by Lessee, which approval will not be unreasonably delayed or withheld,
or as otherwise determined in the manner specified in the applicable Schedule.
Lessee shall pay the cost of any such appraisal. So long as no Event of Default
or event which, with the giving of notice, the passage of time, or both, would
constitute an Event of Default, shall have occurred and be continuing, Lessee
may, upon written notice to Lessor received at least one hundred eighty days
prior to the expiration of the Renewal Term, purchase all, but not less than
all, the Equipment covered by the applicable Schedule by the last date of the
Renewal Term (the "Alternative Purchase Date") at a purchase price equal to its
then fair market value on an "In-place, In-use" basis. On the Purchase Date or
the Alternative Purchase Date, as the case may be, for any Equipment, Lessee
shall pay to Lessor the purchase price, together with all sales and other taxes
applicable to the transfer of the Equipment and any other amount payable and
arising hereunder, in immediately available funds, whereupon Lessor shall
transfer to Lessee, without recourse or warranty of any kind, express or
implied, all of Lessor's right, title and interest in and to such Equipment on
an "As Is, Where Is" basis.
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10. OWNERSHIP; INSPECTION; MARKING; FINANCING STATEMENTS. Lessee shall
affix to the Equipment any labels supplied by Lessor indicating ownership of
such Equipment. The Equipment is and shall be the sole property of Lessor.
Lessee shall have no right, title or interest therein, except as lessee under a
Lease. The Equipment is and shall at all times be and remain personal property
and shall not become a fixture. Lessee shall obtain and record such instruments
and take such steps as may be necessary to prevent any person from acquiring any
rights in the Equipment by reason of the Equipment being claimed or deemed to be
real property. Upon request by Lessor, Lessee shall obtain and deliver to Lessor
valid and effective waivers, in recordable form, by the owners, landlords and
mortgagees of the real property upon which the Equipment is located or
certificates of Lessee that it is the owner of such real property or that such
real property is neither leased nor mortgaged. Lessee shall make the Equipment
and its maintenance records available for inspection by Lessor at reasonable
times and upon reasonable notice. Lessee shall execute and deliver to Lessor for
filing any UCC financing statements or similar documents Lessor may reasonably
request.
11. EQUIPMENT USE. Lessee agrees that the Equipment will be operated by
competent, qualified personnel in connection with Lessee's business for the
purpose for which the Equipment was designed and in accordance with applicable
operating instructions, laws and government regulations, and that Lessee shall
use all reasonable precautions to prevent loss or damage to the Equipment from
fire and other hazards. Lessee shall procure and maintain in effect all orders,
licenses, certificates, permits, approvals and consents required by federal,
state or local laws or by any governmental body, agency or authority in
connection with the delivery, installation, use and operation of the Equipment.
12. MAINTENANCE. Lessee, at its sole cost and expense, shall keep the
Equipment in a suitable environment as specified by the manufacturer's
guidelines or the equivalent and meet all recertification requirements, and
shall maintain the Equipment in its original condition and working order,
ordinary wear and tear excepted. At the reasonable request of Lessor, Lessee
shall furnish all proof of maintenance.
13. ALTERATION; MODIFICATIONS; PARTS. Lessee may alter or modify the
Equipment only with the prior written consent of Lessor. Any alteration shall be
removed and the Equipment restored to its normal, unaltered condition at
Lessee's expense (without damaging the Equipment's originally intended function
or its value) prior to its return to Lessor. Any part installed in connection
with warranty or maintenance service or which cannot be removed in accordance
with the preceding sentence shall be the property of Lessor.
14. RETURN OF EQUIPMENT. Except for Equipment that has suffered a Casualty
Loss (as defined in Paragraph 15 below) and is not required to be repaired
pursuant to Paragraph 15 below or Equipment purchased by Lessee pursuant to
Paragraph 9 above, upon expiration or termination of the Term or the Renewal
Term of a Lease, or upon demand by Lessor pursuant to Paragraph 22 below, Lessee
shall contact Lessor for shipping instructions and, at Lessee's own risk,
immediately return the Equipment, freight prepaid, to a location in the
continental United States specified by Lessor. At the time of such return to
Lessor, the Equipment shall (i) be in the operating order, repair and condition
as required by or specified in the original specifications and warranties of
each manufacturer and vendor thereof, ordinary wear and tear excepted, and meet
all recertification requirements and (ii) be capable of being promptly assembled
and operated by a third party purchaser or third party lessee without further
repair, replacement, alterations or improvements, and in accordance and
compliance with any and all statutes, laws, ordinances, rules and regulations of
any governmental authority or any political subdivision thereof applicable to
the use and operation of the Equipment. Except as otherwise provided under
Paragraph 9 hereof, at least one hundred eighty days before the expiration of
the Renewal Term, Lessee shall give Lessor notice of its intent to return the
Equipment at the end of such Renewal Term. During the one hundred eighty-day
period prior to the end of a Term or the Renewal Term, Lessor and its
prospective purchasers or lessees shall have, upon not less than two business
days' prior notice to Lessee and during normal business hours, or at any time
and without prior notice upon the occurrence and continuance of an Event of
Default, the right of access to the premises on which the Equipment is located
to inspect the Equipment, and Lessee shall cooperate in all other respects with
Lessor's remarketing of the Equipment. The provisions of this Paragraph 14 are
of the essence of the Lease, and upon application to any court of equity having
jurisdiction in the premises, Lessor shall be entitled to a decree against
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Lessee requiring specific performance of the covenants of Lessee set forth in
this Paragraph 14. If Lessee fails to return the Equipment when required, the
terms and conditions of the Lease shall continue to be applicable and Lessee
shall continue to pay Rent until the Equipment is received by Lessor.
15. CASUALTY INSURANCE; LOSS OR DAMAGE. Lessee will maintain, at its own
expense, liability and property damage insurance relating to the Equipment,
insuring against such risks as are customarily insured against on the type of
equipment leased hereunder by businesses in which Lessee is engaged in such
amounts, in such form, and with insurers reasonably satisfactory to Lessor;
provided, however, that the amount of insurance against damage or loss shall not
be less than the greater of (a) the replacement value of the Equipment and (b)
the stipulated loss value of the Equipment specified in the applicable Schedule
("Stipulated Loss Value"). Each liability insurance policy shall provide
coverage (including, without limitation, personal injury coverage) of not less
than $1,000,000 for each occurrence, and shall name Lessor as an additional
insured; and each property damage policy shall name Lessor as sole loss payee
and all policies shall contain a clause requiring the insurer to give Lessor at
least thirty days prior written notice of any alteration in the terms or
cancellation of the policy. Lessee shall furnish a copy of each insurance policy
(with endorsements) or other evidence satisfactory to Lessor that the required
insurance coverage is in effect; provided, however, Lessor shall have no duty to
ascertain the existence of or to examine the insurance policies to advise Lessee
if the insurance coverage does not comply with the requirements of this
Paragraph. If Lessee fails to insure the Equipment as required, Lessor shall
have the right but not the obligation to obtain such insurance, and the
reasonable cost of the insurance shall be for the account of Lessee due as part
of the next due Rent. Lessee consents to Lessor's release, upon its failure to
obtain appropriate insurance coverage, of any and all information necessary to
obtain insurance with respect to the Equipment or Lessor's interest therein.
Until the Equipment is returned to and received by Lessor as provided in
Paragraph 14 above, Lessee shall bear the entire risk of theft or destruction
of, or damage to, the Equipment including, without limitation, any condemnation,
seizure or requisition of title or use ("Casualty Loss"). No Casualty Loss shall
relieve Lessee from its obligations to pay Rent except as provided in clause (b)
below. When any Casualty Loss occurs, Lessee shall promptly notify Lessor and,
at the option of Lessor, shall promptly (a) place such Equipment in good repair
and working order; or (b) pay Lessor an amount equal to the Stipulated Loss
Value of such Equipment and all other amounts (excluding Rent) payable by Lessee
hereunder, together with a late charge on such amounts at a rate per annum equal
to the rate imputed in the Rent payments hereunder (as reasonably determined by
Lessor) from the date of the Casualty Loss through the date of payment of such
amounts, whereupon Lessor shall transfer to Lessee, without recourse or warranty
(express or implied), all of Lessor's interest, if any, in and to such Equipment
on an "AS IS, WHERE IS" basis. The proceeds of any insurance payable with
respect to the Equipment shall be applied, at the option of Lessor, either
towards (i) repair of the Equipment or (ii) payment of any of Lessee's
obligations hereunder. Lessee hereby appoints Lessor as Lessee's
attorney-in-fact to make claim for, receive payment of, and execute and endorse
all documents, checks or drafts issued with respect to any Casualty Loss under
any insurance policy relating to the Equipment.
16. TAXES. Lessee shall pay when due, and indemnify and hold Lessor
harmless from, all sales, use, excise and other taxes, charges, and fees
(including, without limitation, income, franchise, business and occupation,
gross receipts, licensing, registration, titling, personal property, stamp and
interest equalization taxes, levies, imposts, duties, charges or withholdings of
any nature), and any fines, penalties or interest thereon, imposed or levied by
any governmental body, agency or tax authority upon or in connection with the
Equipment, its purchase, ownership, delivery, leasing, possession, use or
relocation of the Equipment or otherwise in connection with the transactions
contemplated by each Lease or the Rent thereunder, excluding taxes on or
measured by the net income of Lessor. Lessee retains the option to diligently
contest, in good faith, taxes levied, provided that Lessee provides prior
written notice to Lessor and with respect to which adequate reserves are
maintained in accordance with General Accepted Accounting Principles. Upon
request, Lessee will provide proof of payment. Unless Lessor elects otherwise,
Lessor will pay all property taxes on the Equipment for which Lessee shall
reimburse Lessor promptly upon request. Lessee shall timely prepare and file all
reports and returns which are required to be made with respect to any obligation
of Lessee under this Paragraph 16. Lessee shall, to the extent permitted by law,
cause
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all billings of such fees, taxes, levies, imposts, duties, withholdings and
governmental charges to be made to Lessor in care of Lessee. Upon request,
Lessee will provide Lessor with copies of all such billings.
17. LESSOR'S PAYMENT. If Lessee fails to perform its obligations under
Paragraph 15 or 16 above, or Paragraph 23 below, Lessor shall have the right to
substitute performance, in which case, Lessee shall immediately reimburse Lessor
therefor.
18. GENERAL INDEMNITY. Each Lease is a net lease. Therefore, Lessee shall
indemnify Lessor and its successors and assigns against, and hold Lessor and its
successors and assigns harmless from, any and all claims, actions, damages,
obligations, liabilities and all costs and expenses, including, without
limitation, legal fees, incurred by Lessor or its successors and assigns arising
out of each Lease including, without limitation, the purchase, ownership,
delivery, lease, possession, maintenance, condition, use or return of the
Equipment, or arising by operation of law, except that Lessee shall not be
liable for any claims, actions, damages, obligations and costs and expenses
determined by a non-appealable, final order of a court of competent jurisdiction
to have occurred as a result of the gross negligence or willful misconduct of
Lessor or its successors and assigns. Lessee agrees that upon written notice by
Lessor of the assertion of any claim, action, damage, obligation, liability or
lien, Lessee shall assume full responsibility for the defense thereof, provided
that Lessor's failure to give such notice shall not limit or otherwise affect
its rights hereunder. Any payment pursuant to this Paragraph (except for any
payment of Rent) shall be of such amount as shall be necessary so that, after
payment of any taxes required to be paid thereon by Lessor, including taxes on
or measured by the net income of Lessor, the balance will equal the amount due
hereunder. The provisions of this Paragraph with regard to matters arising
during a Lease shall survive the expiration or termination of such Lease.
19. ASSIGNMENT BY LESSEE. Lessee shall not, without the prior written
consent of Lessor, (a) assign, transfer, pledge or otherwise dispose of any
Lease or Equipment, or any interest therein; (b) sublease or lend any Equipment
or permit it to be used by anyone other than Lessee and its employees; or (c)
move any Equipment from the location specified for it in the applicable
Schedule, except that Lessee may move Equipment to another location within the
United States provided that Lessee has delivered to Lessor (A) prior written
notice thereof and (B) duly executed financing statements and other agreements
and instruments (all in form and substance satisfactory to Lessor) necessary or,
in the opinion of the Lessor, desirable to protect Lessor's interest in such
Equipment. Notwithstanding anything to the contrary in the immediately preceding
sentence, Lessee may keep any Equipment consisting of motor vehicles or rolling
stock at any location in the United States.
20. ASSIGNMENT BY LESSOR. Lessor may assign its interest or grant a
security interest in any Lease and the Equipment individually or together, in
whole or in part. If Lessee is given written notice of any such assignment, it
shall immediately make all payments of Rent and other amounts hereunder directly
to such assignee. Each such assignee shall have all of the rights of Lessor
under each Lease assigned to it. Lessee shall not assert against any such
assignee any set-off, defense or counterclaim that Lessee may have against
Lessor or any other person. Except that any modifications to provisions within
the Agreement, requested by the Assignee, must be coordinated and communicated
to Lessee by Lessor.
21. DEFAULT; NO WAIVER. Lessee or any guarantor of any or all of the
obligations of Lessee hereunder (together with Lessee, the "Lease Parties")
shall be in default under each Lease upon the occurrence of any of the following
events (each, an "Event of Default"): (a) Lessee fails to pay within ten days of
when due any amount required to be paid by Lessee under or in connection with
any Lease; (b) any of the Lease Parties fails to perform or observe (i) any of
the terms, covenants or agreement contained in Paragraph 14, 15 and 19 hereof or
(ii) any other term, covenant or agreement under or in connection with a Lease
(other than the other Events of Default specified in this Paragraph 21) and such
failure remains unremedied for fifteen days from the later of (A) the date on
which such Lease Party has given Lessor written notice of such failure and (B)
the date on which such Lease Party knew or should have known of such failure;
(c) any representation made or financial information delivered or furnished by
any of the Lease Parties under or in connection with a Lease shall prove to have
been inaccurate in any material respect when made; (d) any of the Lease Parties
makes an assignment for the benefit of creditors, whether voluntary or
involuntary, or consents to the appointment of a trustee or receiver, or if
either shall
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be appointed for any of the Lease Parties or for a substantial part of its
property without its consent and, in the case of any such involuntary
proceeding, such proceeding remains undismissed or unstayed for forty-five days
following the commencement thereof; (e) any petition or proceeding is filed by
or against any of the Lease Parties under any Federal or State bankruptcy or
insolvency code or similar law and, in the case of any such involuntary petition
or proceeding, such petition or proceeding remains undismissed or unstayed for
forty-five days following the filing or commencement thereof, or any of the
Lease Parties takes any action authorizing any such petition or proceeding; (f)
any of the Lease Parties fails to pay when due any indebtedness for borrowed
money or under conditional sales or installment sales contracts or similar
agreements, leases or obligations evidenced by bonds, debentures, notes or other
similar agreements or instruments to any creditor (including Lessor under any
other agreement) after any and all applicable cure periods therefor shall have
elapsed or there shall exist at any time an Event of Default or other event
which, with the giving of notice or passage of time (or both), would constitute
an Event of Default under the Master Lease Agreement dated as of even date
herewith between Transamerica Business Credit Corporation, as lessor, and Cell
Genesys, Inc. as lessee; (g) any judgment shall be rendered against any of the
Lease Parties which shall remain unpaid or unstayed for a period of sixty days;
(h) any of the Lease Parties shall dissolve, liquidate, wind up or cease its
business, sell or otherwise dispose of all or substantially all of its assets or
make any material change in its lines of business; (i) any of the Lease Parties
shall amend or modify its name, unless such Lease Party delivers to Lessor prior
to any such proposed amendment or modification written notice of such amendment
or modification and within thirty days after such amendment or modification
delivers executed financing statements (in form and substance satisfactory to
the Lessor); (j) any of the Lease Parties shall merge or consolidate with any
other entity or make any material change in its capital structure, in each case
without Lessor's prior written consent, which shall not be unreasonably
withheld; (k) any of the Lease Parties shall suffer any loss or suspension of
any material license, permit or other right or asset or otherwise suffer a
material adverse change in the business, prospects, operations, results of
operations, assets, liabilities or condition (financial or otherwise), fail
generally to pay its debts as they mature, or call a meeting for purposes of
compromising its debts; (l) any of the Lease Parties shall deny or disaffirm its
obligations hereunder or under any of the documents delivered in connection
herewith; (m) there is a change in more than 50% of the ownership of any equity
interests of any of the Lease Parties on the date hereof, except where Cell
Genesys, Inc. owns more than 25% and no other single or beneficial party owns
more than 50% equity interest, or more than 50% of such interest becomes subject
to any contractual, judicial or statutory lien, charge, security interest or
encumbrance; or (n) there shall occur an Event of Default as defined in the
Master Lease Agreement dated as of March 27, 1997, between Lessor and Cell
Genesys, Inc.
22. REMEDIES. Upon the occurrence and continuation of an Event of Default,
Lessor shall have the right, in its sole discretion, to exercise any one or more
of the following remedies: (a) terminate each Lease; (b) declare any and all
Rent and other amounts then due and any and all Rent and other amounts to become
due under each Lease (collectively, the "Lease Obligations") immediately due and
payable; (c) take possession of any or all items of Equipment, wherever located,
without demand, notice, court order or other process of law, and without
liability for entry to Lessee's premises, for damage to Lessee's property or
otherwise; (d) demand that Lessee immediately return any or all Equipment to
Lessor in accordance with Paragraph 14 above, and, for each day that Lessee
shall fail to return any item of Equipment, Lessor may demand an amount equal to
the Rent payable for such Equipment in accordance with Paragraph 14 above; (e)
lease, sell or otherwise dispose of the Equipment in a commercially reasonable
manner, with or without notice and on public or private bid; (f) recover the
following amounts from the Lessee (as damages, including reimbursement of
reasonable costs and expenses, liquidated for all purposes and not as a
penalty): (i) all reasonable costs and expenses of Lessor reimbursable to it
hereunder, including, without limitation, expenses of disposition of the
Equipment, legal fees and all other amounts specified in Paragraph 23 below;
(ii) an amount equal to the sum of (A) any accrued and unpaid Rent through the
later of (1) the date of the applicable default or (2) the date that Lessor has
obtained possession of the Equipment or such other date as Lessee has made an
effective tender of possession of the Equipment to Lessor (the "Default Date")
and (B) if Lessor resells or re-lets the Equipment, Rent at the periodic rate
provided for in each Lease for the additional period
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that it takes Lessor to resell or re-let all of the Equipment; (iii) the present
value of all future Rent reserved in the Leases and contracted to be paid over
the unexpired Term of the Leases discounted at five percent simple interest per
annum; (iv) the reversionary value of the Equipment as of the expiration of the
Term of the applicable Lease as set forth on the applicable Schedule; and (v)
any indebtedness for Lessee's indemnity under Paragraph 18 above, plus a late
charge at the rate specified in Paragraph 3 above, less the amount received by
Lessor, if any, upon sale or re-let of the Equipment; and (g) exercise any other
right or remedy to recover damages or enforce the terms of the Leases. Upon the
occurrence and continuance of an Event of Default or an event which with the
giving of notice or the passage of time, or both, would result in an Event of
Default, Lessor shall have the right, whether or not Lessor has made any demand
or the obligations of Lessee hereunder have matured, to appropriate and apply to
the payment of the obligations of Lessee hereunder all security deposits and
other deposits (general or special, time or demand, provisional or final) now or
hereafter held by and other indebtedness or property now or hereafter owing by
Lessor to Lessee. Lessor may pursue any other rights or remedies available at
law or in equity, including, without limitation, rights or remedies seeking
damages, specific performance and injunctive relief. Any failure of Lessor to
require strict performance by Lessee, or any waiver by Lessor of any provision
hereunder or under any Schedule, shall not be construed as a consent or waiver
of any other breach of the same or of any other provision. Any amendment or
waiver of any provision hereof or under any Schedule or consent to any departure
by Lessee herefrom or therefrom shall be in writing and signed by Lessor.
No right or remedy is exclusive of any other provided herein or permitted
by law or equity. All such rights and remedies shall be cumulative and may be
enforced concurrently or individually from time to time.
23. LESSOR'S EXPENSE. Lessee shall pay Lessor, on demand, all of Lessor's
reasonable expenses (including legal fees and expenses) incurred in connection
with the preparation, execution and delivery of this Agreement and any other
agreement and transaction contemplated hereby and all costs and expenses in
protecting and enforcing Lessor's rights and interests in each Lease and the
Equipment, including, without limitation, legal, collection and remarketing fees
and expenses incurred by Lessor in enforcing the terms, conditions or provisions
of each Lease or, upon the occurrence and continuation of an Event of Default.
24. LESSEE'S WAIVERS. To the extent permitted by applicable law, Lessee
hereby waives any and all rights and remedies conferred upon a lessee by
Sections 2A-508 through 2A-522 of the UCC. To the extent permitted by applicable
law, Lessee also hereby waives any rights now or hereafter conferred by statute
or otherwise which may require Lessor to sell, lease or otherwise use any
Equipment in mitigation of Lessor's damages as set forth in Paragraph 22 above
or which may otherwise limit or modify any of Lessor's rights or remedies under
Paragraph 22. Any action by Lessee against Lessor for any default by Lessor
under any Lease shall be commenced within one year after any such cause of
action accrues.
25. NOTICES; ADMINISTRATION. Except as otherwise provided herein, all
notices, approvals, consents, correspondence or other communications required or
desired to be given hereunder shall be given in writing and shall be delivered
by overnight courier, hand delivery or certified or registered mail, postage
prepaid, if to Lessor, then to Technology Finance Division, 76 Batterson Park
Road, Farmington, Connecticut 06032, Attention: Assistant Vice President, Lease
Administration, with a copy to Lessor at Riverway II, West Office Tower, 9399
West Higgins Road, Rosemont, Illinois 60018, Attention: Legal Department, if to
Lessee, then to Abgenix, Inc., 324 Lakeside Drive, Foster City, California
94404, Attention: Manger, Finance and Treasury or such other address as shall be
designated by Lessee or Lessor to the other party. All such notices and
correspondence shall be effective when received.
26. REPRESENTATIONS. Lessee represents and warrants to Lessor that (a)
Lessee is duly organized, validly existing and in good standing under the laws
of the State of its incorporation; (b) the execution, delivery and performance
by Lessee of this Agreement are within Lessee's powers, have been duly
authorized by all necessary action, and do not contravene (i) Lessee's
organizational documents or (ii) any law or contractual restriction binding on
or affecting Lessee; (c) no authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body is
required for the due execution, delivery and performance by Lessee of this
Agreement; (d) each Lease constitutes the legal, valid and binding obligations
of
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Lessee enforceable against Lessee in accordance with its terms; (e) the
equipment cost of each item of Equipment does not exceed the fair and usual
price for such type of equipment purchased in like quantity and reflects all
discounts, rebates, and allowances for the Equipment given to the Lessee by the
manufacturer, supplier or any other person including, without limitation,
discounts for advertising, prompt payment, testing or other services; and (f)
all information supplied by Lessee to Lessor in connection herewith is correct
and does not omit any material statement necessary to insure that the
information supplied is not misleading.
27. FURTHER ASSURANCES. (a) Contemporaneously with or prior to the
execution of this Agreement, Lessee shall deliver or cause to be delivered a
continuing, absolute and unconditional guaranty, in form and substance
satisfactorily to Lessor, made by Cell Genesys, Inc. (the "Guarantor") in favor
of Lessor (the "Guaranty"). (b) If, at any time during the Term of any Lease,
Lessor releases the Guarantor of its obligations under the Guaranty and Lessee
thereafter fails to maintain a Cash Position Ratio (as defined in Paragraph
27(c) below) of at least 2.0:1.0., Lessee shall within thirty days of such
failure, and without necessity of a demand or declaration from Lessor, secure an
irrevocable standby letter of credit issued by a financial institution
acceptable to Lessor, naming Lessor as beneficiary, on terms and conditions
acceptable to Lessor, in an amount equal to 100% of the remaining Rent and any
Additional Rent (discounted at five percent simple interest) owed to Lessor. All
fees and expenses charged with respect to the letter of credit as set forth in
the applicable agreement and all fees and expenses, including, without
limitation, attorney's fees, incurred by Lessor in connection with such letter
of credit shall be paid by Lessee. (c) So long as the Guaranty or an irrevocable
standby letter of credit is not in effect, Lessee shall maintain a Cash Position
Ratio of not less than 2.0:1.0. "Cash Position Ratio" shall mean, as of the date
of such calculation, the ratio of (i) Lessee's verifiable aggregate liquid
assets consisting of cash, cash equivalents or investment grade securities which
are fee and clear of any interests, claims or liens (including, without
limitation, restrictions imposed pursuant to financial covenants) in favor of
any person or entity to (ii) the balance of all remaining Rent and any
Additional Rent (discounted at five percent interest) owed to Lessor. Lessee,
upon the request of Lessor, will execute, acknowledge, record or file, as the
case may be, such further documents and do such further acts as may be
reasonably necessary, desirable or proper to carry out more effectively the
purposes of this Agreement. Lessee hereby appoints Lessor as its
attorney-in-fact to execute on behalf of Lessee and authorizes Lessor to file
without Lessee's signature any UCC financing statements and amendments Lessor
deems advisable.
28. FINANCIAL STATEMENTS. Lessee shall deliver to Lessor: (a) as soon as
available, but not later than 120 days after the end of each fiscal year of
Lessee and its consolidated subsidiaries, the consolidated balance sheet, income
statement and statements of cash flows and shareholders equity for Lessee and
its consolidated subsidiaries (the "Financial Statements") for such year,
reported on by independent certified public accountants without an adverse
qualification; and (b) as soon as available, but not later than 60 days after
the end of each of the first three fiscal quarters in any fiscal year of Lessee
and its consolidated subsidiaries, the Financial Statements for such fiscal
quarter, together with a certification duly executed by a responsible officer of
Lessee that such Financial Statements have been prepared in accordance with
generally accepted accounting principles and are fairly stated in all material
respects (subject to normal year-end audit adjustments).
29. CONSENT TO JURISDICTION. Lessee irrevocably submits to the jurisdiction
of any Illinois state or federal court sitting in Illinois for any action or
proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby, and Lessee irrevocably agrees that all claims in respect of
any such action or proceeding may be heard and determined in such Illinois state
or federal court.
30. WAIVER OF JURY TRIAL. LESSEE AND LESSOR IRREVOCABLY WAIVE ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
31. FINANCE LEASE. Lessee and Lessor agree that each Lease is a "Finance
Lease" as defined by Section 2A-103(g) of the UCC. Lessee acknowledges that
Lessee has reviewed and approved each written Supply Contract (as defined by UCC
2A-103(y)) covering Equipment purchased from each "Supplier" (as defined by UCC
2A-103(x)) thereof.
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<PAGE> 9
32. NO AGENCY. Lessee acknowledges and agrees that neither the manufacturer
or supplier, nor any salesman, representative or other agent of the manufacturer
or supplier, is an agent of Lessor. No salesman, representative or agent of the
manufacturer or supplier is authorized to waive or alter any term or condition
of this Agreement or any Schedule and no representation as to the Equipment or
any other matter by the manufacturer or supplier shall in any way affect
Lessee's duty to pay Rent and perform its other obligations as set forth in this
Agreement or any Schedule.
33. GOVERNING LAW; SEVERABILITY. EACH LEASE SHALL BE GOVERNED BY THE LAWS
OF THE STATE OF ILLINOIS WITHOUT REGARD TO ITS CONFLICT OF LAW PROVISIONS. IF
ANY PROVISION SHALL BE HELD TO BE INVALID OR UNENFORCEABLE, THE VALIDITY AND
ENFORCEABILITY OF THE REMAINING PROVISIONS SHALL NOT IN ANY WAY BE AFFECTED OR
IMPAIRED.
LESSEE ACKNOWLEDGES THAT LESSEE HAS READ THIS AGREEMENT AND THE SCHEDULE
HERETO, UNDERSTANDS THEM, AND AGREES TO BE BOUND BY THEIR TERMS AND CONDITIONS.
FURTHER, LESSEE AND LESSOR AGREE THAT THIS AGREEMENT AND THE SCHEDULES DELIVERED
IN CONNECTION HEREWITH FROM TIME TO TIME ARE THE COMPLETE AND EXCLUSIVE
STATEMENT OF THE AGREEMENT BETWEEN THE PARTIES, SUPERSEDING ALL PROPOSALS OR
PRIOR AGREEMENTS, ORAL OR WRITTEN, AND ALL OTHER COMMUNICATIONS BETWEEN THE
PARTIES RELATING TO THE SUBJECT MATTER HEREOF.
IN WITNESS WHEREOF, the parties hereto have executed or caused this Master
Lease Agreement to be duly executed by their duly authorized officers as of this
_28___ day of __March________, 1997.
ABGENIX, INC.
By: /s/ R. Scott Greer
------------------------------------
Name: R. Scott Greer
Title: President & CEO
Federal Tax ID Number: 94-3248826
TRANSAMERICA BUSINESS CREDIT CORPORATION
By: /s/ Robert D. Pomeroy, Jr.
------------------------------------
Name: Robert D. Pomeroy, Jr.
Title: Executive Vice President
-9-
<PAGE> 10
SCHEDULE TO MASTER LEASE AGREEMENT
Dated as of March 27, 1997
Schedule No. 1
LESSOR NAME & MAILING ADDRESS LESSEE NAME & MAILING ADDRESS
Transamerica Business Credit Abgenix, Inc.
Corporation 324 Lakeside Drive
Riverway II Foster City, California 94404
West Office Tower
9399 West Higgins Road
Rosemont, Illinois 60018
Equipment Location (if different than Lessee's address above):
7601 Dumbarton Cr. Fremont, California
This Schedule covers the following described equipment ("Equipment").
See Exhibit II attached hereto and made a part hereof.
The Equipment is hereby leased pursuant to the provisions of the Master Lease
Agreement between the undersigned Lessee and Lessor dated March 27, 1997 (the
"Master Lease"), the terms of which are incorporated herein by reference
thereto, plus the following additional terms, provisions and modifications.
Lessor reserves the right to adjust the monthly payments in accordance with the
Commitment Letter dated as of March 7, 1997, between the Lessor and Lessee, if
the Lessor has not received this Schedule executed by the Lessee within five
business days from the date set forth above.
<TABLE>
<S> <C>
1. Term (Number of Months) 48 months
2. Equipment Cost $903,584.07
3. Commencement Date March 31, 1997
4. Rate Factor 2.45784% of Equipment Cost
5. Total Rents
6. Advance Rents (first and last) $45,611.62
Monthly rental payments including
monthly sales/use tax will be in the
amount of $22,805.81
and the second such rental payment
will be due on May 1, 1997
and subsequent rental payments will
be due on the same day of each month thereafter.
8. Security Deposit $ None
</TABLE>
-10-
<PAGE> 11
<TABLE>
<S> <C>
9. In addition to the monthly rental
payments provided for herein, Lessee shall
pay to Lessor, as interim rent, payable on
the commencement date specified above, an
amount equal to 1/30th of the monthly rental
payment (including monthly sales/use tax)
multiplied by the number of days from and
including the commencement date through the
end of the same calendar month. $ 760.20
</TABLE>
<TABLE>
<CAPTION>
EQUIPMENT MONTHLY SALES TAX TOTAL MONTHLY
COST RENTAL @ 8.25% PAYMENT
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Taxable $294,496.76 $7,238.26 $597.16 $7,835.42
Exempt $609,087.31 $14,970.39 $14,970.39
----------- ---------- ---------
Total $903,584.07 $22,208.65 $22,805.81
=========== ========== ==========
</TABLE>
Lessee hereby irrevocably authorizes Lessor to insert in this Schedule the
Commencement Date and the due date of the first rental payment.
Except as expressly provided or modified hereby, all the terms and provisions of
the Master Lease Agreement shall remain in full force and effect.
The Purchase Date shall be March 1, 2001. The Purchase Price shall be the Fair
Market Value of the Equipment. Lessee and Lessor agree that the Fair Market
Value of the Equipment on the Purchase Date shall be equal to 10% of the
Equipment Cost.
The Stipulated Loss Value of any items of Equipment shall be an amount equal to
the present value of all future Rent discounted at a rate of 6% per annum plus
the Reversionary Value.
The Reversionary Value of any item of Equipment shall be 10% of Equipment Cost.
In witness whereof, this Schedule is hereby executed and agreed to this 28th day
of March 1997.
-11-
<PAGE> 12
TRANSAMERICA BUSINESS CREDIT ABGENIX, INC.
CORPORATION (Lessee)
(Lessor)
By: /s/ Robert D. Pomeroy, Jr. By: /s/ R. Scott Greer
---------------------------------- ------------------------------------
Title: Executive Vice President Title: CEO
-12-
<PAGE> 13
SCHEDULE TO MASTER LEASE AGREEMENT
Dated as of April 24, 1997
Schedule No. 2
LESSOR NAME & MAILING ADDRESS LESSEE NAME & MAILING ADDRESS
Transamerica Business Credit Abgenix, Inc.
Corporation 324 Lakeside Drive
Riverway II Foster City, California 94404
West Office Tower
9399 West Higgins Road
Rosemont, Illinois 60018
Equipment Location (if different than Lessee's address above):
7601 Dumbarton Cr. Fremont, California
This Schedule covers the following described equipment ("Equipment").
See Exhibit II and Rider I attached hereto and made a part hereof.
The Equipment is hereby leased pursuant to the provisions of the Master Lease
Agreement between the undersigned Lessee and Lessor dated March 27, 1997 (the
"Master Lease"), the terms of which are incorporated herein by reference
thereto, plus the following additional terms, provisions and modifications.
Lessor reserves the right to adjust the monthly payments in accordance with the
Commitment Letter dated as of March 7, 1997, between the Lessor and Lessee, if
the Lessor has not received this Schedule executed by the Lessee within five
business days from the date set forth above.
<TABLE>
<S> <C>
1. Term (Number of Months) 48 months
2. Equipment Cost $283,841.22
3. Commencement Date April 30, 1997
4. Rate Factor 2.46741% of Equipment Cost
5. Total Rents $336,169.44
6. Advance Rents (first and last) $ 14,007.06
Monthly rental payments including
monthly sales/use tax will be in the
amount of $7,003.53
and the second such rental payment
will be due on June 1, 1997
and subsequent rental payments will
be due on the same day of each month thereafter.
8. Security Deposit $ None
</TABLE>
-13-
<PAGE> 14
<TABLE>
<S> <C>
9. In addition to the monthly rental
payments provided for herein, Lessee shall
pay to Lessor, as interim rent, payable on
the commencement date specified above, an
amount equal to 1/30th of the monthly rental
payment (including monthly sales/use tax)
multiplied by the number of days from and
including the commencement date through the
end of the same calendar month. $ 233.45
</TABLE>
Lessee hereby irrevocably authorizes Lessor to insert in this Schedule the
Commencement Date and the due date of the first rental payment.
Except as expressly provided or modified hereby, all the terms and provisions of
the Master Lease Agreement shall remain in full force and effect.
The Purchase Date shall be April 1, 2001. The Purchase Price shall be the Fair
Market Value of the Equipment. Lessee and Lessor agree that the Fair Market
Value of the Equipment on the Purchase Date shall be equal to 10% of the
Equipment Cost.
The Stipulated Loss Value of any items of Equipment shall be an amount equal to
the present value of all future Rent discounted at a rate of 6% per annum plus
the Reversionary Value.
The Reversionary Value of any item of Equipment shall be 10% of Equipment Cost.
In witness whereof, this Schedule is hereby executed and agreed to this 30th
day of April 1997.
TRANSAMERICA BUSINESS CREDIT ABGENIX, INC.
CORPORATION (Lessee)
(Lessor)
By: /s/ Gary P. Moro By: [SIG]
--------------------------------- ------------------------------------
Title: Vice President Title: Assistant Treasurer
-14-
<PAGE> 15
SCHEDULE TO MASTER LEASE AGREEMENT
Dated as of May 22, 1997
Schedule No. 3
LESSOR NAME & MAILING ADDRESS LESSEE NAME & MAILING ADDRESS
Transamerica Business Credit Abgenix, Inc.
Corporation 324 Lakeside Drive
Riverway II Foster City, California 94404
West Office Tower
9399 West Higgins Road
Rosemont, Illinois 60018
Equipment Location (if different than Lessee's address above):
7601 Dumbarton Cr. Fremont, California
This Schedule covers the following described equipment ("Equipment").
See Exhibit II and Rider I attached hereto and made a part hereof.
The Equipment is hereby leased pursuant to the provisions of the Master Lease
Agreement between the undersigned Lessee and Lessor dated March 27, 1997 (the
"Master Lease"), the terms of which are incorporated herein by reference
thereto, plus the following additional terms, provisions and modifications.
Lessor reserves the right to adjust the monthly payments in accordance with the
Commitment Letter dated as of March 7, 1997, between the Lessor and Lessee, if
the Lessor has not received this Schedule and Delivery and Acceptance
Certificate executed by the Lessee within five business days from the date set
forth above.
<TABLE>
<S> <C>
1. Term (Number of Months) 48 months
2. Equipment Cost $75,307.03
3. Commmencement Date May 30, 1997
4. Rate Factor 2.45593% of Equipment Cost
5. Total Rents $88,776.00
6. Advance Rents (first and last) $ 3,699.00
Monthly rental payments including
monthly sales/use tax will be in the
amount of $1,849.50
and the second such rental payment
will be due on July 1, 1997
and subsequent rental payments will
be due on the same day of each month thereafter.
</TABLE>
-16-
<PAGE> 16
<TABLE>
<S> <C>
8. Security Deposit N O N E
9. In addition to the monthly rental
payments provided for herein, Lessee shall
pay to Lessor, as interim rent, payable on
the commencement date specified above, an
amount equal to 1/30th of the monthly rental
payment (including monthly sales/use tax)
multiplied by the number of days from and
including the commencement date through the
end of the same calendar month. $ 123.30
</TABLE>
Lessee hereby irrevocably authorizes Lessor to insert in this Schedule the
Commencement Date and the due date of the first rental payment.
Except as expressly provided or modified hereby, all the terms and provisions of
the Master Lease Agreement shall remain in full force and effect.
