UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): July 9, 1998
XOMA CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
0-14710 94-2756657
(Commission File Number) (IRS Employer Identification No.)
2910 Seventh Street, Berkeley, California 94710
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (510) 644-1170
None
(Former name or former address, if changed since last report)
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Item 5. Other Events
On July 16, 1998, XOMA Corporation ("XOMA") announced that it had signed an
exclusive license with Incyte Pharmaceuticals, Inc. ("Incyte") for all of
Incyte's patents and patent applications relating to
bactericidal/permeability-increasing protein ("BPI"). The license provides that
XOMA will pay Incyte a royalty on sales of BPI products covered by the license,
up to a maximum of $11.5 million, and will make a $1.5 million advance royalty
payment, one-half in cash and one-half in shares of XOMA common stock. Incyte
will also receive warrants to purchase 250,000 shares of XOMA common stock at
$6.00 per share.
Item 7. Exhibits
1. License Agreement between Incyte Pharmaceuticals, Inc. and XOMA
Corporation effective as of July 9, 1998 (with certain confidential
information omitted, which omitted information is the subject of a
confidential treatment request and has been filed separately with the
Securities and Exchange Commission)
2. Form of Common Stock Purchase Warrant
3. Registration Rights Agreement dated as of July 9, 1998 by and among
XOMA Corporation and Incyte Pharmaceuticals, Inc.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: July 16, 1998 XOMA CORPORATION
By: /s/ Christopher J. Margolin
-----------------------------------
Name: Christopher J. Margolin
Title: Vice President, General Counsel
and Secretary
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EXHIBIT INDEX
Number Description
1. License Agreement between Incyte Pharmaceuticals, Inc. and XOMA
Corporation effective as of July 9, 1998 (with certain confidential
information omitted, which omitted information is the subject of a
confidential treatment request and has been filed separately with the
Securities and Exchange Commission)
2. Form of Common Stock Purchase Warrant
3. Registration Rights Agreement dated as of July 9, 1998 by and among XOMA
Corporation and Incyte Pharmaceuticals, Inc.
[*] indicates that a confidential portion of this Agreement has been omitted and
filed separately with the Securities and Exchange Commission.
================================================================================
LICENSE AGREEMENT
between
INCYTE PHARMACEUTICALS, INC.
and
XOMA CORPORATION
effective as of
July 9, 1998
================================================================================
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TABLE OF CONTENTS
Page
Section 1. Definitions .....................................................2
1.1. "Biologically Active"........................................2
1.2. "Combination Product"........................................2
1.3. "Excluded Technologies"......................................2
1.4. "Incyte Patents".............................................2
1.5. "Licensed Product"...........................................3
1.6. "Market Price"...............................................3
1.7. "Net Sales"..................................................4
1.8. "Principal Countries"........................................5
1.9. "Underlying Shares"..........................................5
1.10. "Valid Claim"...............................................5
1.11. "XOMA Patents"..............................................5
Section 2. License to XOMA..................................................6
Section 3. Royalties .......................................................7
3.1. Payment .....................................................7
3.2. Initial Payment; Prepayments.................................8
3.3. Payment Dates...............................................10
3.4. Records and Accounting......................................10
3.5. Currency of Payments........................................12
3.6. Combination Product Net Sales...............................12
3.7. Payment in Stock............................................12
Section 4. Prosecution ....................................................16
Section 5. Third Party Infringement........................................18
Section 6. Oppositions and Interferences...................................19
Section 7. Covenants Not to Sue............................................20
Section 8. Representations and Warranties..................................21
Section 9. Term and Termination............................................26
9.1. Term .......................................................26
9.2. Termination.................................................26
9.3. Survival of Provisions......................................27
Section 10. Rockefeller/Cornell License Agreement..........................27
10.1. Additional Definitions.....................................27
10.2. Assignment and Assumption..................................28
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Page
10.3. Additional Representations and Warranties of Incyte........28
10.4. Indemnification............................................29
Section 11. General Provisions.............................................30
11.1. Notices ...................................................30
11.2. GOVERNING LAW..............................................30
11.3. Entire Agreement; Amendment................................31
11.4. Binding Effect; Assignability..............................31
11.5. Waiver ....................................................31
11.6. Severability...............................................32
11.7. Publicity..................................................32
11.8. No Partnership.............................................33
11.9. DISCLAIMER OF WARRANTIES...................................33
11.10. Indemnification...........................................33
11.11. Non-competition...........................................34
11.12. Dispute Resolution........................................34
11.13. Further Assurances.........................................35
11.14. Counterparts...............................................36
Signatures.................................................................37
Exhibit 1.4 Incyte Patents
Exhibit 3.2(a) Legend
Exhibit 6(b)-1 Interference Settlement
(Interference No. [*])
Exhibit 6(b)-2 Interference Settlement
(Interference No. [*])
Exhibit 10.2-1 Patents and Intellectual Property
Exhibit 10.2-2 Assignment and Assumption Agreement
-ii-
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LICENSE AGREEMENT
This License Agreement ("Agreement") is entered into effective as of July
9, 1998 ("Effective Date") between Incyte Pharmaceuticals, Inc., a Delaware
corporation ("Incyte"), with its principal offices at 3174 Porter Drive, Palo
Alto, California 94304, and XOMA Corporation, a Delaware corporation ("XOMA"),
with its principal offices at 2910 Seventh Street, Berkeley, California 94710.
WHEREAS, Incyte owns and/or controls certain patent rights relating to
bactericidal/permeability-increasing protein ("BPI") or
lipopolysaccharide-binding protein ("LBP") molecules and related technology that
XOMA desires to license from Incyte, and Incyte is willing to grant such
licenses to XOMA; and
WHEREAS, simultaneously with the execution hereof, XOMA is delivering to
Incyte (a) a warrant (the "Warrant") to purchase 250,000 shares of common stock,
par value $.0005 per share, of XOMA ("Common Stock") and (b) a registration
rights agreement, dated the Effective Date (the "Registration Rights
Agreement"), relating to the registration of the Advance Shares and the
Underlying Shares, as such terms are defined herein;
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NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, Incyte and XOMA agree as follows:
Section 1. Defnitions. As used in this Agreement, the following words will
have the following meanings:
1.1. "Biologically Active" means therapeutically or prophylactically
active or having diagnostic properties.
1.2. "Combination Product" shall mean a product comprising a Licensed
Product and at least one other ingredient which is Biologically Active.
1.3. "Excluded Technologies" means Incyte's proprietary [*].
1.4. "Incyte Patents" shall mean any and all patents or patent rights
owned, licensed or otherwise controlled by Incyte relating to BPI or LBP
molecules or related technology (except as such molecules may be used in
connection with the Excluded Technologies), including without
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limitation (i) those patents listed on Exhibit 1.4 hereto, (ii) any such
patents or patent rights, if any, licensed or otherwise acquired from
collaborators, (iii) any patents or patent applications related to any of
the foregoing as continuations, continuations-in-part, divisions,
extensions, reissues or renewals or substitutions and (iv) any foreign
counterparts of any of the foregoing.
1.5. "Licensed Product" shall mean any formulation or product or
method or system which, but for the licenses granted hereunder, would
infringe a Valid Claim of an Incyte Patent in the country in which such
formulation, product, method or system is made (or had made), used, sold,
or imported (or had imported) by XOMA or its sublicensees hereunder.
1.6. "Market Price" shall mean, on any date specified herein, (i) the
average daily closing price for the ten consecutive trading days before the
day in question on any principal national securities exchange in the United
States on which the Common Stock is traded, or (ii) if the Common Stock is
not traded on a principal national securities exchange in the United
States, the average daily closing price for the ten consecutive trading
days before the day in question as reported on the Nasdaq National
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Market ("NNM") or the Nasdaq SmallCap Market ("Nasdaq SmallCap" and,
together with NNM, "Nasdaq") operated by The Nasdaq Stock Market, Inc. or
the average of the means between the bid and asked prices in the United
States over-the-counter market, as reported by The National Quotation
Bureau, Inc., or an equivalent generally accepted reporting service, for
the ten consecutive trading days before the day in question. The closing
price referred to in clauses (i) and (ii) above shall be the last reported
sale price or, in case no reported sale takes place on such day, the
average of the reported closing bid and asked prices on such principal
national securities exchange or as reported on Nasdaq.
1.7. "Net Sales" shall mean the total amount invoiced in connection
with sales of the Licensed Products, in any arm's length transaction, after
deduction of all the following to the extent applicable to such sales:
(i) all trade, cash and quantity credits, discounts, refunds or
rebates;
(ii) allowances or credits for returns;
(iii) sales commissions; and
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(iv) sales taxes (including value added tax);
provided, that in respect of sales which are not "at arm's length" sales,
the Net Sales shall be deemed to be the total sales price invoiced at the
time of such sales for sales of Licensed Products which are "at arm's
length" sales after the aforementioned deductions.
1.8. "Principal Countries" shall mean the United States of America,
the United Kingdom, France, Germany, Italy and Japan.
1.9. "Underlying Shares" shall mean the shares of Common Stock
issuable upon exercise of the Warrant or as any prepayment of royalties
hereunder in accordance with Section 3.7 of this Agreement.
1.10. "Valid Claim" shall mean a subsisting claim of an issued and
unexpired patent that (i) has not been held invalid, unpatentable or
unenforceable by a decision of a governmental body or court of competent
jurisdiction that is unappealable or unappealed within the time allowed for
appeal, and (ii) has not been rendered unenforceable through disclaimer or
otherwise.
1.11. "XOMA Patents" shall mean any and all patents or patent rights
owned, licensed or otherwise controlled
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by XOMA relating to BPI or LBP molecules or related technology, and any
patents or patent applications related thereto (whether continuations,
continuations-in-part, divisions, extensions, reissues or renewals,
substitutions) and any and all foreign counterparts of any of the
foregoing.