The Purchase Date shall be May 1, 2001. The Purchase Price shall be the Fair
Market Value of the Equipment. Lessee and Lessor agree that the Fair Market
Value of the Equipment on the Purchase Date shall be equal to 10% of the
Equipment Cost.
The Stipulated Loss Value of any items of Equipment shall be an amount equal to
the present value of all future Rent discounted at a rate of 6% per annum plus
the Reversionary Value.
The Reversionary Value of any item of Equipment shall be 10% of Equipment Cost.
In witness whereof, this Schedule is hereby executed and agreed to this 27
day of May, 1997.
TRANSAMERICA BUSINESS CREDIT ABGENIX, INC.
CORPORATION (Lessee)
(Lessor)
By: By: [SIG]
---------------------------------- ------------------------------------
-17-
<PAGE> 17
Title: Title: Asst. Treasurer
------------------------------
-18-
<PAGE> 18
SCHEDULE TO MASTER LEASE AGREEMENT
Dated as of June 23, 1997
Schedule No. 4
LESSOR NAME & MAILING ADDRESS LESSEE NAME & MAILING ADDRESS
Transamerica Business Credit Abgenix, Inc.
Corporation 324 Lakeside Drive
Riverway II Foster City, California 94404
West Office Tower
9399 West Higgins Road
Rosemont, Illinois 60018
Equipment Location (if different than Lessee's address above):
7601 Dumbarton Circle, Fremont, California
This Schedule covers the following described equipment ("Equipment").
See Exhibit II and Rider I attached hereto and made a part hereof.
The Equipment is hereby leased pursuant to the provisions of the Master Lease
Agreement between the undersigned Lessee and Lessor dated March 27, 1997 (the
"Master Lease"), the terms of which are incorporated herein by reference
thereto, plus the following additional terms, provisions and modifications.
Lessor reserves the right to adjust the monthly payments in accordance with the
Commitment Letter dated as of March 7, 1997, between the Lessor and Lessee, if
the Lessor has not received this Schedule executed by the Lessee within five
business days from the date set forth above.
<TABLE>
<S> <C>
1. Term (Number of Months) 48 months
2. Equipment Cost $382,650.00
3. Commencement Date June 30, 1997
4. Rate Factor 2.4492% of Equipment Cost
1. Total Rents $449,849.28
Total sales/use tax $ 25,524.96 $475,374.24
2. Advance Rents (first and last) $ 18,743.72
Sales/use tax for advance rent $ 1,063.54 $ 19,807.26
3. Monthly rental payments $ 9,371.86
Monthly sales/use tax $ 531.77 $ 9,903.63
and the second such rental payment
will be due on August 1, 1997
and subsequent rental payments will
be due on the same day of each month
thereafter
</TABLE>
-19-
<PAGE> 19
<TABLE>
<S> <C>
4. Security Deposit NONE
5. In addition to the monthly rental payments
provided for herein, Lessee shall
pay to Lessor, as interim rent,
payable on the commencement date
specified above, an amount equal
to 1/30th of the monthly rental
payment (including monthly sales/use
tax) multiplied by the number of
days from and including the commencement
date through the end of the same calendar month. $ 330.13
</TABLE>
Summary of Rental Payment Calculations:
<TABLE>
<CAPTION>
TOTAL
EQUIPMENT MONTHLY SALES TAX MONTHLY
EQUIPMENT COST RENTAL @ 8.25% PAYMENT
- --------- ----------- --------- ------- ---------
<S> <C> <C> <C> <C>
Taxable $263,175.00 $6,445.68 $531.77 $6,977.45
Exempt $119,475.00 $2,926.18 n/a $2,926.18
----------- --------- ------- ---------
Total $382,650.00 $9,371.86 $531.77 $9,903.63
=========== ========= ======= =========
</TABLE>
Lessee hereby irrevocably authorizes Lessor to insert in this Schedule the
Commencement Date and the due date of the first rental payment.
Except as expressly provided or modified hereby, all the terms and provisions of
the Master Lease Agreement shall remain in full force and effect.
The Purchase Date shall be June 1, 2001. The Purchase Price shall be the Fair
Market Value of the Equipment. Lessee and Lessor agree that the Fair Market
Value of the Equipment on the Purchase Date shall be equal to 10% of the
Equipment Cost.
The Stipulated Loss Value of any items of Equipment shall be an amount equal to
the present value of all future Rent discounted at a rate of 6% per annum plus
the Reversionary Value.
The Reversionary Value of any item of Equipment shall be 10% of Equipment Cost.
In witness whereof, this Schedule is hereby executed and agreed to this 30th day
of June 1997.
-20-
<PAGE> 20
TRANSAMERICA BUSINESS CREDIT ABGENIX, INC.
CORPORATION (Lessee)
(Lessor)
By: By:
--------------------------------- ------------------------------------
Title: ------------------------------ Title: CEO
-21-
<PAGE> 21
SCHEDULE TO MASTER LEASE AGREEMENT
Dated as of July 23, 1997
Schedule No. 5
LESSOR NAME & MAILING ADDRESS LESSEE NAME & MAILING ADDRESS
Transamerica Business Credit Abgenix, Inc.
Corporation 324 Lakeside Drive
Riverway II Foster City, California 94404
West Office Tower
9399 West Higgins Road
Rosemont, Illinois 60018
Equipment Location (if different than Lessee's address above):
7601 Dumbarton Circle, Fremont, California
This Schedule covers the following described equipment ("Equipment").
See Exhibit II and Rider I attached hereto and made a part hereof.
The Equipment is hereby leased pursuant to the provisions of the Master Lease
Agreement between the undersigned Lessee and Lessor dated March 27, 1997 (the
"Master Lease"), the terms of which are incorporated herein by reference
thereto, plus the following additional terms, provisions and modifications.
Lessor reserves the right to adjust the monthly payments in accordance with the
Commitment Letter dated as of March 7, 1997, between the Lessor and Lessee, if
the Lessor has not received this Schedule executed by the Lessee within five
business days from the date set forth above.
<TABLE>
<S> <C>
1. Term (Number of Months) 48 months
2. Equipment Cost $ 52,120.35
3. Commencement Date July 31, 1997
4. Rate Factor 2.4490% of Equipment Cost
5. Total Rents $61,268.64
Total sales/use tax $ 3,792.96 $ 65,061.60
6. Advance Rents (first and last) $ 2,552.86
Sales/use tax for advance rent $ 158.04 $ 2,710.90
7. Monthly rental payments $ 1,276.43
Monthly sales/use tax $ 79.02 $ 1,355.45
and the second such rental payment
will be due on September 1, 1997
and subsequent rental payments will
be due on the same day of each month thereafter
</TABLE>
-22-
<PAGE> 22
<TABLE>
<S> <C>
8. Security Deposit NONE
9. In addition to the monthly rental payments
provided for herein, Lessee shall pay to
Lessor, as interim rent, payable on the
commencement date specified above, an amount
equal to 1/30th of the monthly rental payment
(including monthly sales/use tax) multiplied by
the number of days from and including the
commencement date through the end of the same
calendar month. $ 45.18
</TABLE>
Summary of Rental Payment Calculations:
<TABLE>
<CAPTION>
TOTAL
EQUIPMENT MONTHLY SALES TAX MONTHLY
EQUIPMENT COST RENTAL @ 8.25% PAYMENT
----------- --------- ------ ---------
<S> <C> <C> <C> <C>
Taxable $39,108.43 $957.77 $79.02 $1,036.79
Exempt $13,011.93 $318.66 n/a $318.66
----------- --------- ------ ---------
Total $52,120.365 $1,276.43 $79.02 $1,355.45
=========== ========= ====== =========
</TABLE>
Lessee hereby irrevocably authorizes Lessor to insert in this Schedule the
Commencement Date and the due date of the first rental payment.
Except as expressly provided or modified hereby, all the terms and provisions of
the Master Lease Agreement shall remain in full force and effect.
The Purchase Date shall be July 1, 2001. The Purchase Price shall be the Fair
Market Value of the Equipment. Lessee and Lessor agree that the Fair Market
Value of the Equipment on the Purchase Date shall be equal to 10% of the
Equipment Cost.
The Stipulated Loss Value of any items of Equipment shall be an amount equal to
the present value of all future Rent discounted at a rate of 6% per annum plus
the Reversionary Value.
The Reversionary Value of any item of Equipment shall be 10% of Equipment Cost.
In witness whereof, this Schedule is hereby executed and agreed to this 31st day
of July 1997.
-23-
<PAGE> 23
TRANSAMERICA BUSINESS CREDIT ABGENIX, INC.
CORPORATION (Lessee)
(Lessor)
By: By:
--------------------------------- ------------------------------------
Title: ------------------------------ Title: ---------------------------------
-24-
<PAGE> 24
SCHEDULE TO MASTER LEASE AGREEMENT
Dated as of August 25, 1997
Schedule No. 6
LESSOR NAME & MAILING ADDRESS LESSEE NAME & MAILING ADDRESS
Transamerica Business Credit Corporation Abgenix, Inc.
Riverway II 324 Lakeside Drive
West Office Tower Foster City, California 94404
9399 West Higgins Road
Rosemont, Illinois 60018
Equipment Location (if different than Lessee's address above):
7601 Dumbarton Circle, Fremont, California
This Schedule covers the following described equipment ("Equipment").
See Exhibit II and Rider I attached hereto and made a part hereof.
The Equipment is hereby leased pursuant to the provisions of the Master Lease
Agreement between the undersigned Lessee and Lessor dated March 27, 1997 (the
"Master Lease"), the terms of which are incorporated herein by reference
thereto, plus the following additional terms, provisions and modifications.
Lessor reserves the right to adjust the monthly payments in accordance with the
Commitment Letter dated as of March 7, 1997, between the Lessor and Lessee, if
the Lessor has not received this Schedule executed by the Lessee within five
business days from the date set forth above.
<TABLE>
<S> <C> <C> <C>
1. Term (Number of Months) 48 months
2. Equipment Cost $ 82,140.56
3. Commencement Date September 1, 1997
4. Rate Factor 2.44590% of Equipment Cost
5. Total Rents $96,436.80
Total sales/use tax $ 1,987.68 $ 98,424.48
6. Advance Rents (first and last) $ 4,018.20
Sales/use tax for advance rent $ 82.82 $ 4,101.02
7. Monthly rental payments $ 2,009.10
Monthly sales/use tax $ 41.41 $ 2,050.51
and the second such rental payment
will be due on October 1, 1997
and subsequent rental payments will
be due on the same day of each month
thereafter
8. Security Deposit NONE
9. In addition to the monthly rental
payments provided for herein, Lessee
shall
pay to Lessor, as interim rent, payable
on the commencement date specified
above, an amount equal to 1/30th of the
monthly rental payment (including
monthly sales/use tax) multiplied by the
number of days from and including the
commencement date through the end of the
same calendar month. NONE
</TABLE>
1
<PAGE> 25
Summary of Rental Payment Calculations:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
EQUIPMENT EQUIPMENT MONTHLY SALES TAX TOTAL MONTHLY
COST RENTAL @ 8.25% PAYMENT
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Taxable $ 20,518.43 $ 501.88 $ 41.41 $ 543.29
----------------------------------------------------------------------------------------------
Exempt $ 61,622.13 $ 1,507.22 n/a $ 1,507.22
----------------------------------------------------------------------------------------------
Total $ 82,140.56 $ 2,009.10 $ 41.41 $ 2,050.51
----------------------------------------------------------------------------------------------
</TABLE>
Lessee hereby irrevocably authorizes Lessor to insert in this Schedule the
Commencement Date and the due date of the first rental payment.
Except as expressly provided or modified hereby, all the terms and provisions of
the Master Lease Agreement shall remain in full force and effect.
The Purchase Date shall be August 1, 2001. The Purchase Price shall be the Fair
Market Value of the Equipment. Lessee and Lessor agree that the Fair Market
Value of the Equipment on the Purchase Date shall be equal to 10% of the
Equipment Cost.
The Stipulated Loss Value of any items of Equipment shall be an amount equal to
the present value of all future Rent discounted at a rate of 6% per annum plus
the Reversionary Value.
The Reversionary Value of any item of Equipment shall be 10% of Equipment Cost.
In witness whereof, this Schedule is hereby executed and agreed to this 1st day
of September, 1997.
TRANSAMERICA BUSINESS CREDIT ABGENIX, INC.
CORPORATION (Lessee)
(Lessor)
By: /s/ Meg Lengson By: /s/ Kurt Leutzinger
------------------------------ ------------------------------
Title: Meg Lengson Title: Chief Finacial Officer
--------------------------- ---------------------------
Assistant Vice President
2
<PAGE> 26
SCHEDULE TO MASTER LEASE AGREEMENT
Dated as of September 24, 1997
Schedule No. 7
LESSOR NAME & MAILING ADDRESS LESSEE NAME & MAILING ADDRESS
Transamerica Business Credit Corporation Abgenix, Inc.
Riverway II 324 Lakeside Drive
West Office Tower Foster City, California 94404
9399 West Higgins Road
Rosemont, Illinois 6001
Equipment Location (if different than Lessee's address above):
7601 Dumbarton Circle, Fremont, California
This Schedule covers the following described equipment ("Equipment").
See Exhibit II and Rider I attached hereto and made a part hereof.
The Equipment is hereby leased pursuant to the provisions of the Master Lease
Agreement between the undersigned Lessee and Lessor dated March 27, 1997 (the
"Master Lease"), the terms of which are incorporated herein by reference
thereto, plus the following additional terms, provisions and modifications.
Lessor reserves the right to adjust the monthly payments in accordance with the
Commitment Letter dated as of March 7, 1997, between the Lessor and Lessee, if
the Lessor has not received this Schedule executed by the Lessee within five
business days from the date set forth above.
<TABLE>
<S> <C> <C> <C>
1. Term (Number of Months) 48 months
2. Equipment Cost $ 33,335.03
3. Commencement Date September 30, 1997
4. Rate Factor 2.44590% of Equipment Cost
5. Total Rents $ 39,136.80
$39,136.80
6. Advance Rents (first and last) $ 1,630.70
7. Monthly rental payments $ 1,630.70
and the second such rental payment
will be due on November 1, 1997
and subsequent rental payments will
be due on the same day of each month
thereafter
8. Security Deposit NONE
9. In addition to the monthly rental
payments provided for herein, Lessee
shall pay to Lessor, as interim rent,
payable on the commencement date
specified above, an amount equal to
1/30th of the monthly rental payment
(including monthly sales/use tax)
multiplied by the number of days from
and including the commencement date
through the end of the same calendar
month. $ 27.20
</TABLE>
1
<PAGE> 27
Summary of Rental Payment Calculations:
Lessee hereby irrevocably authorizes Lessor to insert in this Schedule the
Commencement Date and the due date of the first rental payment.
Except as expressly provided or modified hereby, all the terms and provisions of
the Master Lease Agreement shall remain in full force and effect.
The Purchase Date shall be September 1, 2001. The Purchase Price shall be the
Fair Market Value of the Equipment. Lessee and Lessor agree that the Fair Market
Value of the Equipment on the Purchase Date shall be equal to 10% of the
Equipment Cost.
The Stipulated Loss Value of any items of Equipment shall be an amount equal to
the present value of all future Rent discounted at a rate of 6% per annum plus
the Reversionary Value.
The Reversionary Value of any item of Equipment shall be 10% of Equipment Cost.
In witness whereof, this Schedule is hereby executed and agreed to this 30th day
of September, 1997.
TRANSAMERICA BUSINESS CREDIT ABGENIX, INC.
CORPORATION (Lessee)
(Lessor)
By: /s/ Gary P. Moro By: /s/ Kurt Leutzinger
-------------------------- --------------------------
Title: Vice President Title: CFO
----------------------- -----------------------
2
<PAGE> 28
SCHEDULE TO MASTER LEASE AGREEMENT
Dated as of October 28, 1997
Schedule No. 8
LESSOR NAME & MAILING ADDRESS LESSEE NAME & MAILING ADDRESS
Transamerica Business Credit Corporation Abgenix, Inc.
Riverway II 7601 Dumbarton Circle
West Office Tower Fremont, CA 94555
9399 West Higgins Road
Rosemont, Illinois 60018
Equipment Location (if different than Lessee's address above):
7601 Dumbarton Circle, Fremont, California
This Schedule covers the following described equipment ("Equipment").
See Exhibit II and Rider I attached hereto and made a part hereof.
The Equipment is hereby leased pursuant to the provisions of the Master Lease
Agreement between the undersigned Lessee and Lessor dated March 27, 1997 (the
"Master Lease"), the terms of which are incorporated herein by reference
thereto, plus the following additional terms, provisions and modifications.
Lessor reserves the right to adjust the monthly payments in accordance with the
Commitment Letter dated as of March 7, 1997, between the Lessor and Lessee, if
the Lessor has not received this Schedule executed by the Lessee within five
business days from the date set forth above.
<TABLE>
<S> <C> <C> <C>
1. Term (Number of Months) 48 months
2. Equipment Cost $143,465.56
3. Commencement Date October 31, 1997
4. Rate Factor 2.44590% of Equipment Cost
5. Total Rents $ 168,432.96
Total sales/use tax $ 11,674.08 $180,107.04
6. Advance Rents (first and last) $ 7,018.04
Sales/use tax for advance rent $ 486.42 $ 7,504.46
7. Monthly rental payments $ 3,509.02
Monthly sales/use tax $ 243.21 $ 3,752.23
and the second such rental payment
will be due on December 1, 1997
and subsequent rental payments will
be due on the same day of each month
thereafter
8. Security Deposit NONE
9. In addition to the monthly rental
payments provided for herein, Lessee
shall pay to Lessor, as interim rent,
payable on the commencement date
specified above, an amount equal to
1/30th of the monthly rental payment
(including monthly sales/use tax)
multiplied by the number of days from
and including the commencement date
through the end of the same calendar
month. $ 125.07
</TABLE>
1
<PAGE> 29
Summary of Rental Payment Calculations:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
EQUIPMENT EQUIPMENT MONTHLY RENTAL SALES TAX TOTAL MONTHLY
COST @ 8.25% PAYMENT
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Exempt $ 22,938.79 $ 561.06 n/a $ 561.06
-------------------------------------------------------------------------------------------
Taxable $ 120,526.77 $ 2,947.96 $ 243.21 $ 3,191.17
-------------------------------------------------------------------------------------------
Total $ 143,465.56 $ 3,509.02 $ 243.21 $ 3,752.23
-------------------------------------------------------------------------------------------
</TABLE>
Lessee hereby irrevocably authorizes Lessor to insert in this Schedule the
Commencement Date and the due date of the first rental payment.
Except as expressly provided or modified hereby, all the terms and provisions of
the Master Lease Agreement shall remain in full force and effect.
The Purchase Date shall be October 1, 2001. The Purchase Price shall be the Fair
Market Value of the Equipment. Lessee and Lessor agree that the Fair Market
Value of the Equipment on the Purchase Date shall be equal to 10% of the
Equipment Cost.
The Stipulated Loss Value of any items of Equipment shall be an amount equal to
the present value of all future Rent discounted at a rate of 6% per annum plus
the Reversionary Value.
The Reversionary Value of any item of Equipment shall be 10% of Equipment Cost.
In witness whereof, this Schedule is hereby executed and agreed to this 31st day
of October 1997.
TRANSAMERICA BUSINESS CREDIT ABGENIX, INC.
CORPORATION (Lessee)
(Lessor)
By: /s/ Gary P. Moro By: /s/ Kurt Leutzinger
-------------------------- --------------------------
Title: Gary P. Moro Title: CFO
----------------------- -----------------------
Vice President
2
<PAGE> 1
EXHIBIT 10.22
THIS LICENSE AGREEMENT (the "Agreement") effective the 1st day of February,
1997 (the "Effective Date"), is made by and between RONALD J. BILLING,
Ph.D., an individual residing at 682 Ora Avo Drive, Vista, CA 92084 ("Licensor")
and ABGENIX, INC., a California corporation doing business at 7601 Dumbarton
Circle, Fremont, CA 94555 ("Licensee").
RECITALS
WHEREAS, Licensor has entered into a Research Evaluation and Option
Agreement with Cell Genesys, Inc. dated June 10, 1996 (the "Research Evaluation
and Option Agreement");
WHEREAS, Cell Genesys, Inc. has assigned the Research Evaluation and
Option Agreement to Licensee, a subsidiary of Cell Genesys, Inc.; and
WHEREAS, Licensor desires to grant to Licensee and Licensee desires to
acquire from Licensor an exclusive worldwide license under the Patent Rights to
commercialize CBL-1 antibody products, on the terms and conditions herein;
NOW, THEREFORE, for and in consideration of the covenants, conditions, and
undertakings, hereinafter set forth, it is agreed by and between the parties as
follows:
1. DEFINITIONS
For purposes of this Agreement, the terms set forth in this Article shall
have the meanings set forth below.
1.1 "Affiliate" shall mean any entity which controls, is controlled by or
is under common control with Licensee. An entity shall be regarded as in control
of another entity if it owns or controls at least fifty percent (50%) of the
shares of the subject entity entitled to vote in the election of directors, or,
in the case of an entity that is not a corporation, for the election of the
corresponding managing authority.
1.2 "Annual License Maintenance Fee" shall have the meaning set forth in
Article 3 hereof.
1.3 "Initial License Fee" shall have the meaning set forth in Article 3
hereof.
1.4 "Intellectual Property" shall have the meaning set forth in Section
9.5.
1.5 "Licensed Field" shall mean all human medical uses.
1.6 "Materials" shall mean samples of (i) the original hybridoma cells
deposited with the ATCC and having the accession number HB8214 and (ii)
samples of murine CBL-1 ascites produced by Licensor.
<PAGE> 2
1.7 "NET SALES" shall mean the gross sales price charged by Licensee or
its Affiliates and Sublicensees for sales of Product to non-Affiliate customers,
[***] with respect to such sales.
1.8 "PATENT RIGHTS" shall mean (i) United States Patent Number 5,330,896
and its priority US applications; (ii) any continuations,
continuations-in-part, divisionals, reexamination certificates, reissues or
extensions of (i) above; (iii) any foreign counterparts of any of (i) or (ii)
above including but not limited to: (a) European Patent Number EP0311438B1 and
(b) Japanese Patent Registration Number 1864269.
1.9 "PRODUCT" shall mean the CBL-1 antibody, together with any analogues,
derivations, modifications, humanized or human versions, or parts thereof, each
to the extent that making, using or selling the above would infringe the Patent
Rights.
1.10 "SUBLICENSEE" shall mean a third party that is not an Affiliate to
whom Licensee has granted a sublicense under the Patent Rights and Materials to
make, use and/or sell Product to the extent of the rights of Licensee therein.
"Sublicensee" shall also include a third party to whom License has granted the
right to distribute Product under the Patent Rights to the extent of the rights
of Licensee therein, provided that such third party is responsible for the
marketing and promotion of Product within the applicable country.
1.11 "TERRITORY" shall mean all the countries of the world.
2. LICENSE GRANT
Subject to the terms and conditions of this Agreement, Licensor
hereby grants to Licensee an exclusive license, under the Patent Rights and
Materials, to make, have made, use and sell Product in the Field in the
Territory. Such license shall be exclusive even as to Licensor, and shall
include the exclusive right to grant and authorize sublicenses for exploitation
worldwide.
3. LICENSE FEES
Licensee shall pay to Licensor an initial license fee of [***] (the
"Initial License Fee") within 30 days of the Effective Date. In addition,
Licensee shall pay to Licensor an annual license maintenance fee of [***] (the
"Annual License Maintenance Fee") on each anniversary of the Effective Date.
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
<PAGE> 3
4. ROYALTIES; THIRD-PARTY ROYALTIES
4.1 ROYALTY RATES. In consideration for the license and rights granted
herein, Licensee agrees to pay to Licensor royalties of [***] of Product by it
and its Affiliates and, subject to Section 11, their Sublicensees; provided,
however, that beginning with the first calendar quarter following
commercialization of Product, Licensee shall in no event pay Licensor annual
royalties of [***].
4.2 SINGLE ROYALTY; NON-ROYALTY SALES. Only one royalty shall be payable
with respect to any Product, regardless of how many claims or patents within
the Patent Rights cover such Product. In addition, no royalty shall be payable
under this Article 4 with respect to sales of Product among Licensee and its
Affiliates and/or Sublicensees or for use in research and/or development or
clinical trials.
4.3 TERMINATION OF ROYALTIES. Royalties under Section 4.1 will be due
until the later of (i) ten years from the first commercial sale of Product in
any country or (ii) on a country-by-country basis, the expiration of the
last-to-expire patent within the Patent Rights covering the Product in such
country.
4.4 THIRD-PARTY ROYALTIES. Licensee will be responsible for the payment
of any royalties, license fees and milestone and other payments due to third
parties under licenses or similar agreements entered into by Licensee to all
the manufacture, use or sale of Product.
5. MILESTONE PAYMENT
Licensee shall issue to Licensor 25,000 shares of common stock of Licensee
upon the submission of a Product License Application ("PLA") for the first
indication of Product.
6. ACCOUNTING AND RECORDS
6.1 ROYALTY REPORTS AND PAYMENTS. After the first commercial sale of
Product on which royalties are required, Licensee agrees to make quarterly
written reports to Licensor within 60 days after the end of each calendar
quarter, stating in each such report the number, description, and aggregate Net
Sales of Product sold during the calendar quarter upon which a royalty is
payable under Article 4 above. Concurrently with the making of such reports,
Licensee shall pay to Licensor royalties at the applicable rate specified in
Section 4.1 above. All payments to Licensor hereunder shall be made in U.S.
Dollars to a bank account designated by Licensor.
6.2 RECORDS, INSPECTION. Licensee shall keep complete, true and accurate
books of account and records for the purpose of determining the royalty amounts
payable to Licensor under this
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
-3-
<PAGE> 4
Agreement. Such books and records shall be kept for at least three years
following the end of the calendar quarter to which they pertain. Licensee
shall require each of its Sublicensees to maintain similar books and records.
6.3 Currency Conversion. If any currency conversion shall be required in
connection with the calculation of royalties hereunder, such conversion shall be
made using the selling exchange rate for conversion of the foreign currency
into U.S. Dollars, quoted for current transactions reported in The Wall Street
Journal for the last business day of the calendar quarter to which such payment
pertains.
6.4 Late Payments. Any payments due from Licensee that are not paid on
the date such payments are due under this Agreement shall bear interest to the
extent permitted by applicable law at the prime rate as reported by the Bank of
America in San Francisco, California on the date such payment is due, plus an
additional two percent, calculated on the number of days such payment is
delinquent. This Section 6.4 shall in no way limit any other remedies available
to any party.
7. MATERIALS; CONSULTING
7.1 Materials. Licensee acknowledges that Licensor has already provided
to Licensee samples of the Materials. Title to the Materials shall remain with
Licensor. Upon any termination of the Agreement pursuant to Section 14.3,
Licensee shall return Materials to Licensor.
7.2 Consulting. Licensor shall provide services as a consultant to
Licensee with respect to Product from time to time as reasonably requested by
Licensee until the commercialization of Product for the first indication, such
services not to exceed more than one day per calendar month. Licensor hereby
covenants and agrees that, during such time as he is providing consulting
services to Licensee pursuant to this Section 7.2, Licensor shall not perform
consulting services to any third party with respect to Product, without the
Licensee's prior written consent. In consideration for the services to be
provided pursuant to this Section 7.2, Licensee shall grant Licensor an option
to purchase 10,000 shares of common stock of Licensee under the Abgenix, Inc.
1996 Incentive Stock Plan.
7.3 Research and Development Funding. Licensee shall provide research and
development funding to the CV Cancer Center until the commercialization of
Product for the first indication as follows: [***] shall be paid to the CV
Center within 30 days of the Effective Date and [***]. The monthly research and
development payments shall be subject to adjustment annually by a percentage
equal to the [***].
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
-4-
<PAGE> 5
8. DEVELOPMENT OF PRODUCT, DUE DILIGENCE
8.1 Funding and Conduct. Licensee shall independently furnish and be
responsible for funding and conducting all of its preclinical and clinical
research and development of Product, at its own expense.
8.2 IND Filing. Licensor shall allow Licensee to access Licensor's IND
relating to murine CBL-1 by providing Licensee with a letter of access to such
IND, at the request and at the discretion of Licensee. Licensor shall execute
and deliver such other documents as may be reasonably requested by Licensee to
access such IND.
8.3 Due Diligence. Licensee agrees to use commercially reasonable efforts
consistent with prudent business judgment to commercialize Product. Licensee
agrees to commit not less than [***] to the development of Product until Product
obtains regulatory approval in any one country of the world. Licensee shall keep
Licensor reasonably informed as to the status of such commercialization efforts.
9. PATENTS, INTELLECTUAL PROPERTY
9.1 Patent Prosecution. Licensee shall have responsibility for preparing,
filing, prosecuting and maintaining patents and patent applications worldwide
relating to the Patent Rights and conducting any interferences, reexaminations,
or requesting reissues or patent term extensions with respect to the Patent
Rights. Licensee shall keep Licensor reasonably informed as to the status of
such patent matters and shall provide Licensor copies of any documents received
by Licensee from such patent offices including notice of all interferences,
reexaminations, oppositions or requests for patent term extensions. Licensor
shall cooperate with and assist Licensee in connection with such activities, at
Licensee's request and expense.
9.2 Patent Enforcement. In the event that any Patent Rights necessary for
the practice of the license granted herein are infringed or misappropriated by
a third party or are subject to a declaratory judgment action arising from
such infringement. Licensee shall have the exclusive right to enforce or defend
any declaratory judgment action, at its expense, involving any Patent Rights.
In such event, Licensee shall keep Licensor reasonably informed of the progress
of any such claim, suit or proceeding. Any recovery received by Licensee as a
result of any such claim, suit or proceeding shall be retained by Licensee.
9.3 Infringement Claims. If the production, sale or use of Product
pursuant to this Agreement results in any claim, suit or proceeding alleging
patent infringement against Licensee, Licensee shall have the exclusive right
to defend and control the
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
<PAGE> 6
defense of any such claim, suit or proceeding, at its own expense, using counsel
of its choice. Licensee shall keep Licensor reasonably informed of all material
developments in connection with any such claim, suit or proceeding as it relates
to the Patent Rights. Subject to the limitation set forth below, the costs of
any damages and expenses (including attorneys' and professional fees) shall be
divided [***]. Licensee shall deduct Licensor's share of such costs from any
amounts due, or which may become due, to Licensor pursuant to this Agreement;
provided, however, that in no event shall such deductions [***] of any such
amounts and Licensor shall not be liable for any costs in excess of such
deductible amounts.
9.4 Patent Marking. Licensee agrees to mark and have its Affiliates and
Sublicensees mark all Products sold pursuant to this Agreement in accordance
with the applicable statute or regulations in the country or countries of
manufacture and sale thereof.
9.5 Intellectual Property Rights. Licensee may disclose to Licensor
inventions, technology, improvements, discoveries, developments, original works
of authorship, trade secrets or intellectual property, conceived, developed or
reduced to practice by employee of Licensee ("Intellectual Property").
Intellectual Property shall be treated as confidential information subject to
the provisions of Article 10. Title to any Intellectual Property, including
patent applications, divisionals, continuations, continuations-in-part, patents
or reissues and re-examinations thereon shall be owned by Licensee.
10. CONFIDENTIALITY
10.1 Confidential Information. Except as expressly provided herein, the
parties agree that, for the term of this Agreement and for five years
thereafter, the receiving party shall keep completely confidential and shall
not publish or otherwise disclose and shall not use for any purpose any
information furnished to it by another party hereto pursuant to this Agreement
except to the extent that it can be established by the receiving party by
competent proof that such information:
(a) was already known to the receiving party, other than under an
obligation of confidentiality, at the time of disclosure;
(b) was generally available to the public or otherwise part of the
public domain at the time of its disclosure to the receiving party;
(c) became generally available to the public or otherwise part of
the public domain after its disclosure and other than through any act or
omission of the receiving party in breach of this Agreement; or
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
-6-
<PAGE> 7
(d) was subsequently lawfully disclosed to the receiving party by a
person other than a party or developed by the receiving party without reference
to any information or materials disclosed by the disclosing party.
10.2 Permitted Disclosures. Notwithstanding Sections 10.1 above and 15.16
below, Licensee may disclose Licensor's information to the extent such
disclosure is reasonably necessary in filing or prosecuting patent
applications, prosecuting or defending litigation, complying with applicable
governmental regulations or otherwise submitting information to tax or other
governmental authorities, making a permitted sublicense or other exercise of
its rights hereunder or conducting clinical trials.
11. SUBLICENSES
Pursuant to Article 2 herein, Licensee shall have the right to grant and
authorize sublicenses to third parties; provided, however, the Licensee shall
remain responsible for any payments due Licensor for Net Sales of Product by any
Sublicensee. In the event that Licensee receives a license fee from a
Sublicensee at any time within [***] provided, however, that to the extent that
such fee is creditable against future royalties on Net Sales of Product by the
Sublicensee, Licensee shall not be required to pay Licensor royalties on such
Net Sales of Product pursuant to Section 4.1 Except as set forth in this Section
11, Licensee may retain any amounts received from Sublicensees in excess of the
amounts owed to Licensor pursuant to Article 4. Any sublicense granted by
Licensee pursuant to this Agreement shall provide that the Sublicensee will be
subject to the applicable terms of this Agreement.
12. INDEMNIFICATION
Licensee agrees to indemnify and hold Licensor harmless from and against
any losses, claims, damages, liabilities or actions suffered or incurred in
connection with third party claims arising from any Product manufactured, used,
sold or otherwise distributed by Licensee and its Affiliates or Sublicensees;
provided, however, that Licensee shall not be required to provide
indemnification to Licensor for any losses, claims, damages, liabilities or
actions suffered or incurred in connection with third party claims resulting
from the gross negligence, recklessness or intentional misconduct by Licensor
or its agents. If Licensor intends to claim indemnification under this Article
12, it shall promptly notify Licensee in writing of any loss, claim, damage,
liability or action in respect of which Licensor intends to clam such
indemnification, and Licensee shall have the right to participate in or to
assume the defense thereof with counsel of its choice; provided, however, that
Licensor shall have the right to retain its own counsel, at its own expense.
This indemnity agreement shall not apply to amounts
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
-7-
<PAGE> 8
paid in settlement of any losses, claims, damages, liabilities or actions if
such settlement is effected without the consent of Licensee. The failure to
deliver written notice to Licensee within a reasonable time after the
commencement of any such action, if prejudicial to its ability to defend such
action shall relieve Licensee of any Liability that it may have to Licensor
under this Article 12. Licensor shall cooperate fully with Licensee and its
legal representatives in the investigation of any action, claim or liability
covered by this indemnification.
13. REPRESENTATIONS AND WARRANTIES
13.1 Licensor. Licensor represents and warrants that:
(i) it has the full right and authority to enter into this Agreement
and grant the rights and licenses granted herein;
(ii) it has not previously granted and will not grant any rights
inconsistent or in conflict with the rights and licenses granted to Licensee
herein;
(iii) there are no existing or threatened actions, suits or claims
pending against Licensor with respect to the Patent Rights or Materials or the
right of Licensor to enter into and perform its obligations under this
Agreement;
(iv) it has not previously granted, and will not grant during the
term of this Agreement, any right, license or interest in and to the Patent
Rights or Materials, or any portion thereof, with respect to the Product, or its
manufacture or use.
13.2 Licensee: Licensee represents and warrants that:
(i) it has the full right and authority to enter into this
Agreement; and
(ii) it has not entered and during the term of this Agreement will
not enter any other agreement inconsistent or in conflict with this Agreement.
13.3 Disclaimer. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT,
LICENSOR MAKES NO REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND, EITHER
EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND VALIDITY OF PATENT RIGHTS
CLAIMS, ISSUED OR PENDING.
14. TERM AND TERMINATION
14.1 Effectiveness. This Agreement shall become effective as of the
Effective Date and the license rights granted by Licensor under Article 2 above
shall be in full force and effect as of such date.
-8-
<PAGE> 9
14.2 Term. Unless earlier terminated pursuant to the other provisions of
this Article 14, this Agreement shall continue in full force and effect until
the expiration of the last to expire patent within the Patent Rights claiming
Product. The licenses granted under Article 2 shall survive the expiration (but
not an earlier termination) of this Agreement; provided that such license shall
in such event become nonexclusive.
14.3 Termination for Breach. Either party to this Agreement may terminate
this Agreement in the event the other party shall have materially breached or
defaulted in the performance of any of its material obligations hereunder, and
such shall have continued for sixty days after written notice thereof was
provided to the breaching party by the nonbreaching party that terminates the
Agreement as to such party. Any termination shall become effective at the end of
such sixty day period unless the breaching party has cured any such breach or
default prior to the expiration of the sixty day period. However, if the party
alleged to be in breach of this Agreement disputes such breach within such sixty
day period, the non-breaching party shall not have the right to terminate this
Agreement unless it has been determined by an arbitration proceeding in
accordance with Section 15.12 below that this Agreement was materially breached,
and the breaching party fails to cure such breach within 30 days following the
final decision of the arbitrators or such other time as directed by the
arbitrators.
14.4 Other Termination Rights. Licensee may terminate this Agreement and
the license granted herein, in its entirety or as to any particular patent
within the Patent Rights in a particular country, at any time, by providing
Licensor ninety-days written notice. In the event of termination as to a
particular country, the subject patent in such country shall cease to be within
the Patent Rights for all purposes of this Agreement.
14.5 Effect of Termination.
14.5.1 Termination of this Agreement for any reason shall not release
either party hereto from any liability which at the time of such termination has
already accrued to the other party or which is attributable to a period prior to
such termination.
14.5.2 In the event this Agreement is terminated for any reason,
Licensee and its Affiliates and Sublicensees shall have the right to sell or
otherwise dispose of the stock of any Product subject to this Agreement then on
hand. Upon termination of this Agreement by Licensor for any reason, any
sublicense granted by Licensee hereunder shall survive, provided that upon
request by Licensor, such Sublicensee promptly agrees in writing to be bound by
the applicable terms of this Agreement.
14.5.3 Section 9.5 and Articles 10, 12, 13, 14, and 15 shall survive
the expiration and any termination of this Agreement for any reason.
-9-
<PAGE> 10
15. MISCELLANEOUS
15.1 Governing Laws. This Agreement shall be interpreted and construed in
accordance with the laws of the State of California, without regard to conflicts
of law principles.
15.2 Waiver. It is agreed that no waiver by any party hereto of any
breach or default of any of the covenants or agreements herein set forth shall
be deemed a waiver as to any subsequent and/or similar breach or default.
15.3 Assignment. This Agreement and the license granted hereunder may not
be assigned by Licensee to any third party without the written consent of
Licensor, and Licensor may not assign this Agreement to a third party without
the consent of Licensee; except Licensee may assign this Agreement without such
consent to (a) an Affiliate or (b) an entity that acquires substantially all of
the stock or assets of the Licensee's business to which this Agreement relates.
The terms and conditions of this Agreement shall be binding on and inure to the
benefit of such permitted successors and assigns.
15.4 Independent Contractors. The relationship of the parties hereto is
that of independent contractors. The parties hereto are not deemed to be
employees, agents, partners or joint venturers of the others for any purpose as
a result of this Agreement or the transactions contemplated thereby.
15.5 Compliance with Laws. In exercising their rights under this license,
the parties shall fully comply with the requirements of any and all applicable
laws, regulations, rules and orders of any governmental body having jurisdiction
over the exercise of rights under this license.
15.6 No Implied Obligations. Nothing in this Agreement shall be deemed to
require Licensee to exploit the Patent Rights nor to prevent Licensee from
commercializing products similar to or competitive with any Product, in addition
to or in lieu of such Product.
15.7 Notices. Any notice required or permitted to be given to the parties
hereto shall be given in writing and shall be deemed to have been properly given
if delivered in person or when received if mailed by first class certified mail
to the other party at the appropriate address as set forth below or to such
other addresses as may be designated in writing by the parties from time to time
during the term of this Agreement.
Licensor: Ronald J. Billing, Ph.D.
682 Ora Avo Drive
Vista, CA 92084
<PAGE> 11
Licensee: Abgenix, Inc.
7601 Dumbarton Circle
Fremont, CA 94555
Attn: President
15.8 Export Laws. Notwithstanding anything to the contrary contained
herein, all obligations of Licensor and Licensee are subject to prior
compliance with United States export regulations and such other United States
laws and regulations as may be applicable, and to obtaining all necessary
approvals required by the applicable agencies of the government of the United
States. Licensee shall use efforts consistent with prudent business judgment to
obtain such approvals. Licensor shall cooperate with Licensee and shall provide
assistance to Licensee as reasonably necessary to obtain any required approvals.
15.9 Severability. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision and the parties shall discuss in good faith appropriate
revised arrangements.
15.10 Force Majeure. Nonperformance of any party (except for payment
obligations) shall be executed to the extent that performance is rendered
impossible by strike, fire, earthquake, flood, governmental acts or orders or
restrictions, failure of suppliers, or any other reason where failure to
perform, is beyond the reasonable control and not caused by the negligence,
intentional conduct or misconduct of the nonperforming party.
15.11 No Consequential Damages. IN NO EVENT SHALL ANY PARTY HERETO BE
LIABLE FOR SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF THIS
AGREEMENT OR THE EXERCISE OF RIGHTS HEREUNDER.
15.12 Dispute Resolution; Arbitration. The parties will attempt to
resolve any dispute under this Agreement by mutual agreement, and, if required,
there shall be a face-to-face meeting between a senior executive of Licensee
and the Licensor. Any dispute under this Agreement which is not settled after
such meeting, shall be finally settled by binding arbitration, conducted in
accordance with the Rules of Arbitration of the American Arbitration
Association by three arbitrators appointed in accordance with said rules. The
costs of the arbitration, including administrative and arbitrators' fees, shall
be shared equally by the parties. Otherwise, except as set forth in the next
sentence, each party shall bear its own costs and attorneys' and witness' fees.
The prevailing party in any arbitration, as determined by the arbitration
panel, shall be entitled to an award against the other party in the amount of
the prevailing party's costs and reasonable attorneys' fees. The arbitration
shall be held in San Francisco, California. A disputed performance or suspended
performance pending the resolution of the arbitration must be completed within
thirty days following
-11-
<PAGE> 12
the final decision of the arbitrators. Any arbitration shall be completed
within six months from the filing of notice of a request for such arbitration.
15.13 COMPLETE AGREEMENT. It is understood and agreed between
Licensor and Licensee that this Agreement, together with the Research
Evaluation and Option Agreement, constitute the entire agreement, both written
and oral, between the parties with respect to the subject matter hereof, and
that all prior agreements respecting the subject matter hereof, either written
or oral, expressed or implied, shall be abrogated, canceled, and are null and
void and of no effect. No amendment or change hereof or addition hereto shall
be effective or binding on either of the parties hereto unless reduced to
writing and executed by the respective duly authorized representatives of
Licensor and Licensee.
15.14 COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original and both together shall be
deemed to be one and the same agreement.
15.15 HEADINGS. The captions to the several Articles and Sections
hereof are not a part of this Agreement, but are included merely for
convenience of reference only and shall not affect its meaning or
interpretation.
15.16 NONDISCLOSURE. Except as provided in Article 10, each of the
parties hereto agrees not to disclose to any third party the terms of this
Agreement without the prior written consent of each other party hereto, except
to advisors, investors, potential investors, sublicensees, potential
sublicensees and others on a need to know basis, or to the extent required by
law.
15.17 ATTORNEY. Licensor and Licensee hereby acknowledge that each
has had the opportunity to consult with an attorney of their choice and that
each has entered into this Agreement upon their own free will and with due
consideration for all the terms and provisions herein.
-12-
<PAGE> 13
IN WITNESS WHEREOF, the parties have executed this Agreement, their
respective officers hereunto duly authorized, as of the day and year first
above written.
RONALD J. BILLING ABEGNIX, INC.
(Licensor) (Licensee)
[SIG] /s/ R. SCOTT GREER
- ----------------------------------- -----------------------------------
Social Security Number R. Scott Greer
###-##-#### President and Chief Executive
Officer
AGREED TO:
ANGELA BILLING
[SIG]
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Social Security Number
###-##-####
<PAGE> 1
EXHIBIT 10.26
AGREEMENT
THIS AGREEMENT (the "Agreement") effective as of March 26, 1997 (the
"Effective Date") is made by and among Xenotech, L.P., a California limited
partnership ("XT"), Xenotech, Inc., a Delaware corporation and General Partner
of XT ("XT"), Cell Genesys, Inc., a Delaware corporation ("CGI"), Abgenix,
Inc., a Delaware corporation and wholly-owned subsidiary of CGI ("ABX"), JAPAN
TOBACCO INC., A Japanese corporation ("JT"), and JT Immunotech USA Inc., a New
York corporation and wholly-owned indirect subsidiary of JT ("JT").
RECITALS
A. XT, CGI, ABX and JT, along with GenPharm International, Inc. ("GPI"),
are entering into that certain Release and Settlement Agreement (the "Settlement
Agreement"), dated March 26, 1997, and pursuant thereto that certain Cross
License Agreement (the "Cross License Agreement") and Interference Settlement
Procedure Agreement (the "Interference Settlement Procedure Agreement"), and CGI
and GPI are entering into that certain Sublicense Agreement ("Sublicense
Agreement" and, together with the Settlement Agreement, Cross License Agreement
and Interference Settlement Procedure Agreement, the "GPI Agreements"), each of
even date therewith.
B. The parties now wish to enter into certain agreements relating to the
obligations of XT, CGI, ABX and JT under the GPI Agreements.
NOW, THEREFORE, in consideration of the covenants, conditions, and
undertakings hereinafter set forth, it is agreed by and among the parties as
follows:
1. DEFINITIONS
1.1 "Convertible Note" shall mean the $15,000,000 convertible note
attached as Exhibit A to the Cross License Agreement.
1.2 "Master Research License and Option Agreement" shall mean the Master
Research License and Option Agreement among CGI, JT and XT dated June 28, 1996.
1.3 "Patent Rights" shall have the meaning set forth in the Cross License
Agreement.
1.4 "Third Party License Agreements" shall have the meaning set forth in
the Cross License Agreement.
1.5 "Xenotech Group" shall have the meaning set forth in the Interference
Settlement Procedure Agreement.
<PAGE> 2
2. AMENDMENT OF EXISTING LICENSES
The parties agree that all existing licenses among them are hereby
amended to be subject to those rights granted to GPI pursuant to the Cross
License Agreement. In the event of any conflict between the Cross License
Agreement and such existing licenses, the parties agree that the Cross License
Agreement shall control.
3. PATENT RIGHTS
The parties agree that the Patent Rights licensed to XT pursuant to the
Cross License Agreement shall become part of XenoMouse Technology, as such term
is defined in Master Research License and Option Agreement, and shall be
subject to all of the rights and obligations of the parties with respect to
XenoMouse Technology.
4. AMENDMENT OF LIMITED PARTNERSHIP AGREEMENT
The parties agree that Section 10.6(b) of the Limited Partnership
Agreement among XTI, as General Partner, CGI and JTI, as Limited Partners, as
amended by Amendments Nos. 1, 2, 3, and 4 thereto (the "Limited Partnership
Agreement") is hereby further amended by adding reference to the Cross License
Agreement as clause (x) thereto.
5. PAYMENTS TO GPI
5.1 JT shall be responsible for making payment of $3,750,000 to GPI
pursuant to the Settlement Agreement.
5.2 XT shall be responsible for making the payment of $7,470,000 to GPI
pursuant to Section 3.1 of the Cross License Agreement and CGI shall be
responsible for making payment of $11,280,000 to GPI pursuant to such section.
ABX and JTI shall be responsible for making capital contributions to XT equal
to one-half of any payments made by XT pursuant to this Section 5.2, with a
$3,735,000 portion of the Convertible Note being deemed to constitute ABX's
contribution thereof. ABX and JTI agree that, as of the date of the deemed
contribution, the fair market value of the portion of the Convertible Note being
contributed is equal to $3,735,000 for partnership capital allocation purposes.
5.3 XT shall be responsible for making the payments of $7,500,000 each to
GPI pursuant to Section 3.2 of the Cross License Agreement. ABX and JTI each
shall be responsible for making capital contributions to XT equal to one-half
of any payments made by XT pursuant to this Section 5.3.
5.4 The parties confirm that the allocation set forth in Section 8.1(e)
of the Limited Partnership Agreement applies to allocate to ABX any partnership
income arising with respect to the Convertible Note.
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<PAGE> 3
6. AMENDMENT OF AGREEMENTS; OTHER ACTIONS
The parties agree to complete all such further amendments to existing
agreements and other actions as may be necessary or appropriate to effect the
purposes of the provisions of this Agreement and the GPI Agreements within 60
days of the Effective Date.
7. INTERFERENCE AGREEMENT
When the Xenotech Group is required or allowed to take action pursuant to
the Interference Settlement Procedure Agreement, such action shall be taken by
the party having responsibility for prosecuting the patent application or
which had responsibility for prosecuting the patent involved, pursuant to the
existing agreements among the parties, unless not provided for therein, in
which case the inventing party (or the assignee of the inventor) shall have
such responsibility.
8. THIRD PARTY LICENSE AGREEMENTS
When the Xenotech Group is required or allowed to take action pursuant to
the Cross License Agreement with respect to a Xenotech Group Third Party
License Agreement, such action shall be taken and controlled by the party
initially responsible for negotiating such Third Party License Agreement. Any
costs arising from such action which are not borne by GPI shall be shared
equally by JT and ABX.
9. [*] OPTION
If either ABX or JT (the "Exercising Party") desires to exercise the
option to obtain a sublicense pursuant to Section 2.10 of the Cross License
Agreement, the Exercising Party shall notify the other party. If the other party
notifies the Exercising Party that it also desires such sublicense, then XT
shall exercise such option, each of ABX and JT shall pay to XT [*] and the
technology sublicensed shall become part of the XenoMouse Technology in the same
manner as set forth in Section 3 above. If the other party declines such
sublicense or does not notify the Exercising Party within thirty days that it
also desires such sublicense, the Exercising Party may exercise such option
directly and shall, in such case, pay the entire sublicense fee.
10. LEGAL FEES
Each party shall bear its own legal fees relating to the GPI Agreements.
11. MISCELLANEOUS
No provision of this Agreement may be modified or amended except
expressly in writing signed by the parties nor shall any terms be waived except
expressly in a writing signed by the party
*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.
-3-
<PAGE> 4
charged therewith. This Agreement shall be governed in accordance with the laws
of the State of California, without regard to principles of conflicts of laws.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective duly authorized officers as of the day and year first above
written, each copy of which shall for all purposes be deemed to be original.
XENOTECH, INC. (AS GENERAL
PARTNERS OF XENOTECH, L.P.
By: /s/ RAYMOND M. NITHY
----------------------
Name: Raymond M. Nithy
---------------------
Title: Chairman
-------------------
By: /s/ TAKASHI KAMIYA
----------------------
Name: Takashi Kamiya
---------------------
Title: President and CEO
-------------------
XENOTECH, INC.
By: /s/ RAYMOND M. NITHY
----------------------
Name: Raymond M. Nithy
---------------------
Title: Chairman
-------------------
By: /s/ TAKASHI KAMIYA
----------------------
Name: Takashi Kamiya
---------------------
Title: President and CEO
-------------------
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<PAGE> 5
CELL GENESYS, INC.
By: /s/ STEPHEN A. SHERMAN
----------------------
Name: Stephen A. Sherman
---------------------
Title: Chairman and CEO
-------------------
ABGENIX, INC.
By: /s/ R. SCOTT GREEN
----------------------
Name: R. Scott Green
---------------------
Title: President and CEO
-------------------
JAPAN TOBACCO INC.
By: /s/ MASAKAZU KAKEI
--------------------------------------------
Name: Masakazu Kakei
-------------------------------------------
Title: Managing Director Pharmaceutical Business
-----------------------------------------
JT IMMUNOTECH USA INC.
By: /s/ NORIAKI OKUBO
----------------------
Name: Noriaki Okubo
---------------------
Title: President
-------------------
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<PAGE> 1
EXHIBIT 10.27
PFIZER, INC.
COLLABORATIVE RESEARCH
AGREEMENT
<PAGE> 2
COLLABORATIVE RESEARCH AGREEMENT
This COLLABORATIVE RESEARCH AGREEMENT ("Agreement") is entered into as of
December 22, 1997 by and between PFIZER INC ("Pfizer"), a Delaware corporation,
having an office at 235 East 42nd Street, New York, New York 10017 and its
Affiliates, and ABGENIX, INC. ("Abgenix"), a Delaware corporation, having an
office at 7601 Dumbarton Circle, Fremont, CA 94555;
WHEREAS, Abgenix has expertise in the generation of human monoclonal antibodies
through utilization of transgenic Xenomouse(TM) animals; and
WHEREAS, Abgenix is licensed under the patents and patent applications set forth
in Exhibit A attached to and made part of this Agreement with respect to the
transgenic Xenomouse(TM) animals; and
WHEREAS, Pfizer has the capability to undertake research for the discovery and
evaluation of agents for treatment of disease and also the capability for
clinical analysis, manufacturing and marketing with respect to therapeutic
agents;
WHEREAS, Pfizer and Abgenix enter into this Agreement to discover and develop
patentable therapeutic antibody agents;
NOW, THEREFORE, the parties agree as follows:
1. Definitions
Whenever used in this Agreement, the terms defined in this Section 1 shall have
the meanings specified.
<PAGE> 3
1.1 "Affiliate" means any corporation or other legal entity owning,
directly or indirectly, fifty percent (50%) or more of the voting capital shares
or similar voting securities of Pfizer or Abgenix; any corporation or other
legal entity fifty percent (50%) or more of the voting capital shares or similar
voting rights of which is owned, directly or indirectly, by Pfizer or Abgenix or
any corporation or other legal entity fifty percent (50%) or more of the voting
capital shares or similar voting rights of which is owned, directly or
indirectly, by a corporation or other legal entity which owns, directly or
indirectly, fifty percent (50%) or more of the voting capital shares or similar
voting securities of Pfizer or Abgenix.
1.2 "Research Plan" means the written plan describing the research and
development in the Area to be carried out by Pfizer and Abgenix pursuant to this
Agreement. The Research Plan is attached to and made a part of this Agreement as
Exhibit B.
1.3 "Research Program" is the collaborative research program in the Area
conducted by Pfizer and Abgenix pursuant to the Research Plan.
1.4 "Effective Date" is December 22, 1997.
1.5 "Contract Period" means the period beginning on the Effective Date
and ending on the date on which this Agreement terminates.
1.6 "Area" means research or development with respect to the discovery
and development of therapeutic Antibody Products directed against a Target
Antigen useful in the treatment or prevention of human disease.
1.7 "Technology" means and includes all materials, technology, technical
information, know-how, expertise and trade secrets within the Area.
1.8 "Abgenix Technology" means Technology that is or was:
(a) developed by employees of or consultants to Abgenix alone or
jointly with third parties prior to the Effective Date; or
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<PAGE> 4
(b) acquired by purchase, license, assignment or other means from
third parties by Abgenix prior to the Effective Date or since that date that is
not part of Joint Technology.
1.9 "Joint Technology" means Technology that is or was:
(a) developed by employees of or consultants to Pfizer or Abgenix
solely or jointly with each other in the course of performing the Research
Program including (i) Antibody Products, (ii) cells that express or secrete
Antibody Products and (iii) materials derived from Antibody Products or cells
that express or secrete Antibody Products; provided, however that XenoMouse(TM)
animals immunized in the course of conducting the Research Program shall remain
Abgenix Technology; or
(b) acquired by purchase, license, assignment or other means from
third parties by Abgenix or Pfizer, pursuant to Article 7, in the course of
performing the Research Program.
1.10 "Pfizer Technology" means Technology that is or was:
(a) developed by employees of or consultants to Pfizer alone or
jointly with third parties prior to the Effective Date; or
(b) acquired by purchase, license, assignment or to other means from
third parties by Pfizer prior to the Effective Date or since that date that is
not of Joint Technology.
1.11 "Abgenix Confidential Information" means all information about any
element of the Abgenix or Joint Technology which is disclosed by Abgenix to
Pfizer and designated "Confidential" in writing by Abgenix at the time of
disclosure or within thirty (30) days following disclosure, to the extent that
such information as of the date of disclosure to Pfizer is not (i) known to
Pfizer other than by virtue of a prior confidential disclosure to Pfizer by
Abgenix; or (ii) disclosed in published literature, or otherwise generally known
to the public
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<PAGE> 5
through no fault or omission of Pfizer; or (iii) obtained from a third party
free from any obligation of confidentiality to Abgenix.
1.12 "Pfizer Confidential Information" means all information about any
element of Pfizer or Joint Technology which is disclosed by Pfizer to Abgenix
and designated "Confidential" in writing by Pfizer at the time of disclosure or
within thirty (30) days following disclosure to the extent that such information
as of the date of disclosure to Abgenix is not (i) known to Abgenix other than
by virtue of a prior confidential disclosure to Abgenix by Pfizer; or (ii)
disclosed in published literature, or otherwise generally known to the public
through no fault or omission of Abgenix; or (iii) obtained from a third party
free from any obligation of confidentiality to Pfizer.
1.13 "Valid Claim" means a claim within Patent Rights so long as such
claim shall not have been disclaimed by Pfizer (in the case of Patent Rights
within the Pfizer Technology) or by Abgenix (in the case of Patent Rights within
the Abgenix Technology) or both (in the case of Joint Patent Rights) and shall
not have been held invalid in a final decision rendered by a tribunal of
competent jurisdiction from which no appeal has been or can be taken.
1.14 "Patent Rights" shall mean:
(a) the Abgenix Patent Rights, the Abgenix-Controlled Patent Rights
and the Joint Patent Rights; and
(b) all patent rights in and to inventions within Pfizer Technology
including all the Valid Claims of patent applications, whether domestic or
foreign, claiming such patentable inventions, including all continuations,
continuations-in-part, divisions, and renewals, all letters patent granted
thereon, and all reissues, reexaminations and extensions thereof.
1.15 "Abgenix Patent Rights" shall mean:
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<PAGE> 6
(a) the Valid Claims of Abgenix's patents and patent applications,
listed in Exhibit Al, and patents issuing on them, including any divisions,
continuation, continuation-in-part, renewal, extension, reexamination, reissue
or foreign counterpart thereof; and
(b) all patent rights in and to inventions within Abgenix Technology
including all the Valid Claims of patent applications, whether domestic or
foreign, claiming such patentable inventions, including all continuations,
continuations-in-part, divisions, and renewals, all letters patent granted
thereon, and all reissues, reexaminations and extensions thereof.
1.16 "Abgenix Controlled Patent Rights" shall mean the Valid Claims of
the licensed patent applications and patents listed on Exhibit A2, including all
continuations, continuations-in-part, divisions, and renewals, all letters
patent granted thereon, and all reissues, reexaminations, extensions and all
foreign counterparts thereof.
1.17 "Joint Patent Rights" shall mean all patent rights in and to
inventions within the Joint Technology, including all the Valid Claims of patent
applications, whether domestic or foreign, claiming such patentable inventions,
including all continuations, continuations-in-part, divisions, and renewals, all
letters patent granted thereon, and all reissues, reexaminations and extensions
thereof.
1.18 "Target Antigen" means the target molecule used as an immunogen for
the discovery of antibodies.
1.19 " Antibody Product" means a whole antibody, or a fragment thereof,
that binds to a particular Target Antigen and is derived from Abgenix Technology
pursuant to the Research Plan.
1.20 "Licensed Antibody Product" shall have the meaning defined in the
License Agreement.
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<PAGE> 7
1.21 "Materials Transfer Agreement" means that certain Materials
Transfer Agreement entered into by and between Pfizer and Abgenix existing as of
September 25, 1997.
1.22 "License Agreement" means the License and Royalty Agreement
attached hereto as Exhibit C entered into by and between Pfizer and Abgenix as
of the Effective Date.
2. Collaborative Research Program
2.1.1 Purpose. Abgenix and Pfizer shall conduct the Research Program
throughout the Contract Period. All Technology in the Area developed in the
course of performing the Research Plan will become part of the Joint Technology.
The objective of the Research Program is to discover and develop Antibody
Products. The Target Antigen for this Agreement is [*].
2.1.2 Research Plan. The Research Plan is described in the attached
Exhibit B. Each new Research Plan, if any, for each succeeding Target Antigen,
in accordance with Section 9.6, shall be appended to Exhibit B and made part of
this Agreement. Additional research projects, determined to be needed by the
Research Committee will also be appended to Exhibit B and made part of this
Agreement in accordance with Section 2.2 below.
2.1.3 Exclusivity. Abgenix agrees that during the Contract Period,
Abgenix shall not conduct research itself or sponsor any other research, or
engage in any research sponsored by any third party to develop or commercialize
any protein, peptide, or antibodies that bind to the Target Antigen without
Pfizer's consent.
2.2 Research Committee
2.2.1 Purpose. Pfizer and Abgenix shall establish a Research
Committee (the "Research Committee"):
*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.
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<PAGE> 8
(a) to review and evaluate progress under the Research Plan;
(b) to prepare the Research Plan, and any amendments thereto, for
any additional projects or Target Antigens; and
(c) to coordinate and monitor publication of research results
obtained from and the exchange of information and materials that relate to the
Research Program. (This function shall survive the termination of this
Agreement).
2.2.2 Membership.. Pfizer and Abgenix each shall appoint, in its sole
discretion, three members to the Research Committee. Substitutes may be
appointed at any time.
The members initially shall be:
Pfizer Appointees: [*]
[*]
[*]
Abgenix Appointees: [*]
[*]
[*]
2.2.3 Chair. The Research Committee shall be chaired by two co-
chairpersons, one appointed by Pfizer and the other appointed by Abgenix.
2.2.4 Meetings. The Research Committee shall meet at least
quarterly, at places selected by each party in turn and on dates mutually agreed
by the parties. The location of the first meeting of the Research Committee
shall be at Pfizer's election. Representatives of Pfizer or Abgenix or both, in
addition to members of the Research Committee, may attend such meetings at the
invitation of either party.
2.2.5 Minutes. The Research Committee shall keep accurate minutes of
its deliberations which record all proposed decisions and all actions
recommended or taken. Drafts of the minutes shall be delivered to all Research
*Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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<PAGE> 9
Committee members within five (5) business days after each meeting. The party
choosing the location for the meeting shall be responsible for the preparation
and circulation of the draft minutes. Draft minutes shall be edited by the
cochairpersons and shall be issued in final form only with their approval and
agreement.
2.2.6 Decisions. All technical decisions of the Research Committee
shall be made by majority of the members, with final authority residing with
Pfizer. Notwithstanding the foregoing or any other provision of this Agreement
(i) Research Plans may only be amended (and Research Plans for additional Target
Antigens adopted) as mutually agreed by Pfizer and Abgenix and approved by the
Research Committee, and (ii) except as Abgenix may otherwise agree, Abgenix
shall only be obligated under this Agreement to perform research activities in
accordance with such a Research Plan.
2.2.7 Expenses. Pfizer shall bear all expenses, including reasonable
travel, related to the participation of the designated members of the Research
Committee.
2.3 Reports and Materials.
2.3.1 Reports. During the Contract Period, Pfizer and Abgenix each
shall furnish to the Research Committee:
(a) summary written reports within fifteen (15) days after the end
of each stage of the Research Plan, commencing on the Effective Date, describing
the progress under the Research Plan; and
(b) comprehensive written reports within thirty (30) days after the
end of each year, describing in detail the work accomplished by it under the
Research Plan during the year and discussing and evaluating the results of such
work.
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2.3.2 Materials. Abgenix and Pfizer shall, during the Contract
Period, as a matter of course as described in the Research Plan, or upon each
other's written or oral request, furnish to each other samples of biochemical,
biological or synthetic chemical materials which are part of Pfizer Technology,
Abgenix Technology or Joint Technology and which are necessary for each party to
carry out its responsibilities under the Research Plan; provided, however, that
Abgenix shall, upon request, deliver to Pfizer samples of any material made
pursuant to the Research Plan. This will not include the transfer of
Xenomouse(TM) animals by Abgenix. To the extent that Pfizer requests and Abgenix
provides quantities of materials in excess of the quantities required to be
provided under the Research Plan, Pfizer shall reimburse Abgenix for the
reasonable costs of such materials as per Section 3.2.2.
2.3.3 The materials transferred by one party (the "Transferor") to
the other (the "Transferee") shall remain the property of the respective owner
of such materials prior to such transfer, and the transfer of physical
possession of materials to the Transferee, and/or possession or use by the
Transferee, of such materials shall not be, nor be construed as, a sale, lease,
offer to sell or lease, or other transfer of title to such transferred
materials. The Transferee shall retain control over the Transferor's materials
provided to the Transferee hereunder and shall not transfer the Transferor's
materials to any third party without the Transferor's written consent.
2.4 Laboratory Facilities and Personnel. Abgenix shall provide suitable
laboratory facilities, equipment and personnel for the work to be done by
Abgenix in carrying out the Research Program.
2.5 Diligent Efforts. Pfizer and Abgenix each shall use reasonably
diligent efforts to achieve the objectives of the Research Program. Abgenix will
use reasonably diligent efforts to achieve the objectives listed in the Research
Plan
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and Pfizer will use reasonably diligent efforts to assist Abgenix in each
Research Plan.
3. Funding the Research Program.
3.1.1 Pfizer will fund the research to be performed by Abgenix, pursuant
to this Agreement, by making payments to Abgenix within thirty (30) days of the
completion of each event as described in the Research Plan, according to the
following schedule:
<TABLE>
<CAPTION>
EVENT AMOUNT
----- ------
<S> <C>
A. Execution of this Agreement [*]
B. [*]
C. [*] [*]
</TABLE>
3.1.2 [*].
*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.
*CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
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<PAGE> 12
3.2 Other Payments.
3.2.1 [*], Pfizer shall pay Abgenix the amount of [*].
3.2.2 [*].
3.2.3 [*].
3.3. Each payment pursuant to this Agreement shall be paid by Pfizer in
U.S. currency by wire transfer in immediately available funds to an account
designated by Abgenix, or by other mutually acceptable means within thirty (30)
days after receipt and acceptance by Pfizer of the invoice from Abgenix.
3.4 Abgenix shall keep for three (3) years from the conclusion of each
year complete and accurate records of its expenditures of payments received by
it from Pfizer under Section 3.2.3. The records shall conform to good accounting
principles as applied to a similar company similarly situated. Pfizer shall have
the right at its own expense during the term of this Agreement and during the
subsequent three-year period to appoint an independent certified public
accountant reasonably acceptable to Abgenix to inspect said records to verify
the accuracy of such expenditures, pursuant to each Research Plan. Upon
reasonable notice by Pfizer, Abgenix shall make its records available for
inspection by the independent certified public accountant during regular
business hours at the place
*Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
*CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
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or places where such records are customarily kept, to verify the accuracy of the
expenditures. This right of inspection shall not be exercised more than once in
any calendar year and not more than once with respect to records covering any
specific period of time. All information concerning such expenditures, and all
information learned in the course of any audit or inspection, shall be deemed to
be Abgenix Confidential Information, except to the extent that it is necessary
for Pfizer to reveal the information in order to enforce any rights it may have
pursuant to this Agreement or if disclosure is required by law. The failure of
Pfizer to request verification of any expenditures before or during the
three-year period shall be considered acceptance by Pfizer of the accuracy of
such expenditures, and Abgenix shall have no obligation to maintain any records
pertaining to such report or statement beyond such three-year period. The
results of such inspection, if any, shall be binding on the parties.
4. Treatment of Confidential Information
4.1 Confidentiality
4.1.1 Pfizer and Abgenix each recognize that the other's
Confidential Information constitutes highly valuable, confidential information.
Subject to the terms and conditions of the License and Royalty Agreement between
the parties of even date with this Agreement (the "License Agreement"), the
obligations set forth in Section 4.3 and the publication rights set forth in
Section 4.2, Pfizer and Abgenix each agree that during the term of this
Agreement and for five (5) years thereafter, it will keep confidential, and will
cause its Affiliates to keep confidential, all Abgenix Confidential Information
or Pfizer Confidential Information, as the case may be, that is disclosed to it,
or to any of its Affiliates pursuant to this Agreement. Neither Pfizer nor
Abgenix nor any of their respective Affiliates shall use such Confidential
Information of the
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other party except as expressly permitted in this Agreement. For the purposes of
this Section 4, it is understood that Joint Technology shall be deemed
Confidential Information of both parties.
4.1.2 Pfizer and Abgenix each agree that any disclosure of the
other's Confidential Information to any officer, employee or agent of the other
party or of any of its Affiliates shall be made only if and to the extent
necessary to carry out its responsibilities under this Agreement and shall be
limited to the maximum extent possible consistent with such responsibilities.
Pfizer and Abgenix each agree not to disclose the other's Confidential
Information to any third parties under any circumstance without written
permission from the other party. Each party shall take such action, and shall
cause its Affiliates to take such action, to preserve the confidentiality of
each other's Confidential Information as it would customarily take to preserve
the confidentiality of its own Confidential Information. Each party, upon the
other's request, will return all the Confidential Information disclosed to it by
the other party pursuant to this Agreement, including all copies and extracts of
documents, within sixty (60) days of the request upon the termination of this
Agreement except for one (1) copy which may be kept for the purpose of complying
with continuing obligations under this Agreement.
4.1.3 Abgenix and Pfizer each represent that all of its employees,
and any consultants to such party, participating in the Research Program who
shall have access to Joint Technology, the Technology of the other (Pfizer
Technology or Abgenix Technology, as the case may be) or Confidential
Information of the other (Pfizer Confidential Information or Abgenix
Confidential Information, as the case may be) are bound by agreement to maintain
such information in confidence.
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4.2 Publication. Notwithstanding any matter set forth with
particularity in this Agreement to the contrary, results obtained in the course
of the Research Program may be submitted for publication following scientific
review by the Research Committee and subsequent approval by Abgenix's and
Pfizer's managements, which approval shall not be unreasonably withheld. After
receipt of the proposed publication by both Pfizer's and Abgenix's managements
written approval or disapproval shall be provided within thirty (30) days for a
manuscript, within fourteen (14) days for an abstract for presentation at, or
inclusion in the proceedings of a scientific meeting, and within fourteen (14)
days for a transcript of an oral presentation to be given at a scientific
meeting.
4.3 Publicity. Except as required by law, neither party may disclose the
terms of this Agreement nor the research described in it without the written
consent of the other party, which consent shall not be unreasonably withheld.
4.4 Permitted Disclosure.
4.4.1 Disclosure Required by Law. If either party is requested to
disclose the Confidential Information in connection with a legal or
administrative proceeding or is otherwise required by law to disclose the
Confidential Information, such party will give the other party prompt notice of
such request. The disclosing party may seek an appropriate protective order or
other remedy or waive compliance with the provisions of this Agreement. If such
party seeks a protective order or other remedy, the other party will cooperate.
If such party fails to obtain a protective order or waive compliance with the
relevant provisions of this Agreement, the other party will disclose only that
portion of Confidential Information which its legal counsel determines it is
required to disclose.
4.4.2 Disclosure of Inventions. Each party shall promptly inform the
other about all inventions in the Area within the Joint Technology that are
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made in the course of carrying out the Research Program by employees of, or
consultants to, either of them solely, or jointly with employees of, or
consultants to the other.
4.5 Restrictions on Transferring Materials. Abgenix recognizes that the
biological and biochemical materials which are part of Pfizer Technology or
Joint Technology, represent valuable commercial assets. Therefore, throughout
the Contract Period and for five (5) years thereafter, Abgenix agrees not to
transfer such materials to any third party, unless prior written, consent for
any such transfer is obtained from Pfizer.
5. Intellectual Property Rights. The following provisions relate to
rights in the intellectual property developed by or for Abgenix or Pfizer, or
both, during the course of carrying out the Research Program.
5.1 Ownership. All Abgenix Confidential Information and Abgenix
Technology shall be owned by Abgenix. All Pfizer Confidential Information and
Pfizer Technology shall be owned by Pfizer. All Joint Technology shall be
jointly owned by Abgenix and Pfizer except for the hybridoma cells generated
during the course of conducting the Research Program ("Hybridoma Technology")
which shall be owned by Abgenix.
5.2 Grants of Research Licenses.
5.2.1 Abgenix and Pfizer each grants to the other a nonexclusive,
irrevocable, worldwide, royalty-free, perpetual license, including the right to
grant sublicenses to Affiliates, to make and use Confidential Information, Joint
Technology and joint Patent Rights for all research purposes other than the sale
or manufacture for sale of products or processes except for the following:
(i) this license does not include the Xenomouse(TM) animals owned by
Abgenix; and
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(ii) neither party can use an Antibody Product derived from the Joint
Technology to identify or model the structure of a Target Antigen or the
structure of the Antibody Product to which the Target Antigen is bound, to
design a molecule of pharmaceutical therapeutic value which is not an antibody.
5.2.2 Abgenix grants to Pfizer a co-exclusive, irrevocable,
worldwide, royalty-free, perpetual license, including the right to grant
sublicenses to Affiliates, to make and use Hybridoma Technology for all research
purposes other than the sale or manufacture for sale of products or processes.
6. Provisions Concerning the Filing, Prosecution and Maintenance of Joint Patent
Rights. The following provisions relate to the filing, prosecution and
maintenance of Joint Patent Rights during the term of this Agreement:
6.1 Filing, Prosecution and Maintenance by Abgenix. With respect to
Joint Patent Rights in which Abgenix employees or consultants, alone or together
with Pfizer employees, or consultants are named as inventors, Abgenix shall have
the exclusive right and obligation :
(a) to file applications for letters patent on patentable inventions
included in Joint Patent Rights; provided, however, that Abgenix shall consult
with Pfizer regarding countries in which such patent applications should be
filed and shall file patent applications in those countries where Pfizer
requests that Abgenix file such applications; and, further provided, that
Abgenix, at its option and expense, may file in countries where Pfizer does not
request that Abgenix file such applications;
(b) to take all reasonable steps to prosecute all pending and new
patent applications included within Joint Patent Rights;
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(c) to respond to oppositions, nullity actions, re-examinations,
revocation actions and similar proceedings filed by third parties against the
grant of letters patent for such applications;
(d) to maintain in force any letters patent included in Joint Patent
Rights by duly filing all necessary papers and paying any fees required by the
patent laws of the particular country in which such letters patent were granted;
and
(e) to cooperate fully with, and take all necessary actions
requested by, Pfizer in connection with the preparation, prosecution and
maintenance of any letters patent included in Joint Patent Rights.
Abgenix shall notify Pfizer in a timely manner of any decision to
abandon a pending patent application or an issued patent included in Joint
Patent Rights. Thereafter, Pfizer shall have the option, at its expense, of
continuing to prosecute any such pending patent application or of keeping the
issued patent in force.
6.1.1 Copies of Documents. Abgenix and Pfizer shall provide to each
other copies of all patent applications that are part of Joint Patent Rights
prior to filing, for the purpose of obtaining substantive comment of the other
party's patent counsel. Abgenix and Pfizer shall also provide to the other
copies of all documents relating to prosecution of all such patent applications
in a timely manner and shall provide to the other every six (6) months a report
detailing the status of all patent applications that are a part of Joint Patent
Rights.
6.1.2 Reimbursement of Costs for Filing Prosecuting and Maintaining
Joint Patent Rights, Within thirty (30) days of receipt of invoices from
Abgenix, Pfizer shall reimburse Abgenix for all the costs of filing,
prosecuting, responding to opposition and maintaining patent applications and
patents in countries where Pfizer requests that patent applications be filed,
prosecuted and maintained. Such reimbursement shall be in addition to other
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funding payments under this Agreement and shall include such costs of all
activities described in 6.1 (a)-(e) above. However, Pfizer may, upon sixty (60)
days notice, request that Abgenix discontinue filing or prosecution of certain
patent applications in any country and discontinue reimbursing Abgenix for the
costs of filing, prosecuting, responding to opposition or maintaining such
patent application or patent in any country. Abgenix shall pay all costs in
those countries in which Pfizer requests that Abgenix not file, prosecute or
maintain patent applications and patents, but in which Abgenix, at its option,
elects to do so.