Section 2. License to XOMA. Incyte hereby grants to XOMA an irrevocable,
exclusive (even as to Incyte), freely sublicenseable, worldwide license under
the Incyte Patents (including without limitation to make, have made, use, sell,
have sold, import or have imported Licensed Products) and any know-how
(including any improvements thereon) relating to BPI and LBP molecules or
related technology (except as such molecules may be used in connection with the
Excluded Technologies) that is hereafter discovered or developed by or on behalf
of Incyte or that Incyte hereafter becomes aware has previously been discovered
or developed by it or on its behalf. XOMA shall make any sublicensee hereunder
aware of the terms and obligations of this Agreement, and such sublicensee shall
agree in writing to be bound by terms and conditions consistent with this
Agreement.
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Section 3. Royalties
3.1. Payment. XOMA shall pay Incyte, on a country-by-country basis, a
royalty of [*] of Net Sales of all Licensed Products sold by
XOMA and its sublicensees in the United States or in any other country
where there exists a Valid Claim of an Incyte Patent; provided, that in no
event shall royalties payable under this Agreement exceed U.S.$11,500,000
in the aggregate (converted, as necessary, in accordance with Section 3.5)
and provided further, that if at any time during the term hereof the
royalties (including any and all prepayments thereof) paid hereunder shall
reach U.S. $11,500,000, the license granted herein shall become a fully
paid up, perpetual license, with no further royalties due thereafter. XOMA
shall be entitled to credit royalties due under this Section 3.1, in the
order in which the payment obligations for such royalties arise, against
the initial payment made by XOMA under Section 3.2(a) and any additional
prepayments made under Section 3.2(c). XOMA's obligation to pay such
royalties shall continue during the term of this Agreement, subject to the
foregoing provisos, with respect to any Licensed Product in any country for
so long as there is a Valid Claim of an Incyte Patent existing in that
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country which the sale of a Licensed Product in that country would infringe
but for the license granted herein. In no event shall XOMA be required to
pay more than one royalty on the same Licensed Product.
3.2. Initial Payment; Prepayments. (a) XOMA will make an initial,
nonrefundable payment to Incyte in the amount of U.S. $1,500,000. Such
payment will be made within ten (10) days after the Effective Date in a
combination of (i) shares of Common Stock having an aggregate market value
based on the Market Price on the Effective Date of $750,000 (the "Advance
Shares") and (ii) $750,000 in cash. Incyte acknowledges that the
certificates representing the Advance Shares shall initially bear the
legend set forth on Exhibit 3.2(a) hereto.
(b) In the event that the registration statement relating to the
resale by Incyte of the Advance Shares required to be filed pursuant to the
Registration Rights Agreement (i) is not filed with the Securities and
Exchange Commission (the "SEC") within 30 days of the Effective Date or
(ii) is not declared effective by the SEC on or prior to the 60th day after
the filing thereof (which 60-day period shall be extended by an additional
60 days in the event that XOMA is notified that such registration statement
will be reviewed by the SEC), then XOMA shall,
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within five business days following receipt by XOMA of a written request
from Incyte delivered after the expiration of the applicable 30-, 60- or
120-day period, repurchase the Advance Shares from Incyte for cash at a
price equal to their aggregate Market Price on the Effective Date.
(c) XOMA may, at its option, prepay its royalty obligations under
Section 3.1, at any time prior to such obligation becoming payable
hereunder as set forth in Section 3.3, either (i) in cash or (ii) at the
election of XOMA, but subject to the fulfillment of the conditions, and in
accordance with the other provisions, set forth in Section 3.7 below, in
shares of Common Stock having a market value based on the Market Price as
of the Registration Effectiveness Date (as defined in Section 3.7(b)(iii)
below) equal to the amount of the obligation being prepaid or (iii) in any
combination of (i) and (ii). In addition, XOMA may, at its option, consent
to the immediate application of any amount(s) to be paid in exercise of all
or any portion(s) of the Warrant to the prepayment of royalty obligations
under Section 3.1 that have not yet become payable hereunder as set forth
in Section 3.3, such that no cash payment by Incyte will be required upon
such exercise of the Warrant to the extent of the amounts so applied, all
in accordance with the terms and procedures set forth
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in the Warrant. Any prepayments referred to in this Section 3.2(c) shall be
nonrefundable.
3.3. Payment Dates. Except as provided in Section 3.2, royalties
payable hereunder shall be paid in cash within forty-five (45) days from
the end of each calendar quarter for Net Sales during the preceding
quarter. Such payment shall be accompanied by a statement showing the
following:
(i) gross sales of Licensed Products and Combination Products,
i.e., the amount invoiced prior to any deductions,
(ii) the deductions permitted under Section 1.7 hereof to arrive
at Net Sales, and
(iii) the royalty computations and subject of payment.
3.4. Records and Accounting. (a) XOMA shall keep, and require its
sublicensees hereunder to keep, for a period of at least three years after
the date of entry, complete and accurate records, in accordance with United
States generally accepted accounting principles (or comparable
international accounting principles), of Net Sales with respect to which a
royalty is payable under this
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Agreement. All royalties payable under Section 3.1 shall accrue based on
sales of Licensed Products as and when recorded by XOMA or its sublicensees
in its or their accounting records.
(b) Incyte shall have the right at its own expense to have an
independent, certified public accountant, selected as set forth herein,
review XOMA's or its sublicensee's records upon reasonable notice and
during reasonable business hours for the sole purpose of verifying the
accuracy of the payments provided for in this Agreement. If Incyte desires
to have such review performed, Incyte shall notify XOMA and shall designate
a nationally-recognized accounting firm which is reasonably acceptable to
XOMA (including in light of any past relationship of such firm with XOMA).
The inspection right provided for in this Section 3.4 may not be exercised
more than once for any calendar year with respect to XOMA's or its
sublicensee's records. Should such review lead to the discovery of an
underreporting of royalties due hereunder, subject to Section 11.12, such
royalties shall be promptly remitted with interest at an annual rate of [*]
to Incyte. In addition, subject to Section 11.12, if the underreporting is
greater than five percent (5%), XOMA, in addition to promptly pay-
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ing any unpaid royalties, shall pay the reasonable cost of such review.
3.5. Currency of Payments. All cash payments under this Agreement
shall be made in United States Dollars by check payable to the order of
Incyte or by wire transfer to such bank account as Incyte may designate
from time to time. Any payments invoiced in currencies other than United
States Dollars shall first be calculated in the currency in which the sales
are invoiced and then converted to United States Dollars at the exchange
rate being used by XOMA in maintaining its accounting records for the
period for which royalties are payable.
3.6. Combination Product Net Sales. In determining the Net Sales of
Combination Products, Net Sales shall first be calculated in accordance
with the definition of Net Sales and then multiplied by the percentage
value of the Licensed Product contained in the Combination Product, such
percentage value being the quotient obtained by dividing the costs of
manufacturing the Licensed Product by the sum of the cost of the
manufacturing of the Licensed Product plus other Biologically Active
ingredients.
3.7. Prepayments in Stock. (a) Although all regular, semi-annual
royalty payments pursuant to Section 3.3
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shall be paid in cash, XOMA may elect to prepay all or any portion of its
royalty obligations under Section 3.1 by delivery of shares of Common Stock
to the extent the following conditions have been satisfied:
(i) The shares of Common Stock delivered in prepayment shall have
a market value based on the Market Price as of the Registration
Effectiveness Date equal to the amount of such prepayment; and
(ii) All shares of Common Stock delivered in prepayment shall,
upon issue, be duly and validly issued and fully paid and
non-assessable and free of any preemptive rights.
(b) In order to elect to make such a prepayment, XOMA shall follow the
following procedures:
(i) On the day (which shall be a business day) that XOMA elects
to make a prepayment hereunder (the "Prepayment Notice Date"), some
portion of which is to consist of shares of Common Stock (such
portion, the "Stock Prepayment"), XOMA shall provide Incyte with a
notice of its intention to do so, setting forth the amount of the
Stock Prepayment to be made and the number of shares of Common Stock
to be ini-
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tially issued in payment thereof (the "Initial Prepayment Shares"),
based on the Market Price as of the Prepayment Notice Date. The
Initial Prepayment Shares shall be deemed issued by XOMA, with Incyte
as the record holder thereof, as of the Prepayment Notice Date but
shall be held by XOMA (or the transfer agent for the Common Stock) on
behalf of Incyte until required to be delivered as set forth below.
(ii) XOMA shall then register the Initial Prepayment Shares, and
Incyte shall cooperate in such registration, as provided in the
Registration Rights Agreement. In the event that the registration
statement relating to the resale by Incyte of the Initial Prepayment
Shares required to be filed pursuant to the Registration Rights
Agreement (A) is not filed with the SEC within 30 days of the
Prepayment Notice Date or (B) is not declared effective by the SEC on
or prior to the 60th day after the filing thereof (which 60-day period
shall be extended by an additional 60 days in the event that XOMA is
notified that such registration statement will be reviewed by the
SEC), then XOMA shall, within five business days following receipt by
XOMA of a written request from Incyte delivered at the expiration of
the applicable
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30-, 60- or 120-day period, repurchase the Initial Prepayment Shares
from Incyte for cash at a price equal to their aggregate Market Price
as of the Prepayment Notice Date.
(iii) In the event that the Market Price as of the date on which
the registration statement relating to the resale by Incyte of the
Initial Prepayment Shares is declared effective by the SEC (the
"Registration Effectiveness Date") is less than or equal to the Market
Price as of the Prepayment Notice Date, then XOMA shall (A) not later
than three business days after the Registration Effectiveness Date,
deliver to Incyte or its designee a certificate or certificates in the
name of Incyte representing the Initial Prepayment Shares and (B) pay
to Incyte an amount in cash equal to the difference, if any, between
the amount of the Stock Payment and the aggregate market value of the
Initial Prepayment Shares based on the Market Price as of the
Registration Effectiveness Date.