6.1.3 Pfizer shall have the right to file on behalf of and as an
agent for Abgenix all applications for, and take all actions necessary to obtain
patent extensions pursuant to 35 USC Section 156 and foreign counterparts with
respect to the Joint Patent Rights to the extent that such extensions are
available by reason of a Licensed Antibody Product under the License Agreement
during the period the License Agreement is in effect. Abgenix agrees, to sign,
such further documents and take such further actions as may be requested by
Pfizer in this regard, at Pfizer's expense
6.2 Filing, Prosecution and Maintenance by Pfizer. With respect to
Patent Rights in which Pfizer employees or consultants alone are named as
inventors, Pfizer shall have those rights and duties ascribed to Abgenix in
Section 6.1., except that Pfizer will bear all related expenses.
6.3 Neither party may disclaim a Valid Claim within Joint Patent Rights
without the consent of the other.
7. Acquisition of Rights from Third Parties.
(a) During the Contract Period, Abgenix and Pfizer shall each
promptly notify each other of any and all opportunities to acquire in any manner
from third parties, technology or patents or information which it elects to use
in
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the course of performing the Research Program. Abgenix and Pfizer shall decide
if such rights should be acquired in connection with the Research Program and,
if so, whether by Abgenix, Pfizer or both, it being understood that nothing
herein shall obligate either party to obtain such rights or, if it does acquire
such rights, to make such rights available for use in the Research Program. If
acquired such rights shall become part of the Confidential Information,
Technology or Patent Rights, whichever is appropriate, of the acquiring party or
Joint Technology, as the case may be.
8. Other Agreements. Concurrently with the execution of this Agreement,
Abgenix and Pfizer shall enter into the License Agreement appended to and made
part of this Agreement as Exhibit C and the Stock Purchase Agreement appended to
and made a part of this Agreement as Exhibit D. This Agreement, the Stock
Purchase Agreement and the License Agreement are the sole agreements with
respect to the subject matter and supersede all other agreements and
understandings between the parties with respect to same. The Materials Transfer
Agreement is hereby terminated and superseded by this Agreement, provided,
however, that Abgenix shall not (except as otherwise authorized pursuant to this
Agreement or the License Agreement) disclose or license to any third party
inventions made using the antigen materials provided to Abgenix under the
Materials Transfer Agreement without the prior agreement of Pfizer.
9. Term, Termination and Disengagement.
9.1 Term. Unless sooner terminated, as provided below or extended, by
mutual agreement of the parties, this Agreement shall expire on December 21,
1999.
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9.2 Events of Termination. The following events shall constitute events
of termination ("Events of Termination"):
(a) any written representation or warranty by Abgenix or Pfizer, or
any of its officers, made under or in connection with this Agreement shall prove
to have been incorrect in any material respect when made;
(b) Abgenix or Pfizer shall fail in any material respect to perform
or observe any term, covenant or understanding contained in this Agreement or in
any of the other documents or instruments delivered pursuant to, or concurrently
with, this Agreement, and any such failure shall remain unremedied for thirty
(30) days after written notice to the failing party.
9.3 Termination.
9.3.1 Upon the occurrence of any Event of Termination, the party not
responsible may, by notice to the other party, terminate this Agreement.
9.3.2 If Pfizer terminates this Agreement pursuant to
Section 9.3.1, the License Agreement shall not automatically terminate, but
instead shall terminate or expire in accordance with its terms. If Abgenix
terminates this Agreement pursuant to Section 9.3.1, the License Agreement
shall terminate immediately.
9.4 Termination of this Agreement by either party, with or without
cause, will not terminate the licenses granted pursuant to Section 5.2.
9.5 Termination of this Agreement for any reason shall be without
prejudice to:
(a) the rights and obligations of the parties provided in Sections
2.3.3, 4, 6, 12 and 15;
(b) Abgenix's right to receive all payments accrued under Section 3;
or
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(c) any other remedies which either party may otherwise have.
9.6 Option for Additional Target-Antigens by Pfizer. Pfizer shall have
the option, in its sole, unfettered discretion, to discuss with Abgenix the
research and development of up to two (2) Target Antigens, in addition to [*]
during the term of this Agreement; provided, however, that Abgenix shall not be
obligated to accept any such additional Target Antigen proposed by Pfizer or
grant any rights or obligations with respect to such additional Target Antigens
or antibodies to them. This option shall expire if not exercised by Pfizer on or
before the last day of the twenty fourth month this Agreement is in effect. If
Pfizer exercises this option, by notice to Abgenix, and Abgenix accepts either
of both of the Target Antigens, the parties shall adopt a Research Plan during
the ensuing ninety (90) day period which shall include the funding payments not
to exceed those set forth in Sections 3.1 and 3.2 for the next ensuing two (2)
year period. All other terms and conditions of this Agreement shall otherwise
remain in full force.
10. Representations and Warranties. Abgenix and Pfizer each represents
and warrants as follows:
10.1 It is a corporation duly organized, validly existing and is in good
standing under the laws of the State of Delaware, is qualified to do business
and is in good standing as a foreign corporation in each jurisdiction in which
the conduct of its business or the ownership of its properties requires such
qualification and has all requisite power and authority, corporate or otherwise,
to conduct its business as now being conducted, to own, lease and operate its
properties and to execute, deliver and perform this Agreement.
10.2 The execution, delivery and performance by it of this Agreement
have been duly authorized by all necessary corporate action and do not and will
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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not (a) require any consent or approval of its stockholders, (b) violate any
provision of any law, rule, regulations, order, writ, judgment, injunctions,
decree, determination award presently in effect having applicability to it or
any provision of its certificate of incorporation or by-laws or (c) result in a
breach of or constitute a default under any material agreement, mortgage, lease,
license, permit or other instrument or obligation to which it is a party or by
which it or its properties may be bound or affected.
10.3 This Agreement is a legal, valid and binding obligation of it
enforceable against it in accordance with its terms and conditions, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
moratorium, reorganization or similar laws, from time to time in effect,
affecting creditor's rights generally.
10.4 It is not under any obligation to any person, or entity,
contractual or otherwise, that is conflicting or inconsistent in any respect
with the terms of this Agreement or that would impede the diligent and complete
fulfillment of its obligations.
10.5 It has good and marketable title to or valid leases or licenses
for, all of its properties, rights and assets necessary for the fulfillment of
its responsibilities under the Research Program, subject to no claim of any
third party other than any relevant lessors or licensors.
10.6 ALL MATERIALS PROVIDED BY ABGENIX UNDER THE RESEARCH PROGRAM
(INCLUDING WITHOUT LIMITATION ALL HYBRIDOMAS AND ANTIBODY PRODUCTS) ARE PROVIDED
"AS IS" EXCEPT AS EXPRESSLY PROVIDED IN THIS SECTION 10, ABGENIX MAKES NO
WARRANTY, EXPRESS OR IMPLIED, AND EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES,
INCLUDING WITHOUT
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LIMITATION, ANY WARRANTIES AS TO THE PATENT RIGHTS. MERCHANTABILITY, FITNESS FOR
A PARTICULAR PURPOSE, VALIDITY, NONINFRINGEMENT OR ENFORCABILITY.
11. Covenants of Abgenix and Pfizer Other Than Reporting Requirements.
Throughout the Contract Period, Abgenix and Pfizer each shall:
11.1 maintain and preserve its corporate existence, rights, franchises
and privileges in the jurisdiction of its incorporation, and qualify and remain
qualified as a foreign corporation in good standing in each jurisdiction in
which such qualification is from time to time necessary or desirable in view of
their business and operations or the ownership of their properties.
11.2 comply in all material respects with the requirements of all
applicable laws, rules, regulations and orders of any government authority to
the extent necessary to conduct the Research Program, except for those laws,
rules, regulations, and orders it may be contesting in good faith.
12. Indemnification. Pfizer and Abgenix will indemnify each other for
damages, settlements, costs, legal fees and other expenses incurred in
connection with a claim by a third party against either party based on any
action or omission of the indemnifying party's agents, employees, or officers
related to its obligations under this Agreement; provided, however, that the
foregoing shall not apply (i) if the claim is found to be based upon the
negligence, recklessness or willful misconduct of the party seeking
indemnification; or (ii) if such party falls to give the other party prompt
notice of any claim it receives and such failure materially prejudices the other
party with respect to any claim or action to which its obligation pursuant to
this Section applies. Notwithstanding the foregoing, Abgenix shall not indemnify
Pfizer for claims arising from the sale of Antibody
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Products or exercise of rights granted to Pfizer under Section 5.2, or the
License Agreement (including without limitation product liability claims) and
Pfizer shall indemnify Abgenix with respect to such claims and to claims arising
from Joint Patent Rights, Pfizer Patent Rights, Joint Technology and Pfizer
Technology except for intellectual property claims with respect to Abgenix
Patent Rights, Abgenix Controlled-Patent Rights or Abgenix Technology. Each
party, in its sole discretion, shall choose legal counsel, shall control the
defense of such claim or action and shall have the right to settle same on such
terms and conditions it deems advisable; provided however, it shall obtain the
other party's prior consent to such part of any settlement which requires
payment or other action by the other party or is likely to have a material
adverse effect on the other party's business.
13. Notices. All notices shall be in writing mailed via certified mail,
return receipt requested, courier, or facsimile transmission addressed as
follow, or to such other address as may be designated from time to time:
If to Pfizer: Pfizer Central Research
Eastern Point Road
Groton, CT 06340
Attention: Dr. George Milne, President
with copy to: Joshua A. Kalkstein, General Counsel
If to Abgenix: Abgenix, Inc.
7601 Dumbarton Circle
Fremont, CA 94555
Attention: President
cc:
Wilson, Sonsini, Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304
Attn: Kenneth A. Clark
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Notices shall be deemed given as of the date sent.
14. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
15. Miscellaneous.
15.1 Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties and their respective legal representatives,
successors and permitted assigns.
15.2 Headings. Paragraph headings are inserted for convenience of
reference only and do not form a part of this Agreement,
15.3 Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original.
15.4 Amendment, Waiver. This Agreement may be amended, modified,
superseded or canceled, and any of the terms may be waived, only by a written
instrument executed by each party or, in the case of waiver, by the party or
parties waiving compliance. The delay or failure of any party at any time or
times to require performance of any provisions shall in no manner affect the
rights at a later time to enforce the same. No waiver by any party of any
condition or of the breach of any term contained in this Agreement, whether by
conduct, or otherwise, in any one or more instances, shall be deemed to be, or
considered as, a further or continuing waiver of any such condition or of the
breach of such term or any other term of this Agreement.
15.5 No Third Party Beneficiaries. No third party including any employee
of any party to this Agreement, shall have or acquire any rights by
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reason of this Agreement. Nothing contained in this Agreement shall be deemed to
constitute the parties partners with each other or any third party.
15.6 Assignment and Successors. This Agreement may not be assigned by
either party, except that each party may assign this Agreement and the rights
and interests of such party, in whole or in part, to any of its Affiliates, any
purchaser of all or substantially all of its assets or to any successor
corporation resulting from any merger or consolidation of such party with or
into such corporations.
15.7 Force Majeure. Neither Pfizer nor Abgenix shall be liable for
failure of or delay in performing obligations set forth in this Agreement, and
neither shall be deemed in breach of its obligations, if such failure or delay
is due to natural disasters or any causes reasonably beyond the control of
Pfizer or Abgenix.
15.8 Severability. If any provision of this Agreement is or becomes
invalid or is ruled invalid by any court of competent jurisdiction or is deemed
unenforceable, it is the intention of the parties that the remainder of the
Agreement shall not be affected.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized representatives.
PFIZER INC
By: [SIG]
------------------------------------
Title: President, Control Research Div.
---------------------------------
ABGENIX, INC.
By: [SIG]
------------------------------------
Title: Vice President,
Corporate Development
cc: Pfizer Inc, Legal Division, Groton, CT 06340
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EXHIBIT A
EXHIBIT A1
ABGENIX PATENT RIGHTS
[*]
*CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
<PAGE> 30
EXHIBIT A1 (CONTINUED)
[*]
*CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
<PAGE> 31
EXHIBIT A2
ABGENIX CONTROLLED PATENT RIGHTS
[*]
*CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
<PAGE> 32
EXHIBIT A2 (CONTINUED)
[*]
*CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
---END---
<PAGE> 33
EXHIBIT B
ABGENIX, INC.
CONFIDENTIAL
Pfizer Research Plan
November 26, 1997
Page 1
RESEARCH PLAN
[*]
*CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
<PAGE> 34
ABGENIX, INC.
CONFIDENTIAL
Pfizer Research Plan
November 26, 1997
Page 2
[*]
*CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
<PAGE> 35
ABGENIX, INC.
CONFIDENTIAL
Pfizer Research Plan
November 26, 1997
Page 3
[*]
*CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
<PAGE> 36
EXHIBIT C
LICENSE AND ROYALTY AGREEMENT
This LICENSE AND ROYALTY AGREEMENT is entered into as of December 22, 1997
(the "Effective Date") by and between PFIZER INC ("Pfizer"), a Delaware
corporation, having an office at 235 East 42nd Street, New York, New York 10017
and its Affiliates and ABGENIX, INC. ("Abgenix"), a Delaware corporation, having
an office at 7601 Dumbarton Circle, Fremont, CA 94555;
WHEREAS, Pfizer desires to obtain an exclusive license under Abgenix's
right, title and interest in the Patent Rights so that Pfizer can manufacture,
use, sell, offer for sale and import the Licensed Antibody Products; and
WHEREAS, Abgenix is willing to grant such license;
Therefore, in consideration of the mutual covenants and promises set forth
in this Agreement, the parties agree as follows:
1. DEFINITIONS.
The capitalized terms used in this Agreement and not defined elsewhere in
it shall have the meanings specified for such terms in this Section 1 and in the
Research Agreement.
1.1 "RESEARCH AGREEMENT" means the Collaborative Research Agreement
between Pfizer and Abgenix effective December 22, 1997.
1.2 "NET SALES" means the gross amount invoiced by Pfizer, its
<PAGE> 37
Affiliates, or any sublicensee of Pfizer for sales to a third party or parties
of Licensed Antibody Products, less [*] invoices as a separate item.
1.3 "LICENSED ANTIBODY PRODUCT" means any Antibody Product, (i) the
manufacture, use, sale, offer for sale or import would be within the scope of
any Valid Claim within the Patent Rights or (ii) is developed using a method or
using a transgenic animal, wherein the use of such method or such transgenic
animal would be within the scope of any Valid Claim within the Patent Rights.
1.4 "SUBLICENSEE" shall mean a third party who has been granted a
sublicense to make, use, sell, offer for sale or import Licensed Antibody
Products. It is understood that the term "sublicensee" shall have the foregoing
meaning whether or not such term is capitalized herein.
2. OPTION, GRANT OF LICENSE, TERM, RIGHTS AND OBLIGATIONS.
2.1 OPTION.
For a period of [*] from the Effective Date, Pfizer shall have the
exclusive option to acquire the License described in Section 2.2 below. Such
option will be exercised in writing by Pfizer to Abgenix.
2.2 LICENSE GRANTED TO PFIZER UNDER THE PATENT RIGHTS.
If the option described in Section 2.1 is exercised by Pfizer,
Abgenix will grant to Pfizer:
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THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
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(a) an exclusive, worldwide license, including the right to grant
sublicenses, to manufacture, use, sell, offer for sale and import Licensed
Antibody Products under all Abgenix's right, title and interest in the Joint
Patent Rights;
(b) an exclusive, worldwide license, to manufacture, use, sell,
offer for sale and import Licensed Antibody Products under all Abgenix's right,
title and interest in the Abgenix Patent Rights for human medical uses (subject
to the non-exclusive grant of rights to GenPharm International Inc. under that
certain Cross License Agreement effective as of March 26, 1997 by and among
Abgenix, GenPharm. and other parties named therein);
(c) a non-exclusive worldwide license to manufacture, use, sell,
offer for sale and import Licensed Antibody Products under all Abgenix's right,
title and interest in the Abgenix-Controlled Patent Rights for human medical
uses.
The licenses described above in (a), (b) and (c) shall be collectively
referred to herein as the "License". Pfizer acknowledges and agrees that its
rights granted under this Agreement and the Collaborative Research Agreement
with respect to the Abgenix Patent Rights and the Abgenix-Controlled Patent
Rights licensed from Xenotech L.P. are subject to the terms and conditions
contained in agreements between Abgenix and Xenotech L.P. including the right to
prosecute, maintain and defend certain patent rights.
2.3 TERM OF LICENSE GRANT AND PAYMENT OF ROYALTIES.
Unless terminated earlier as provided below, the License in a
country shall commence on the date that Pfizer exercises its option pursuant to
Section 2.1 and shall terminate on the date of the last to expire of the Patent
Rights in such country.
2.4 PFIZER OBLIGATIONS.
2.4.1 Pfizer shall use reasonably diligent efforts to exploit
Licensed
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Antibody Products [*].
2.4.2 If Pfizer grants a sublicense pursuant to this Section 2, Pfizer
shall guarantee that any sublicensee fulfills all of Pfizer's obligations under
this Agreement; provided, however, that Pfizer shall not be relieved of its
obligations pursuant to this Agreement.
2.4.3 Pfizer shall not initiate any human clinical trial involving a
Licensed Antibody Product without exercising the option to a license pursuant to
Section 2. 1.
2.5 TECHNICAL ASSISTANCE.
Abgenix shall provide to Pfizer or any sublicensee of Pfizer, at
Pfizer's request and expense, any agreed technical assistance reasonably
necessary to enable Pfizer or such sublicensee to manufacture, use, sell, offer
for sale or import each Licensed Antibody Product and to enjoy fully all the
rights granted to Pfizer pursuant to this Agreement; provided, however, that
Abgenix is reasonably capable of providing that assistance. Pfizer shall
reimburse Abgenix's direct and indirect costs of providing such assistance.
3. MILESTONE PAYMENTS, ROYALTIES, PAYMENTS OF ROYALTIES, ACCOUNTING FOR
ROYALTIES, RECORDS.
3.1 Pfizer shall pay Abgenix, within [*] of the exercise of the option
described in 2.1 by Pfizer to obtain an exclusive license from Abgenix, a [*].
Payment shall be made in US currency by wire transfer in immediately available
funds to an account designated by Abgenix, or by other mutually acceptable
means. Pfizer shall be obligated to make this payment only once with respect to
the first Licensed Antibody Product for a Target Antigen affected by the
License, so that additional
*CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
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Licensed Antibody Products for the same Target Antigen will not require Pfizer
to make additional payments.
3.2 PATENT RIGHTS.
3.2.1 Pfizer shall pay Abgenix a royalty based on the Net Sales of
each Licensed Antibody Product. Such royalty shall be paid with respect to each
country of the world from the date of the first commercial sale (the date of the
invoice of Pfizer or any sublicensee of Pfizer with respect to such sale) of
such Licensed Antibody Product in each such country until the expiration of the
last Patent Right to expire with respect to each such country and each such
Licensed Antibody Product.
3.2.2 If the manufacture and sale of an Antibody Product [*], Pfizer
will pay to Abgenix a royalty based on the Net Sales of each Antibody Product in
each such country for [*] such Antibody Product in such country.
3.3 ROYALTY RATES.
3.3.1 Pfizer shall pay Abgenix a royalty for the sale of each
Licensed Antibody Product under Section 2.2 as set forth in Section 3.2; [*] for
such Licensed Antibody Product for such calendar year, the
*CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
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[*]. Notwithstanding the [*] in the United States. As used in this Section
3.3.1, the [*] shall mean the average [*].
3.3.2 The royalty paid by Pfizer to Abgenix shall be [*] with respect to
Licensed Antibody Products. It is understood that the royalty rate specified in
this Section 3.3.2 is subject to [*] below. Notwithstanding those sections, or
any other provisions of this Agreement, in no event shall the royalty paid to
Abgenix with respect to Net Sales of a Licensed Antibody Product [*] under
Section 4.4 [*]. In the event that an Antibody Product unit is made, used or
sold, in a country in which there [*] shall be made.
*CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
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3.4 RENEGOTIATION OF ROYALTY RATES.
The parties acknowledge that the royalty rates set forth in Section
3.3 are based on the expectation that Licensed Antibody Products will be
administered to patients intravenously. If Pfizer identifies or develops a
different method of administration ("New Dosage Form") with respect to a
Licensed Antibody Product or Antibody Products which represents a commercial
opportunity for Pfizer or improves the safety or efficacy of such Licensed
Antibody Product, the parties may negotiate, as mutually agreed, a new royalty
rate for such Licensed Antibody Product in such New Dosage Form to account for
development costs and changes in the cost of goods, selling price and projected
annual Net Sales. It is understood, however, that the royalty rate specified in
Section 3.3.2 shall be modified only as Pfizer and Abgenix mutually agree.
3.5 PAYMENT DATES.
Royalties shall be paid by Pfizer on Net Sales within sixty (60)
days after the end of each calendar quarter in which such Net Sales are made.
Such payments shall be accompanied by a statement showing the Net Sales of each
Licensed Antibody Product by Pfizer or any sublicensee of Pfizer in each
country, the applicable royalty rate for such Licensed Antibody Product, and a
calculation of the amount of royalty due, including any offsets.
3.6 ACCOUNTING.
The Net Sales used for computing the royalties payable to Abgenix by
Pfizer shall be computed and paid in US dollars by wire transfer in immediately
available funds to a U.S. account designated by Abgenix, or by other mutually
acceptable means. For purposes of determining the amount of royalties due, the
amount of Net Sales in any foreign currency shall be computed by (a) converting
such amount into U.S. dollars at the prevailing commercial rate of exchange for
purchasing dollars with such foreign currency as published in the
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<PAGE> 43
Wall Street Journal for the close of the last business day of the calendar
quarter for which the relevant royalty payment is to be made by Pfizer and (b)
deducting the amount of any governmental tax, duty, charge, or other fee
actually paid in respect of such conversion into, and remittance of U.S.
dollars.
3.7 RECORDS.
Pfizer shall keep for three (3) years from the date of each payment of
royalties complete and accurate records of sales by Pfizer of each Licensed
Antibody Product in sufficient detail to allow the accruing royalties to be
determined accurately. Abgenix shall have the right for a period of [*]
after receiving any report or statement with respect to royalties due and
payable to appoint at its expense an independent certified public accountant
reasonably acceptable to Pfizer to inspect the relevant records of Pfizer to
verify such report or statement. Pfizer shall make its records available for
inspection by such independent certified public accountant during regular
business hours at such place or places where such records are customarily kept,
upon reasonable notice from Abgenix, to verify the accuracy of the reports and
payments. Such inspection right shall not be exercised more than once in any
calendar year nor more than once with respect to sales in any given period.
Abgenix agrees to hold in strict confidence all information concerning royalty
payments and reports, and all information learned in the course of any audit or
inspection, except to the extent necessary for Abgenix to reveal such
information in order to enforce its rights under this Agreement or if disclosure
is required by law. The failure of Abgenix to request verification of any report
or statement during said three-year period shall be considered acceptance of the
accuracy of such report, and Pfizer shall have no obligation to maintain records
pertaining to such report or statement beyond said three-year period. The
results of each inspection, if any, shall be binding on both parties.
*CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
8
<PAGE> 44
3.8 MILESTONE PAYMENTS. Pfizer shall pay Abgenix, within [*] of the
completion of each event set forth below ("Event"), the payment listed opposite
that Event. Payments shall be made in US dollars by wire transfer in immediately
available funds to a U.S. bank account designated by Abgenix, or other mutually
acceptable means. Pfizer shall be obligated to make each payment only once with
respect to each Licensed Antibody Product affected by an Event; provided,
however, that such payment for such Event shall not be due with respect to any
subsequent Licensed Antibody Product directed to a Target Antigen which has
previously been the subject of the same Event. All payments made by Pfizer
pursuant to this Section 3.8 with respect to a Licensed Antibody Product shall
[*] of such Licensed Antibody Product; provided, however, that [*] in any
calendar year with respect to such Licensed Antibody Product shall [*]
<TABLE>
<CAPTION>
EVENT AMOUNT
----- ------
<S> <C>
[*]
</TABLE>
*CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
9
<PAGE> 45
For the purposes of the foregoing, [*] shall mean [*]
shall mean [*]
4. LEGAL ACTION.
4.1 ACTUAL OR THREATENED DISCLOSURE OR INFRINGEMENT.
When information comes to the attention of Pfizer to the effect
that any Joint Patent Rights relating to a Licensed Antibody Product have been
or are threatened to be unlawfully infringed, Pfizer shall have the right at its
expense to take such action as It may deem necessary to prosecute or prevent
such unlawful infringement, including the right to bring or defend any suit,
action or proceeding involving any such infringement. Pfizer shall notify
Abgenix promptly of the receipt of any such information and of the commencement
of any such suit, action or proceeding. If Pfizer determines that it is
necessary or desirable for Abgenix to join any such suit, action or proceeding,
Abgenix shall, at Pfizer's expense, execute all papers and perform such other
acts as may be reasonably required to permit Pfizer to commence such action,
suit or proceeding in which case Pfizer shall hold Abgenix free, clear and
harmless from any and all costs and expenses of litigation, including attorneys
fees. If Pfizer brings a suit, it shall have the night first to reimburse itself
out of any sums recovered in such suit or in its settlement for all costs and
expenses, including attorney's fees, related to such suit or settlement, and
[*] of any funds that
*CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
10
<PAGE> 46
shall remain from said recovery shall be paid to Abgenix and the balance of such
funds shall be retained by Pfizer. If Pfizer does not, within [*] after giving
notice to Abgenix of the above-described Information, notify Abgenix of Pfizer's
intent to bring suit against any infringer, Abgenix shall have the right to
bring suit for such alleged infringement, but it shall not be obligated to do
so, and may join Pfizer as party plaintiff, if appropriate, in which event
Abgenix shall hold Pfizer free, clear and harmless from any and all costs and
expenses of such litigation, including attorney's fees, and any sums recovered
in any such suit or in its settlement shall belong to Abgenix. However, [*] of
any such sums received by Abgenix, after deduction of all costs and expenses
related to such suit or settlement, including attorney's fees paid, shall be
paid to Pfizer. Each party shall always have the right to be represented by
counsel of its own selection and at its own expense in any suit instituted by
the other for infringement under the terms of this Section. If Pfizer lacks
standing and Abgenix has standing to bring any such suit, action or proceeding,
then Abgenix shall do so at the request of Pfizer and at Pfizer's expense.
4.2 DEFENSE OF INFRINGEMENT CLAIMS.
Abgenix will cooperate with Pfizer at Pfizer's expense in the
defense of any suit, action or proceeding against Pfizer or any sublicensee of
Pfizer alleging the infringement of the intellectual property rights of a third
party by reason of the use of Patent Rights in the manufacture, use or sale of
the Licensed Antibody Product. Pfizer shall give Abgenix prompt written notice
of the commencement of any such suit, action or proceeding or claim of
infringement and will furnish Abgenix a copy of each communication relating to
the alleged infringement. Abgenix shall give to Pfizer all authority (including
the right to exclusive control of the defense of any such suit, action or
proceeding and the
*CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
11
<PAGE> 47
exclusive right after consultation with Abgenix, to compromise, litigate, settle
or otherwise dispose of any such suit, action or proceeding), at Pfizer's
expense, including by providing information and assistance necessary to defend
or settle any such suit, action or proceeding; provided, however, Pfizer shall
obtain Abgenix's prior consent to such part of any settlement which contemplates
payment or other action by Abgenix or has a material adverse effect on Abgenix's
business. If the parties agree that Abgenix should institute or join any suit,
action or proceeding pursuant to this Section, Pfizer may, at Pfizer's expense,
join Abgenix as a defendant if necessary or desirable, and Abgenix shall execute
all documents and take all other actions, including giving testimony, which may
reasonably be required in connection with the prosecution of such suit, action
or proceeding.
4.3 HOLD HARMLESS.
Abgenix agrees to defend, protect, indemnify and hold harmless
Pfizer and any sublicensee of Pfizer, from and against any loss or expense
arising from any proven claim of a third party that it has been granted rights
by Abgenix that Pfizer or any sublicensee of Pfizer in exercising their rights
granted to Pfizer by Abgenix pursuant to this Agreement, has infringed upon such
rights granted to such third party by Abgenix.
4.4 THIRD PARTY LICENSES.
If the manufacture, use or sale by Pfizer of a Licensed Antibody
Product in any country would, in the opinion of both Pfizer and Abgenix,
infringe a patent owned by a third party, Pfizer and Abgenix, upon mutual
consent, shall attempt to obtain a license under such patent at Pfizer's
expense. If such license is obtained under such patent, [*] of any payments made
by Pfizer to such third party shall be deductible from royalty payments due from
Pfizer to Abgenix pursuant to this Agreement; provided, however, that in
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
12
<PAGE> 48
no event shall royalties payable to Abgenix be lower than [*] of Net Sales as a
result of all such deductions. All such computations, payments, and adjustments
shall be on a country by country and patent by patent basis.
5. REPRESENTATION AND WARRANTY.
5.1 Abgenix represents and warrants to Pfizer that it has the right to
grant the License granted pursuant to this Agreement, and that the License so
granted does not conflict with or violate the terms of any agreement between
Abgenix and any third party.
5.2 EXCEPT AS EXPRESSLY PROVIDED IN THIS SECTION 5 ABGENIX MAKES NO
WARRANTY, EXPRESS OR IMPLIED, AND EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES,
INCLUDING ANY WARRANTIES AS TO THE PATENT RIGHTS, MERCHANTABILITY, OR FITNESS
FOR A PARTICULAR PURPOSE.
6. TREATMENT OF CONFIDENTIAL INFORMATION.
6.1 CONFIDENTIALITY.
6.1.1 Pfizer and Abgenix each recognize that the other's
Confidential Information constitutes highly valuable, confidential information,
Subject to Pfizer's right and obligations pursuant to this Agreement, Pfizer and
Abgenix each agree that during the term of the Research Agreement and for five
(5) years thereafter, it will keep confidential, and will cause its Affiliates
to keep confidential, all Abgenix Confidential Information or Pfizer
Confidential Information, as the case may be, that is disclosed to it or to any
of its Affiliates pursuant to this Agreement. Neither Pfizer, its Affiliates nor
Abgenix shall use Confidential Information of the other party except as
expressly permitted under this Agreement. For all purposes of this Section 6, it
is understood that Joint
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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<PAGE> 49
Technology shall be deemed Confidential Information of both parties.
6.1.2 Subject to Pfizer's rights and obligations pursuant to this
Agreement, Pfizer and Abgenix each agree that any disclosure of the other's
Confidential Information to any officer, employee or agent of the other party or
of any of its Affiliates shall be made only if and to the extent necessary to
carry out its responsibilities under this Agreement and shall be limited to the
maximum extent possible consistent with such responsibilities. Subject to
Pfizer's rights and obligations pursuant to this Agreement, Pfizer and Abgenix
each agree not to disclose the other's Confidential Information to any third
parties under any circumstance without written permission from the other party.
Each party shall take such action, and shall cause its Affiliates to take such
action, to preserve the confidentiality of each other's Confidential Information
as it would customarily take to preserve the confidentiality of its own
Confidential Information. Each party, upon the other's request, will return all
the Confidential Information disclosed to it by the other party pursuant to this
Agreement, including all copies and extracts of documents, within sixty (60)
days of the request upon the termination of this Agreement except for one (1)
copy which may be kept for the purpose of complying with continuing obligations
under this Agreement.
6.2 PUBLICITY. Except as required by law, neither party may disclose the
terms of this Agreement without the written consent of the other party.
6.3 DISCLOSURE REQUIRED BY LAW. If either party is requested to disclose
the Confidential Information in connection with a legal or administrative
proceeding or is otherwise required by law to disclose the Confidential
Information, such party will give the other party prompt notice of such request.
The disclosing party may seek an appropriate protective order or other remedy or
waive compliance with the provisions of this Agreement. If such party seeks a
protective order or other remedy, the other party will cooperate. If such party
14
<PAGE> 50
fails to obtain a protective order or waive compliance with the relevant
provisions of this Agreement, the other party will disclose only that portion of
Confidential Information which its legal counsel determines it is required to
disclose.
6.4 DISCLOSURE OF INVENTIONS. Each party shall promptly inform the other
about all inventions in the Area within Joint Technology that are conceived,
made or developed in the course of carrying out the Research Program by
employees of, consultants to, either of them solely, or jointly with employees
of, or consultants to the other.
7. PROVISIONS CONCERNING FILING, PROSECUTION AND MAINTENANCE OF JOINT PATENT
RIGHTS. The following provisions relate to the filing, prosecution and
maintenance of Joint Patent Rights during the term of this Agreement:
7.1 Filing. Prosecution and Maintenance by Abgenix. With respect to
Joint Patent Rights in which Abgenix employees or consultants, alone or together
with Pfizer employees, or consultants are named as inventors, Abgenix shall have
the exclusive right and obligation :
(a) to file applications for letters patent on patentable
inventions included in Joint Patent Rights; provided, however, that Abgenix
shall consult with Pfizer regarding countries in which such patent applications
should be filed and shall file patent applications in those countries where
Pfizer requests that Abgenix file such applications; and, further provided, that
Abgenix, at its option and expense, may file in countries where Pfizer does not
request that Abgenix file such applications;
(b) to take all reasonable steps to prosecute all pending and
new patent applications included within Joint Patent Rights;
15
<PAGE> 51
(c) to respond to oppositions, nullity actions, re-examinations,
revocation actions and similar proceedings filed by third parties against the
grant of letters patent for such applications;
(d) to maintain in force any letters patent included in Joint
Patent Rights by duly filing all necessary papers and paying any fees required
by the patent laws of the particular country in which such letters patent were
granted; and
(e) to cooperate fully with, and take all necessary actions
requested by, Pfizer in connection with the preparation, prosecution and
maintenance of any letters patent included in Joint Patent Rights.
Abgenix shall notify Pfizer in a timely manner of any decision
to abandon a pending patent application or an issued patent included in Joint
Patent Rights. Thereafter, Pfizer shall have the option, at its expense, of
continuing to prosecute any such pending patent application or of keeping the
issued patent in force.
7.1.1 Copies of Documents. Abgenix and Pfizer shall provide to each
other copies of all patent applications that are part of Joint Patent Rights
prior to filing, for the purpose of obtaining substantive comment of the other
party's patent counsel. Abgenix and Pfizer shall also provide to the other
copies of all documents relating to prosecution of all such patent applications
in a timely manner and shall provide to the other every six (6) months a report
detailing the status of all patent applications that are a part of Joint Patent
Rights.
7.1.2 Reimbursement of Costs for Filing Prosecuting and Maintaining
Joint Patent Rights. Within thirty (30) days of receipt of invoices from
Abgenix, Pfizer shall reimburse Abgenix for all the costs of filing,
prosecuting, responding to opposition and maintaining patent applications and
patents in countries where Pfizer requests that patent applications be filed,
prosecuted and maintained. Such reimbursement shall be in addition to other
16
<PAGE> 52
funding payments under this Agreement and shall include such costs of all
activities described in 7.1 (a)-(e) above. However, Pfizer may, upon sixty (60)
days notice, request that Abgenix discontinue filing or prosecution of patent
applications in any country and discontinue reimbursing Abgenix for the costs of
filing, prosecuting, responding to opposition or maintaining such patent
application or patent in any country. Abgenix shall pay all costs in those
countries in which Pfizer requests that Abgenix not file, prosecute or maintain
patent applications and patents, but in which Abgenix, at its option, elects to
do so.
7.1.3 Pfizer shall have the right to FILE on behalf of and as an
agent for Abgenix all applications for, and take all actions necessary to obtain
patent extensions pursuant to 35 USC Section 156 and foreign counterparts with
respect to the Joint Patent Rights to the extent that such extensions are
available by reason of a Licensed Antibody Product under the License Agreement
during the period the License Agreement is in effect. Abgenix agrees, to sign,
such further documents and take such further actions as may be requested by
Pfizer in this regard, at Pfizer's expense
7.2 Filing, Prosecution and Maintenance by Pfizer. With respect to
Patent Rights in which Pfizer employees or consultants alone are named as
inventors, Pfizer shall have those rights and duties ascribed to Abgenix in
Section 7.1. except that Pfizer will bear all related expenses.
7.3 Neither party may disclaim a Valid Claim within Joint Patent Rights
without the consent of the other.
8. OTHER AGREEMENTS.
Concurrently with the execution of this Agreement, Abgenix and Pfizer
shall enter into a Research Agreement and a Stock Purchase Agreement. This
Agreement, the Research Agreement, and the Stock Purchase Agreement are the
17
<PAGE> 53
sole agreements with respect to the subject matter and supersede all other
agreements and understanding between the parties with respect to same.
9. TERMINATION AND DISENGAGEMENT.
9.1 Events OF TERMINATION. The following events shall constitute events
of termination ("Events of Termination"):
(a) Any written representation or warranty by Abgenix or Pfizer, or
any of its officers, made under or in connection with this Agreement shall prove
to have been incorrect in any material respect when made;
(b) Abgenix or Pfizer shall fail in any material respect to perform
or observe any term, covenant or understanding contained in this Agreement or in
any of the other documents or instruments delivered pursuant to, or concurrently
with, this Agreement, and any such failure shall remain unremedied for thirty
(30) days after written notice to the failing party.
9.2 TERMINATION. Upon the occurrence of any Event of Termination, the
party not responsible may, by notice to the other party, terminate this
Agreement.
9.3 Termination of this Agreement by either party, with or without
cause, will not terminate the licenses granted pursuant to Section 5.2 of the
Research Agreement.
9.4 Termination of this Agreement for any reason shall be without
prejudice to:
(a) the rights and obligations of the parties provided in Sections
6, 7 and 10;
(b) Abgenix's right to receive all royalty payments accrued
hereunder; or
(c) any other remedies which either party may otherwise have.