(iv) In the event that the Market Price as of the Registration
Effectiveness Date is greater than the Market Price as of the
Prepayment Notice Date,
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then XOMA shall (A) not later than three business days after the
Registration Effectiveness Date, deliver to Incyte or its designee a
certificate or certificates in the name of Incyte representing a
number of shares of Common Stock equal to the amount of the Stock
Prepayment divided by the Market Price as of the Registration
Effectiveness Date, and (B) return to XOMA, on behalf of Incyte, and
cancel that number of the Initial Prepayment Shares by which the total
number of Initial Prepayment Shares exceeds the number of shares of
Common Stock represented by the certificate or certificates delivered
pursuant to the immediately preceding clause (A).
Section 4. Prosecution. (a) Promptly after the Effective Date, XOMA shall
assume and be responsible for the prosecution and maintenance of the Incyte
Patents at XOMA's expense. If XOMA finds it necessary to involve Incyte in any
such prosecution, Incyte shall execute all papers and perform such other acts as
may be reasonably required and, at its option and expense, may utilize counsel
of its choice. In the event XOMA lacks the legal status required for any such
prosecution, then XOMA may cause Incyte to do so or take such steps as are
reasonably necessary to give XOMA the required status to take such action. The
strategy of such prosecutions shall be controlled
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by XOMA upon reasonable consultation with Incyte (which consultation shall be at
Incyte's expense).
(b) XOMA shall pay for any annual maintenance fee payable to the United
States Patent & Trademark Office or any similar annual fee required by foreign
patent authorities with respect to any issued Incyte Patent licensed hereunder
and shall be responsible for any and all other costs and expenses related to the
prosecution and maintenance of the Incyte Patents.
(c) Notwithstanding the provisions of Sections 4(a) and (b), XOMA may, upon
30 days' prior written notice to Incyte of its intention to do so, abandon or
otherwise terminate or cause Incyte to abandon or otherwise terminate any Incyte
Patent filed or to be filed in a country or territory outside the Principal
Countries; provided, that if and when the license granted herein becomes fully
paid up in accordance with Section 3 hereof, XOMA shall also, in addition to the
foregoing, have the right, upon such notice, to abandon or otherwise terminate
or cause Incyte to abandon or otherwise terminate any Incyte Patent filed or to
be filed in any of the Principal Countries. Following receipt of any such
notice, Incyte may, at its option and expense, assume and be responsible for the
prosecution and maintenance of the Incyte Patent to which such
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notice relates, without affecting the status of such patent as an Incyte Patent
licensed to XOMA hereunder.
Section 5. Third Party Infringement. Incyte shall notify XOMA promptly when
(and in no event more than 90 days after) it becomes aware of the activities of
any third party which it believes infringe any of the Incyte Patents. XOMA shall
have the sole right (but not the obligation), at its expense, to bring and
maintain any appropriate suit or action involving such infringement, whether
such infringement is first noticed by XOMA or Incyte. Any and all damages or
other payments (including without limitation any royalties) recovered or
received as a consequence of any such suit or action (including any settlement
thereof) shall be exclusively for XOMA's benefit, and Incyte shall have no right
thereto or interest therein. If XOMA finds it necessary to join Incyte in such
suit or action, Incyte shall execute all papers and perform such other acts as
may be reasonably required (including consent to being named as plaintiff in
such action) and, at its option and expense, may be represented by counsel of
its choice. In the event XOMA lacks standing to bring any such action, then XOMA
may cause Incyte to do so or to take such steps as are reasonably necessary to
give XOMA standing to take such action. With respect to any such suit or action
in which XOMA joins Incyte or which XOMA causes Incyte to bring, XOMA agrees, to
the extent permit-
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ted by law, to indemnify and defend Incyte against any losses, claims or damages
incurred by Incyte resulting from any counterclaim brought against Incyte by the
defendant in such suit or action. The litigation strategy and any settlement of
any proceedings referred to in this Section 5 shall be controlled by XOMA.
Section 6. Oppositions and Interferences. (a) Promptly after execution of
this Agreement by XOMA and Incyte (the "Parties" and each, a "Party"), Incyte
shall withdraw from any and all patent opposition proceedings, including appeal
proceedings, relating to the XOMA Patents. Incyte agrees not to enter into any
future opposition to and/or appeal from any decision on the XOMA Patents and
shall not assist or otherwise cooperate with another party in any such
opposition or appeal.
(b) The two pending interference proceedings involving the Parties shall be
resolved in accordance with the terms of Exhibits 6(b)-1 and 6(b)-2 hereto. The
settlement of such proceedings shall be effected by XOMA and in accordance with
Exhibits 6(b)-1 and 6(b)-2. Incyte agrees not to commence or voluntarily
participate in, or assist or otherwise cooperate with any other party in, any
suit or proceeding (including, without limitation, any interference proceeding),
or otherwise
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assert any claim challenging or denying the validity of any claim contained in
any XOMA Patent.
Section 7. Covenants Not to Sue. (a) Incyte covenants that it will not
hereafter cause or assist in the assertion, instigation, maintenance or pursuit
of any claim for breach of this Agreement, infringement, contributory
infringement or inducement of infringement based on (i) any patent now or
hereafter owned, licensed, acquired or otherwise controlled by it against XOMA
or its distributors or customers, for the making, using, selling or importing of
Licensed Products or (ii) the Incyte Patents against XOMA or its distributors or
customers, for the making, using, selling or importing of the Licensed Products.
For purposes of this Section 7, the terms "Incyte" and "XOMA" shall include each
such Party on behalf of itself, each of their respective parents and
subsidiaries and each of their respective directors, officers, employees,
partners, representatives, agents, subcontractors, sublicensees, distributors,
successors and assigns.
(b) Notwithstanding the provisions of Section 2, XOMA covenants that it
will not hereafter cause or assist in the assertion, instigation, maintenance or
pursuit of any claim based on the Incyte Patents for breach of this Agreement,
infringement, contributory infringement, or in-
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ducement of infringement against Incyte or its customers or collaborators based
on their use of nucleotide and amino acid sequences of BPI or LBP in the
"Research Field of Use." For purposes of this Section 7(b), "Research Field of
Use" means the [*].
Section 8. Representations and Warranties. (a) Each Party represents and
warrants to the other Party that (i) it has full right, power and authority to
enter into this Agreement and to perform its obligations hereunder without
consent or approval of any third person; and (ii) it is not subject to any
restriction which would impair its rights and obligations under this Agreement.
Each Party further represents and warrants that it has taken all action required
to authorize it to enter into this Agreement and to render it binding upon it.
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(b) Incyte represents and warrants that:
(i) it is the sole and exclusive owner or exclusive licensee
(with the right to sublicense) of all right, title and interest in the
Incyte Patents;
(ii) it has the full right, power and authority to grant the
rights and licenses granted herein, and the Incyte Patents are free
and clear of any lien, encumbrance, security interest or restriction
on license;
(iii) as of the Effective Date, there are no pending or, to the
best knowledge of Incyte, threatened actions, suits, investigations,
claims or proceedings in any way relating to the Incyte Patents other
than those involving XOMA;
(iv) to the best knowledge of Incyte, no know-how, trade secrets,
data, methods or processes or materials (other than those that relate
to the Excluded Technologies) have been discovered, developed or
otherwise acquired (including by or from collaborators) by or on
behalf of Incyte relating to the BPI or LBP molecules or related
technology other than the Incyte Patents;
<PAGE>
-23-
(v) neither Genentech, Inc. nor Incyte has discovered, developed
or otherwise acquired any rights, claims or other interests relating
to BPI or LBP molecules or related technology as a result of any
collaboration agreement between them that are not being exclusively
licensed to XOMA hereunder;
(vi) Incyte has terminated its development and other business
activities relating to BPI and LBP molecules and related technology
(other than the Excluded Technologies) and will not be pursuing such
activities in the future, except as contemplated by Section 7(b), and
is therefore willing to grant the license herein on an exclusive (even
as to Incyte) basis;
(vii) it is an "accredited investor" within the meaning of Rule
501 under the Securities Act of 1933, as amended (the "Act");
(viii) it is acquiring the Advance Shares and the Warrant
(collectively, the "Securities") for its own account and not with a
view to or for distributing or reselling the Securities or the
Underlying Shares (or any portion thereof), and it has no contract,
undertaking, agreement or arrangement, written or oral,
<PAGE>
-24-
with any other person to sell, transfer or grant participation in any
of the Securities or the Underlying Shares;
(ix) it acknowledges receipt of copies of XOMA's Annual Report on
Form 10-K for the fiscal year ended December 31, 1997, as amended, its
proxy statement relating to its 1998 annual meeting of stockholders
and its Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 1998, each as filed by XOMA with the SEC (collectively, the
"SEC Reports"), and further acknowledges that it has been afforded the
opportunity to ask such questions as it has deemed necessary of, and
to receive answers from, representatives of XOMA concerning the terms
and conditions of the Securities, and the merits and risks of
investing in the Securities;
(x) it understands and acknowledges that (A) the Securities are
being offered and sold to it without registration under the Act in a
private placement that is exempt from registration provisions of the
Act under Section 4(2) of the Act or Regulation D promulgated
thereunder and (B) the availability of such exemption depends in part
on, and XOMA
<PAGE>
-25-
will rely upon, the accuracy and truthfulness of the foregoing
representations; and
(xi) it agrees that it will not distribute, sell, transfer,
assign, hypothecate or offer (A) the Advance Shares or the Underlying
Shares except in accordance with the transfer restrictions described
in the legend set forth in Exhibit 3.2(a) hereto, which is
incorporated into this Section 8(b) as if fully set forth herein, and
the Registration Rights Agreement, or (B) the Warrant except in
accordance with the transfer restrictions included therein.
(c) XOMA represents and warrants that: (i) when issued, the Advance Shares
and the Underlying Shares will be duly authorized, validly issued, fully paid
and non-assessable; and (ii) the Warrant and the Registration Rights Agreement
represent duly authorized, valid and binding obligations of XOMA enforceable
against XOMA in accordance with their respective terms, except (A) as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar laws affecting creditors'
rights generally or subject to general principles of equity (regardless of
whether enforcement is considered in a proceeding at law or in equity) and (B)
with respect to the Registration Rights
<PAGE>
-26-
Agreement, to the extent that rights to indemnification thereunder may be
limited by applicable law or public policy.