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<PAGE> 54
10. INDEMNIFICATION.
Pfizer and Abgenix will indemnify each other for damages, settlements,
costs, legal fees and other expenses incurred in connection with a claim by a
third party against either party based on any action or omission of the
indemnifying party's agents, employees, or officers related to its obligations
under this Agreement; provided, however, that the foregoing shall not apply (i)
if the claim is found to be based upon the negligence, recklessness or wilful
misconduct of the party seeking indemnification; or (ii) if such party fails to
give the other party prompt notice of any claim it receives and such failure
materially prejudices the other party with respect to any claim or action to
which its obligation pursuant to this Section applies. Notwithstanding the
foregoing, Abgenix shall not indemnify Pfizer for claims arising from the sale
of Antibody Products or exercise of rights granted to Pfizer under Section 5.2
of the Research Agreement, or the License Agreement (including without
limitation product liability claims) and Pfizer shall indemnify Abgenix with
respect to such claims and to claims arising from Joint Patent Rights, Pfizer
Patent Rights, Joint Technology and Pfizer Technology except for intellectual
property claims with respect to Abgenix Patent Rights, Abgenix Controlled-Patent
Rights or Abgenix Technology. Each party, in its sole discretion, shall choose
legal counsel, shall control the defense of such Claim or action and shall have
the right to settle same on such terms and conditions it deems advisable;
provided however, it shall obtain the other party's prior consent to such part
of any settlement which requires payment or other action by the other party or
is likely to have a material adverse effect on the other party's business.
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<PAGE> 55
11. NOTICES AND REPORTS.
11.1 All notices shall be in writing mailed via certified mail, return
receipt requested, courier, or facsimile transmission addressed as follows, or
to such other address as may be designated from time to time:
If to Pfizer: Pfizer Central Research
Eastern Point Road
Groton, CT 06340
Attention: Dr. George Milne, President
with copy to: Joshua A. Kalkstein, General Counsel
If to Abgenix: Abgenix, Inc.
7601 Dumbarton Circle
Fremont, CA 94555
Attention: President
cc:
Wilson, Sonsini, Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304
Attn: Kenneth A. Clark
Notices shall be deemed given as of the date sent.
11.2 Reports. Pfizer agrees to keep Abgenix informed with respect to
activities and progress toward further research, development and
commercialization of Licensed Antibody Products. Pfizer agrees to provide to
Abgenix every six months a summary of such activities and progress. In addition,
Pfizer will provide to Abgenix copies of any data regarding the immunogenicity
and pharmacokinetics of the Antibody Products together with copies of any
reports or summaries of such data. Abgenix agrees that all such information will
be deemed Pfizer Confidential Information.
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<PAGE> 56
12. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.
13. MISCELLANEOUS.
13.1 BINDING EFFECT. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective legal representatives, successors
and permitted assigns.
13.2 HEADINGS. Paragraph headings are inserted for convenience of
reference only and do not form a part of this Agreement.
13.3 COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original.
13.4 AMENDMENT; WAIVER; ETC. This Agreement may be amended, modified,
superseded or canceled, and any of the terms may be waived, only by a written
instrument executed by each party or, in the case of waiver, by the party or
parties waiving compliance. The delay or failure of any party at any time or
times to require performance of any provisions shall in no manner affect the
rights at a later time to enforce the same. No waiver by any party of any
condition or of the breach of any term contained in this Agreement, whether by
conduct, or otherwise, in any one or more instances, shall be deemed to be, or
considered as, a further or continuing waiver of any such condition or of the
breach of such term or any other term of this Agreement.
13.5 NO THIRD PARTY BENEFICIARIES. No third party including any employee
of any party to this Agreement, shall have or acquire any rights by reason of
this Agreement. Nothing contained in this Agreement shall be deemed to
constitute the parties partners with each other or any third party.
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<PAGE> 57
13.6. ASSIGNMENT AND SUCCESSORS. This Agreement may not be assigned by
either party, except that each party may assign this Agreement and the rights
and interests of such party, in whole or in part, to any of its Affiliates, any
purchaser of all or substantially all of its assets or to any successor
corporation resulting from any merger or consolidation of such party with or
into such corporations.
13.7 FORCE MAJEURE. Neither Pfizer nor Abgenix shall be liable for failure
of or delay in performing obligations set forth in this Agreement, and neither
shall be deemed in breach of its obligations, if such failure or delay is due to
natural disasters or any causes reasonably beyond the control of Pfizer or
Abgenix.
13.8 SEVERABILITY. If any provision of this Agreement is or becomes
invalid or is ruled invalid by any court of competent jurisdiction or is deemed
unenforceable, it is the intention of the parties that the remainder of the
Agreement shall not be affected.
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<PAGE> 58
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized representatives.
PFIZER INC ABGENIX, INC.
By: [SIG] By: [SIG]
-------------------------------- ------------------------------
Title: President, Control, Research Title: Vice President, Corporate
Development Development
---------------------------- ---------------------------
cc: Pfizer Inc, Legal Division, Groton, CT 06340
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<PAGE> 59
EXHIBIT D
SERIES C PREFERRED
STOCK PURCHASE AGREEMENT
THIS SERIES C PREFERRED STOCK PURCHASE AGREEMENT (the "Agreement") is
made as of the 12th day of January, 1998, by and between Abgenix, Inc., a
Delaware corporation located at 7601 Dumbarton Circle, Fremont, California 94555
(the "Company"), and Pfizer, Inc. (the "Investor").
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Purchase and Sale of Shares.
1.1 Sale of Shares.
(a) The Company shall adopt and file with the
Secretary of State of Delaware on or before the Closing (as defined below) a
Certificate of Designations in the form attached hereto as Exhibit A.
(b) Subject to the terms and conditions of this
Agreement, the Investor agrees to purchase at the Closing and the Company agrees
to sell and issue to the Investor at the Closing, 160,000 shares of the
Company's Series C Preferred Stock at a per share price of $8.00 for an
aggregate purchase price of $1.28 million.
(c) The number of shares of Series C Preferred Stock to
be sold pursuant to this Agreement are hereinafter referred to as the "Shares."
The total amount of Common Stock and other securities issuable upon conversion
of the Shares is hereinafter referred to as the "Conversion Stock." The Shares
and the Conversion Stock are hereinafter collectively referred to as the
"Securities."
1.2 Closing. The purchase and sale of the Shares shall take place
at the offices of Wilson Sonsini Goodrich & Rosati, 650 Page Mill Road, Palo
Alto, California, at 11:00 A.M., on January 12, 1998, or at such other time and
place as the Company and Investors acquiring in the aggregate more than half the
Shares sold pursuant hereto mutually agree upon orally or in writing (which time
and place are designated as the "Closing"). At the Closing the Company shall
deliver to the Investor certificate(s) representing the Shares which such
Investor is purchasing, against delivery to the Company by such Investor of a
check or wire transfer in the aggregate amount of the purchase price payable to
the Company's order.
2. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Investor that, except as set forth on a Schedule
of Exceptions attached hereto as Exhibit B, which exceptions shall be deemed to
be representations and warranties as if made hereunder:
2.1 Organization, Good Standing and Qualification. The Company is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has
<PAGE> 60
all requisite corporate power and authority to carry on its business as now
conducted. The Company is duly qualified to transact business and is in good
standing in each jurisdiction in which the failure so to qualify would have a
material adverse effect on its business or properties.
2.2 Capitalization. The authorized capital of the Company
consists, or will consist prior to the Closing, of:
(a) 20,000,000 shares of Preferred Stock (the
"Preferred Stock"), of which 5,396,667 shares have been designated Series A
Preferred Stock, 3,385,000 shares have been designated Series B Preferred Stock,
160,000 shares have been designated Series C Preferred Stock and the remaining
11,058,333 have not been designated. 4,416,667 shares of Series A Preferred
Stock are issued and outstanding, 3,267,685 shares of Series B Preferred Stock
are issued and outstanding and 160,000 shares of Series C Preferred Stock will
be sold pursuant to this Agreement. The rights, preferences, privileges and
restrictions of the Shares will be as stated in the Company's Certificate of
Designations attached hereto as Exhibit A.
(b) 50,000,000 shares of Common Stock (the "Common
Stock"), of which 171,620 shares are issued and outstanding and 25,000 are
subject to a purchase right pursuant to a license agreement between the Company
and Ronald J. Billing, M.D., dated February 1, 1997.
(c) Options exercisable for up to 1,614,861 shares of
Common Stock, and after accounting for 171,620 shares of Common Stock issued
upon exercise of options or stock purchase rights, there are 604,769 shares
available for grant under the Company's Incentive Stock Plan.
(d) Warrants exercisable for 121,667 shares of Series A
Preferred Stock issued to Cell Genesys, Inc.
(e) Except as provided herein and for (i) the conversion
privileges of the Shares and (ii) the right of first offer provided in the
Amended and Restated Stockholder Rights Agreement attached hereto as Exhibit C
(the "Rights Agreement"), there are no other outstanding options, warrants,
rights (including conversion or preemptive rights) or agreements for the
purchase or acquisition from the Company of any shares of its capital stock. The
Company is not a party or subject to any agreement or understanding, and, to the
Company's knowledge, there is no agreement or understanding between any persons
and/or entities, which affects or relates to the voting or giving of written
consents with respect to any security.
2.3 Subsidiaries. The Company does not presently own or control,
directly or indirectly, any interest in any other corporation, association, or
other business entity. The Company is not a participant in any joint venture,
partnership, or similar arrangement.
2.4 Authorization. All corporate action on the part of the
Company, its officers, directors and stockholders necessary for the
authorization, execution and delivery of this Agreement and the Rights
Agreement, the performance of all obligations of the Company hereunder and
thereunder and
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the authorization, issuance (or reservation for issuance) and delivery of the
Shares being sold hereunder has been taken or will be taken prior to the
Closing, and this Agreement and the Rights Agreement constitute valid and
legally binding obligations of the Company, enforceable in accordance with their
terms.
2.5 Valid Issuance of Preferred and Common Stock.
(a) The Shares which are being purchased by the
Investor hereunder, when issued, sold and delivered in accordance with the terms
hereof for the consideration expressed herein, will be duly and validly issued,
fully paid and nonassessable and, based in part upon the representations of the
Investor in this Agreement, will be issued in compliance with all applicable
federal and state securities laws. The Conversion Stock has been duly and
validly reserved for issuance and, upon issuance in accordance with the terms of
the Certificate of Designations, shall be duly and validly issued, fully paid
and nonassessable, and issued in compliance with all applicable securities laws,
as presently in effect, of the United States and each of the states whose
securities laws govern the issuance of the Shares hereunder and will be free of
restrictions on transfer other than restrictions on transfer under this
Agreement or the Rights Agreement and under applicable state and federal
securities law.
(b) The outstanding shares of Common Stock and Preferred
Stock are all duly and validly authorized and issued, fully paid and
nonassessable, and were issued in compliance with all applicable federal and
state securities laws.
2.6 Governmental Consents. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state, local or provincial governmental authority on
the part of the Company is required in connection with the consummation of the
transactions contemplated by this Agreement and the Rights Agreement, except for
the filing pursuant to Section 25102(f) of the California Corporate Securities
Law of 1968, as amended, and the rules thereunder, which filing will be effected
within 15 days of the sale of the Shares hereunder or as otherwise required by
Rule 506 of the Securities Act of 1933, as amended (the "Act").
2.7 Litigation. There is no action, suit, proceeding or
investigation pending or currently threatened against the Company which
questions the validity of this Agreement and the Rights Agreement or the right
of the Company to enter into them, or to consummate the transactions
contemplated hereby and thereby, or which might result, either individually or
in the aggregate, in any material adverse changes in the assets, condition,
affairs or prospects of the Company, financially or otherwise, or any change in
the current equity ownership of the Company, nor is the Company aware that there
is any basis for the foregoing. The foregoing includes, without limitation,
actions pending or threatened (or any basis therefor known to the Company)
involving the prior employment of any of the Company's employees, their use in
connection with the Company's business of any information or techniques
allegedly proprietary to any of their former employers, or their obligations
under any agreements with prior employers or negotiations by the Company with
proposed backers of, or investors in, the Company or its proposed business. The
Company is not a party or subject to the provisions of any order, writ,
injunction, judgment or decree of any court or government agency or
instrumentality.
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There is no action, suit, proceeding or investigation by the Company currently
pending or which the Company intends to initiate.
2.8 Patents and Trademarks. The Company owns or possesses
sufficient title and ownership of or rights to all patents, trademarks, service
marks, trade names, copyrights, trade secrets, licenses, information,
proprietary rights and processes necessary for its business as now conducted and
as proposed without any conflict with or infringement of the rights of others.
There are no outstanding options, licenses, or agreements of any kind relating
to the foregoing, nor is the Company bound by or a party to any options,
licenses or agreements of any kind with respect to the patents, trademarks,
service marks, trade names, copyrights, trade secrets, licenses, information,
proprietary rights and processes of any other person or entity. The Company has
not received any communications alleging that the Company has violated or, by
conducting its business as proposed to be conducted immediately after the
Closing, would violate any of the patents, trademarks, service marks, trade
names, copyrights or trade secrets, licenses or other proprietary rights of any
other person or entity. The Company is not aware that any of its employees is
obligated under any contract (including licenses, covenants or commitments of
any nature) or other agreement, or subject to any judgment, decree or order of
any court or administrative agency, that would interfere with the use of his or
her best efforts to promote the interests of the Company or that would conflict
with the Company's business as proposed to be conducted immediately after the
Closing. Neither the execution nor delivery of this Agreement or the Rights
Agreement nor the carrying on of the Company's business by the employees of the
Company, nor the conduct of the Company's business as proposed to be conducted
immediately after the Closing, will, to the Company's knowledge, conflict with
or result in a breach of the terms, conditions or provisions of, or constitute a
default under, any contract, covenant or instrument under which any of such
employees is now obligated. The Company does not believe it is or will be
necessary to utilize any inventions of any of its employees (or people it
currently intends to hire) made prior to their employment by the Company. The
Company has not granted rights to manufacture, produce, assemble, license,
market, or sell its products to any other person and is not bound by any
agreement that affects the Company's exclusive right to develop, manufacture,
assemble, distribute, market, or sell its products.
2.9 Compliance with Other Instruments.
(a) The Company is not in violation or default of any
provisions of its Certificate of Incorporation, Certificate of Designations or
Bylaws, as amended, or of any instrument, judgment, order, writ, decree or
contract to which it is a party or by which it is bound or, to its knowledge, of
any provision of federal or state statute, rule or regulation applicable to the
Company. The execution, delivery and performance of this Agreement and the
Rights Agreement and the consummation of the transactions contemplated hereby
and thereby will not result in any such violation or be in conflict with or
constitute, with or without the passage of time and giving of notice, either a
default under any such provision, instrument, judgment, order, writ, decree or
contract or an event which results in the creation of any lien, charge or
encumbrance upon any assets of the Company or the suspension, revocation,
impairment, forfeiture or nonrenewal of any material permit, license,
authorization or approval applicable to the Company, its business or operations
or any of its assets or properties.
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(b) To the Company's knowledge, the Company has met
every condition, and has performed no act, the occurrence of which would result
in the Company's loss of any right granted under any permit, license,
authorization, approval, distribution or other agreement.
2.10 Related Party Transactions. There are no obligations of the
Company to employees, officers, directors or 5% stockholders of the Company
other than (a) for payment of salary for services rendered, (b) reimbursement
for reasonable expenses incurred on behalf of the Company and (c) for other
standard employee benefits made generally available to all employees (including
stock option agreements outstanding under any stock option plan approved by the
Board of Directors of the Company). No employee, officer, director or 5%
stockholder of the Company or member of his or her immediate family thereof is
indebted to the Company, nor is the Company indebted (or committed to make loans
or extend or guarantee credit) to any of them. To the Company's knowledge, none
of such persons has any direct or indirect ownership interest in any firm or
corporation with which the Company is affiliated or with which the Company has a
business relationship, or any firm or corporation that competes with the
Company, except that employees, officers or directors of the Company and members
of their immediate families may own stock in publicly traded companies that may
compete with the Company. To the Company's knowledge except for agreements to
purchase shares of the Company's securities, no officer or director or any
member of their immediate families is, directly or indirectly, interested in any
material contract with the Company.
2.11 Agreements; Action.
(a) Except for agreements explicitly contemplated
hereby, there are no agreements, understandings or proposed transactions between
the Company and any of its officers, directors, affiliates, or any affiliate
thereof.
(b) There are no agreements, understandings,
instruments, contracts or proposed transactions to which the Company is a party
or by which it is bound which involve (i) obligations (contingent or otherwise)
of, or payments to the Company in excess of $50,000, (ii) the license of any
patent, copyright, trade secret or other proprietary right to or from the
Company, (iii) provisions restricting or affecting the development, manufacture
or distribution of the Company's products or services, or (iv) indemnification
by the Company with respect to infringements of proprietary rights.
(c) The Company has not (i) declared or paid any
dividends, or authorized or made any distribution upon or with respect to any
class or series of its capital stock, (ii) incurred any indebtedness for money
borrowed or incurred any other liabilities individually in excess of $50,000 or
in excess of $200,000 in the aggregate, (iii) made any loans or advances to any
person, other than ordinary advances for travel expenses, or (iv) sold,
exchanged or otherwise disposed of any of its assets or rights, other than in
the ordinary course of business.
(d) The Company is not a party to and is not bound by
any contract, agreement or instrument, or subject to any restriction under its
Certificate of Incorporation, Certificate
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of Designations or Bylaws, as amended, which materially adversely affects its
business as now conducted and as proposed to be conducted.
2.12 Disclosure. The Company has fully provided the Investor with
all the information which such Investor has requested for deciding whether to
purchase the Shares and all information which the Company believes is reasonably
necessary to enable such Investor to make such decision. Neither this Agreement
nor any other statements or certificates made or delivered in connection
herewith contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements herein or therein not misleading.
2.13 Registration or First Offer Rights. Except as provided in
the Rights Agreement, the Company has not granted or agreed to grant any
registration rights, including piggyback rights, or any right of first offer to
any person or entity.
2.14 Corporate Documents. Except for amendments necessary to
satisfy representations and warranties or conditions contained herein (the form
of which amendments has been approved by the Investor), the Company's
Certificate of Incorporation, Certificate of Designations and Bylaws, as
amended, are in the form previously provided to the Investor.
2.15 Title to Property and Assets. The Company owns its property
and assets free and clear of all mortgages, liens, loans and encumbrances,
except such encumbrances and liens which arise in the ordinary course of
business and do not individually or in the aggregate materially impair the
Company's ownership or use of such property or assets. With respect to the
property and assets it leases, the Company is in compliance with such leases
and, to its knowledge, holds a valid leasehold interest free of any liens,
claims or encumbrances.
2.16 Permits. The Company has all franchises, permits, licenses,
and any similar authority necessary for the conduct of its business as now being
conducted by it, the lack of which could materially and adversely affect the
business, properties, or financial condition of the Company and believes it can
obtain, without undue burden or expense, any similar authority for the conduct
of its business as planned to be conducted. The Company is not in default in any
material respect under any of such franchises, permits, licenses or other
similar authority.
2.17 Financial Statements. The Company has delivered to the
Investor its audited balance sheet and income statement for the period from
inception (July 15, 1996) to December 31, 1996 and unaudited balance sheet and
income statement for the nine month period ended September 30, 1997
(collectively the "Financial Statements"). The Financial Statements, together
with the notes thereto, (i) are complete and correct in all material respects,
(ii) are in accordance with the Company's books and records, (iii) present
fairly its financial position as of that date and the results of its operations
for the period indicated, and (iv) have been prepared in conformity with
generally accepted accounting principles consistently applied throughout the
periods indicated, subject, in the case of interim statements, to normal year
end adjustments and the absence of footnotes. Except as set forth in the
Financial Statements, the Company has no material liabilities, contingent or
otherwise, other than
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(i) liabilities incurred in the ordinary course of business and (ii) obligations
under contracts and commitments incurred in the ordinary course of business and
not required under generally accepted accounting principles to be reflected in
the Financial Statements which, in both cases, individually or in the aggregate,
are not material to the financial condition or operating results of the Company.
Except as disclosed in the Financial Statements, the Company is not a guarantor
or indemnitor of any indebtedness of any other person, firm or corporation.
2.18 Changes. To the Company's knowledge, since September 30,
1997, there has not been:
(a) Any change in the assets, liabilities, financial
condition or operating results of the Company from that reflected in the
Financial Statements, except changes in the ordinary course of business that
have not been, in the aggregate, materially adverse.
(b) any damage, destruction or loss, whether or not
covered by insurance, materially and adversely affecting the business,
properties, or financial condition of the Company (as such business is presently
conducted and as it is proposed to be conducted);
(c) any waiver or compromise by the Company of a
valuable right or of a material debt owed to it;
(d) any satisfaction or discharge of any lien, claim
or encumbrance or payment of any obligation by the Company, except in the
ordinary course of business and which is not material to the business,
properties, or financial condition of the Company (as such business is presently
conducted and it is proposed to be conducted);
(e) any material change to a material contract or
arrangement by which the Company or any of its assets is bound or subject;
(f) any material change in any compensation arrangement
or agreement with any employee, officer, director, or stockholder;
(g) any sale, assignment or transfer of any patents,
trademarks, copyrights, trade secrets or other intangible assets;
(h) any resignation or termination of employment of
any key officer of the Company; and the Company, to its knowledge, does not know
of the impending resignation or termination of employment of any such officer;
(i) receipt of notice that there has been a loss of, or
material order cancellation by, any major customer of the Company;
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(j) any mortgage, pledge, transfer of a security
interest in, or lien, created by the Company, with respect to any of its
material properties or assets, except liens for taxes not yet due or payable;
(k) any loans or guarantees made by the Company to or
for the benefit of its employees, officers or directors, or any members of their
immediate families, other than travel advances and other advances made in the
ordinary course of its business;
(l) any declaration, setting aside or payment or other
distribution in respect of any of the Company's capital stock, or any direct or
indirect redemption, purchase or other acquisition of any of such stock by the
Company;
(m) to the Company's knowledge, any other event or
condition of any character that might materially and adversely affect the
business, properties, or financial condition of the Company (as such business is
presently conducted and as it is proposed to be conducted); or
(n) any agreement or commitment by the Company to do
any of the things described in this Section 2.19.
2.19 Employee Benefit Plans. The Company does not have any
Employee Benefit Plan as defined in the Employee Retirement Income Security Act
of 1974.
2.20 Tax Returns, Payments and Elections. The Company has filed
all tax returns and reports as required by law. These returns and reports are
true and correct in all material respects. The Company has paid all taxes and
other assessments due. The provision for taxes of the Company as shown in the
Financial Statements is adequate for taxes due or accrued as of the date
thereof. The Company has not elected pursuant to the Internal Revenue Code of
1986, as amended (the "Code"), to be treated as a Subchapter S corporation or a
collapsible corporation pursuant to Section 341(f) or Section 1362(a) of the
Code, nor has it made any other elections pursuant to the Code (other than
elections which relate solely to methods of accounting, depreciation or
amortization) which would have a material effect on the Company, its financial
condition, its business as presently conducted or proposed to be conducted or
any of its properties or material assets. The Company has never had any tax
deficiency proposed or assessed against it and has not executed any waiver of
any statute of limitations on the assessment or collection of any tax or
governmental charge. To the Company's knowledge none of its federal income tax
returns and none of its state income or franchise tax or sales or use tax
returns has ever been audited by governmental authorities. Since the date of the
Financial Statements, the Company has made adequate provisions on its books of
account for all taxes, assessments and governmental charges with respect to its
business, properties and operations for such period. The Company has withheld or
collected from each payment made to each of its employees, the amount of all
taxes (including, but not limited to, federal income taxes, Federal Insurance
Contribution Act taxes and Federal Unemployment Tax Act taxes) required to be
withheld or collected therefrom, and has paid the same to the proper tax
receiving officers or authorized depositaries.
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2.21 Insurance. The Company has in full force and effect fire and
casualty insurance policies, with coverage customary for companies similarly
situated to the Company.
2.22 Minute Books. The minute books of the Company made available
to Investor or its counsel as requested, contain a complete summary of all
meetings and actions by consent of directors and stockholders since the time of
incorporation and reflect all transactions referred to in such minutes
accurately in all material respects.
2.23 Labor Agreements and Actions. The Company and its employees
are not bound by or subject to (and none of its assets or properties is bound by
or subject to) any written or oral, express or implied, contract, commitment or
arrangement with any labor union, and no labor union has requested or, to the
knowledge of the Company, has sought to represent any of the employees,
representatives or agents of the Company. There is no strike or other labor
dispute involving the Company pending, or to the knowledge of the Company
threatened, nor is the Company aware of any labor organization activity
involving its employees. The Company is not aware that any officer or key
employee, or that any group of key employees, intends to terminate their
employment with the Company, nor does the Company have a present intention to
terminate the employment of any of the foregoing. The employment of each officer
and employee of the Company is terminable at the will of the Company.
2.24 Employees: Employee Compensation. To its knowledge, the
Company has complied in all material respects with all applicable state and
federal equal employment opportunity and other laws related to employment. To
the Company's knowledge, no employee of the Company is or will be in violation
of any judgment, decree or order, or any term of any employment contract, patent
disclosure agreement or other contract or agreement relating to the relationship
of any such employee with the Company or any other party because of the nature
of the business conducted or to be conducted by the Company or to the
utilization by the employee of his best efforts with respect to such business.
The Company is not party to or bound by any currently effective employment
contract, deferred compensation agreement, bonus plan, incentive plan, profit
sharing plan, retirement agreement, or other employee compensation agreement.
2.25 Real Property Holding Corporation. The Company is not a real
property holding corporation within the meaning of Internal Revenue Code Section
897(c)(2) and any regulations promulgated thereunder.
2.26 Offering. Subject in part to the truth and accuracy of the
Investor's representations set forth in Section 3 of this Agreement, the offer,
sale and issuance of the shares as contemplated by this Agreement are exempt
from the registration requirements of the Act, and will have been registered or
qualified (or are exempt from registration and qualification) under the
registration, permit or qualification requirements of all applicable state
securities laws. Neither the Company nor any authorized agent acting on its
behalf has taken or will take any action hereafter that would cause the loss of
such exemption.
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2.27 Environmental and Safety Laws. To its knowledge, the Company
is not in violation of any applicable statute, law or regulation relating to the
environment or occupational health and safety, and to its knowledge, no material
expenditures are or will be required in order to comply with any such existing
statute, law or regulation.
3. Representations and Warranties of the Investor. The Investor hereby
represents and warrants that:
3.1 Authorization. This Agreement constitutes its valid and
legally binding obligation, enforceable in accordance with its terms. The
Investor represents that it has full power and authority to enter into this
Agreement.
3.2 Purchase Entirely for Own Account. This Agreement is made
with the Investor in reliance upon such Investor's representation to the
Company, which by such Investor's execution of this Agreement such Investor
hereby confirms, that the Shares will be acquired for investment for such
Investor's own account, not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof, and that such Investor has no
present intention of selling, granting any participation in, or otherwise
distributing the same. By executing this Agreement, the Investor further
represents that such Investor does not have any contract, undertaking, agreement
or arrangement with any person to sell, transfer or grant participation to such
person or to any third person, with respect to any of the Securities.
3.3 Disclosure of Information. The Investor believes it has
received all the information it considers necessary or appropriate for deciding
whether to purchase the Shares. The Investor further represents that it has had
an opportunity to ask questions and receive answers from the Company regarding
the terms and conditions of the offering of the Shares. The foregoing, however,
does not limit or modify the representations and warranties of the Company in
Section 2 of this Agreement or the right of the Investor to rely thereon.
3.4 Investment Experience. The Investor is an investor in
securities of companies in the development stage and acknowledges that it is
able to fend for itself, and bear the economic risk of its investment and has
such knowledge and experience in financial or business matters that it is
capable of evaluating the merits and risks of the investment in the Shares. If
other than an individual, Investor also represents it has not been organized for
the purpose of acquiring the Shares.
3.5 Accredited Investor. The Investor is an accredited
investor as defined in Rule 501(a) of Regulation D under the Act.
3.6 Restricted Securities. The Investor understands that the
Shares it is purchasing are characterized as "restricted securities" under the
federal securities laws inasmuch as they are being acquired from the Company in
a transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the Act only in certain limited circumstances. In this connection, The Investor
represents that it is familiar with Rule 144, as presently in effect, and
understands the resale limitations imposed thereby and by the Act.
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3.7 Further Limitations on Disposition. Without in any way
limiting the representations set forth above, The Investor further agrees not to
make any disposition of all or any portion of the Shares (or the Conversion
Stock) unless and until:
(a) There is then in effect a Registration Statement
under the Act covering such proposed disposition and such disposition is made in
accordance with such Registration Statement; or
(b) (i) Such Investor shall have notified the Company of
the proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, and (ii) if
requested by the Company, such Investor shall have furnished the Company with an
opinion of Investor's corporate counsel or counsel, reasonably satisfactory to
the Company, that such disposition will not require registration of such shares
under the Act.
(c) Notwithstanding the provisions of subsections
(a) and (b) above, no such registration statement or opinion of counsel shall be
necessary for a transfer by an Investor which is a partnership to a partner of
such partnership or a retired partner of such partnership who retires after the
date hereof, or to the estate of any such partner or retired partner or the
transfer by gift, will or intestate succession of any partner to such partner's
spouse or lineal descendants or ancestors or by an Investor which is a
corporation to an Affiliate (as defined under the Act), if the transferee agrees
in writing to be subject to the terms hereof to the same extent as if such
transferee were an original Investor hereunder.
3.8 Legends. It is understood that the certificates evidencing
the Shares (and the Conversion Stock) may bear one or all of the following
legends:
(a) "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT
TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE
144 OF SUCH ACT."
(b) Any legend required by the laws of the State of
California or any other applicable state, including any legend required by the
California Department of Corporations and Sections 417 and 418 of the California
Corporations Code.
4. California Commissioner of Corporations. THE SALE OF THE SECURITIES
THAT IS THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE
COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, AND THE ISSUANCE OF
SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION
THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL UNLESS THE SALE OF THE
SECURITIES IS EXEMPT FROM QUALIFICATION BY SECTION 25100,
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25102 OR 25105 OF THE CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO
THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED
UNLESS THE SALE IS SO EXEMPT.
5. Conditions of Investor's Obligations at Closing. The obligations of
the Investor under Section 1.1(b) of this Agreement are subject to the
fulfillment on or before the Closing of each of the following conditions, the
waiver of which shall not be effective against any Investor who does not consent
in writing thereto:
5.1 Representations and Warranties. The representations and
warranties of the Company contained in Section 2 shall be true on and as of the
Closing with the same effect as though such representations and warranties had
been made on and as of the date of such Closing.
5.2 Performance. The Company shall have performed and complied
with all agreements, obligations and conditions contained in this Agreement that
are required to be performed or complied with by it on or before the Closing.
5.3 Compliance Certificate. The President or CEO of the Company
shall deliver to the Investor at the Closing a certificate certifying that the
conditions specified in Sections 5.1 and 5.2 have been fulfilled and stating
that there shall have been no adverse change in the business, affairs,
operations, properties, assets or condition of the Company since September 30,
1997.
5.4 Officer's Certificate. The President, CEO or CFO of the
Company shall deliver to the Investor at the Closing a certificate certifying
that the Certificate of Incorporation and Bylaws of the Company are true and
correct.
5.5 Qualifications. The Commissioner of Corporations of the State
of California shall have issued a permit qualifying the offer and sale of the
Shares and the Conversion Stock to the Investor pursuant to this Agreement, or
such offer and sale shall be exempt from such qualification under the California
Corporate Securities Law of 1968, as amended. All authorizations, approvals, or
permits, if any, of any governmental authority or regulatory body of the United
States or of any state that are required in connection with the issuance and
sale of the Shares and the Conversion Stock pursuant to this Agreement shall be
duly obtained and effective as of the Closing. Wilson Sonsini Goodrich & Rosati,
counsel for the Company, will undertake the filing of any such authorizations,
approvals, or permits and will provided copies of any such authorizations,
approvals, or permits to the Investor.
5.6 Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated at the Closing and
all documents incident thereto shall be reasonably satisfactory in form and
substance to the Investor and counsel to any of the Investor, and they shall
have received all such counterpart original and certified or other copies of
such documents as they may reasonably request.
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5.7 Certificate of Designations. The Certificate of
Designations in the form attached hereto as Exhibit A shall have been approved
by the Company's Board of Directors and filed with the Delaware Secretary of
State.
5.8 Rights Agreement. The Company and the Investor shall
have entered into the Rights Agreement in the form attached hereto as Exhibit C.
5.9 Opinion of Company Counsel. The Investor shall have
received from Wilson Sonsini Goodrich & Rosati, counsel for the Company, an
opinion, dated as of the Closing, in the form attached hereto as Exhibit D.
5.10 Consents, Permits, and Waivers. The Company shall have
obtained any and all consents, permits and waivers necessary or appropriate for
consummation of the transactions contemplated by this Agreement and the Rights
Agreements (except for such as may be properly obtained subsequent to the
Closing).
6. Conditions of the Company's Obligations at Closing. The
obligations of the Company to the Investor under this Agreement are subject to
the fulfillment on or before the Closing of each of the following conditions,
the waiver of which shall not be effective unless consented to in writing by the
Company:
6.1 Representations and Warranties. The representations and
warranties of the Investor contained in Section 3 shall be true on and as of the
Closing with the same effect as though such representations and warranties had
been made on and as of the Closing.
6.2 Payment of Purchase Price. The Investor shall have
delivered the purchase price specified in Section 1.1(b).
6.3 California Qualification. The Commissioner of
Corporations of the State of California shall have issued a permit qualifying
the offer and sale to the Investor of the Shares and the Conversion Stock or
such offer and sale shall be exempt from such qualification under the California
Corporate Securities Law of 1968, as amended. All authorizations, approvals, or
permits, if any, of any governmental authority or regulatory body of the United
States or of any state that are required in connection with the issuance and
sale of the Shares and Conversion Stock pursuant to this Agreement shall be duly
obtained and effective as of the Closing.
6.4 Certificate of Designations. The Certificate of
Designations attached hereto as Exhibit A shall have been accepted for filing by
the Delaware Secretary of State.
6.5 Rights Agreement. The Company and the Investor shall
have entered into the Rights Agreement in the form attached hereto as Exhibit C.
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6.6 Pfizer, Inc. Agreement. The Company and Pfizer, Inc.
shall have entered into the Collaborative Research Agreement.
7. Covenants of the Company.
7.1 Delivery of Financial Statements. The Company shall
deliver to the Investor:
(a) as soon as practicable, but in any event within
one hundred (100) days after the end of each fiscal year of the Company
commencing with the fiscal year ending December 31, 1997, a balance sheet, and
statements of operations and cash flow for such fiscal year. Such year-end
financial reports to be in reasonable detail and shown compared to the prior
fiscal year, prepared in accordance with generally accepted accounting
principles ("GAAP") consistently applied and consistent with the requirements of
Regulation S-X of the Securities and Exchange Act of 1934, as amended (the
"Exchange Act"), and audited and certified by independent public accountants of
nationally recognized standing selected by the Company;
(b) within fifty (50) days of the end of each
quarter, and until a public offering of Common Stock of the Company, a
management letter, describing the results of operations and liquidity and
capital resources, and an unaudited statement of operations and balance sheet
and cash flow for and as of the end of such quarter, in reasonable detail and
prepared in accordance with GAAP consistently applied, subject to year end audit
adjustments and the absence of footnotes;
(c) with respect to the financial statements called
for in subsection (b) of this Section 7.1, an instrument executed by the Chief
Financial Officer, President or Chairman of the Company and certifying that such
financials were prepared in accordance with GAAP consistently applied with prior
practice for earlier periods and fairly present the financial condition of the
Company and its results of operation for the period specified, subject to
year-end audit adjustments and the absence of footnotes;
7.2 Inspection. The Company shall permit the Investor at such
Investor's expense to visit and inspect the Company's properties, to examine its
books of account and records and to discuss the Company's affairs, finances and
accounts with its officers, all at such reasonable times as may be requested in
writing by the Investor; provided, however, that the Company shall not be
obligated pursuant to this Section 7.2 to provide access to any information
which it reasonably considers to be a trade secret, proprietary information or
other confidential information.
7.3 Termination of Covenants. The covenants set forth in Sections
7.1 and 7.2 shall terminate and be of no further force or effect when the sale
of securities pursuant to a registration statement filed by the Company under
the Act in connection with the firm commitment underwritten offering of its
securities to the general public is consummated at a per share price not less
than $9.00 (as adjusted for any stock dividends, combinations, splits,
recapitalizations and the like with respect to such shares) with aggregate
proceeds to the Company of not less than $15.0 million (after deduction of
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underwriters commissions and expenses) or when the Company first becomes subject
to the periodic reporting requirements of Section 12(g) or 15(d) of the Exchange
Act, whichever event shall first occur.
8. Miscellaneous.
8.1 Survival of Warranties. The warranties, representations and
covenants of the Company and Investors contained in or made pursuant to this
Agreement shall survive the execution and delivery of this Agreement and the
Closing and shall in no way be affected by any investigation of the subject
matter thereof made by or on behalf of the Investor or the Company.
8.2 Successors and Assigns. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
8.3 Governing Law. This Agreement shall be governed by and
construed under the laws of the State of California as applied to agreements
among California residents entered into and to be performed entirely within
California.
8.4 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.5 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
8.6 Notices. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or upon
deposit with the United States Post Office, by registered or certified mail,
postage prepaid and addressed to the party to be notified at the address
indicated for such party on the signature page hereto or in the case of the
Company on the first page of this Agreement, or at such other address as such
party may designate by ten (10) days' advance written notice to the other
parties.
8.7 Finder's Fee. Each party represents that it neither is nor
will be obligated for any finders' fee or commission in connection with this
transaction. The Investor agrees to indemnify and to hold harmless the Company
from any liability for any commission or compensation in the nature of a
finders' fee (and the costs and expenses of defending against such liability or
asserted liability) for which the Investor or any of its officers, partners,
employees, or representatives is responsible. The Company agrees to indemnify
and hold harmless the Investor from any liability for any commission or
compensation in the nature of a finders' fee (and the costs and expenses of
defending against such liability or asserted liability) for which the Company or
any of its officers, employees or representatives is responsible.