Section 9. Term and Termination
9.1. Term. This Agreement shall expire and be of no further force and
effect on the tenth anniversary of the Effective Date unless, on or prior
to such date, the license granted herein becomes fully paid up in
accordance with Section 3 hereof.
9.2. Termination. Failure by XOMA to comply with any of its material
obligations contained in (i) this Agreement with respect to any particular
country to which this license pertains, (ii) the Warrant or (iii) the
Registration Rights Agreement shall entitle Incyte to give XOMA notice
specifying the nature of the default and requiring it to cure such default.
If such default is not cured (in the case of this Agreement, with respect
to that particular country) within the forty-five (45) day period after the
receipt of such notice, Incyte shall be entitled, except as otherwise
specifically provided in this Agreement and without prejudice to any of its
other rights conferred on it by this Agreement, to terminate all or part of
this Agreement or the licenses granted herein (but, in the case of a
material breach under this Agree-
<PAGE>
-27-
ment with respect to a particular country, then only with respect to that
country); provided, that if XOMA shall have commenced its good faith
efforts to cure such default, except for a default in XOMA's payment
obligations under this Agreement, within such forty-five (45) day period,
then such right to terminate shall be suspended for as long as such efforts
continue; provided, further, that this Section 9.2 shall be of no further
force and effect if and when the license granted herein becomes fully paid
up in accordance with Section 3 hereof.
9.3. Survival of Provisions. The obligations of the Parties under
Sections 10.4 and 11.10 (but only to the extent such obligations remain
unfulfilled at termination) shall survive any termination of this
Agreement.
Section 10. Rockefeller/Cornell License Agreement.
10.1. Additional Definitions. As used in this Agreement,
"Rockefeller/Cornell License Agreement" means the Agreement, dated as of
June 1, 1986, by and among Invitron Corporation (the predecessor of
Incyte), The Rockefeller University ("Rockefeller"), The Cornell Research
Foundation, Inc. ("CRF") and Cornell University (collectively with
Rockefeller and CRF, the "Existing Licensors") relating to a collaboration
among the parties
<PAGE>
-28-
thereto and Carl Nathan, M.D. ("Nathan") and Joelle Gabay, Ph.D. ("Gabay").
10.2. Assignment and Assumption. Incyte hereby agrees to assign,
transfer, convey and deliver to XOMA all of Incyte's right, title and
interest in and to the Rockefeller/Cornell License Agreement (including
without limitation all of Incyte's rights to the patents and other
intellectual property set forth on Exhibit 10.2-1), free and clear of any
liens or encumbrances, and XOMA hereby agrees to assume, become responsible
for and discharge the obligations of Incyte thereunder when they become
due. To further evidence such assignment and assumption, the Parties have
executed and delivered as of the Effective Date an Assignment and
Assumption Agreement in the form attached hereto as Exhibit 10.2-2.
10.3. Additional Representations and Warranties of Incyte. Incyte
represents and warrants that:
(a) the granting of the license pursuant to this Agreement on the
terms and subject to the conditions set forth herein, together with the
assignment of the Rockefeller/Cornell License Agreement pursuant to Section
10.2 hereof, constitute a disposition of the entire business of
<PAGE>
-29-
Incyte to which the Rockefeller/Cornell License Agreement relates;
(b) Incyte has no outstanding financial obligations pursuant to the
Cornell/Rockefeller License Agreement as of the Effective Date; and
(c) to the best knowledge of Incyte, Exhibit 10.2-1 hereto is a
complete and accurate list of all of Incyte's rights, claims and other
interests to or in patents or any other intellectual property pursuant to
or granted under the Cornell/Rockefeller License Agreement.
10.4. Indemnification. Without limiting the generality of Section
11.10 hereof, Incyte shall indemnify, defend and hold harmless XOMA from
and against any and all losses, costs or expenses (including reasonable
attorney's fees) suffered or incurred by XOMA arising out of, in connection
with or as a result of any rights of third parties or any obligations of
Incyte to third parties regarding BPI and LBP molecules and related
technology and relating to or derived from Incyte's relationship with the
Existing Licensors, Gabay or Nathan or otherwise under the
Cornell/Rockefeller License Agreement and not disclosed and assigned as
provided in this Section 10.
<PAGE>
-30-
Section 11. General Provisions
11.1. Notices. All notices which may be required pursuant to this
Agreement (i) shall be in writing, (ii) shall be addressed, in the case of
Incyte to the Legal Department at the address set forth at the beginning of
this Agreement, and in the case of XOMA to the Legal Department at the
address set forth at the beginning of this Agreement (or to such other
person or address as either Party may so designate from time to time),
(iii) shall be mailed, postage-prepaid, by registered mail or certified
mail, return receipt requested, sent by nationally-recognized overnight
carrier or transmitted by courier for hand delivery and (iv) shall be
deemed to have been given on the date of receipt. Any such notice may be
sent by facsimile transmission but shall in such case be subsequently
confirmed by a writing mailed, sent or transmitted as set forth above and
shall be deemed to have been given on the date of receipt of such facsimile
transmission subject to receipt of such confirmation.
11.2. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
<PAGE>
-31-
11.3. Entire Agreement; Amendment. This Agreement (including the
Exhibits hereto), the Warrant and the Registration Rights Agreement
constitute the entire agreement between the Parties regarding the subject
matter hereof and thereof, and there are no prior written or oral promises
or representations not incorporated herein or therein. No amendment or
modification of the terms of this Agreement shall be binding on either
Party unless reduced to writing and signed by an authorized officer of the
Party to be bound.
11.4. Binding Effect; Assignability. This Agreement shall be binding
upon and inure to the benefit of the Parties hereto and their respective
successors and permitted assigns. This Agreement shall not be assignable by
either Party, either in whole or in part, except (a) to a successor to all
or substantially all of a Party's business by merger, sale of assets, sale
of stock or otherwise or (b) in the case of XOMA, to any entity controlled
by, under common control with or controlling XOMA or to a successor to all
or substantially all of the business of XOMA to which this Agreement
relates.
11.5. Waiver. The waiver by a Party hereto of any breach of or default
under any of the provisions of this
<PAGE>
-32-
Agreement or the failure of a Party to enforce any of the provisions of
this Agreement or to exercise any right thereunder shall not be construed
as a waiver of any other breach or default or as a waiver of any such
rights or provisions hereunder.
11.6. Severability. If any part of this Agreement shall be invalid or
unenforceable under applicable law, such part shall be ineffective only to
the extent of such invalidity or unenforceability, without in any way
affecting the remaining parts of this Agreement. In addition, the part that
is ineffective shall be deemed reformed in such a manner as to as nearly
approximate the intent of the Parties as possible.
11.7. Publicity. Neither Incyte nor XOMA shall issue any public
statement concerning the transactions contemplated by this Agreement
without the other Party's prior consent; provided, however, that either
Party may disclose the transaction or the terms hereof or thereof from time
to time without the other Party's approval (i) if such approval has been
requested and not received and such Party concludes (after consulting with
counsel) that it is required by law to disclose the transaction or the
terms thereof or (ii) to the extent that similar disclo-
<PAGE>
-33-
sure has been previously approved pursuant to this Section 11.7.
11.8. No Partnership. Nothing in this Agreement is intended or shall
be deemed to constitute a partnership, agency, employer-employee or joint
venture relationship between the Parties. No Party shall incur any debts or
make any commitments on behalf of the other.
11.9. DISCLAIMER OF WARRANTIES. EXCEPT AS OTHERWISE EXPRESSLY SET
FORTH IN THIS AGREEMENT, INCYTE MAKES NO REPRESENTATIONS AND EXTENDS NO
WARRANTIES OR CONDITIONS OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING,
BUT NOT LIMITED TO, WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, VALIDITY OF THE INCYTE PATENTS OR NON-INFRINGEMENT OF THE
INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES.
11.10. Indemnification. Each Party shall indemnify, defend and hold
harmless the other Party from and against any losses, costs or expenses
(including reasonable attorneys' fees) suffered or incurred by such other
Party in connection with any breach by the first Party of the provisions
hereof.
<PAGE>
-34-
11.11. Non-competition. For the term of the license granted under this
Agreement, Incyte agrees that it will not compete with XOMA or its
sublicensees or assignees with respect to, or otherwise engage in any
research, development, marketing or other business activities relating to,
BPI or LBP molecules or related technology except as such molecules may be
used in connection with the Excluded Technologies. The Parties agree that
the foregoing covenant imposes a reasonable restraint on Incyte in light of
the Parties' respective activities and businesses and their respective
current and future plans, including without limitation (a) Incyte's desire
not to pursue the activities described above and consequent willingness to
grant the license herein on an exclusive (even as to Incyte) basis and (b)
XOMA's development plans for BPI- and/or LBP-related products, which
include investments it would not otherwise be prepared to make without the
grant of the license herein on such exclusive basis.
11.12. Dispute Resolution. The Parties agree that any dispute,
controversy or claim arising out of or relating to this Agreement, or the
breach, termination, or invalidity thereof (including without limitation
any dispute relating to the amount of any royalty), shall be resolved
through negotiation and mediation. If a dispute arises
<PAGE>
-35-
between the Parties, the Parties agree to try in good faith to resolve such
dispute by mediation administered by the American Arbitration Association
in accordance with its Commercial Mediation Rules. The mediation proceeding
shall be conducted at the location of the Party not originally requesting
the resolution of the dispute. The Parties agree that they shall share
equally the cost of the mediation filing and hearing fees, and the cost of
the mediator. Each Party must bear its own attorney's fees and associated
costs and expenses. Any dispute which cannot be so resolved shall be
submitted exclusively to the federal courts located in San Francisco
County, California, and the Parties hereby consent to the jurisdiction and
venue of such court.
11.13. Further Assurances. Each Party shall do and perform, or cause
to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments
and documents, as the other Party may reasonably request in order to carry
out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.