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8.8 Expenses. The Company shall pay all costs and expenses that
it incurs with respect to the negotiation, execution, delivery and performance
of this Agreement and the Rights Agreement. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the Certificate
of Designations or the Rights Agreement, the prevailing party shall be entitled
to reasonable attorney's fees, costs and necessary disbursements in addition to
any other relief to which such party may be entitled.
8.9 Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the holders of
at least a majority of the Securities. Any amendment or waiver effected in
accordance with this Section shall be binding upon each holder of any securities
purchased under this Agreement at the time outstanding (including securities
into which such securities are convertible), each future holder of all such
securities, and the Company; provided, however, that no condition set forth in
Section 5 hereof may be waived with respect to any Investor who does not consent
thereto.
8.10 Severability. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
8.11 Aggregation of Stock. All Shares held or acquired by
affiliated entities or persons shall be aggregated together for the purpose of
determining the availability of any rights under this Agreement.
8.12 Entire Agreement. This Agreement and the documents referred
to herein constitute the entire agreement among the parties and no party shall
be liable or bound to any other party in any manner by any warranties,
representations or covenants except as specifically set forth herein or therein.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
ABGENIX, INC.
By:
-----------------------------------------
Kurt Leutzinger, Chief Financial Officer
PFIZER, INC.
By:
-----------------------------------------
Title:
--------------------------------------
ABGENIX, INC. SERIES C PREFERRED STOCK
PURCHASE AGREEMENT SIGNATURE PAGE.
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EXHIBIT 10.28
AMENDED AND RESTATED
STOCKHOLDER RIGHTS AGREEMENT
This Amended and Restated Stockholder Rights Agreement (the "Agreement")
is made effective as of January 12, 1998 by and among Abgenix, Inc. (the
"Company"), and the holders of Preferred Stock listed on Exhibit A attached
hereto.
RECITALS
WHEREAS, the Company and certain holders of the Company's Series A
Preferred Stock and Series B Preferred Stock entered into a Stockholders Rights
Agreement, dated December 23, 1997 (the "Original Agreement");
WHEREAS, the Company will sell and issue Series C Preferred Stock to
Pfizer, Inc. pursuant to the Series C Preferred Stock Purchase Agreement, of
even date herewith; and
WHEREAS, the Company and the other parties to the Original Agreement
desire to amend and restate the Original Agreement to include the Series C
Preferred Stock as Registrable Securities.
Now, therefore, the parties agree as follows:
1. Registration Rights.
1.1 Definitions.
(a) The terms "register", "registered," and "registration"
refer to a registration effected by preparing and filing a registration
statement or similar document in compliance with the Act, and the declaration or
ordering of effectiveness of such registration statement or document;
(b) The term "Registrable Securities" means (1) the Common
Stock issuable or issued upon conversion of the Series A Preferred Stock, Series
B Preferred Stock and Series C Preferred Stock and (2) any Common Stock of the
Company issued as (or issuable upon the conversion or exercise of any warrant,
right or other security which is issued as) a dividend or other distribution
with respect to, or in exchange for or in replacement of, such Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock or Common
Stock, excluding in all cases, however, (i) any Registrable Securities sold by a
holder of Registrable Securities in a transaction in which such holder's rights
under this Section 1 are not assigned, or (ii) any Registrable Securities sold
to or through a broker or dealer or underwriter in a public distribution or a
public securities transaction.
(c) The number of shares of "Registrable Securities then
outstanding" shall be determined by the number of shares of Common Stock
outstanding and the number of shares of Common Stock issuable pursuant to then
exercisable or convertible securities which are Registrable Securities.
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(d) The term "Holder" means any person who is a party to
this agreement owning or having the right to acquire Registrable Securities or
any assignee thereof in accordance with Section 1.13 hereof; and
(e) The term "Form S-3" means such form under the Act as
in effect on the date hereof or any registration form under the Act subsequently
adopted by the Securities and Exchange Commission (the "SEC") which permits
inclusion or incorporation of substantial information by reference to other
documents filed by the Company with the SEC.
(f) The term "Act" shall mean the Securities Act of 1933,
as amended.
1.2 Request for Registration.
(a) If the Company shall receive at any time, a written
request from either (i) the Holders of at least 50% of the Registrable
Securities then outstanding (including securities con vertible into Registrable
Securities) or (ii) the Holders of at least 50% of the outstanding shares of the
Series B Preferred Stock (or Common Stock issued or issuable upon conversion of
the Series B Preferred Stock), that the Company file a registration statement
under the Act covering the registration of Registrable Securities, with an
anticipated aggregate offering price, net of underwriting discounts and
commissions, which would exceed $5,000,000, then the Company shall, within ten
(10) days of the receipt thereof, give written notice of such request to all
Holders and shall, subject to the limitations of Section 1.2(b), use its
diligent best efforts to effect as soon as practicable, and in any event within
90 days of the receipt of such request, the registration under the Act of all
Registrable Securities which the Holders request to be registered within twenty
(20) days of the mailing of such written notice by the Company; provided,
however, that the Company shall not be obligated to take any action to effect
any such registration, qualification or compliance pursuant to this Section
1.2(a):
(i) During the period starting with the date
sixty (60) days prior to the Company's estimated date of filing of, and ending
on the date 180 days immediately following the effec tive date of, any
registration statement pertaining to securities of the Company (other than a
registration of securities in a Rule 145 transaction or with respect to an
employee benefit plan), provided that the Company is actively employing in good
faith all reasonable efforts to cause such registration statement to become
effective;
(ii) After the Company has effected two such
registrations pursuant to this Section 1.2(a), and such registrations have been
declared or ordered effective;
(iii) If the Company shall furnish to such Holders
a certificate signed by the President of the Company stating that in the good
faith judgment of the Board of Directors it would be seriously detrimental to
the Company or its stockholders for a registration statement to be filed at such
time, then the Company's obligation to use its best efforts to register, qualify
or comply under this Section 1.2(a) shall be deferred for a period not to exceed
90 days from the date of receipt of written
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<PAGE> 3
request from the Holders; provided, however, that the Company may not utilize
the right under this Section 1.2(a) more than once in any twelve-month period.
(b) If the Holders initiating the registration request
hereunder (the "Initiating Holders") intend to distribute the Registrable
Securities covered by their request by means of an under writing, they shall so
advise the Company as a part of their request made pursuant to this Section 1.2
and the Company shall include such information in the written notice referred to
in Section 1.2(a). In such event, the right of any Holder to include such
Holder's Registrable Securities in such registration shall be conditioned upon
such Holder's participation in such underwriting and the inclusion of such
Holder's Registrable Securities in the underwriting (unless otherwise mutually
agreed by a majority in interest of the Initiating Holders and such Holder) to
the extent provided herein. All Holders proposing to distribute their securities
through such underwriting shall (together with the Company as provided in
Section 1.4(e)) enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting by a majority in
interest of the Initiating Holders. Notwith standing any other provision of this
Section 1.2, if the underwriter advises the Initiating Holders in writ ing that
marketing factors require a limitation of the number of shares to be
underwritten, then the Initiating Holders shall so advise all Holders of
Registrable Securities which would otherwise be under written pursuant hereto,
and the number of shares of Registrable Securities that may be included in the
underwriting shall be allocated among all Holders thereof, including the
Initiating Holders, in proportion (as nearly as practicable) to the amount of
Registrable Securities of the Company owned by each Holder.
1.3 Company Registration. If (but without any obligation to do
so) the Company proposes to register (including for this purpose a registration
effected by the Company for stockholders other than the Holders) any of its
stock or other securities under the Act in connection with the public offering
of such securities solely for cash (other than a registration relating solely to
the sale of securities to participants in a Company stock benefit plan, or a
registration on any form which does not include substantially the same
information as would be required to be included in a registration statement
cover ing the sale of the Registrable Securities), the Company shall, at such
time, promptly give each Holder written notice of such registration. Upon the
written request of each Holder given within twenty (20) days after mailing of
written notice by the Company, the Company shall, subject to the provisions of
Section 1.8, cause to be registered under the Act all of the Registrable
Securities that each such Holder has requested to be registered.
1.4 Obligations of the Company. Whenever required under this
Section 1 to effect the registration of any Registrable Securities, the Company
shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its best efforts to cause
such registration statement to become effective, and, upon the request of the
Holders of a majority of the Registrable Securities registered thereunder, keep
such registration statement effective for up to ninety (90) days.
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(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Act with respect to the disposition of all securities covered
by such registration statement.
(c) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus and any amendment of or
supplement thereto, in conformity with the require ments of the Act, and such
other documents as they may reasonably request in order to facilitate the
disposition of Registrable Securities owned by them.
(d) Cause such Registrable Securities to be registered
pursuant to these provisions to be listed on each securities exchange on which
similar securities issued by the Company are then listed.
(e) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be rea sonably requested by the
Holders, provided that the Company shall not be required in connection there
with or as a condition thereto to qualify to do business or to file a general
consent to service of process in any such states or jurisdictions.
(f) In the event of any underwritten public offering,
enter into and perform its obligations under an underwriting agreement, in usual
and customary form, with the managing under writer(s) of such offering. Each
Holder participating in such underwriting shall also enter into and per form its
obligations under such an agreement provided that such underwriting agreement
shall not pro vide for indemnification or contribution obligations on the part
of the holders greater than the obligations set forth in Section 1.10(b).
(g) Notify each Holder of Registrable Securities covered
by such registration statement at any time when a prospectus relating thereto is
required to be delivered under the 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 or incomplete in the light of the circumstances then
existing.
(h) Furnish, at the request of any Holder requesting
registration of Registrable Securities pursuant to this Section 1, on the date
that such Registrable Securities are delivered to the underwriters for sale in
connection with a registration pursuant to this Section 1, 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 an opinion, dated 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, addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities.
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1.5 Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 1 with
respect to the Registrable Securities of any selling Holder that such holder
shall furnish to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of such securities
as shall be required to effect the registration of such Holder's Registrable
Securities.
1.6 Expenses of Demand Registration. All expenses (other than
underwriting discounts and commissions) incurred in connection with
registrations, filings or qualifications pursuant to Section 1.2, including
(without limitation) all registration, filing and qualification fees, printers'
and accounting fees, fees and disbursements of counsel for the Company, and the
reasonable fees and dis bursements (not to exceed $15,000) of one counsel for
the selling Holders shall be borne by the Company; provided, however, that the
Company shall not be required to pay for any expenses of any registration
proceeding begun pursuant to Section 1.2 if the registration request is
subsequently withdrawn at the request of the Holders of a majority of the
Registrable Securities to be registered (in which case all Participating Holders
shall bear such expenses), unless the Holders of a majority of the Registrable
Securities agree to forfeit their right to a demand registration pursuant to
Section 1.2; pro vided further, however, that if at the time of such withdrawal,
the Holders have learned of a material adverse change in the condition,
business, or prospects of the Company from that known to the Holders at the time
of their request, then the Holders shall not be required to pay any of such
expenses and shall retain their rights pursuant to Section 1.2.
1.7 Expenses of Company Registration. The Company shall bear and
pay all expenses incurred in connection with any registration, filing or
qualification of Registrable Securities with respect to the registrations
pursuant to Section 1.3 for each Holder (which right may be assigned as provided
in Section 1.13), including (without limitation) all registration, filing, and
qualification fees, printers and accounting fees relating or apportionable
thereto and the fees and disbursements (not to exceed $15,000) of one counsel
for the selling Holders selected by them, but excluding underwriting dis counts
and commissions relating to Registrable Securities.
1.8 Underwriting Requirements. In connection with any offering
involving an underwriting of shares being issued by the Company, the Company
shall not be required under Section 1.3 to include any of the Holders'
securities in such underwriting unless they accept the terms of the underwriting
as agreed upon between the Company and the underwriters selected by it, and then
only in such quantity as will not, in the opinion of the underwriters,
jeopardize the success of the offer ing by the Company; provided that such
underwriting agreement shall not provide for indemnification or contribution
obligations on the part of the Holders greater than the obligations set forth in
Section 1.10(b). If the total amount of securities, including Registrable
Securities, requested by stock holders to be included in such offering exceeds
the amount of securities to be sold other than by the Company that the
underwriters reasonably believe compatible with the success of the offering,
then the Company shall be required to include in the offering only that number
of such securities, including Registrable Securities, which the underwriters
believe will not jeopardize the success of the offering (the securities so
included to be apportioned pro rata among the selling stockholders according to
the total amount of securities entitled to be included therein owned by each
selling stockholder or in such other
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proportions as shall mutually be agreed to by such selling stockholders) but in
no event shall the amount of securities of the selling Holders included in the
offering be reduced below twenty-five percent (25%) of the total amount of
securities included in such offering, unless such offering is the initial public
offer ing of the Company's securities in which case the selling stockholders may
be excluded entirely if the underwriters make the determination described above
and no other stockholder's securities are included. For purposes of
apportionment, any selling stockholder which is a Holder of Registrable
Securities and which is a partnership or corporation, the partners, retired
partners and stockholders of such Holder, or the estates and family members of
any such partners and retired partners and any trusts for the benefit of any of
the foregoing persons shall be deemed to be a single "selling stockholder", and
any pro rata reduction with respect to such "selling stockholder" shall be based
upon the aggregate amount of shares carrying registration rights owned by all
entities and individuals included in such "selling stockholder", as defined in
this sentence.
1.9 Delay of Registration. No Holder shall have any right to
obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this Section 1.
1.10 Indemnification. In the event any Registrable Securities are
included in a registration statement under this Section 1:
(a) To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, any underwriter (as defined in the Act)
for such Holder and each person, if any, who controls such Holder or underwriter
within the meaning of the Act or the Securities Exchange Act of 1934, amended
(the "1934 Act"), against any losses, claims, damages, or liabilities (joint or
several) to which they may become subject under the Act, the 1934 Act or other
federal or state law, insofar as such losses, claims, damages, or liabilities
(or actions in respect thereof) arise out of or are based upon any of the
following statements, omissions or violations (collectively a "Violation"): (i)
any untrue state ment or alleged untrue statement of a material fact contained
in such registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto, (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not misleading, or
(iii) any violation or alleged violation by the Company of the Act, the 1934
Act, any state securities law or any rule or regulation promulgated under the
Act, the 1934 Act or any state securities law; and the Company will pay to each
such Holder, underwriter or controlling person, as incurred, any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability, or action; provided, however,
that the indemnity agreement contained in this Section 1.10(a) shall not apply
to amounts paid in settlement of any such loss, claim, damage, liability, or
action if such settlement is effected without the consent of the Company (which
consent shall not be unreasonably withheld), nor shall the Company be liable in
any such case for any such loss, claim, damage, liability, or action to the
extent that it arises out of or is based upon a Violation which occurs in
reliance upon and in conformity with written infor mation furnished expressly
for use in connection with such registration by any such Holder, underwriter or
controlling person.
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(b) To the extent permitted by law, each selling Holder
will indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the registration statement, each person, if any, who
controls the Company within the meaning of the Act, any under writer, any other
Holder selling securities in such registration statement and any controlling
person of any such underwriter or other Holder, against any losses, claims,
damages, or liabilities (joint or several) to which any of the foregoing persons
may become subject, under the Act, the 1934 Act or other federal or state law,
insofar as such losses, claims, damages, or liabilities (or actions in respect
thereto) arise out of or are based upon any Violation, in each case to the
extent (and only to the extent) that such Violation occurs in reliance upon and
in conformity with written information furnished by such Holder expressly for
use in connection with such registration; and each such Holder will pay, as
incurred, any legal or other expenses reasonably incurred by any person intended
to be indemnified pursuant to this Section 1.10(b), in connection with
investigating or defending any such loss, claim, damage, liability, or action;
provided, however, that the indemnity agreement contained in this Section
1.10(b) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the consent
of the Holder, which consent shall not be unreasonably withheld; provided, that,
in no event shall any indemnity under this Section 1.10(b) exceed the gross
proceeds from the offering received by such Holder.
(c) Promptly after receipt by an indemnified party under
this Section 1.10 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 1.10, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representa tion of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party repre sented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if prejudicial to its ability to defend such
action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 1.10, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section
1.10.
(d) The obligations of the Company and Holders under this
Section 1.10 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 1, and otherwise.
1.11 Reports Under Securities Exchange Act of 1934. With a view
to making available to the Holders the benefits of Rule 144 promulgated under
the Act and any other rule or regulation of the SEC that may at any time permit
a Holder to sell securities of the Company to the public without registration or
pursuant to a registration on Form S-3, the Company agrees to:
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(a) make and keep public information available, as those
terms are understood and defined in SEC Rule 144, at all times after ninety (90)
days after the effective date of the first registration statement filed by the
Company for the offering of its securities to the general public;
(b) take such action, including the voluntary registration
of its Common Stock under Section 12 of the 1934 Act, as is necessary to enable
the Holders to utilize Form S-3 for the sale of their Registrable Securities,
such action to be taken as soon as practicable after the end of the fiscal year
in which the first registration statement filed by the Company for the offering
of its securities to the general public is declared effective;
(c) file with the SEC in a timely manner all reports and
other documents required of the Company under the Act and the 1934 Act; and
(d) furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company that it has complied with the reporting requirements of SEC Rule 144 (at
any time after ninety (90) days after the effective date of the first
registration statement filed by the Company), the Act and the 1934 Act (at any
time after it has become subject to such reporting requirements), or that it
qualifies as a registrant whose securities may be resold pursuant to Form S-3
(at any time after it so qualifies), (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company, and (iii) such other information as may be reasonably requested in
availing any Holder of any rule or regula tion of the SEC which permits the
selling of any such securities without registration or pursuant to such form.
1.12 Form S-3 Registration. In case the Company shall receive
from any Holder(s) of the Company's Registrable Securities, a written request or
requests that the Company effect a registration on Form S-3 and any related
qualification or compliance with respect to all or a part of the Registrable
Securities owned by such Holder(s), the Company will:
(a) promptly give written notice of the proposed
registration, and any related qualification or compliance, to all other Holders;
and
(b) as soon as practicable, effect such registration and
all such qualifications and compliances as may be so requested and as would
permit or facilitate the sale and distribution of all or such portion of such
Holder's or Holders' Registrable Securities as are specified in such request,
together with all or such portion of the Registrable Securities of any other
Holder(s) joining in such request as are specified in a written request given
within 15 days after receipt of such written notice from the Company; provided,
however, that the Company shall not be obligated to effect any such registra
tion, qualification or compliance, pursuant to this Section 1.12: (1) if Form
S-3 is not available for such offering by the Holders; (2) if the Holders,
together with the holders of any other securities of the Company entitled to
inclusion in such registration, propose to sell Registrable Securities and such
other securities (if any) at an aggregate price to the public of less than
$500,000; (3) if the Company shall fur nish to the Holders a certificate signed
by the President of the Company stating that in the good faith
-8-
<PAGE> 9
judgment of the Board of Directors of the Company, it would be seriously
detrimental to the Company and its stockholders for such Form S-3 Registration
to be effected at such time, in which event the Company shall have the right to
defer the filing of the Form S-3 registration statement for a period of not more
than 90 days after receipt of the request of the Holder or Holders under this
Section 1.12; pro vided, however, that the Company shall not utilize the right
under this Section 1.12(b) more than once in any twelve (12) month period; (4)
if the Company has already effected two registrations on Form S-3 for the
Holders pursuant to this Section 1.12 in any twelve (12) month period; or (5) in
any particular jurisdiction in which the Company would be required to qualify to
do business or to execute a general consent to service of process in effecting
such registration, qualification or compliance.
(c) If the Holders requesting registration pursuant to
this Section 1.12 intend to distribute the Registrable Securities covered by
their request by means of an underwriting, they shall so advise the Company as
part of their request made pursuant to this Section 1.12 and the Company shall
include such information in the written notice referred to in Section 1.12(a).
In such event, the right of any Holder to include his Registrable Securities in
such registration shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting (unless otherwise mutually agreed by a majority in interest of the
Initiating Holders and such Holder) to the extent provided herein. All Holders
proposing to distribute their securities through such underwriting shall
(together with the Company as provided in Section 1.4(e)) enter into an under
writing agreement in customary form with the underwriter or underwriters
selected for such underwriting by a majority in interest of the Initiating
Holders. Notwithstanding any other provision of this Section 1.12, if the
underwriter advises the Initiating Holders in writing that marketing factors
require a limitation of the number of shares to be underwritten, then the
Initiating Holders shall so advise all Holders of Registrable Securities which
would otherwise be underwritten pursuant hereto, and the num ber of shares of
Registrable Securities that may be included in the underwriting shall be
allocated among all Holders thereof, including the Initiating Holders, in
proportion (as nearly as practicable) to the amount of Registrable Securities of
the Company owned by each Holder.
(d) Subject to the foregoing, the Company shall file a
registration statement covering the Registrable Securities and other securities
so requested to be registered as soon as practi cable after receipt of the
request or requests of the Holders. The Company shall pay all expenses incurred
in connection with registrations requested pursuant to Section 1.12, including
(without limita tion) all registration, filing, qualification, printer's and
accounting fees and the fees and disbursements (not to exceed $15,000) of
counsel for the selling Holder or Holders and counsel for the Company, but
excluding any underwriters' discounts or commissions associated with Registrable
Securities. Registra tions effected pursuant to this Section 1.12 shall not be
counted as demands for registration or registra tions effected pursuant to
Sections 1.2 or 1.3, respectively.
1.13 Assignment of Registration Rights. The rights to cause the
Company to register Registrable Securities pursuant to this Section 1 may be
assigned by a Holder to a transferee or assignee who acquires at least 250,000
shares of Registrable Securities, provided the Company is, within a rea sonable
time after such transfer, furnished with written notice of the name and address
of such transferee or assignee and the securities with respect to which such
registration rights are being assigned; and pro-
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<PAGE> 10
vided, further, that such assignment shall be effective only if immediately
following such transfer the further disposition of such securities by the
transferee or assignee is restricted under the Act. Notwith standing the above,
such rights may be assigned by a Holder to (i) a limited partner, general
partner or other affiliate of a Holder or (ii) any family member of a Holder or
any trust for the benefit of a Holder or a family member of a Holder, regardless
of the number of shares acquired by such Transferee.
1.14 Limitations on Subsequent Registration Rights. From and
after the date of this Agreement, the Company shall not, without the prior
written consent of the Holders of at least sixty-six and two-thirds percent (66
2/3%) of the outstanding Registrable Securities, enter into any agreement with
any holder or prospective holder of any securities of the Company which would
allow such holder or prospective holder to include such securities in any
registration filed under Section 1.3 hereof, unless under the terms of such
agreement, such holder or prospective holder may include such securities in any
such registration only to the extent that the inclusion of such holder's
securities will not reduce the amount of the Registrable Securities of the
Holders which is included.
1.15 "Market Stand-Off" Agreement. Each holder of securities
which are or at one time were Registrable Securities (or which are or were
convertible into Registrable Securities) hereby agrees that, during a period not
to exceed 180 days, following the effective date of a registration state ment of
the Company filed under the Act, it shall not, to the extent agreed upon by the
Company and such underwriter, sell or otherwise transfer or dispose of (other
than to a transferee who agrees to be similarly bound) any Common Stock of the
Company held by it at any time during such period except Common Stock included
in such registration; provided, however, that:
(a) such agreement shall be applicable only to the first
such registration statement of the Company which covers Common Stock (or other
securities) to be sold on its behalf to the public in an underwritten offering;
and
(b) all officers, directors and other 5% stockholders of
the Company enter into similar agreements.
In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the Registrable Securities of each
Investor (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such period.
1.16 Termination of Registration Rights. No stockholder shall be
entitled to exercise any right provided for in this Section 1 after five (5)
years following the consummation of the sale of Common Stock pursuant to a
registration statement filed by the Company under the Act in connection with the
initial firm commitment underwritten offering of its securities to the general
public.
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<PAGE> 11
2. Right of First Offer.
2.1 Grant of Right. Subject to the terms and conditions specified
in this Section 2, the Company hereby grants to each Major Investor (as
hereinafter defined) a right of first offer with respect to future sales by the
Company of its Future Shares (as hereinafter defined). For purposes of this
Section 2, a Major Investor shall mean any Holder holding an aggregate of at
least 250,000 shares of Registrable Securities on the date of any future sale of
Future Shares.
2.2 Future Shares. "Future Shares" shall mean shares of any
capital stock of the Company, whether now authorized or not, and any rights,
options or warrants to purchase such capital stock, and securities of any type
that are, or may become, convertible into such capital stock; provided however,
that "Future Shares" do not include (i) shares of Series A, Series B or Series C
Preferred Stock (ii) shares of Series A Preferred Stock issued or issuable upon
the exercise of a warrant issued to Cell Genesys, Inc. on January 23, 1997,
(iii) shares of Series A Preferred Stock issued or issuable upon the exercise of
a warrant issued to Cell Genesys, Inc. on March 27, 1997, (iv) shares of Series
A Preferred issued or issuable upon the conversion of a Convertible Promissory
Note issued to Cell Genesys, dated July 15, 1996, (v) shares of Series A
Preferred Stock issued or issuable upon the conversion of convertible promissory
notes issued to Cell Genesys, pursuant to the Line of Credit from Cell Genesys,
effective as of November 1, 1997, (vi) shares of Common Stock issued or issuable
upon the conversion of the Series A, Series B or Series C Preferred Stock, (vii)
securities offered pursuant to a registration statement filed under the Act,
(viii) all shares of Common Stock hereafter issued or issuable to officers,
directors, employees or consultants of the Company pursuant to any employee or
consultant stock offer ing, plan or arrangement approved by the Board of
Directors of the Company, (ix) securities issued pur suant to agreements to
license technology approved by the Board of Directors of the Company, (x)
securities issued pursuant to the acquisition of another business by the Company
by merger, purchase of substantially all assets or other reorganization whereby
the Company or its stockholders own more than 50% of the surviving or successor
corporation, (xi) securities issued pursuant to any rights or agree ments,
provided that the right of first refusal established by this Section 2 applied
with respect to the ini tial offer of such rights or agreements, and (xii)
securities issued in connection with any stock split, stock dividend or
recapitalization of the Company.
2.3 Notice. In the event the Company proposes to offer any of its
Future Shares, the Company shall first make an offering of such Future Shares to
each Major Investor in accordance with the following provisions:
(a) The Company shall deliver a notice by certified mail
(the "Notice") to the Major Investors stating (i) its bona fide intention to
offer such Future Shares, (ii) the number of such Future Shares to be offered,
(iii) the price, if any, for which it proposes to offer such Future Shares, and
(iv) a statement as to the number of days from receipt of such Notice within
which the Investor must respond to such Notice.
(b) Within 20 calendar days after receipt of the Notice,
the Major Investor may elect to purchase or obtain, at the price and on the
terms specified in the Notice, up to that portion
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<PAGE> 12
of such Future Shares which equals the proportion that the number of shares of
Common Stock issued and held, or issuable upon conversion of the Preferred Stock
then held, by such Major Investor bears to the total number of shares of Common
Stock issued and outstanding, including shares issuable upon con version of
convertible securities issued and outstanding. The Company shall promptly, in
writing, inform each Major Investor which purchases all the Future Shares
available to it (the "Fully-Exercising Investor") of any other Major Investor's
failure to do likewise. During the ten-day period commencing after receipt of
such information, each Fully-Exercising Investor shall be entitled to obtain
that portion of the Future Shares offered to the Major Investors which was not
subscribed for, which is equal to the proportion that the number of shares of
Common Stock issued and held, or issuable upon conversion of the Shares then
held, by such Fully-Exercising Investor bears to the total number of shares of
Common Stock issued and outstanding, including shares issuable upon conversion
of convertible securities issued and outstanding then held, by all
Fully-Exercising Investors who wish to purchase some of the unsubscribed shares.
2.4 Sale after Notice. If all such Future Shares referred to in
the Notice are not elected to be obtained as provided in Section 2.3 hereof, the
Company may, during the 90-day period following the expiration of the period
provided in Section 2.3 hereof, offer the remaining unsubscribed Future Shares
to any person or persons at a price not less than, and upon terms no more
favorable to the offeree than those specified in the Notice. If the Company does
not enter into an agreement for the sale of the Future Shares within such
period, or if such agreement is not consummated within 90 days of the execution
thereof, the right provided hereunder shall be deemed to be revived and such
Future Shares shall not be offered unless first reoffered to the Major Investors
in accordance herewith.
2.5 Expiration. The right of first offer to acquire future shares
granted under this Section 2 shall expire for each Major Investor on the date
which such Major Investor no longer holds a minimum of 250,000 shares of
Registrable Securities of the Company.
2.6 Assignment. The right of first offer granted under this
Section 2 is assignable by the Major Investors to any transferee of a minimum of
250,000 shares of Registrable Securities.
2.7 Termination of Rights. No stockholder shall be entitled to
exercise any right provided for in this Section 2 (i) upon the consummation of
the sale of securities pursuant to a registra tion statement filed by the
Company under the Act in connection with the initial firm commitment
underwritten offering of its securities to the general public or (ii) when the
Company first becomes sub ject to the periodic reporting requirements of Section
12(g) or 15(d) of the Securities Exchange Act of 1934, whichever event shall
first occur.
3. Prior Registration Rights and Right of First Refusal. Each
undersigned Holder who is entitled to registration rights and a right of first
refusal pursuant to the Company's Original Agreement hereby agrees on behalf of
all holders of such registration rights and right of first refusal that they
shall be amended and superceded in their entirety and the registration rights
under Section 1 of this Agreement and the right of first offer under Section 2
of this Agreement shall be substituted.
-12-
<PAGE> 13
4. Legend.
(a) Each certificate representing the Registrable Securities
owned by a Holder shall be endorsed with the following legend (the "Legend"):
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO THE TERMS OF A STOCKHOLDERS RIGHTS
AGREEMENT, A COPY OF WHICH MAY BE OBTAINED UPON
WRITTEN REQUEST TO THE COMPANY."
(b) The Company agrees that, during the term of this Agreement,
it will not remove, and will not permit to be removed (upon registration of
transfer, reissuance of otherwise), the Legend from any such certificate and
will place or cause to be placed the Legend on any new certificate issued to
represent Investor Shares theretofore represented by a certificate carrying the
Legend.
5. Miscellaneous Provisions.
5.1 Waivers and Amendments. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the holders of
at least a majority of the shares of Registrable Securities; provided, however,
that, so long as more than 250,000 shares of Series B Preferred Stock are
outstanding, this Agreement may be amended or waived only with the written
consent of the Company and the holders of at least a majority of the Series B
Preferred Stock then outstanding (or the Common Stock issued or issuable upon
conversion of the Series B Preferred Stock). Any amendment or waiver effected in
accordance with this Section 4.1 shall be binding upon each person or entity
which are granted certain rights under this Agreement and the Company.
5.2 Notices. All notices and other communications required or
permitted hereunder shall be in writing and, except as otherwise noted herein,
shall be deemed effectively given upon per sonal delivery, delivery by
nationally recognized courier or upon deposit with the United States Post
Office, (by first class mail, postage prepaid) addressed: (a) if to the Company,
at 7601 Dumbarton Circle, Fremont, California 94555 (or at such other address as
the Company shall have furnished to the Holders in writing) attention of
President and (b) if to a Holder, at the latest address of such person shown on
the Company's records.
5.3 Descriptive Headings. The descriptive headings herein have
been inserted for convenience only and shall not be deemed to limit or otherwise
affect the construction of any provisions hereof.
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<PAGE> 14
5.4 Governing Law. This Agreement shall be governed by and
interpreted under the laws of the State of California as applied to agreements
among California residents, made and to be performed entirely within the State
of California.
5.5 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
and all of which shall constitute the same instrument, but only one of which
need be produced.
5.6 Expenses. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorney's fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
5.7 Successors and Assigns. Except as otherwise expressly
provided in this Agreement, this Agreement shall benefit and bind the
successors, assigns, heirs, executors and administrators of the parties to this
Agreement.
5.8 Entire Agreement. This Agreement constitutes the full and
entire understanding and agreement between the parties with regard to the
subject matter of this Agreement.
5.9 Separability; Severability. Unless expressly provided in this
Agreement, the rights of each Investor under this Agreement are several rights,
not rights jointly held with any other Investors. Any invalidity, illegality or
limitation on the enforceability of this Agreement with respect to any Investor
shall not affect the validity, legality or enforceability of this Agreement with
respect to the other Investors. If any provision of this Agreement is judicially
determined to be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not be affected or impaired.
5.10 Stock Splits. All references to numbers of shares in this
Agreement shall be appropriately adjusted to reflect any stock dividend, split,
combination or other recapitalization of shares by the Company occurring after
the date of this Agreement.
[Remainder of page intentionally left blank]
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<PAGE> 15
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first set forth above.
ABGENIX, INC.
/s/ Kurt Leutzinger
- ----------------------------------------
Kurt Leutzinger, Chief Financial Officer
ABGENIX, INC. STOCKHOLDERS RIGHTS
AGREEMENT SIGNATURE PAGE
<PAGE> 16
Pfizer Inc.
By: /s/ [unreadable]
--------------------------------
Title: Vice President
-----------------------------
ABGENIX, INC. STOCKHOLDERS RIGHTS
AGREEMENT SIGNATURE PAGE
<PAGE> 17
EXHIBIT A
<TABLE>
<CAPTION>
SHARES OF
STOCKHOLDER PREFERRED STOCK
============================================================= =================
<S> <C>
SERIES A PREFERRED STOCK
Cell Genesys, Inc 4,416,667
SERIES B PREFERRED STOCK
Bayview Investors, LTD 56,280
Behrens, Mary Kathleen 15,385
Biotechvest L.P. 46,154
Boston Safe Deposit and Trust Company as Trustee for U S WEST Benefit
Assurance Trust 38,462
Boston Safe Deposit and Trust Company as Trustee for U S WEST Pension
Trust 115,386
Crossover Fund II, L.P. 224,145
Crossover Fund IIA, L.P. 67,663
Curran Partners, L.P. 30,769
Discovery Fund, L. P., The 42,307
Eaton Vance Worldwide Health Sciences Fund, Inc. 276,923
EGS Private Healthcare Partnership, L.P. 91,256
EGS Private Healthcare Counterpart, L.P. 16,436
Farley Industries Pension Trust f/b/o/ the Retirement Program of Farley Inc. 46,154
Farley, William F. 30,769
Finsbury Worldwide Pharmaceutical Trust PLC 184,615
Fruit of the Loom, Inc. Senior Executive Officer Deferred Compensation Trust 30,769
Healthcare Emerging Growth Fund 15,385
KCM Biomedical, L.P. 74,912
Lombard Odier & Co. 384,614
Kucherlapati, Raju 10,000
Maroun, Pasena D. 153,846
New York Life Insurance Company 307,692
Olleana Corporation 30,769
Omega Ventures II Cayman, L.P. 87,064
Omega Ventures II, L.P. 334,079
Pharos Genesis Fund Limited 76,923
S-E Banken - Luxembourg, S. A. 69,227
S-E Banken - Lakemedelsfond 392,305
Seedling Fund, L.P., The 17,396
SERIES C PREFERRED STOCK
Pfizer Inc. 160,000
</TABLE>
ABGENIX, INC. STOCKHOLDERS RIGHTS
AGREEMENT SIGNATURE PAGE
<PAGE> 1
EXHIBIT 10.29
SCHERING-PLOUGH
RESEARCH INSTITUTE
COLLABORATIVE RESEARCH AGREEMENT
<PAGE> 2
COLLABORATIVE RESEARCH AGREEMENT
This Collaborative Research Agreement (the "Agreement"), effective as of
January 28, 1998 (the "Effective Date") is made by and between Abgenix, Inc., a
Delaware corporation having its principal place of business at 7601 Dumbarton
Circle, Fremont, California 94555 ("ABX") and Schering-Plough Research
Institute, a Delaware corporation having its principal place of business at 2015
Galloping Hill Road, Kenilworth, New Jersey 07033 ("SPRI").
WHEREAS SPRI and ABX are interested in conducting research regarding
antibodies derived from XenoMouse(TM) Animals (described below) that bind to
[*], as set forth below;
NOW THEREFORE, in consideration of the mutual promises contained in this
Agreement, the parties agree as follows:
1. DEFINITIONS For purposes of this Agreement, the following terms shall have
the meanings set forth below:
1.1 "Antibody" shall mean a composition comprising a whole antibody or
fragment thereof, said antibody or fragment having been derived in whole or part
from immunization of the XenoMouse Animals with the Target Antigen, or having
been derived from nucleotide sequences encoding, or amino acid sequences of,
such an antibody or fragment.
1.2 "Research" shall mean the research activities set forth in Exhibit A.
1.3 "Target Antigen" shall mean [*].
1.4 "XenoMouse Animals" shall mean one or more transgenic mice available
for use by ABX that produce human antibodies when immunized with antigens.
2. RESEARCH PROGRAM
2.1 Research Program Activities. Subject to the terms and conditions set
forth in this Agreement, the parties shall conduct the Research as set forth in
Exhibit A on a collaborative basis with the goal of generating and studying
Antibodies that bind to the Target Antigen. Each party shall use commercially
reasonable efforts to conduct the Research in accordance with Exhibit A within
the time schedules contemplated therein. The parties will confer at mutually
agreed times, no less than [*] in person or by telephonic conference call, to
discuss the status of the research project pursuant to Exhibit A. The obligation
of each party to use commercially reasonable efforts to conduct the
*CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
1
<PAGE> 3
Research in accordance with Exhibit A is expressly conditioned upon the
performance by each party of its obligations to the other party under this
Agreement, including but not limited to, the obligations set forth in Exhibit A.
2.2 SPRI Responsibilities. Promptly following execution of this Agreement,
SPRI will provide to ABX reasonable quantities of the materials set forth in
Exhibit A. Upon request by ABX, SPRI agrees to provide reasonable assistance to
ABX in performance of the Research. SPRI shall provide a reasonably detailed
report to ABX showing the data generated pursuant to item I of Exhibit A,
promptly after completion of the tasks set forth in item I of Exhibit A.
2.3 ABX Responsibilities. After receiving Target Antigen materials from
SPRI for immunization, ABX shall use commercially reasonable efforts to immunize
XenoMouse Animals with the Target Antigen [*] and in accordance with Exhibit A
during the term of this Agreement. ABX shall provide a reasonably detailed
report to SPRI showing the data generated pursuant to items E and F of Exhibit
A, promptly after completion of the tasks set forth in items E and F of Exhibit
A.