<PAGE>
-36-
11.14. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original but all of which shall constitute
one and the same agreement.
<PAGE>
-37-
IN WITNESS WHEREOF, the undersigned parties have agreed to the foregoing as
of the Effective Date.
INCYTE PHARMACEUTICALS, INC. XOMA CORPORATION
By: By:
----------------------------- --------------------------------
Name: Roy A. Whitfield Name: John L. Castello
Title: Chief Executive Title: Chairman of the Board,
Officer President and Chief
Executive Officer
<PAGE>
EXHIBIT 1.4
Incyte Patents
1. Use of Bactericidal/Permeability Increasing Protein or Biologically Active
Analogs Thereof to Treat Endotoxin-related Disorders
Inventors: MARRA, Marian N.; SCOTT, Randal W.
Based on PCT/US90/00837 [WO 90/09183] filed February 14, 1990, which
is a continuation-in-part of U.S. Serial No. 07/468,696 filed January
22, 1990 (issued as U.S. Patent No. 5,089,274), which is a
continuation-in-part of U.S. Serial No. 07/310,842 filed February 14,
1989 (abandoned).
MATTER NO. COUNTRY SERIAL NO. PATENT NO.
[*] AU 51706/90 647734
[*] CA 2048619
[*] EP 90904068.5 0460058
[*] EP 97118279.5
[*] IL 93360/2 93360
[*] JP 504045/90
[*] KR 702247/90
[*] *NZ 232510
[*] *US 07/310,842
[*] US 07/468,696 5,089,274
2. Recombinant BPI Proteins, Uses of BPI Proteins, and Methods of Preparing
Same
Inventors: MARRA, Marion N.; SCOTT, Randal W.
Based on PCT/US91/05758[WO 92/03535] filed August 13, 1991, which is a
continuation-in-part of U.S. Serial No. 07/681,551 filed April 5, 1991
(issued as U.S. Patent No. 5,171,739), which is a continuation-in-part
of U.S. Serial No. 07/567,016 filed August 13, 1990 (abandoned).
MATTER NO. COUNTRY SERIAL NO. PATENT NO.
[*] AU 88501/91 660427
[*] CA 2088496
[*] EP 91918397.0 0544832
[*] JP 517796/91
[*] KR 700379/93
[*] *US 07/567,016
[*] US 07/681,551 5,171,739
[*] *US 07/725,656
[*] US 07/990,662 5,308,834
- - ----------
* Abandoned
<PAGE>
MATTER NO. COUNTRY SERIAL NO. PATENT NO.
[*] US 07/990,044 5,334,584
[*] US 07/915,720 5,770,694
[*] [*] [*]
3. A New Form of Liposaccharide Binding Protein (LBP)
Inventors: SEILHAMER, Jeffrey J.; DELEGEANE, Angelo M.
Based on PCT/US92/08298 [WO 93/06228] filed September 28, 1992 which
is based on U.S. Serial No. 07/765,660 filed September 26, 1991
(abandoned).
MATTER NO. COUNTRY SERIAL NO. PATENT NO.
*AU
*CA
*EP 92922186.7
*JP
*US 07/765,660
4. Compositions Comprising a Bactericidal/Permeability Increasing Protein and
a Lipid Carrier, Methods of Making Same, and Uses Thereof
Inventors: MARRA, Marian N.; SCOTT, Randal W.; SNABLE, James L.; WILDE,
Craig G.
Based on PCT/US92/08234 [WO 93/05797] filed September 28, 1992, which
is a continuation-in-part of U.S. Serial No. 07/766,566 filed
September 27, 1991 (issued a U.S. Patent No. 5,234,912).
MATTER NO. COUNTRY SERIAL NO. PATENT NO.
[*] AU 26997/92 664206
[*] CA 2119262
[*] EP 93906309.5
[*] JP 506407/93
[*] US 07/766,566 5,234,912
[*] [*] [*]
5. Use of Bactericidal/Permeability Increasing Protein and Lipoplysaccharide
Binding Protein Levels and Ratios Thereof in Diagnosis
Inventors: SCOTT, Randal W.; FISHER, Charles J.; MARRA, Marian N.; OPAL,
Steven M.
Based on PCT/US94/03086 [WO 94/21280] filed March 21, 1994, which is a
continuation-in-part of U.S. Serial No. 08/034,294 filed March 22,
1993 (abandoned).
- - ----------
* Abandoned
-2-
<PAGE>
MATTER NO. COUNTRY SERIAL NO. PATENT NO.
*EP 94912836.7
[*] *US 08/034,294
[*] [*] [*]
6. Recombinant BPI-Based and LBP-Based Proteins, Nucleic Acid Molecules
Encoding Same, Methods of Producing Same, and Uses Thereof
Inventors: SCOTT, Randal W.; MARRA, Marian N.
Based on PCT/US94/04709 [WO 94/25476] filed April 29, 1994, which is a
continuation-in-part of U.S. Serial No. 08/165,717 filed December 10,
1993 (abandoned), which is a continuation-in-part of U.S. Serial No.
08/056,292 filed April 30, 1993.
MATTER NO. COUNTRY SERIAL NO. PATENT NO.
[*] *AU 69429/94
[*] *CA 2161972
[*] *EP 94917901.4
[*] *JP 6-524554
[*] *US 08/056,292
[*] *US 08/165,717
7. Glycosylated and Non-Glycosylated Bactericidal/Permeability Increasing
Proteins, and Methods for Producing Same
Inventors: MARRA, Marian N.; SCOTT, Randal W.; LANE, John C.; SNABLE, James
L.
Based on PCT/US94/07466 [WO 95/01428] filed July 1, 1994, which is
based on U.S. Serial No. 08/087, 484 filed July 2, 1993 (abandoned).
MATTER NO. COUNTRY SERIAL NO. PATENT NO.
[*] AU 72170/94
[*] CA 2166488
[*] EP 94921451.4
[*] JP 7-503669
[*] *US 08/087,484
8. Recombinant Endotoxin-Neutralizing Proteins
Inventors: SCOTT, Randal W.; MARRA, Marian N.
Based on PCT/US96/06134 [WO 96/34873] filed May 1, 1996, which is
identical to U.S. Serial No. 08/431,517 filed May 1, 1995.
- - ----------
* Abandoned
-3-
<PAGE>
MATTER NO. COUNTRY SERIAL NO. PATENT NO.
[*] *US 08/431,517
[*] [*] [*]
9. Neutralization of Non-Lipopolysaccharide Compounds by
Bactericidal/Permeability Increasing Protein
Inventors: ESPEVIK, Terje; MARRA, Marian N.
MATTER NO. COUNTRY SERIAL NO. PATENT NO.
[*] *US 08/265,088
[*] US 08/267,139 5,532,216
- - ----------
* Abandoned
-4-
<PAGE>
EXHIBIT 3.2(a)
Legend
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE, AND MAY NOT BE DISTRIBUTED, SOLD, TRANSFERRED, ASSIGNED,
HYPOTHECATED OR OFFERED UNLESS THERE IS IN EFFECT A REGISTRATION STATEMENT
UNDER SUCH ACT AND LAWS COVERING SUCH SECURITIES OR THE ISSUER RECEIVES AN
OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES REASONABLY
SATISFACTORY TO THE ISSUER OR A NO-ACTION LETTER FROM THE COMMISSION
INDICATING THAT SUCH DISTRIBUTION, SALE, TRANSFER, ASSIGNMENT,
HYPOTHECATION OR OFFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS
DELIVERY REQUIREMENTS OF SUCH ACT AND LAWS."
<PAGE>
EXHIBIT 6(b)-1
INTERFERENCE SETTLEMENT AGREEMENT
[*]
<PAGE>
EXHIBIT 6(b)-2
INTERFERENCE SETTLEMENT AGREEMENT
[*]
<PAGE>
EXHIBIT 10.2-1
Patents and Intellectual Property
Antimicrobial Proteins, Compositions Containing Same and Uses Thereof
Inventors: GABAY, Joelle, E.; NATHAN, Carl F.
COUNTRY APPLICATION NO. PATENT NO.
EP 87117408.2 272489
*US 06/935,509
US 07/106,524 5,126,257
US 07/125,684 5,087,569
*US 07/276,136
*US 07/677,371
US 07/835,725 5,338,724
US 07/208,181 5,654,167
<PAGE>
EXHIBIT 10-2.2
ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Agreement"), made as of July 9,
1998, among Incyte Pharmaceuticals, Inc., a Delaware corporation ("Assignor"),
and XOMA Corporation, a Delaware corporation ("Assignee").
W I T N E S S E T H :
WHEREAS, pursuant to the License Agreement, dated as of July 9, 1998,
between Assignor and Assignee (the "License Agreement"), Assignee has succeeded
to the entire business of Incyte to which the Rockefeller/Cornell License
Agreement (as such term is defined in the License Agreement) relates; and
WHEREAS, pursuant to the License Agreement, Assignor has agreed, among
other things, to assign to Assignee all right, title and interest of Assignor in
the Rockefeller/Cornell License Agreement, and Assignee has agreed, among other
things, to assume the obligations of Incyte thereunder (the "Assumed
Obligations");
NOW, THEREFORE, in consideration of good and valuable consideration, the
mutual receipt and legal sufficiency of which is hereby acknowledged, and
pursuant to and in accordance with the terms of the License Agreement, the
parties hereto do hereby agree as follows:
1. Effective as of the Effective Date (as such term is defined in the
License Agreement), Assignor hereby assigns, transfers, conveys and delivers
unto Assignee all of Assignor's right, title and interest in and to the
Rockefeller/Cornell License Agreement, free and clear of any liens or
encumbrances.
2. Effective as of the Effective Date, Assignee hereby accepts the
assignment, transfer, conveyance and delivery of all of Assignor's right, title
and interest in and to the Rockefeller/Cornell License Agreement and hereby
assumes, becomes responsible for and undertakes to discharge the Assumed
Obligations when they become due.
3. This Agreement may only be amended, modified, supplemented or waived by
an instrument in writing executed by the parties hereto.