2.4 Payments. SPRI shall pay to ABX [*] Such payments shall be
nonrefundable and noncreditable. It is understood that if SPRI enters into a
definitive Research, Option and License Agreement, it will make all the payments
described under this Section 2.4 regardless of whether or not the goal described
in Exhibit A was met. Each of SPRI and ABX shall be solely responsible for its
own out-of-pocket costs and disbursements incurred, and for providing the
necessary facilities, supplies (except for materials to be provided pursuant to
Exhibit A), personnel and other resources necessary in the performance of the
Research and its obligations under this Agreement.
2.5 Exclusivity. In consideration of the payment to ABX hereunder, during
the term of this Agreement, ABX shall not actively solicit or enter into any
agreement with a third party pursuant to which ABX would convey or grant rights
to such third party regarding [*] In addition, during the term of this
Agreement, ABX shall not offer the [*] to any third party for purposes of
discussing or evaluating a possible business relationship relating to such
Antibodies, nor enter into any agreements which would otherwise diminish the
rights granted to SPRI under this Agreement, without the prior written consent
of SPRI. ABX shall not, without SPRI's written consent, use for the benefit of
any third party, or provide to any third party, the XenoMouse Animals immunized
in the course of performing the Research or any materials derived from such
XenoMouse Animals in the course of performing the Research.
*CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
2
<PAGE> 4
2.6 Material Transfer Terms.
2.6.1 Transfer by SPRI. SPRI agrees to provide the materials
required to be provided to ABX pursuant to the Research (the "SPRI Materials")
solely upon the following terms and conditions:
(a) All SPRI Materials provided to ABX by SPRI under this Agreement
shall remain the property of SPRI, and the transfer of physical possession of
any such materials to, and the physical possession of any such materials by, ABX
shall not be (nor be construed as) a sale, lease, offer to sell or lease, or
other transfer of title of such materials to ABX;
(b) All SPRI Materials shall remain in the control of ABX and shall
not be transferred to any other party, and ABX shall use the SPRI Materials only
for purposes of performing the Research and not for any other purpose; and
(c) ABX agrees to use the SPRI Materials in compliance with all
applicable national, state, and local laws and regulations, including all
applicable National Institutes of Health guidelines, and agrees that such
materials will not be used in humans. ABX acknowledges that the SPRI Materials
are experimental in nature and may have unknown characteristics and therefore
agrees to use prudence and reasonable care in the use, handling, storage,
transportation, disposition and containment of SPRI Materials and all
derivatives thereof.
2.6.2 Transfer by ABX. ABX agrees to provide the XenoMouse
Materials (as defined below) required to be provided to SPRI pursuant to the
Research solely upon the following terms and conditions:
(a) All materials derived in whole or part from the XenoMouse Animals, including
without limitation all Antibodies to the Target Antigen and all [*] derived from
XenoMouse Animals under this Agreement (collectively, "XenoMouse Materials"),
shall be the property of ABX, and the transfer of physical possession of any
such materials to, and the physical possession of any such materials by, SPRI
shall not be (nor be construed as) a sale, lease, offer to sell or lease, or
other transfer of title of such materials to SPRI;
(b) All XenoMouse Materials shall remain in the control of SPRI and
shall not be transferred to any other party, and SPRI shall use the XenoMouse
Materials only for purposes of performing the Research and not for any other
purpose; and
(c) SPRI agrees to use the XenoMouse Materials in compliance with
all applicable national, state, and local laws and regulations, including all
applicable National Institutes of Health guidelines, and agrees that such
materials will not be used in humans. SPRI acknowledges that the XenoMouse
Animals, and all materials derived in whole or part from the XenoMouse Animals,
are experimental in nature and may have unknown
*CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
3
<PAGE> 5
characteristics and therefore agrees to use prudence and reasonable care in the
use, handling, storage, transportation, disposition and containment of XenoMouse
Materials and all derivatives thereof.
2.7 Research License. Each party hereby grants the other party a
non-exclusive license to perform the Research activities set forth in Exhibit A
under all patents and patent applications owned or controlled by the granting
party that are necessary to perform such activities.
3. RESEARCH AND LICENSE OPTION
During the period commencing on the Effective Date and ending on [*] or (ii)
termination of this agreement (the "Option Period"), SPRI, through a corporate
affiliate, shall have the exclusive option to enter into a written definitive
agreement ("Research, Option and License Agreement") that will provide for the
additional research described in Exhibit B and an option to acquire a worldwide,
exclusive (even as to ABX) license, including the right to sublicense, to
develop, make, have made, use, export and import [*] derived from XenoMouse
animals under this Agreement in order to develop, make, have made, use, sell,
offer for sale, export and import [*] generated under this Agreement upon
mutually agreeable terms and conditions to be set forth in the Research, Option
and License Agreement. It is understood that any such license will be subject to
non-exclusive grant of rights to GenPharm International Inc. ("GenPharm") under
that certain Cross License Agreement effective as of March 26, 1997 by and among
Abgenix, GenPharm and other parties named therein. The parties agree to
negotiate the terms of the Research, Option and License Agreement in good faith
during the Option Period, it being understood that, in addition to other key
terms to be negotiated by the parties, the Research, Option and License
Agreement shall provide for further research reimbursement fees, license fees,
milestone payments, royalty and other key financial terms set forth on the
attached term sheet as Exhibit C; and other customary terms and conditions for
commercial agreements of this type, including, but not limited to, provisions
relating to intellectual property, confidentiality and publication,
representations and warranties of each party, diligence, indemnification, and
reporting.
4. CONFIDENTIALITY
4.1 Confidentiality. During the term of this Agreement and for a period of
ten (10) years following the expiration or termination of this Agreement ABX and
SPRI shall keep completely confidential and shall not, without the prior written
consent of the other party, publish or otherwise disclose, and shall not use for
any purpose other than conducting the Research, any information furnished to it
by the other party or generated pursuant to this Agreement, except to the extent
that such information:
*CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
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<PAGE> 6
(a) was already known to the receiving party, other than under an
obligation of confidentiality, at the time of disclosure;
(b) was generally available to the public or otherwise part of the
public domain at the time of its disclosure to the receiving party;
(c) became generally available to the public or otherwise part of
the public domain after its disclosure and other than through acts or omissions
of the receiving party;
(d) was subsequently lawfully disclosed to the receiving party by a
third party under no obligation of confidentiality; or
(e) was independently developed by the receiving party without the
use of such confidential information received from the disclosing party and such
independent development can be documented by contemporaneous written records of
the receiving party kept in the ordinary course of business.
4.2 Disclosure Required by Law. Notwithstanding the foregoing Section 4.1,
either party may disclose the other party's confidential information to the
extent such disclosure is required by law, regulation, rule act of order or any
governmental authority or agency to be disclosed provided that if a party is so
required to make any such disclosure of the other party's secret or confidential
information, other than pursuant to a confidentiality agreement or protective
order, it will give reasonable advance notice to the other party of such
disclosure requirement and will use efforts consistent with prudent business
judgment to secure confidential treatment of such information prior to its
disclosure (whether through protective orders or confidentiality agreements or
otherwise) and thereafter the receiving party uses reasonable efforts to
disclose to the requesting entity only the minimum confidential information
required to be disclosed in order to comply with the request, whether or not a
protective order or other similar order is obtained by the disclosing party.
4.3 No Publicity. A party may not use the name of the other party, or any
of its affiliates, in any publicity or advertising and may not issue a press
release or otherwise publicize or disclose any information related to the
existence of this Agreement or the terms or conditions hereof, without the prior
written consent of the other party, such consent not to be unreasonably
withheld. The parties shall agree on a form of initial press release (Exhibit D
attached hereto) that may be used by either party to describe this Agreement
and either party may subsequently release any information contained in such
press release without consultation with or consent of the other. Nothing in the
foregoing, however, shall prohibit a party from making such disclosures to the
extent deemed necessary under applicable federal or state securities laws or any
rule or regulation of any nationally recognized securities exchange. In such
event, however, the disclosing party shall use good faith efforts to consult
with the other party prior to such disclosure and, where applicable, shall
request confidential treatment to the extent available. Nothing in
5
<PAGE> 7
the foregoing, however, shall prohibit a party from making such disclosures to
professional advisors, including, but not limited to, attorneys, accountants and
bankers under customary confidentiality conditions. In the event of disclosure
to a banker, however, the disclosing party shall notify the other party of such
disclosure.
5. INDEMNIFICATION
5.1 SPRI. SPRI agrees to indemnify and hold ABX and its directors,
officers, employees and agents harmless from and against any claims, damages,
liabilities or actions (including reasonable attorneys' fees and other expenses
of litigation) relating to or arising from (i) ABX's use of materials provided
by SPRI in performing the Research; (ii) SPRI's use of XenoMouse Materials; or
(iii) the breach by SPRI of any representation or warranty contained in this
Agreement; provided, however, that SPRI shall not be obligated to indemnify or
hold harmless ABX to the extent that such claims arise from the negligence or
willful misconduct of ABX
5.2 ABX. ABX agrees to indemnify and hold SPRI and its directors,
officers, employees and agents harmless from and against any claims, damages,
liabilities or actions (including reasonable attorneys' fees and other expenses
of litigation) arising from the negligence or willful misconduct of ABX or the
breach by ABX of any representation or warranty contained in this Agreement;
provided, however, that ABX shall not be obligated to indemnify or hold harmless
SPRI to the extent that such claims arise from the negligence or willful
misconduct of SPRI.
5.3 Limitation of Liability. With respect to any claim by one party
against the other arising out of the performance or failure of performance of
the other party under this Agreement, the parties expressly agree that the
liability of such party to the other party for such breach shall be limited
under this Agreement or otherwise at law or equity to direct damages only and in
no event shall a party be liable for: (i) punitive, exemplary or consequential
damages, or (ii) the cost of procurement of substitute goods, technology or
services.
6. TERM; TERMINATION
6.1 Term. Subject to the next sentence this Agreement shall commence on
the Effective Date and, unless earlier terminated by mutual agreement of the
parties, shall continue in effect until [*]. Notwithstanding anything contained
herein to the contrary, at any time prior to the execution of the Research,
Option and License Agreement SPRI shall have the unilateral right to terminate
this Agreement, with or without cause, by giving thirty (30) days advance
written notice to ABX. In such event, and provided that ABX performed the
activities assigned to it in Exhibit A until the time of receipt of the written
notice of termination, SPRI shall pay ABX the Research
*CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
6
<PAGE> 8
payments described in section 2.4 of this Agreement regardless of whether or not
the Research pursuant to Exhibit A was completed. The expiration of this
Agreement shall not affect the rights and liabilities of the parties accrued
prior to such expiration. Articles 4, 5, and 8 and Section 2.6 shall survive any
expiration or termination of this Agreement.
6.2 Destruction of Materials. Upon the expiration or termination of this
Agreement, SPRI and ABX shall destroy the SPRI Materials and the ABX Materials
and any XenoMouse Animals that have been immunized with the Target Antigen
unless otherwise mutually agreed by the parties, provided that each party's
legal counsel may retain one copy of confidential information (other than
biological materials) furnished by the other party pursuant to this Agreement in
a secure location for the sole purpose of identification such party's
obligations under the confidentiality provisions of this Agreement.
7. REPRESENTATIONS AND WARRANTIES
7.1 Representations and Warranties of Each Party. Each of ABX and SPRI
hereby represents, warrants and convenants to the other party hereto as follows:
(a) it is a corporation duly organized and validly existing under
the laws of the state or other jurisdiction of its incorporation or formation;
(b) the execution, delivery and performance of this Agreement by
such party has been duly authorized by all requisite corporate action;
(c) it has the power and authority to execute and deliver this
Agreement and to perform its obligations hereunder; and
(d) the execution, delivery, and performance by such party of this
Agreement and its compliance with the terms and provisions hereof does not and
will not conflict with or result in a breach of any of the terms and provisions
of, or constitute a default under, (i) a loan agreement, guaranty, financing
agreement, or other agreement or instrument binding or affecting it or its
property; (ii) the provisions of its charter documents or bylaws; or (iii) any
order, writ, injunction or decree or any court or governmental authority entered
against it or by which any of its property is bound.
7.2 ABX's Representations. ABX hereby represents, warrants and
convenants to SPRI as follows:
(a) to the best of its knowledge, Abgenix has sufficient right,
title and interest in and to the XenoMouse Animals, and to [*] derived from the
XenoMouse Animals, and to Antibodies to the Target Antigen derived from the
XenoMouse Animals to perform the Research set forth herein, to grant the
Research License set forth in section 2.7, and to enter into the Research,
Option and License
*CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
7
<PAGE> 9
Agreement on terms to be negotiated by the parties;
(b) it will use diligent efforts not to diminish the rights granted
to SPRI hereunder, including, without limitation, by not committing or
permitting any acts or omissions which would cause the breach of any agreements
between itself and third parties which provide for intellectual property rights
applicable to the development, manufacture, use or sale of Antibodies to the
Target Antigen and all [*] derived from XenoMouse Animals and in connection
therewith. ABX agrees to provide SPRI promptly with notice of any alleged breach
and ABX is in compliance in all material respects with any such agreements with
third parties.
7.3 SPRI's Representations. SPRI hereby represents, warrants and
convenants to ABX that it has not entered into any agreement with any third
party that would prohibit it from entering into the definitive Research, Option
and License Agreement.
7.4 Continuing Representations. The representations and warranties of each
party contained in Sections 7.1, 7.2 and 7.3 above shall survive the execution
of this Agreement and shall remain true and correct after the date hereof with
the same effect as if made as of the date hereof.
7.5 No Inconsistent Agreement. As of the Effective Date neither party has
in effect, and during the term of this Agreement neither party shall enter into,
any oral or written agreement or arrangement that would be inconsistent with its
obligations under this Agreement.
8. MISCELLANEOUS PROVISIONS
8.1 Governing Laws. This Agreement shall be interpreted and construed in
accordance with the laws of the State of California, without regard to conflicts
of law principles.
8.2 Assignments. Neither this Agreement nor any right or obligation
hereunder may be assigned or delegated, in whole or part, by either party
without the prior written consent of the other, which consent shall not be
unreasonably withheld; provided, however, that either party may, without the
written consent of the other, assign its rights and delegate its obligations
hereunder to (i) any entity to which it has acquired all or substantially all of
the business or assets of the assigning party, or (ii) any successor corporation
resulting from any merger or consolidation with another corporation. Any
purported assignment in violation or the preceding sentence shall be void. Any
permitted assignee shall assume all obligations of its assignor under this
Agreement.
8.3 No Warranties. EACH OF SPRI AND ABX ACKNOWLEDGE AND AGREE THAT ANY AND
ALL MATERIALS PROVIDED BY ONE PARTY TO THE OTHER PURSUANT TO THIS AGREEMENT,
INCLUDING BUT NOT LIMITED TO
*CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
8
<PAGE> 10
ALL ANTIBODIES AND OTHER MATERIALS DERIVED IN WHOLE OR PART FROM XENOMOUSE
ANIMALS PROVIDED TO SPRI PURSUANT TO THIS AGREEMENT ARE PROVIDED "AS IS." EACH
OF SPRI AND ABX MAKES NO REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND
REGARDING ANY MATERIALS PROVIDED PURSUANT TO THIS AGREEMENT, INCLUDING BUT NOT
LIMITED TO THE XENOMOUSE ANIMALS OR ANTIBODIES OR OTHER MATERIALS DERIVED IN
WHOLE OR PART FROM THE XENOMOUSE ANIMALS, WHETHER EXPRESS OR IMPLIED, AND EACH
OF SPRI AND ABX SPECIFICALLY DISCLAIMS ANY WARRANTIES OF MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE, OR NONINFRINGEMENT.
8.4 Independent Contractors. The relationship of the parties hereto is
that of independent contractors. The parties hereto are not deemed to be agents,
partners or joint venturers of the others for any purpose as a result of this
Agreement or the transactions contemplated thereby. Neither ABX nor SPRI shall
have the authority to make any statements, representations or commitments of any
kind, or to take any action, which shall be binding on the other, without the
prior written consent of the other party to do so.
8.5 Notices. All requests and notices required or permitted to be given to
the parties hereto shall be given in writing, shall expressly reference the
section(s) of this Agreement to which they pertain, and shall be deemed to have
been properly given if delivered in person or when received if mailed by first
class certified mail to the other party at the appropriate address as set forth
below or to such other addresses as may hereinafter be designated in writing by
the parties.
SPRI: Schering-Plough Research Institute
2015 Galloping Hill Road
Kenilworth, New Jersey 07033
Attn: Dr. Francis Cuss
ABX: Abgenix, Inc.
7601 Dumbarton Circle
Fremont, California 94555
Attn: President
8.6 No Implied Licenses. Only licenses and rights granted expressly herein
shall be of legal force and effect. No license or other right shall be created
hereunder by implication, estoppel or otherwise. Under no circumstances shall a
party hereto, as a result of this Agreement, obtain any ownership interest in,
or any other right or license to, any existing or future technology, know-how,
patents, patent applications or products of the other party except as expressly
provided in this Agreement.
8.7 Severability. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this
9
<PAGE> 11
Agreement shall continue in full force and effect without said provision and the
parties shall discuss in good faith appropriate revised arrangements.
8.8 No Consequential Damages. IN NO EVENT SHALL A PARTY HERETO BE LIABLE
FOR SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF THIS AGREEMENT
OR THE EXERCISE OF ITS RIGHTS HEREUNDER, INCLUDING WITHOUT LIMITATION LOST
PROFITS, REGARDLESS OF ANY NOTICE OF SUCH DAMAGES.
8.9 Complete Agreement. This Agreement constitutes the entire agreement,
written and oral, between the parties with respect to the subject matter hereof,
and supersedes all prior agreements between the parties respecting the subject
matter hereof, whether written or oral, expressed or implied. This Agreement can
be modified or amended in a writing signed by the parties, and the rights under
this Agreement can be waived only in a writing signed by the party to be
charged.
8.10 Dispute Resolution
8.10.1 Cooperation. In the event that SPRI and ABX are unable,
after exercising good faith efforts, to reach agreement on an issue relating to
this Agreement, then upon written notice to the other party the issue shall be
referred to SPRI's Executive Vice President - Discovery Research and the
President of ABX, or their designees with similar authority, who shall meet and
use good faith efforts to reach agreement on the issue (the "Dispute"). In the
event the representatives of SPRI and ABX are unable to reach agreement on the
Dispute in such meeting, then the parties shall have the right to submit the
Dispute to binding arbitration in accordance with the provisions of Section
8.10.2 by providing written notice to the other party within two (2) weeks after
such meeting.
8.10.2 Arbitration. All Disputes arising in connection with this
Agreement shall be finally settled by binding arbitration conducted in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association then in effect. The arbitration shall be held in San Francisco,
California if the Dispute was referred to arbitration by SPRI and in New York,
New York if the Dispute was referred to arbitration by ABX, and the arbitrator
shall be an independent expert with a background suitable for the matters in
dispute. The cost of the arbitration, including administrative and arbitrator's
fees, shall be shared equally by the parties. Each party shall bear its own
costs and attorneys' and witnesses' fees. The prevailing party in any
arbitration, as determined by the arbitrator, shall be entitled to an award
against the other party in the amount of the prevailing party's costs and
reasonable attorneys' fees. A disputed or suspended performance pending the
resolution of the arbitration shall be completed within thirty (30) days
following the final decision of the arbitrator. Any arbitration under this
section 8.10.2 shall be completed within six (6) months from the filing of
notice of a request for such arbitration.
10
<PAGE> 12
8.11 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original and together shall be deemed to be one
same agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective duly authorized officers as of the day and year first above
written.
ABGENIX, INC. SCHERING-PLOUGH RESEARCH INSTITUTE
By: /s/ R. SCOTT GREER By: /s/ JONATHAN SPICEHANDLER
------------------------------ -----------------------------------
Printed Name: R. Scott Greer Printed Name: Jonathan Spicehandler
-------------------- -------------------------
Title: CEO Title: President
--------------------------- --------------------------------
Date: January 28, 1998 Date: January 30, 1998
---------------------------- ---------------------------------
11
<PAGE> 13
EXHIBIT A
[ * ]
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
12
<PAGE> 14
EXHIBIT B
[ * ]
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
13
<PAGE> 15
EXHIBIT C
[ * ]
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
14
<PAGE> 16
EXHIBIT D
[ABGENIX LOGO]
Contact: Kurt Leutzinger
Vice President and Chief
Financial Officer
510-608-6575
ABGENIX SIGNS AGREEMENT WITH SCHERING-PLOUGH
FREMONT, Calif., January XX, 1998 -- Abgenix, Inc., a subsidiary of Cell
Genesys, Inc. (Nasdaq: CEGE), announced today that it has signed a collaborative
research agreement with Schering-Plough Research Institute (SPRI), the
pharmaceutical research and development arm of Schering-Plough Corporation
(NYSE: SGP). Under the agreement, Abgenix, will use its XenoMouse(TM) technology
to generate fully human monoclonal antibodies to an undisclosed antigen target
for SPRI. The agreement provides SPRI with an option to enter into a research
and license agreement that would provide Abgenix with additional research
payments, milestone payments and royalties on future product sales by
Schering-Plough.
"We are pleased to be collaborating with Schering-Plough Corporation, one of the
world's leading pharmaceutical companies," stated R. Scott Greer, president and
chief executive officer of Abgenix. "This collaboration, along with the
company's recently announced deal with Pfizer Inc., reflects the growing
interest in our XenoMouse(TM) technology."
Abgenix has developed novel strains of transgenic mice (XenoMouse(TM)) that are
capable of quickly generating high affinity, fully human antibodies to
essentially any target, including human antigens. The company currently has
three antibody products in development. ABX-CBL is in a confirmatory Phase II
trial for steroid-resistant graft versus host disease (GVHD). The antibody
targets the specific cells active in an unwanted immune response, such as occurs
in GVHD, kidney transplant rejection, rheumatoid arthritis and psoriasis.
ABX-IL8 is a fully human monoclonal antibody targeting inflammation that is
expected to begin a Phase I clinical trial this quarter for moderate to severe
psoriasis. ABX-EGF is a fully human monoclonal antibody in preclinical
development that may arrest the growth of cancer cells.
- more -
<PAGE> 17
Statements made in this press release about Abgenix's and Cell Genesys' product
development activities, clinical trials, product pipelines, corporate
partnerships and patent portfolio, other than statements of historical fact, are
forward looking statements and are subject to a number of uncertainties that
could cause actual results to differ materially from the statements made,
including risks associated with the success of clinical trials, research and
product development programs, the regulatory approval process, competitive
products and the extent and breadth of Cell Genesys and its subsidiary's patent
portfolio. Please see Cell Genesys' Form 10-K/A dated April 30, 1997 for
information about risks associated with clinical trials and product development
programs and other risks which may affect Cell Genesys and its subsidiary.
###
[1/XX/98]
<PAGE> 1
EXHIBIT 10.30
EXCERPTS FROM THE
MINUTES OF A MEETING OF
THE BOARD OF DIRECTORS OF
ABGENIX, INC.
Wednesday October 23, 1996
12:00 p.m. - 5:00 p.m.
The Board of Directors of Abgenix, Inc. (the "Company") held a meeting
at the time indicated above pursuant to notice. Directors Stephen A. Sherwin
(Chairman), R. Scott Greer, Raju Kucherlapati and Joseph Maroun were present at
the meeting.
Also present at the invitation of the Board was Sarah O'Dowd, outside
counsel to the Company.
Dr. Sherwin called the meeting to order. Ms. O'Dowd kept the minutes of
the meeting . . . .
Acceleration of Stock Options
The Board next discussed treatment of options in the event of a change
in control of the Company. After discussion and upon motion duly made and
seconded, it was unanimously:
RESOLVED, that if, in the event of the merger of the Company with or
into another corporation, the successor corporation (or a parent or
subsidiary of such successor corporation) does not agree to assume the
options issued under the Plan or to substitute an equivalent option,
such options shall automatically be accelerated in full so as to become
completely vested and fully exercisable. In such event, the
administrator of the Plan shall notify persons holding options that the
options shall be fully exercisable for a period of 30 days from the date
of such notice, and options will terminate upon the expiration of such
period.
FURTHER RESOLVED, that if an employee holding options issued at any time
under the Plan has served as an employee of the Company for one year or
more as of the date of a "Change of Control" and following such "Change
of Control" employee's Continuous Status as an Employee (as defined in
the Plan) terminates as a result of an "Involuntary Termination" other
than for "Cause" (as such terms are defined below) at any time within 24
months following such Change of Control, then 100% of such employee's
options shall automatically be accelerated in full so as to become
completely vested and fully exercisable.
<PAGE> 2
FURTHER RESOLVED, that for purposes of the foregoing resolution the terms set
forth below shall have the following definitions:
"Change of Control" means the occurrence of any of the following events:
(i) Any "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended) other than
Cell Genesys or a successor in interest to Cell Genesys is or becomes
the "beneficial owner" (as defined in Rule 13d-3 under said Act),
directly or indirectly, of securities of the Company representing 50% or
more of the total voting power represented by the Company's then
outstanding voting securities; or
(ii) A change in the composition of the Board occurring within a
two-year period, as a result of which fewer than a majority of the
directors are Incumbent Directors. "Incumbent Directors" shall mean
directors who either (A) are directors of the Company as of the date
hereof, or (B) are elected, or nominated for election, to the Board as
provided in the Governance Agreement between the Company and Cell
Genesys (but shall not include an individual whose election or
nomination is in connection with an actual or threatened proxy contest
relating to the election of directors to the Company); or
(iii) The stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than (x)
a merger or consolidation with Cell Genesys or (y) a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of
the surviving entity) at least 50% of the total voting power represented
by the voting securities of such surviving entity outstanding
immediately after such merger or consolidation, or the stockholders of
the Company approve a plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of all or
substantially all the Company's assets.
"Involuntary Termination" means (i) the elimination of an employee's job
position or a material reduction of the employee's job position or a
material reduction of the employee's duties, authority or
responsibilities, relative to the employee's job position or duties,
authority or responsibilities as in effect immediately prior to such
reduction; (ii) a reduction by the Company in the base salary of the
employee as in effect immediately prior to such reduction; (iii) the
relocation of the employee to a facility or a location more than 50
miles from the employee's then present location; or (iv) any other
involuntary termination of the employee's employment without cause
except in the event of disability.
-2-
<PAGE> 3
"Cause" means (i) any act of personal dishonesty, fraud or
misrepresentation taken by an employee in connection with his
responsibilities as an employee and intended to result in substantial
gain or personal enrichment of the employee at the expense of the
Company; (ii) the employee's conviction of a felony; (iii) improper
disclosure of the Company's confidential or proprietary information by
the employee; or (iv) the employee's continued failure to substantially
perform his principal duties in a reasonable period of time after
receipt of written notice from the Company. . . .
Adjournment
There being no further Board business to come before the meeting, the
meeting was adjourned at 5:00 p.m.
[SIG]
---------------------------------
Sarah A. O'Dowd
Secretary of the Meeting
-3-
<PAGE> 1
EXHIBIT 10.31
EXCERPTS FROM THE
MINUTES OF A MEETING OF
THE BOARD OF DIRECTORS OF
ABGENIX, INC.
7601 DUMBARTON CIRCLE
FREMONT, CA 94555
OCTOBER 22, 1997
12:00 P.M.
The following are the minutes of the meeting of the Board of Directors
of Abgenix, Inc., a Delaware corporation, held at the above time and place
pursuant to notice duly given to all members of the Board of Directors.
Present at the meeting were directors Stephen Sherwin, R. Scott Greer,
Raju Kucherlapati, Joseph Maroun and Mark Logan, being all members of the Board
of Directors. Also present at the invitation of the Board was Mario M. Rosati.
Dr. Sherwin, Chairman of the Board, called the meeting to order and
requested that Mr. Rosati keep the minutes of the meeting . . .
The Board next discussed the acceleration provisions in the
corporation's outstanding options in the event of a change of control of Cell
Genesys. After further discussion and upon motion duly made and seconded, it
was,
RESOLVED: That, so long as Cell Genesys owns or controls at least a
majority of the Abgenix voting stock, upon a Change of Control of Cell
Genesys (as defined below) (or if Abgenix is merged with or into Cell
Genesys in anticipation of such Change of Control of Cell Genesys, then
upon the closing of the merger of Abgenix with or into Cell Genesys),
then each share of Abgenix voting stock held by a director or an
employee of Abgenix who has served for one year or more (collectively,
"Abgenix Employees") shall become subject to the provisions set forth
<PAGE> 2
below, and each option to acquire a share of Abgenix voting stock held
by an Abgenix Employee shall become subject to the provisions set forth
below.
RESOLVED FURTHER: That upon a Change of Control of Cell Genesys (as
defined below) (or if Abgenix is merged with or into Cell Genesys in
anticipation of such Change of Control of Cell Genesys, then upon the
closing of the merger of Abgenix with or into Cell Genesys), then each
share of Abgenix voting stock held by an officer of Cell Genesys at or
above the vice-presidential level ("CG Officer") shall become subject to
the provisions set forth below, and each option to acquire a share of
Abgenix voting stock held by a CG Officer shall become subject to the
provisions set forth below.
RESOLVED FURTHER: That, upon a Change of Control of Cell Genesys, should
an Abgenix Employee or a CG Officer be Involuntarily Terminated other
than for Cause (as such terms are defined below) at any time within 24
months following such Change of Control of Cell Genesys, then 100% of
such individual's Abgenix shares and options shall automatically be
accelerated in full so as to become completely vested and fully
exercisable.
RESOLVED FURTHER: That, for the purpose of these resolutions "Change of
Control" means the occurrence of any of the following events: (i) any
"person" (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under said Act), directly
or indirectly, of securities of Cell Genesys representing 50% or more of
the total voting power represented by Cell Genesys' then outstanding
voting securities; (ii) a change in the composition of the Board of
Directors of Cell Genesys as a result of which fewer than a majority of
the directors are "Incumbent Directors;" or (iii) the stockholders of
Cell Genesys approve (x) a merger or consolidation of Cell Genesys with
any other corporation, other than a merger or consolidation which would
result in the voting securities of Cell Genesys outstanding immediately
prior thereto continuing to represent (either by remaining outstanding
or by being converted into voting securities of the surviving entity or
the entity that controls Cell Genesys or controls such surviving entity)
at least fifty percent (50%) of the total voting power represented by
the voting securities of Cell Genesys, such surviving entity or the
entity that controls Cell Genesys or controls such surviving entity
outstanding immediately after such merger or consolidation, or (y) the
stockholders of Cell Genesys approve a plan of complete liquidation of
Cell Genesys or an agreement for the sale or disposition by Cell Genesys
of all or substantially all Cell Genesys' assets.
RESOLVED FURTHER: That "Incumbent Directors" shall mean directors who
either (A) are directors of Cell Genesys as of the date hereof, or (B)
are elected, or nominated for election, to the Board of Directors with
the affirmative votes (either by a specific vote or by approval of the
proxy statement of Cell Genesys in which such person is named as a
nominee for election as a director without objection to such nomination)
of at least three-quarters of the Incumbent Directors at the time of
such election or nomination
<PAGE> 3
RESOLVED FURTHER: That "Involuntary Termination" means (i) the
elimination of an Abgenix Employee's or a CG Officer's job position or a
material reduction of an Abgenix Employee's or a CG Officer's job
position or a material reduction of an Abgenix Employee's or CG
Officer's duties, authority or responsibilities, relative to such
individual's job position or duties, authority or responsibilities as in
effect immediately prior to such reduction; (ii) a reduction in the base
salary of an Abgenix Employee or CG Officer as in effect immediately
prior to such reduction; (iii) the relocation of an Abgenix Employee or
CG Officer to a facility or a location more than 50 miles from the
individual's then present location; or (iv) any other involuntary
termination of the Abgenix Employee's or the CG Officer's employment
without cause except in the event of disability.
RESOLVED FURTHER: That "Cause" means (i) any act of personal dishonesty,
fraud or misrepresentation taken by an Abgenix Employee or a CG Officer
in connection with his responsibilities as an employee or officer and
intended to result in substantial gain or personal enrichment of the
individual; (ii) the Abgenix Employee's or the CG Officer's conviction
of a felony; (iii) improper disclosure of Abgenix's or Cell Genesys's
confidential or proprietary information by the Abgenix Employee or CG
Officer or (iv) the Abgenix Employee's or CG Officer's continued failure
to substantially perform his principal duties in a reasonable period of
time after receipt of written notice from Abgenix or Cell Genesys.
RESOLVED FURTHER: That it is the intent of the Board that the above
resolutions amended and superseded the October 23, 1996 resolutions of
this Board with respect to the acceleration of option in the event of a
Change of Control of Cell Genesys.
RESOLVED FURTHER: That should the corporation's accountants determine
that pooling of interests would be unavailable as a result of the
change, then the board may elect to nullify the above resolutions.
The Board next discussed the acceleration provisions in the
corporation's outstanding options in the event of a change of control of the
corporation. In this connection, it was noted that the options will accelerate
to become exercisable in full in the event of a change of control of the
corporation per the board resolution of October 23, 1996. One criterion requires
an individual to be an employee of the corporation for at least one year to
receive the benefit of acceleration. After further discussion of this provision
and upon motion duly made and seconded, it was,
RESOLVED: That in the event of a change of control of the corporation,
an employee of the corporation holding options issued at any time under
the Plan regardless of time served shall receive the benefit of the
acceleration provisions set forth in the board resolutions of October
23,
<PAGE> 4
1996, provided, however, that should the corporation's accountants
determine pooling of interests would be unavailable as a result of this
change, then the board may elect to nullify the change.
. . .There being no further business, the meeting was thereupon duly
adjourned.
/s/ Mario M. Rosati
------------------------
Mario M. Rosati
Secretary of the Meeting
<PAGE> 1
EXHIBIT 10.32
CONFIDENTIAL TREATMENT REQUESTED BY ABGENIX, INC.
EXCLUSIVE WORLDWIDE PRODUCT LICENSE
THIS PRODUCT LICENSE AGREEMENT (the "Agreement") effective the ____ day
of November, 1997, is made by and between XENOTECH, L.P., a California limited
partnership ("XT"), and ABGENIX, INC., a Delaware corporation ("Licensee").
RECITALS
XT desires to grant to Licensee and Licensee desires to acquire from XT
an exclusive worldwide license or sublicense, as the case may be, under the
Licensed Technology to commercialize Products, on the terms and conditions
herein.
NOW, THEREFORE, for and in consideration of the covenants, conditions,
and undertakings hereinafter set forth, it is agreed by and between the parties
as follows:
1. DEFINITIONS.
For purposes of this Agreement, the terms set forth in this Article
shall have the meanings set forth below.
1.1 "ABX" shall mean Abgenix, Inc.
1.2 "Affiliate" shall mean any entity which controls, is
controlled by or is under common control with any one of ABX, JTI or XT. An
entity shall be regarded as in control of another entity if it owns or controls
at least fifty percent (50%) of the shares of the subject entity entitled to
vote in the election of directors (or, in the case of an entity that is not a
corporation, for the election of the corresponding managing authority);
provided, however, XT shall not be an Affiliate of ABX or JTI under this
Agreement and XT shall not be considered controlled by ABX or JTI for purposes
of determining Affiliates of ABX or JTI.
1.3 "Antibody" shall mean a composition comprising a whole
antibody or a fragment thereof, said antibody or fragment having been derived
from the Licensed Technology and/or generated from the Mice or the Future
Generation Mice or having been derived from nucleotide sequences encoding, or
amino acid sequences of, such an antibody or fragment.
1.4 "Antibody Product" shall mean any product comprising an
Antibody or Genetic Material encoding an Antibody wherein, in respect of each
Antibody Product, said Genetic Material does not encode multiple Antibodies.
1.5 "Antibody-Secreting Cell" shall mean a cell that secretes an
Antibody, except where such cell is part of a mammal.
1.6 "[***] Technology" shall mean (i) all U.S. patent
applications and patents listed on Schedule 1 and patents issuing on such patent
applications owned by or licensed to XT
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
<PAGE> 2
which relate to the [***], in each case to the extent XT has the right to
license or sublicense the same; (ii) any continuations, divisionals,
reexaminations, reissues or extensions of any of (i) above; (iii) any foreign
counterparts issued or issuing on any of (i) or (ii) above; and (iv) [***] as
set forth in Schedule 1.
1.7 "CGI" shall mean Cell Genesys, Inc.
1.8 "Effective Date" shall mean the date this Agreement is
executed by XT and Licensee.
1.9 "Future Generation Mice" shall have the meaning defined in
the Master Research License and Option Agreement, as amended.
1.10 "Genetic Material" shall mean a nucleotide sequence,
including DNA, RNA, and complementary and reverse complementary nucleotide
sequences thereto, whether coding or noncoding and whether intact or a fragment.
1.11 "GenPharm Cross License" shall mean that certain Cross
License Agreement, effective as of March 26, 1997, entered into by and among the
parties, GenPharm International, Inc. ("GenPharm") and the other parties named
therein, as the same may be amended from time to time.
1.12 "IND" shall mean an Investigational New Drug Exemption for a
Product, as defined in the U.S. Food, Drug and Cosmetic Act and the regulations
promulgated thereunder, or its non-U.S. equivalent.
1.13 "JTI" shall mean Japan Tobacco Inc.
1.14 "License Fee" shall have the meaning set forth in Article 3
hereof.
1.15 "Licensed Field" shall mean [***].
1.16 "Licensed Technology" shall mean the [***] Technology, the
[***] Technology, and XT-Controlled Rights.
1.17 "Master Research License and Option Agreement" shall mean
that certain Master Research License and Option Agreement entered into by CGI,
JTI and XT as of June 28, 1996 (and subsequently assigned by CGI to ABX), as it
may be amended.
1.18 "Mice" shall have the meaning defined in the Master Research
License and Option Agreement, as amended.