4. This Agreement and all the terms and provisions hereof shall inure to
the benefit of and shall be binding upon the parties hereto and their respective
successors, transferees and assigns.
<PAGE>
-2-
5. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which, when taken together, shall
constitute one and the same instrument.
6. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAW.
IN WITNESS WHEREOF, Assignor and Assignee have executed this Agreement as
of the day and year first above written.
INCYTE PHARMACEUTICALS, INC.
By:
----------------------------------
Name: Roy A. Whitfield
Title: Chief Executive Officer
XOMA CORPORATION
By:
---------------------------------
Name: John L. Castello
Title: Chairman of the Board,
President and Chief
Executive Officer
THIS WARRANT (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT
FROM REGISTRATION UNDER SECTION 4 OF THE UNITED STATES SECURITIES ACT OF 1933
(THE "ACT"), AND NEITHER THIS WARRANT NOR ANY SHARES ACQUIRED UPON EXERCISE OF
THIS WARRANT MAY BE OFFERED, SOLD, RESOLD, PLEDGED, ASSIGNED OR OTHERWISE
TRANSFERRED OR DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
EXEMPTION THEREFROM. IN ADDITION, THE HOLDER OF THIS WARRANT HAS AGREED FOR THE
BENEFIT OF THE ISSUER THAT SUCH WARRANT MAY NOT BE OFFERED, SOLD, RESOLD,
PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED OR DISPOSED OF EXCEPT TO A SUCCESSOR
TO ALL OR SUBSTANTIALLY ALL OF SUCH HOLDER'S BUSINESS BY MERGER, SALE OF ASSETS,
SALE OF STOCK OR OTHERWISE.
No. W-1 Right to Purchase
Common Stock
WARRANT
THIS CERTIFIES THAT, for value received, Incyte Pharmaceuticals, Inc., a
Delaware corporation ("Incyte"), is entitled to purchase from XOMA Corporation,
a Delaware corporation (the "Company"), at any time or from time to time during
the period specified in Paragraph II hereof, 250,000 fully paid and
nonassessable shares of the Company's Common Stock, par value $.0005 per share
(the "Common Stock"), at an exercise price per share equal to U.S. $6.00 (the
"Exercise Price"). The term "Warrant Shares," as used herein, refers to the
Common Stock purchasable hereunder. The Warrant Shares and the Exercise Price
are subject to adjustment as provided in Paragraph IV hereof.
This Warrant is being issued in connection with a License Agreement
effective as of July 9, 1998 (the "License Agreement") between Incyte and the
Company.
This Warrant ("Warrant") is subject to the following terms, provisions, and
conditions:
I. Manner of Exercise; Issuance of Certificates; Payment for Shares.
Subject to the provisions hereof, this Warrant may be exercised from time to
time by the holder hereof, in whole or in part (but not as to a fractional
Warrant Share and not for any number of Warrant Shares less than 10,000 or such
lesser number equal to the total number of Warrant Shares remaining available
for purchase hereunder), by the surrender of this Warrant, together with a
completed Exercise Agreement in the form attached hereto as Annex A, to the
<PAGE>
-2-
Company during normal business hours on any trading day at the Company's
principal office located at 2910 Seventh Street, Berkeley, California 94710,
Attention: Legal Department (or such other office or agency of the Company as it
may designate by notice to the holder hereof), and upon either (a) payment to
the Company in cash in United States dollars or by certified or official bank
check payable in United States dollars of the Exercise Price for the Warrant
Shares specified in said Exercise Agreement or (b) consent by the Company to the
application of the Exercise Price for the Warrant Shares specified in said
Exercise Agreement to the prepayment of royalty obligations under the License
Agreement in accordance with the provisions thereof. The Warrant Shares so
purchased shall be deemed to be issued to the holder hereof or its designee as
the record owner of such shares as of the close of business on the date on which
the original of this Warrant shall have been surrendered, the original,
completed Exercise Agreement delivered, and payment made for such shares or
consent given to the application of the Exercise Price to the prepayment of
royalties, as the case may be, as aforesaid. Certificates for the Warrant Shares
so purchased, representing the aggregate number of shares specified in said
Exercise Agreement, shall be delivered to the holder hereof within a reasonable
time, not exceeding seven trading days, after this Warrant shall have been so
exercised. The certificates so delivered shall be in such denominations as may
be requested by the holder hereof and shall be registered in the name of said
holder or, with the prior written consent of the Company, in such other name as
shall be designated by said holder. If this Warrant shall have been exercised
only in part, then, unless this Warrant has expired, the Company shall, at its
expense, at the time of delivery of said certificates, deliver to said holder a
new Warrant representing the number of shares with respect to which this Warrant
shall not then have been exercised. The Company shall pay any and all United
States federal and state taxes and other expenses and charges payable in
connection with the preparation, execution, and delivery of share certificates
(and any new Warrants) pursuant to this Paragraph I except that, in case such
share certificates shall be registered in a name or names other than the holder
of this Warrant, funds sufficient to pay all transfer taxes which shall be
payable in connection with the execution and delivery of such share certificates
shall be paid by the holder hereof to the Company at the time of the delivery of
such share certificates by the Company as mentioned above.
II. Period of Exercise. After July 9, 1998 and before the earlier of (i)
5:00 p.m. California time on July 9, 2008 and (ii) 5:00 p.m. California time on
the date which is 10 days after the date on which the License Agreement becomes
fully paid up as provided therein, this Warrant is exercisable at any time or
from time to time.
III. Certain Agreements of the Company. The Company hereby covenants and
agrees as follows:
<PAGE>
-3-
A. Shares to be Fully Paid. All Warrant Shares will, upon issuance, be
validly issued, fully paid, and nonassessable and free from all liens, with
respect to the issue thereof.
B. Reservation of Shares. During the period within which this Warrant
may be exercised, the Company will at all times have authorized, and
reserved for the purpose of issue upon exercise of this Warrant, a
sufficient number of shares of Common Stock to provide for the exercise of
this Warrant. The Company will not take any action which results in any
adjustment of the Exercise Price if the total number of shares of Common
Stock issuable after the action upon the exercise of this Warrant would
exceed the total number of shares of Common Stock then authorized by the
Company's charter and available for the purpose of issue upon such
exercise.
C. Registration. Registration of the Warrant Shares will be governed
by a Registration Rights Agreement dated July 9, 1998 (the "Registration
Rights Agreement") between the Company and Incyte.
IV. Antidilution Provisions. The Exercise Price and the number of Warrant
Shares purchasable hereunder shall be subject to adjustment from time to time as
provided in this Paragraph IV. Upon each adjustment of the Exercise Price, the
holder of this Warrant shall thereafter be entitled to purchase, at the Exercise
Price resulting from such adjustment, the largest number of Warrant Shares
obtained by multiplying the Exercise Price in effect immediately prior to such
adjustment by the number of Warrant Shares purchasable hereunder immediately
prior to such adjustment and dividing the product thereof by the exercise price
resulting from such adjustment.
A. Definition. For the purpose of this Paragraph IV, "Capital Stock" shall
include the Common Stock and any additional class of shares of the Company
having no preference as to dividends or distributions on liquidation which may
be authorized in the future by an amendment to the Company's certificate of
incorporation or bylaws; provided that the shares purchasable pursuant to this
Warrant shall include only shares of Common Stock, or shares resulting from any
subdivision or combination of the Common Stock, or in the case of any
reorganization, reclassification, consolidation, merger, or sale of the
character referred to in Paragraph IV hereof, the shares or other securities or
property provided for in said Paragraph.
B. Treatment of Stock Dividends, Stock Splits, etc. In case the Company, at
any time or from time to time after the date hereof, shall declare or pay any
dividend or other distribution on the Capital Stock payable in Capital Stock, or
shall effect a subdivision of the outstanding shares of Capital Stock into a
greater number of shares of Capital Stock (by reclassification or otherwise than
by payment of a dividend in Capital Stock), then, and in each such case, (a)
subject to Paragraph IV.D hereof, the Exercise Price shall be reduced,
con-
<PAGE>
-4-
currently with such issue or sale, to a price determined by multiplying such
Exercise Price by a fraction
1. the numerator of which shall be the number of shares of Capital
Stock outstanding immediately prior to such issue or sale, and
2. the denominator of which shall be the number of shares of Capital
Stock outstanding immediately after such issue or sale,
and (b) such additional shares of Capital Stock shall be deemed to have been
issued (i) in the case of any such dividend, immediately after the close of
business on the record date for the determination of holders of any class of
securities entitled to receive such dividend, or (ii) in the case of any such
subdivision, at the close of business on the day immediately prior to the day
upon which such corporate action becomes effective.
C. Adjustments for Combinations, etc. In case the outstanding shares of
Capital Stock shall be combined or consolidated, by reclassification or
otherwise, into a lesser number of shares of Capital Stock, the Exercise Price
in effect immediately prior to such combination or consolidation shall,
concurrently with the effectiveness of such combination or consolidation, be
proportionately increased.
D. Minimum Adjustment of Exercise Price; Effective Date for Adjustments. If
the amount of any adjustment of the Exercise Price required pursuant to this
Paragraph IV would result in an increase in the number of Warrant Shares
purchasable hereunder which is less than one percent (1%) of the number of
Warrant Shares purchasable hereunder immediately before such adjustment is
otherwise so required to be made, such amount shall be carried forward and
adjustment with respect thereto made at the time of and together with any
subsequent adjustment which, together with such amount and any other amount or
amounts so carried forward, shall result in an increase in the number of Warrant
Shares purchasable hereunder which is at least one percent (1%) of number of
Warrant Shares purchasable hereunder immediately before such adjustment;
provided that, upon the exercise of this Warrant, all adjustments carried
forward and not theretofore made up to and including the date of such exercise
shall, with respect to the portion of this Warrant then exercised, be made.
E. Changes in Capital Stock. In case at any time the Company shall be a
party to any transaction (including, without limitation, a merger,
consolidation, sale of all or substantially all of the Company's assets,
liquidation, or recapitalization of the Capital Stock) in which the previously
outstanding Capital Stock shall be changed into or exchanged for different
securities of the Company or common shares, other securities of another
corporation or interests in a noncorporate entity or other assets (including
cash) or any combination of any of the foregoing (each such transaction being
herein called the "Transaction"), then lawful and adequate provision shall be
made whereby the holder of this Warrant shall thereafter have the
<PAGE>
-5-
right to receive upon the basis and upon the terms and conditions specified
herein and in lieu of the Common Stock immediately theretofore purchasable
hereunder, such shares of stock, securities or assets (including, without
limitation, cash) as may (by virtue of such Transaction) be issued or payable
with respect to or in exchange for a number of outstanding shares of Common
Stock equal to the number of shares of Common Stock immediately theretofore so
purchasable hereunder had such Transaction not taken place, and in any such case
appropriate provisions shall be made with respect to the rights and interests of
the holder of this Warrant to the end that the provisions hereof shall
thereafter be applicable, as nearly as may be, in relation to any shares of
stock, securities or assets thereafter deliverable upon exercise of this
Warrant.
F. Certain Issues Excepted. Anything herein to the contrary
notwithstanding, the Company shall not be required to make any adjustment of the
Exercise Price (i) in the case of the issuance of this Warrant, (ii) in the case
of the issuance of Common Stock issuable upon exercise of this Warrant, (iii) in
the case of the issuance of Capital Stock (a) upon the exercise of options
outstanding on the date hereof or hereafter granted and issued pursuant to (I)
the Company's 1981 Stock Option Plan, as in effect on the date hereof and as it
may be amended from time to time, (II) the Company's Restricted Stock Plan, as
in effect on the date hereof and as it may be amended from time to time (the
"Restricted Stock Plan") and (III) the Company's 1993 Directors Stock Option
Plan, as in effect on the date hereof and as it may be amended from time to
time, (b) pursuant to the Restricted Stock Plan or the Company's 1998 Employee
Stock Purchase Plan, as in effect on the date hereof and as it may be amended
from time to time (the option and purchase plans referred to in clauses (I),
(II), (III) and (b) above being collectively preferred to as the "Plans"), or
(c) pursuant to, or upon the exercise of options or similar rights granted
and/or issued pursuant to, any successor to or replacement of any of the Plans
or any similar plan or arrangement adopted by the Company for compensatory,
incentive or other similar purposes (collectively, the "Future Plans"), (iv) in
the case of the granting or issuance of options or similar rights to acquire
Capital Stock pursuant to the Plans or the Future Plans or (v) in the event such
adjustment will result in an Exercise Price below the existing par value of the
Company's Common Stock.
G. Notice of Adjustment. Upon the occurrence of any event requiring an
adjustment of the Exercise Price, then and in each such case the Company shall
deliver to the holder of this Warrant a notice stating the Exercise Price
resulting from such adjustment and the increase or decrease, if any, in the
number of shares of Common Stock issuable upon exercise of this Warrant, setting
forth in reasonable detail the method of calculation and the facts upon which
such calculation is based.
H. Certain Events. The Company may make such reductions in the Exercise
Price or increase in the number of shares of Common Stock purchasable hereunder
as it deems advisable, including any reductions or increases, as the case may
be, necessary to en-
<PAGE>
-6-
sure that any event treated for federal income tax purposes as a distribution of
stock or stock rights will not be taxable to recipients.
I. No Rights or Liabilities as a Stockholder. This Warrant shall not
entitle the holder hereof to any voting rights or other rights as a stockholder
of the Company. No provision of this Warrant, in the absence of affirmative
action by the holder hereof to purchase Warrant Shares, and no mere enumeration
herein of the rights or privileges of the holder hereof, shall give rise to any
liability of such holder for the Exercise Price or as a stockholder of the
Company, whether such liability is asserted by the Company or by creditors of
the Company.
V. Transfer Restrictions. Incyte, by acceptance hereof, agrees that this
Warrant is being acquired for investment and that Incyte will not offer, sell,
resell, pledge, assign or otherwise transfer or dispose of this Warrant, except
to a successor to all or substantially all of Incyte's business by merger, sale
of assets, sale of stock or otherwise under circumstances which will not result
in a violation of the Act or any applicable state Blue Sky laws or similar laws
relating to the sale of securities. In addition, Incyte, by acceptance hereof,
agrees that it will not offer, sell, resell, pledge, assign or otherwise
transfer or dispose of any Warrant Shares, except under circumstances which will
not result in a violation of the Act or any applicable state Blue Sky laws or
similar laws relating to the sale of securities.
VI. Replacement of Warrant; Cancellation.
A. Replacement of Warrant. Upon receipt of evidence reasonably satisfactory
to the Company of the loss, theft, destruction, or mutilation of this Warrant
and, in the case of any such loss, theft, or destruction, upon delivery of an
indemnity agreement reasonably satisfactory in form and amount to the Company,
or, in the case of any such mutilation, upon surrender and cancellation of this
Warrant, the Company, at its expense, will execute and deliver to the registered
holder, in lieu thereof, a new Warrant of like tenor.
B. Cancellation. Upon the surrender of this Warrant in connection with any
transfer, exchange, or replacement as provided in this Paragraph VI, this
Warrant shall be promptly cancelled by the Company.
VII. General Provisions.
A. Notices. All notices which may be required pursuant to this Warrant (i)
shall be in writing, (ii) shall be addressed, in the case of the holder of this
Warrant to such holder at the address shown for such holder on the books of the
Company, and in the case of the Company to the Legal Department at 2910 Seventh
Street, Berkeley, California 94710 (or to such other person or address as either
party may so designate from time to time), (iii) shall be mailed, postage
prepaid, by registered mail or certified mail, return receipt requested, sent
<PAGE>
-7-
by nationally-recognized overnight carrier or transmitted by courier for hand
delivery and (iv) shall be deemed to have been given on the date of receipt.
Subject to the requirements of Paragraph I regarding delivery of original
documents upon exercise hereof, any such notice may be sent by facsimile
transmission but shall in such case be subsequently confirmed by a writing
mailed, sent or transmitted as set forth above and shall be deemed to have been
given on the date of receipt of such facsimile transmission subject to receipt
of such confirmation.
B. GOVERNING LAW. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICTS OF LAW.
C. Amendment. No amendment or modification of the terms of this Warrant
shall be binding on either the holder hereof or the Company unless reduced to
writing and signed by an authorized officer of the party to be bound.
D. Binding Effect; Assignability. This Warrant shall be binding upon and
inure to the benefit of the holder hereof and the Company and their respective
successors and permitted assigns. This Warrant shall not be assignable by either
such party, either in whole or in part, except to a successor to all or
substantially all of a party's business by merger, sale of assets, sale of stock
or otherwise.
E. Obligations of Warrant Holder. By accepting this Warrant, the holder
hereof agrees to all of its obligations contained herein.
<PAGE>
-8-
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its
duly authorized officer on this 9th day of July, 1998.
XOMA CORPORATION
By:
-----------------------------------
Name: John L. Castello
Title: Chairman of the Board,
President and Chief Executive
Officer
<PAGE>
FORM OF EXERCISE AGREEMENT
Dated: ______, _____
To: XOMA CORPORATION
The undersigned, pursuant to the provisions set forth in the within
Warrant, hereby agrees to purchase _______ shares (which number shall be not
less than 10,000 or such lesser number equal to the total number of shares
remaining available for purchase under the within Warrant) of Common Stock
covered by such Warrant, and makes payment herewith in full therefor at the
price per share provided by such Warrant in the amount of U.S.$_______ either
[CHECK ONLY ONE]: (a) in cash or by certified or official bank check or (b) with
the consent of the Company (to be indicated below), to be applied, without
requiring any cash to be provided herewith, as a prepayment of royalty
obligations under the License Agreement. Please issue a certificate or
certificates for such shares of Common Stock in the name of:
Name:_________________________
Signature:____________________
Title of Signing Officer or Agent (if
any):_____________________
Note: The above signature should correspond
exactly with the name on the face of the
within Warrant or with the name of the
assignee appearing in the assignment\
form.
Signature guaranteed by:
---------------------------------
NOTE: Signature must be guaranteed by a
commercial bank, trust company, or by a mem-
ber firm of a registered national securities
exchange.
and, if said number of shares of Common Stock shall not be all the shares
purchasable under the within Warrant, a new Warrant is to be issued in the name
of said undersigned covering the balance of the shares purchasable thereunder.
The undersigned hereby consents to
the application of the amount indi-
cated above to the prepayment of
A-1
<PAGE>
royalties under the License Agree-
ment as of the date first above writ-
ten:
XOMA CORPORATION
By:_________________________
Name:
Title:
A-2
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of July 9, 1998,
by and among XOMA Corporation, a Delaware corporation with its headquarters
located at 2910 Seventh Street, Berkeley, California 94710 (the "Company"), and
Incyte Pharmaceuticals, Inc., a Delaware corporation with its headquarters at
3174 Porter Drive, Palo Alto, California 94304 (the "Investor").
WHEREAS:
A. In connection with the License Agreement between the parties hereto
effective as of even date herewith (the "License Agreement"), the Company has
agreed, upon the terms and subject to the conditions contained therein, to issue
and sell to the Investor (i) ( ) shares (the "Advance Shares") of common stock
of the Company, par value $.0005 per share (the "Common Stock"), and (ii) a
warrant (the "Warrant") to acquire two hundred fifty thousand (250,000) shares
of Common Stock (the "Warrant Shares"), upon the terms and subject to the
limitations and conditions set forth in the Warrant. In addition, the License
Agreement provides that shares of Common Stock (the "Prepayment Shares") may be
issued in prepayment of royalties thereunder, upon the terms and subject to the
limitations and conditions set forth in the License Agreement; and
B. To induce the Investor to execute and deliver the License Agreement, the
Company has agreed to provide certain registration rights under the Securities
Act of 1933, as amended, and the rules and regulations thereunder, or any
similar successor statute and rules (collectively, the "Securities Act"), and
applicable state securities laws.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Investor
hereby agree as follows:
1. Definitions.
(a) As used in this Agreement, the following terms shall have the following
meanings:
(i) "Register," "Registered" and "Registration" refer to a
registration effected by preparing and filing a Registration Statement or
Statements in compliance with the Securities Act and pursuant to Rule 415
under the Securities Act or any successor rule providing for offering
securities on a continuous basis ("Rule 415"), and the declaration or
ordering of effectiveness of such Registration Statement by the United
States Securities and Exchange Commission (the "SEC").