1.19 "Net Sales" shall mean the [***] charged by Licensee or its
Affiliates and Sublicensees for sales of Product to non-Affiliate customers,
[***]
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
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[***], with respect to such sales, and [***], as reflected in [***] of Licensee
and its Affiliates or Sublicensees, to the extent [***]. "Net Sales" for [***]
shall mean [***], where [***] shall mean the [***]. Notwithstanding the
foregoing, [***] shall include [***], but notwithstanding any of the foregoing,
shall not include [***]. Notwithstanding the foregoing, "Net Sales" for [***]
shall be [***].
1.20 "Product" and "Products" shall mean one or more Antibody
Products which incorporate (i) an Antibody which binds to the Product Antigen or
(ii) Genetic Material encoding such an Antibody wherein said Genetic Material
does not encode multiple antibodies.
1.21 "Product Antigen" shall mean [***].
1.22 "Sublicensee" shall mean a third party that is not an
Affiliate (provided, however, that CGI may be a Sublicensee of ABX, whether or
not CGI is an Affiliate of ABX) to whom Licensee has granted a sublicense under
the Licensed Technology to make, use and/or sell Products to the extent of the
rights of Licensee therein. "Sublicensee" shall also include a third party to
whom Licensee has granted the right to distribute Products under the Licensed
Technology to the extent of the rights of Licensee therein, provided that such
third party is responsible for the marketing and promotion of Products within
the applicable country.
1.23 "Territory" shall mean all the countries of the world.
1.24 "Transgenic Product" shall mean any product constituting (i)
Mice or Future Generation Mice, (ii) Genetic Material from Mice or Future
Generation Mice, or (iii) an Antibody-Secreting Cell.
1.25 "Universal Receptor Product" shall mean a substance that is
developed utilizing [***] Universal Receptor Technology.
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
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<PAGE> 4
1.26 "Universal Receptor Technology" shall mean technology for
universal receptors [***]. As used herein: (i) "universal receptor" shall mean a
receptor [***].
1.27 "Valid Claim" shall mean a claim of a pending or issued, and
unexpired patent included within the Licensed Technology, which has not been
held unenforceable, unpatentable or invalid by a court or other governmental
agency of competent jurisdiction, and which has not been admitted to be invalid
or unenforceable through reissue, disclaimer or otherwise.
1.28 "[***] Technology" shall mean (i) all U.S. patent
applications and patents listed on Schedule 2 and patents issuing on such
applications; (ii) any continuations, divisionals, reexaminations, reissues or
extensions of any of (i) above; (iii) any foreign counterparts issued or issuing
on any of (i) or (ii) above; and (iv) the Mice (as such term is defined in the
Master Research License and Option Agreement) and [***] as set forth on Schedule
2.
1.29 "XT-Controlled Rights" shall mean all rights to patents or
technology that are licensed to XT pursuant to the agreements listed on Schedule
4 or any other license or similar agreement granting XT rights to patents or
technology (each such agreement an "XT In-License"), to the extent that XT has
the right under the terms of the applicable XT In-License to further license or
sublicense such rights during the Term of this Agreement.
1.30 "XT In-License" shall have the meaning set forth in Section
1.29 above.
2. LICENSE GRANT; USE OF MICE BY THIRD PARTIES.
2.1 Subject to the terms and conditions of this Agreement, XT
hereby grants to Licensee an exclusive license or sublicense, as the case may
be, under the Licensed Technology, to make and have made Products anywhere in
the world and to use, sell, lease, offer to sell or lease, import, export,
otherwise transfer physical possession of or otherwise transfer title to such
Products
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
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<PAGE> 5
in the Licensed Field in the Territory. Such license or sublicense shall be
exclusive even as to XT, and shall include the exclusive right to grant and
authorize sublicenses for exploitation worldwide; provided, however, that
Licensee may not, under this license, grant sublicenses to any rights to the
Mice except as provided in Section 2.2 of this Agreement.
2.2 In connection with the grant of a sublicense under this
Agreement to a third party, and notwithstanding any provision to the contrary in
the Master Research License and Option Agreement or any Material Transfer
Agreement entered into between the parties under Sections 2.1, 2.2 or 2.3 of the
Master Research License and Option Agreement, Licensee shall have the right to
grant a sublicense to use Mice and Future Generation Mice transferred to the
third party pursuant to the terms of Section 2.7 of the Master Research License
and Option Agreement, and Transgenic Products other then Mice or Future
Generation Mice, to research, develop, make, have made, use, import, export,
sell, lease, offer to sell or lease or otherwise distribute or commercialize
Products, with the proviso that the sublicense described in this Section 2.2
shall not exceed the Licensee's rights conferred in accordance with the Master
Research License and Option Agreement or this Product License.
2.3 It is understood and agreed that, as to all XT-Controlled
Rights, the grant of rights under this Article 2 shall be subject in all
respects to the applicable XT In-License(s) pursuant to which such XT-Controlled
Rights were granted to XT.
3. LICENSE FEE.
Licensee shall pay to XT within thirty days of the Effective Date a
license fee of [***].
4. ROYALTIES.
4.1 Royalty Rates. In consideration for the license and rights
granted herein, Licensee agrees to pay to XT royalties of [***] of Net Sales of
Products by it and its Affiliates and Sublicensees.
4.2 Royalty Offsets. In the event that (i) Licensee, its
Affiliate or Sublicensee is required to pay [***], or (ii) any reimbursement
payments are due to XT pursuant to Section 5.1 below, then Licensee may deduct
the aggregate of any such amounts from any royalty amount owing to XT for the
sale of such Products pursuant to Section 4.1 above; provided, however, that
payments from Licensee to a third party that is an Affiliate, or was an
Affiliate at any time within two (2) years prior to the Effective Date, may not
be offset under this Section 4.2. Notwithstanding the foregoing provisions of
this Section 4.2, in no event shall the royalties due to XT pursuant to Section
4.1 above be so reduced to less than [***] of the amount that would otherwise be
due to XT thereunder. [***]
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
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[***].
4.3 Single Royalty; Non-Royalty Sales. Only one royalty shall be
payable with respect to any Product, regardless of how many claims or patents
within the Licensed Technology cover such Product. In addition, no royalty shall
be payable under this Article 4 with respect to sales of Products among Licensee
and its Affiliates and/or Sublicensees and their Affiliates or for use in
research and/or development or clinical trials.
4.4 No Patent Protection. Royalties shall be payable at the rates
specified in Section 4.1 or 4.2 above only with respect to sales of Products
that would infringe a Valid Claim in the country in which such Products are
sold. In the event that such Products are not covered by a Valid Claim in such
country, XT shall be paid a royalty on such sales in accordance with this
Article 4, [***].
4.5 Combination Products. In the event that a Product is sold in
combination as a single product with another product or component, Net Sales
from such combination sales for purposes of calculating the amounts due under
this Article 4 shall be [***]. In the event that no such separate sales are made
in the same quarter by Licensee, Net Sales for royalty determination shall be
[***].
4.6 Termination of Royalties. Royalties under Section 4.1, 4.2,
or 4.4 will be due until the later of (i) ten years from the first commercial
sale of Products in any country or (ii) on a country-by-country basis, the
expiration of the last-to-expire patent within the Licensed Technology covering
the Products in such country.
5. THIRD PARTY ROYALTIES.
5.1 Royalties Payable by XT. XT will be responsible for the
payment of any royalties, license fees and milestone and/or other payments due
to third parties under licenses or similar agreements entered into by XT
necessary to allow the manufacture, use or sale of Products. Licensee shall
reimburse XT for any royalties paid by XT to third parties under licenses or
similar agreements covering Products necessary to allow the manufacture, use or
sale or other exploitation of Products anywhere in the world. Licensee shall
continue any such reimbursement payments to XT until XT's obligation to pay
royalties to a third party under any license covering Products expires or
terminates. XT agrees not to enter into any license or similar agreement after
the Effective Date which would obligate Licensee to make any payments under this
Section 5.1 without the prior written consent of Licensee.
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
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5.2 Royalties Payable by Licensee. Xenotech shall have no
responsibility under the terms of this Agreement for the payment of any
royalties, license fees or milestone or other payments due to third parties
under licenses or similar agreements entered into by Licensee, its Affiliates,
or its Sublicensees to allow the manufacture, use or sale of Products.
6. ACCOUNTING AND RECORDS.
6.1 Royalty Reports and Payments. After the first commercial sale
of Products on which royalties are required, Licensee agrees to make quarterly
written reports to XT within eighty days after the end of each calendar quarter,
stating in each such report the number, description, and aggregate Net Sales of
Products sold during the calendar quarter upon which a royalty is payable under
Article 4 above. Concurrently with the making of such reports, Licensee shall
pay to XT royalties at the applicable rate specified in Section 4.1, 4.2 or 4.4
above and all royalties payable pursuant to Section 5.1 above, and any
adjustment to Net Sales for a prior period in accordance with the definition of
Net Sales in Section 1.11 hereof. All payments to XT hereunder shall be made in
U.S. Dollars to a bank account designated by XT.
6.2 Early Third Party License Payments. If XT is obligated to pay
royalties to a third party prior to ninety days after the end of the calendar
quarter, XT shall so notify Licensee and Licensee shall provide the reports and
payments set forth in Section 6.1 above not later than ten days before the date
such payments are due to the third party. Up to thirty-five days before such
payments are due, XT may provide Licensee with an invoice by facsimile setting
forth the royalties XT must pay third parties with respect to Licensee's
activities in the Territory in the preceding quarter, and Licensee shall pay
such invoices within thirty days of receipt of such invoice.
6.3 Records; Inspection. Licensee shall keep (and cause its
Affiliates and Sublicensees to keep) complete, true and accurate books of
account and records for the purpose of determining the royalty amounts payable
to XT under this Agreement. Such books and records shall be kept at the
principal place of business of Licensee or its Affiliates or Sublicensees, as
the case may be, for at least three years following the end of the calendar
quarter to which they pertain. Such records of Licensee or its Affiliates will
be open for inspection during such three-year period by a representative of XT
for the purpose of verifying the royalty statements. Licensee shall require each
of its Sublicensees to maintain similar books and records and to open such
records for inspection during the same three-year period by a representative of
Licensee reasonably satisfactory to XT on behalf of, and as required by, XT for
the purpose of verifying the royalty statements. All such inspections may be
made no more than once each calendar year, at reasonable times mutually agreed
by XT and Licensee. The XT representative will be obliged to execute a
reasonable confidentiality agreement prior to commencing any such inspection.
Inspections conducted under this Section 6.3 shall be at the expense of XT,
unless a variation or error producing an increase exceeding [***] of the amount
stated for the period covered by the inspection is established in the course of
any such inspection, whereupon all costs relating thereto will be paid by
Licensee. Upon the expiration of three years following the end of any fiscal
year, the calculation of royalties payable with respect to
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
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<PAGE> 8
such year shall be binding and conclusive, and Licensee shall be released from
any liability or accountability with respect to royalties for such year.
6.4 Currency Conversion. If any currency conversion shall be
required in connection with the calculation of royalties hereunder, such
conversion shall be made using the selling exchange rate for conversion of the
foreign currency into U.S. Dollars, quoted for current transactions reported in
The Wall Street Journal for the last business day of the calendar quarter to
which such payment pertains.
6.5 Late Payments. Any payments due from Licensee that are not
paid on the date such payments are due under this Agreement shall bear interest
to the extent permitted by applicable law at [***], calculated on the number of
days such payment is delinquent. This Section 6.5 shall in no way limit any
other remedies available to any party.
6.6 Withholding Taxes.
6.6.1 Unless immediately reimbursable under Section 6.6.2
below, all payments required to be made pursuant to Articles 3, 4 and 5 hereof
shall be without deduction or withholding for or on account of any taxes (other
than taxes imposed on or measured by net income) or similar governmental charge
imposed by a jurisdiction. Such taxes are referred to herein as "Withholding
Taxes" and such Withholding Taxes shall be the sole responsibility of the
withholding party. The withholding party shall provide a certificate evidencing
payment of any Withholding Taxes hereunder.
6.6.2 XT agrees to elect to claim a tax credit for
Withholding Taxes with respect to which it is entitled so to elect, and further
agrees not to amend such election for the full carry-forward period with respect
to such credit. At the time that XT realizes a reduction in U.S. tax liability
by actually utilizing the Withholding Taxes as a credit against regular U.S. tax
liability (determined on a "first-in-first-out" basis pro rata with other
available foreign tax credits) , then the amount of such reduction attributable
to such credit shall immediately be reimbursed to the withholding party. For
these purposes, a reduction in U.S. tax liability shall include both a direct
reduction in XT's own tax liability and a reduction in the U.S. tax liability of
any of its partners.
6.7 Tax Indemnity. Except as provided in Section 6.6, each party
(the "Tax Indemnitor") shall indemnify and hold harmless the other party hereto
(each a "Tax Indemnitee") from and against any tax or similar governmental
charge assessed solely because of this Agreement with respect to and directly
attributable to the income or the assets of the Tax Indemnitor. In the event
that any governmental agency shall make a claim against a party hereto which
could give rise to an indemnity hereunder, such potential Tax Indemnitee shall
give reasonably prompt notice to the potential Tax Indemnitor of the assertion
of such claim. If the transmission of such notice is unreasonably deferred and
has a material, adverse affect on the ability of the potential Tax Indemnitor to
challenge such claim, such potential Tax Indemnitor shall be released from
liability hereunder. The Tax Indemnitor alone shall (at its own expense) control
the defense or compromise
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
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of any such claim. The Tax Indemnitee shall execute any documents required to
enable Tax Indemnitor to defend such claim, provide any information necessary
therefor, and cooperate with Tax Indemnitor in such defense.
6.8 XT Tax Indemnity. XT shall indemnify and hold harmless
Licensee and its Affiliates from and against any increase to its country of
incorporation income tax liability directly attributable to a positive
adjustment to the amount of gross receipts (an "Adjustment") reported or
reportable by such party from the income, including the royalty income, received
from Licensee on Covered Products. The amount payable hereunder shall be equal
to the difference between (a) the product of (i) the amount of the Adjustment,
and (ii) the highest combined marginal corporate tax rate in the country of
incorporation in effect for the taxable year for which such Adjustment is made,
and (b) the reduction in the party's foreign tax liability, which for purposes
of this Agreement shall be equal to the product of (i) the amount of any
correlative adjustment to its foreign taxable income, and (ii) the highest
combined marginal foreign corporate tax rate in effect for the taxable year for
which the correlative adjustment is made. No indemnification payment shall be
required hereunder until comprehensive efforts to obtain a correlative
adjustment to Licensee's or its Affiliates', as the case may be, taxable income
in a foreign state (which may include, for example invoking competent authority
provisions under the U.S. Japanese Income Tax Treaty (if applicable) or other
applicable bilateral tax treaty) have, to the extent reasonable to do so, been
exhausted.
7. RESEARCH AND DEVELOPMENT.
7.1 Funding and Conduct. Licensee shall independently furnish and
be responsible for funding and conducting all of its preclinical and clinical
research and development of Products, at its own expense.
7.2 Biomaterials. In the case of Previously Selected Antigens as
defined in the Master Research License and Option Agreement, at the reasonable
request of Licensee, XT shall make available as part of the license granted
hereunder to Licensee [***]. Such hybridomas, reagents and materials, as well as
the related data thus made available will be used only by Licensee and its
Affiliates and Sublicensees and manufacturing subcontractors.
8. DUE DILIGENCE.
8.1 [***].
8.1.1 Licensee agrees [***] as may be agreed upon by the
parties [***] the Effective Date.
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
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8.1.2 Notwithstanding the foregoing, Licensee shall be
[***]. After [***], shall be [***] in the United States or Japan.
8.2 Failure to Meet Due Diligence Obligation.
8.2.1 If the diligence requirements set forth in Section
8.1 are not met by Licensee (or its Affiliates or Sublicensees) in the United
States or in Japan, Licensee's rights hereunder shall terminate upon written
notice by XT to Licensee and subject to Sections 8.3, 8.4 and 13.3 below.
8.2.2 Notwithstanding Section 8.2.1, the license granted
hereunder to Licensee shall not terminate by reason of a delay [***], to the
extent that prudent business judgment, based on circumstances outside of
Licensee's reasonable control, reasonably justifies such delay.
8.3 Dispute Resolution. In the event that a dispute arises
whether the diligence requirements in Article 8 have been met or circumstances
exist which Licensee believes justifies a failure on its part to meet such
obligation, the parties will attempt to resolve any dispute by mutual agreement
during a period of 30 days following Licensee's receipt of the notice under
Section 8.2.1.
8.4 Arbitration. In the event that the parties are unable to
resolve such dispute pursuant to Section 8.3 above, such dispute shall be
settled between XT and Licensee by binding arbitration as set forth in Section
14.12. If the arbitrator determines that the party acted in good faith, but
failed to meet its obligations under Section 8.1 above, the license granted to
such party shall not terminate unless the nonperforming party fails to cure such
non-performance within a reasonable period of time, as determined by the
arbitrator.
9. PATENTS.
9.1 [***] Technology.
(a) XT or its licensor, as they may agree, shall have
responsibility for preparing, filing, prosecuting and maintaining patents and
patent applications worldwide relating to the [***] Technology and conducting
any interferences, oppositions, reexaminations, or requesting reissues or patent
term extensions with respect to the [***] Technology. XT shall keep Licensee
reasonably informed as to the status of such patent matters, including without
limitation, by providing Licensee the opportunity to review and comment on any
substantive documents which will be filed in any patent office, and providing
Licensee copies of any substantive documents received by XT from such patent
offices including notice of all interferences,
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
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reexaminations, oppositions or requests for patent term extensions. Licensee
shall cooperate with and assist XT in connection with such activities, at XT's
request and expense.
(b) In the event that Licensee becomes aware that any
[***] Technology necessary for the practice of the license granted herein is
infringed or misappropriated by a third party or is subject to a declaratory
judgment action arising from such infringement, Licensee shall promptly notify
XT and XT shall thereafter promptly notify the owner of such intellectual
property. XT or its licensor, as they may agree, shall have the exclusive right
to enforce, or defend any declaratory judgment action, at its expense, involving
any [***] Technology. In such event, XT shall keep Licensee reasonably informed
of the progress of any such claim, suit or proceeding. Any recovery received by
XT as a result of any such claim, suit or proceeding shall be used first to
reimburse XT for all expenses (including attorneys, and professional fees)
incurred in connection with such claim, suit or proceeding, [***].
9.2 [***] Technology.
9.2.1 Licensee shall, at its expense, have the initial
worldwide responsibility for preparing, filing, prosecuting and maintaining
patent applications and conducting any interferences, oppositions,
reexaminations, or requesting reissues or patent term extensions with respect to
[***] Technology, except to the extent XT may not have the right to do so.
Licensee shall give XT the opportunity to review the status of all such pending
patent applications and actions and shall keep XT fully informed of the progress
of such applications and actions, including, without limitation, by promptly
providing XT with copies of all substantive worldwide correspondence sent to and
received from patent offices, and providing notice of all interferences,
reexaminations, oppositions or requests for patent term extensions. In the event
that Licensee declines or fails to prepare, file, prosecute or maintain such
patent applications or patents or take such other actions, relating to the
Products in any country, it shall promptly and in no event later than ninety
days prior to any filing deadline, provide notice to XT. XT shall have the right
to assume such responsibilities at its own expense, using counsel of its choice.
9.2.2 In the event that Licensee becomes aware that any
[***] Technology is infringed or misappropriated by a third party in any country
of the world, or is subject to a declaratory judgment action arising from such
infringement in any country, Licensee shall promptly notify XT and XT shall
thereafter promptly notify the owner of such intellectual property. Licensee
shall have the exclusive right to enforce, or defend any declaratory judgment
action, in any country of the world, at its expense, involving any Antigen
Technology. In such event, Licensee shall keep XT reasonably informed of the
progress of any such claim, suit or proceeding. Any recovery by Licensee
received as a result of any such claim, suit or proceeding shall be used first
to reimburse Licensee for all expenses (including attorneys, and professional
fees) incurred in connection with such claim, suit or proceeding, [***].
9.3 Infringement Claims. If the production, sale or use of
Products pursuant to this Agreement results in any claim, suit or proceeding
alleging patent infringement against Licensee
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
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(or its Affiliates or Sublicensees), Licensee shall promptly notify XT thereof
in writing setting forth the facts of such claim in reasonable detail. [***],
Licensee shall have the exclusive right to defend and control the defense of any
such claim, suit or proceeding, at its own expense, using counsel of its choice.
Licensee shall keep XT reasonably informed of all material developments in
connection with any such claim, suit or proceeding as it relates to the Licensed
Technology, Licensee shall have the right to deduct any damages and expenses
(including attorneys' and professional fees) against any amounts due, or which
may become due, to XT pursuant to this Agreement. Notwithstanding the above,
Licensee shall not be able to settle any such claim, suit or proceeding that
involves any admission of the invalidity of the Licensed Technology.
9.4 Patent Marking. Licensee agrees to mark and have its
Affiliates and Sublicensees mark all Products sold pursuant to this Agreement in
accordance with the applicable statutes or regulations in the country or
countries of manufacture and sale thereof.
10. CONFIDENTIALITY.
10.1 Confidential Information. Except as expressly provided
herein, the parties agree that, for the term of this Agreement and for five
years thereafter, the receiving party shall keep completely confidential and
shall not publish or otherwise disclose and shall not use for any purpose any
information furnished to it by another party hereto pursuant to this Agreement
except to the extent that it can be established by the receiving party by
competent proof that such information:
(a) was already known to the receiving party, other than
under an obligation of confidentiality, at the time of disclosure;
(b) was generally available to the public or otherwise
part of the public domain at the time of its disclosure to the receiving party;
(c) became generally available to the public or otherwise
part of the public domain after its disclosure and other than through any act or
omission of the receiving party in breach of this Agreement; or
(d) was subsequently lawfully disclosed to the receiving
party by a person other than a party or developed by the receiving party without
reference to any information or materials disclosed by the disclosing party.
10.2 Permitted Disclosures. Notwithstanding Sections 10.1 above
and 14.16 below, each party hereto may disclose the other party's information to
the extent such disclosure is reasonably necessary in filing or prosecuting
patent applications, prosecuting or defending litigation, complying with
applicable governmental regulations or otherwise submitting information to tax
or
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
-12-
<PAGE> 13
other governmental authorities, making a permitted sublicense or other exercise
of its rights hereunder or conducting clinical trials, provided that if a party
is required to make any such disclosure of the other party's secret or
confidential information, other than pursuant to a confidentiality agreement, it
will give reasonable advance notice to the latter party of such disclosure
requirement and, save to the extent inappropriate in the case of patent
applications, will use efforts consistent with prudent business judgment to
secure confidential treatment of such information prior to its disclosure
(whether through protective orders or otherwise). Notwithstanding the foregoing,
XT shall not disclose to third parties, clinical data or regulatory filings
received from Licensee except as agreed in writing by Licensee.
11. SUBLICENSES.
Pursuant to Article 2 herein, Licensee will have the right to grant and
authorize sublicenses to third parties; provided, however, the Licensee shall
remain responsible for any payments due XT for Net Sales of Products by any
Sublicensee. [***]. Any sublicense granted by Licensee pursuant to this
Agreement shall provide that the Sublicensee will be subject to the applicable
terms of this Agreement. Licensee shall provide XT with a copy of relevant
portions of each sublicense agreement, as reasonably required by XT.
12. REPRESENTATIONS AND WARRANTIES.
12.1 XT. XT represents and warrants that:
(i) it has the full right and authority to enter into this
Agreement and grant the rights and licenses granted herein;
(ii) it has not previously granted and will not grant any
rights inconsistent or in conflict with the rights and licenses granted to
Licensee herein;
(iii) there are no existing or threatened actions, suits
or claims pending against XT with respect to the Licensed Technology or the
right of XT to enter into and perform its obligations under this Agreement;
(iv) it has not previously granted, and will not grant
during the term of this Agreement, any right, license or interest in and to the
Licensed Technology, or any portion thereof, with respect to the Products, or
their manufacture or use;
(v) Schedule 3 hereto sets forth all royalties, license
fees, milestone payments and similar payments due to third parties for which
Licensee is obligated to reimburse XT under Section 5.1 above as of the
Effective Date; and
(vi) the Licensed Technology is all the technology owned
by or licensed to XT as of the Effective Date.
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
-13-
<PAGE> 14
12.2 Licensee. Licensee represents and warrants that:
(i) it has the full right and authority to enter into
this Agreement,
(ii) to its knowledge, there are no existing or threatened
actions, suits or claims pending with respect to the subject matter hereof or
the right of Licensee to enter into and perform its obligations under this
Agreement; and
(iii) it has not entered and during the term of this
Agreement will not enter any other agreement inconsistent or in conflict with
this Agreement.
12.3 Disclaimer. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS
AGREEMENT, XT MAKES NO REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND,
EITHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND VALIDITY OF LICENSED
TECHNOLOGY CLAIMS, ISSUED OR PENDING.
12.4 Effect of Representations and Warranties. It is understood
that if the representations and warranties under this Article 12 are not true
and accurate and a party incurs liabilities, costs or other expenses as a result
of such falsity, the party at fault shall indemnify, defend and hold the injured
party harmless from and against any such liabilities, costs or expenses
incurred, provided that the party at fault receives prompt notice of any claim
against the injured party resulting from or related to such falsity and the sole
right to control the defense or settlement thereof.
13. TERM AND TERMINATION.
13.1 Effectiveness. This Agreement shall become effective as of
the Effective Date and the license rights granted by XT under Article 2 above
shall be in full force and effect as of such date.
13.2 Term. Unless earlier terminated pursuant to the other
provisions of this Article 13, this Agreement shall continue in full force and
effect until the later of
(i) the expiration of the last to expire patent within the
Licensed Technology claiming Products; or
(ii) the twentieth anniversary of the Effective Date.
The licenses granted under Article 2 shall survive the expiration (but not an
earlier termination) of this Agreement; provided that such licenses shall in
such event become nonexclusive.
13.3 Termination for Breach. Either party to this Agreement may
terminate this Agreement in the event the other party shall have materially
breached or defaulted in the
-14-
<PAGE> 15
performance of any of its material obligations hereunder, and such shall have
continued for sixty days after written notice thereof was provided to the
breaching party by the nonbreaching party that terminates the Agreement as to
such party. Any termination shall become effective at the end of such sixty day
period unless the breaching party has cured any such breach or default prior to
the expiration of the sixty day period. However, if the party alleged to be in
breach of this Agreement disputes such breach within such sixty day period, the
non-breaching party shall not have the right to terminate this Agreement unless
it has been determined by an arbitration proceeding in accordance with Section
14.12 below that this Agreement was materially breached, and the breaching party
fails to cure such breach within thirty days following the final decision of the
arbitrators or such other time as directed by the arbitrators.
13.4 Other Termination Rights. Licensee may terminate this Agreement and
the license granted herein, in its entirety or as to any particular patent
within the Licensed Technology in a particular country, at any time, by
providing XT ninety-days written notice. In the event of termination as to a
particular country, the subject patent in such country shall cease to be within
the Licensed Technology for all purposes of this Agreement.
13.5 Effect of Termination.
13.5.1 Termination of this Agreement for any reason shall not
release either party hereto from any liability which at the time of such
termination has already accrued to the other party or which is attributable to a
period prior to such termination.
13.5.2 In the event this Agreement is terminated for any reason,
Licensee and its Affiliates and Sublicensees shall have the right to sell or
otherwise dispose of the stock of any Products subject to this Agreement then on
hand. Upon termination of this Agreement by XT for any reason, any sublicense
granted by Licensee hereunder shall survive, provided that upon request by XT,
such Sublicensee promptly agrees in writing to be bound by the applicable terms
of this Agreement.
13.5.3 This Agreement, including, without limitation, any
licenses or sublicenses granted pursuant to this Agreement, shall survive any
dissolution, liquidation or acquisition of XT. Such licenses shall remain in
full force and effect even after any distribution, following dissolution, of the
intellectual property owned or licensed to XT, to any entity. Any transfer of
such intellectual property prior to or following dissolution shall be subject to
the licenses granted herein.
13.5.4 This Agreement, including the license granted in Article
2, is independent of, and shall not be affected by, any breach or termination of
the Master Research License and Option Agreement or any other agreement between
the parties or their Affiliates. In the event of the termination of the Master
Research License and Option Agreement, the rights and obligations of the parties
hereto under Article 12 thereof shall be deemed to be part of this Agreement.
13.5.5 Sections 6.3, 6.5, 6.6, 6.7 and 6.8 and Articles 10, 12,
13 and 14 shall survive the expiration and any termination of this Agreement for
any reason.
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<PAGE> 16
14. MISCELLANEOUS.
14.1 Governing Laws. This Agreement shall be interpreted and
construed in accordance with the laws of the State of California, without regard
to conflicts of law principles.
14.2 Waiver. It is agreed that no waiver by any party hereto of
any breach or default of any of the covenants or agreements herein set forth
shall be deemed a waiver as to any subsequent and/or similar breach or default.
14.3 Assignment. This Agreement and the license granted hereunder
may not be assigned by Licensee to any third party without the written consent
of XT, and XT may not assign this Agreement to a third party without the consent
of Licensee; except any party may assign this Agreement without such consent to
(a) an Affiliate (provided that such Affiliate is two-thirds or greater owned
directly or indirectly) or (b) an entity that acquires substantially all of the
assets of the monoclonal antibody business segment of the assigning party. The
terms and conditions of this Agreement shall be binding on and inure to the
benefit of the permitted successors and assigns of the parties.
14.4 Independent Contractors. The relationship of the parties
hereto is that of independent contractors. The parties hereto are not deemed to
be agents, partners or joint venturers of the others for any purpose as a result
of this Agreement or the transactions contemplated thereby.
14.5 Compliance with Laws. In exercising their rights under this
license, the parties shall fully comply with the requirements of any and all
applicable laws, regulations, rules and orders of any governmental body having
jurisdiction over the exercise of rights under this license.
14.6 No Implied Obligations. Except as expressly provided in
Article 8 above, nothing in this Agreement shall be deemed to require Licensee
to exploit the Licensed Technology nor to prevent Licensee from commercializing
products similar to or competitive with any Products, in addition to or in lieu
of such Products.
14.7 Notices. Any notice required or permitted to be given to the
parties hereto shall be given in writing and shall be deemed to have been
properly given if delivered in person or when received if mailed by first class
certified mail to the other party at the appropriate address as set forth below
or to such other addresses as may be designated in writing by the parties from
time to time during the term of this Agreement.
XT: Xenotech, L.P.
322 Lakeside Drive
Foster City, California 94404
Attn: Chief Financial Officer
-16-
<PAGE> 17
Japan Tobacco Inc.: Japan Tobacco Inc.
JT Building
2-1 Toranomon 2-chome
Minato-ku, Tokyo 105
Japan
Attn: Vice President
Pharmaceutical Division
with a copy to: JT America Inc.
1825 South Grant Street, Suite 220
San Mateo, CA 94402
Attn: President
and to: Gilbert, Segall and Young LLP
430 Park Avenue
New York, NY 10022
Attn: Neal N. Beaton, Esq.
Abgenix, Inc.: Abgenix, Inc.
7601 Dumbarton Circle
Fremont, California 94555
Attn: President
with a copy to: Wilson Sonsini Goodrich & Rosati, P.C.
650 Page Mill Road
Palo Alto, California 94304
Attn: Kenneth A. Clark, Esq.
14.8 Export Laws. Notwithstanding anything to the contrary
contained herein, all obligations of XT and Licensee are subject to prior
compliance with United States export regulations and such other United States
laws and regulations as may be applicable, and to obtaining all necessary
approvals required by the applicable agencies of the government of the United
States. Licensee shall use efforts consistent with prudent business judgment to
obtain such approvals. XT shall cooperate with Licensee and shall provide
assistance to Licensee as reasonably necessary to obtain any required approvals.
14.9 Severability. In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force and
effect without said provision and the parties shall discuss in good faith
appropriate revised arrangements.
14.10 Force Majeure. Nonperformance of any party (except for
payment obligations) shall be excused to the extent that performance is rendered
impossible by strike, fire, earthquake, flood, governmental acts or orders or
restrictions, failure of suppliers, or any other
-17-
<PAGE> 18
reason where failure to perform, is beyond the reasonable control and not caused
by the negligence, intentional conduct or misconduct of the nonperforming party.
14.11 No Consequential Damages. IN NO EVENT SHALL ANY PARTY
HERETO BE LIABLE FOR SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF
THIS
AGREEMENT OR THE EXERCISE OF RIGHTS HEREUNDER.
14.12 Dispute Resolution; Arbitration. The parties will attempt
to resolve any dispute under this Agreement by mutual agreement, and, if
required, there shall be a face-to-face meeting between senior executives of the
parties. Any dispute under this Agreement which is not settled after such
meeting, shall be finally settled by binding arbitration, conducted in
accordance with the Rules of Arbitration of the International Chamber of
Commerce by three arbitrators appointed in accordance with said rules. The
arbitration proceedings and all pleadings and written evidence shall be in the
English language. Any written evidence originally in a language other than
English shall be submitted in English translation accompanied by the original or
a true copy thereof. The costs of the arbitration, including administrative and
arbitrators' fees, shall be shared equally by the parties. Each party shall bear
its own costs and attorneys' and witness' fees. The prevailing party in any
arbitration, as determined by the arbitration panel, shall be entitled to an
award against the other party in the amount of the prevailing party's costs and
reasonable attorneys, fees. The arbitration shall be held in San Francisco,
California. A disputed performance or suspended performances pending the
resolution of the arbitration must be completed within thirty days following the
final decision of the arbitrators. Any arbitration shall be completed within six
months from the filing of notice of a request for such arbitration.
14.13 Complete Agreement. It is understood and agreed between XT
and Licensee that this Agreement constitutes the entire agreement, both written
and oral, between the parties with respect to the subject matter hereof, and
that all prior agreements respecting the subject matter hereof, either written
or oral, expressed or implied, shall be abrogated, canceled, and are null and
void and of no effect. No amendment or change hereof or addition hereto shall be
effective or binding on either of the parties hereto unless reduced to writing
and executed by the respective duly authorized representatives of XT and
Licensee.
14.14 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original and both together
shall be deemed to be one and the same agreement.
14.15 Headings. The captions to the several Articles and Sections
hereof are not a part of this Agreement, but are included merely for convenience
of reference only and shall not affect its meaning or interpretation.
14.16 Nondisclosure. Except as provided in Article 10, each of
the parties hereto agrees not to disclose to any third party the terms of this
Agreement without the prior written consent of each other party hereto, except
to advisors, investors, licensees, sublicensees and others on a need to know
basis under circumstances that reasonably ensure the confidentiality thereof, or
to the extent
-18-
<PAGE> 19
required by law; provided, however, that the royalty rate specified in Section
4.1 of this executed Product License shall be redacted before the terms of this
executed Product License are disclosed to potential licensees and sublicensees.
Without limitation upon any provision of this Agreement, each of the parties
hereto shall be responsible for the observance by its employees, consultants and
contractors of the foregoing confidentiality obligations.
14.17 Conformity with GenPharm Cross-License. The rights and
licenses granted to Licensee hereunder shall be subject to the GenPharm Cross
License, and to the extent that this Agreement purports to grant greater rights
to Licensee than is permitted under the GenPharm Cross License, such rights
shall be granted only to the extent permitted under the GenPharm Cross License,
and the terms of the GenPharm Cross License shall control.
IN WITNESS WHEREOF, the parties have executed this Agreement, through
their respective officers hereunto duly authorized, as of the day and year first
above written.
XENOTECH, INC. (as General LICENSEE
Partner of XENOTECH, L.P.)
By: /s/ NORIAKI OKUBO By: /s/ R. SCOTT GREER
-------------------------------------- --------------------------
Name: Noriaki Okubo Name: R. Scott Greer
------------------------------------ ------------------------
Title: President and CEO, Xenotech, Inc. Title: President and CEO
----------------------------------- -----------------------
and By: /s/ RAYMOND M. WITHY
----------------------------------
Name: Raymond M. Withy
------------------------------------
Title: Chairman, Xenotech, Inc.
-----------------------------------
Schedule 1: Patents [***] Technology"
Schedule 2: Patents [***] Technology"
Schedule 3: Payments Due to Third Parties
Schedule 4: XT In-Licenses
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
-19-
<PAGE> 20
SCHEDULE 1 PATENTS
None.
<PAGE> 21
SCHEDULE 1
None.
<PAGE> 22
Schedule 2 - Patents
Docket No. Filing Date Serial No. Title Inventors
[***]
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
<PAGE> 23
Schedule 2 - Patents
(Continued)
Docket No. Filing Date Serial No. Title Inventors
[***]
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
<PAGE> 24
Schedule 2
[***]
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
<PAGE> 25
Schedule 2
(Continued)
[***]
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
<PAGE> 26
Schedule 2
(Continued)
[***]
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
<PAGE> 27
Schedule 2
(Continued)
[***]
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
<PAGE> 28
Schedule 3
Royalties Payable by Xenotech
[***]
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
<PAGE> 29
Schedule 4
Xenotech Controlled Rights
[***]
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the references to our firm under the captions "Selected
Financial Data" and "Experts" and to the use of our reports dated January 23,
1998 in the Registration Statement (Form S-1) and related Prospectus of Abgenix,
Inc. for the registration of 3,450,000 shares of its common stock.
Ernst & Young LLP
Palo Alto, California
April 3, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from (a) the
balance sheet of Abgenix, Inc. as of December 31, 1997, and the related
statement of operations for the year then ended and is qualified in its entirety
by reference to such (b) Form S-1.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 4,617
<SECURITIES> 10,704
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 15,871
<PP&E> 6,691
<DEPRECIATION> 915
<TOTAL-ASSETS> 22,084
<CURRENT-LIABILITIES> 9,234
<BONDS> 3,979
31,189
0
<COMMON> 351
<OTHER-SE> 29,805
<TOTAL-LIABILITY-AND-EQUITY> 22,318
<SALES> 0
<TOTAL-REVENUES> 1,954
<CGS> 0
<TOTAL-COSTS> 37,430
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 711
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 35,880
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 35,880
<EPS-PRIMARY> 9.22<F1>
<EPS-DILUTED> 9.22
<FN>
<F1>For Purposes of This Exhibit, Primary means Basic.
</FN>
</TABLE>