<PAGE>
-2-
(ii) "Registrable Securities" means (i) the Advance Shares, the
Prepayment Shares and the Warrant Shares issued or issuable (collectively,
the "Shares") and (ii) shares of Common Stock issued prior to the Effective
Date (as defined herein) of the Registration Statement covering such Shares
as a dividend or other distribution with respect to, in exchange for or in
replacement of, the Shares, excluding in all cases, however, any
Registrable Securities sold by a person in a transaction in which such
person's registration rights are not assigned; provided, however, that any
Shares sold pursuant to an effective registration statement or pursuant to
Rule 144 under the Securities Act shall cease to be Registrable Securities.
(iii) "Registration Statement" means a registration statement of the
Company under the Securities Act.
(b) Capitalized terms used herein and not otherwise defined herein shall
have the respective meanings set forth in the Securities Purchase Agreement.
2. Registration.
(a) Mandatory Registration. (i) The Company shall prepare, and, on or prior
to the date which is thirty (30) days after the Effective Date (as defined in
the License Agreement), file with the SEC a Registration Statement on Form S-3
covering the resale of the Registrable Securities (other than the Prepayment
Shares and any shares of Common Stock issued prior to the Effective Date of such
Registration Statement as a dividend or other distribution with respect thereto,
in exchange therefor or in replacement thereof) which Registration Statement, to
the extent allowable under the Securities Act, shall state that such
Registration Statement also covers such indeterminate number of additional
shares of Common Stock as may become issuable upon exercise of the Warrant (i)
to prevent dilution resulting from stock splits, stock dividends or similar
transactions or (ii) by reason of changes in the Exercise Price (as defined in
the Warrant) of the Warrant in accordance with the terms thereof.
(ii) Upon issuance of any Prepayment Shares in prepayment of royalties
under the License Agreement, the Company shall prepare, and, on or prior to the
date which is thirty (30) days after the date of such issuance, file with the
SEC a Registration Statement on Form S-3 (or, if Form S-3 is not then available,
on such other form of Registration Statement as is then available to effect a
registration of the Registrable Securities) covering the resale of the
Prepayment Shares so issued and any shares of Common Stock issued prior to the
Effective Date of such Registration Statement as a dividend or other
distribution with respect thereto, in exchange therefor or in replacement
thereof.
(b) Effectiveness. The Company shall use its commercially reasonable
efforts to obtain effectiveness of the Registration Statements within ninety
(90) days after the filing of the applicable Registration Statement.
<PAGE>
-3-
(c) No Underwriting. The registration of any Registrable Securities
provided for in this Section 2 shall not be underwritten.
3. Obligations of the Company.
In connection with the registration of the Registrable Securities, the
Company shall have the following obligations:
(a) Once declared effective, the Company shall use its commercially
reasonable efforts to keep each Registration Statement effective pursuant to
Rule 415 at all times (subject to Section 3(e)) until such date as is the
earlier of (i) the date on which all of the Registrable Securities have been
sold and (ii) the date on which the Registrable Securities may be immediately
sold without restriction (including without limitation as to volume by each
holder thereof) without registration under the Securities Act (the "Registration
Period").
(b) The Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to each Registration
Statement and the prospectus used in connection with the Registration Statement
as may be necessary to comply with the provisions of the Securities Act with
respect to the disposition of all Registrable Securities of the Company covered
by such Registration Statement .
(c) The Company shall furnish to the Investor such number of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act and such other documents as the Investor may
reasonably request in order to facilitate the disposition of the Registrable
Securities owned by the Investor.
(d) The Company shall use commercially reasonable efforts to register and
qualify the Registrable Securities covered by each Registration Statement under
such other securities or "blue sky" laws of such jurisdictions in the United
States as the Investor may reasonably request and maintain such registrations
and qualifications in effect at all times during the Registration Period;
provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to (a) qualify to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 3(d), (b) subject itself to general taxation in any such jurisdiction,
(c) file a general consent to service of process in any such jurisdiction, (d)
provide any undertakings that cause the Company undue expense or burden, or (e)
make any change in its charter or bylaws.
(e) In the event that, in the reasonable judgment of the Company, it is
advisable to suspend use of the prospectus relating to a Registration Statement
for a discrete period of time (a "Deferral Period") due to pending material
corporate developments or similar material events that have not yet been
publicly disclosed and as to which the Company believes public disclosure will
be prejudicial to the Company, the Company shall deliver a notice in
<PAGE>
-4-
writing, to the Investor, to the effect of the foregoing (but in no event shall
the Company be obligated to disclose to the Investor the facts and circumstances
giving rise to the foregoing) and, upon receipt of such notice, the Investor
agrees not to dispose of any Registrable Securities covered by such Registration
Statement (other than in transactions exempt from the registration requirements
under the Securities Act) until the Investor is advised in writing by the
Company that use of the prospectus may be resumed; provided, however, that the
aggregate number of days in any such Deferral Period or Deferral Periods shall
be no more than sixty (60) in any 12-month period.
4. Obligations of the Investors.
In connection with the registration of the Registrable Securities, the
Investor shall have the following obligations:
(a) It shall be a condition precedent to the obligations of the Company to
take any action pursuant to this Agreement that the Investor shall furnish to
the Company such information regarding itself, the Registrable Securities held
by it and the intended method of disposition of the Registrable Securities held
by it as shall be required to effect the registration of such Registrable
Securities and shall execute such documents in connection with such registration
as the Company may reasonably request.
(b) The Investor, by acceptance of the Registrable Securities, agrees to
cooperate with the Company as reasonably requested by the Company in connection
with the preparation and filing of the Registration Statement hereunder, unless
such Investor has notified the Company in writing of the Investor's election to
exclude the Registrable Securities from the Registration Statement.
(c) For any offer or sale of any of the Registrable Securities under a
Registration Statement by the Investor in a transaction that is not exempt under
the Securities Act, the Investor, in addition to complying with any other
federal securities laws, shall deliver a copy of the final prospectus (together
with any amendment of or supplement to such prospectus) of the Company covering
the Registrable Securities, in the form furnished to the Investor by the
Company, to the purchaser of any of the Registrable Securities on or before the
settlement date for the purchase of such Registrable Securities.
(d) Upon the receipt by the Investor of any notice from the Company of (1)
the existence of any fact or the happening of any event as a result of which the
prospectus included in a Registration Statement, as such Registration Statement
is then in effect, contains an untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, (2) the
issuance by the SEC of any stop order or injunction suspending or enjoining the
use or the effectiveness of a Registration Statement or the initiation of any
pro-
<PAGE>
-5-
ceedings for that purpose, or the taking of any similar action by the securities
regulators of any state or other jurisdiction, or (3) the request by the SEC or
any other federal or state governmental agency for amendments or supplements to
a Registration Statement or related prospectus or for additional information
related thereto, the Investor shall forthwith discontinue disposition of its
Registrable Securities covered by such Registration Statement or related
prospectus (other than in transactions exempt from the registration requirements
under the Securities Act) until receipt of the supplemented or amended
prospectus or until the Investor is advised in writing by the Company that the
use of the applicable prospectus may be resumed, and, if so directed by the
Company, the Investor shall deliver to the Company or destroy (and deliver to
the Company a certificate of destruction) all copies in the Investor's
possession, of the prospectus covering such Registrable Securities current at
the time of receipt of such notice. In such a case, subject to Section 3(e), the
Company shall as promptly as reasonably practicable (i) prepare an amendment to
correct or update the prospectus, (ii) use its commercially reasonable efforts
to remove the impediments referred to in subclause (2) above, or (iii) comply
with the requests referred to in subclause (3) above.
5. Expenses of Registration.
All reasonable expenses incurred by the Company in connection with
registrations, filings or qualifications pursuant to Sections 2 and 3,
including, without limitation, all registration, listing and qualification fees,
printers and accounting fees and the fees and disbursements of counsel for the
Company shall be borne by the Company. The Investor shall be responsible for the
fees and disbursements of counsel for the Investor, any stock transfer taxes
that may be payable by the Investor, and all brokerage commissions relating to
Registrable Securities.
6. Indemnification.
In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify and hold
harmless the Investor, its directors and officers and each person who controls
the Investor within the meaning of the Securities Act or the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), if any (each, an "Indemnified
Person"), against any joint or several losses, claims, damages or liabilities to
third parties (collectively, "Claims") to which any of them may become subject
under the Securities Act, the Exchange Act or other federal or state law,
insofar as such Claims arise out of or are based upon: (i) any untrue statement
or alleged untrue statement of a material fact in a Registration Statement or
the omission or alleged omission to state therein a material fact required to be
stated or necessary to make the statements therein not misleading; (ii) any
untrue statement or alleged untrue statement of a material fact contained in any
preliminary prospectus if used prior to the effective date of such
<PAGE>
-6-
Registration Statement, or contained in the final prospectus (as amended or
supplemented, if the Company files any amendment thereof or supplement thereto
with the SEC) or the omission or alleged omission to state therein any material
fact necessary to make the statements made therein, in light of the
circumstances under which the statements therein were made, not misleading; or
(iii) any violation or alleged violation by the Company of the Securities Act,
the Exchange Act, any other law, including, without limitation, any state
securities law, or any rule or regulation thereunder relating to the offer or
sale of the Registrable Securities (the matters in the foregoing clauses (i)
through (iii) being, collectively, "Violations"). Subject to the provisions set
forth in Section 6(c), the Company shall reimburse the Indemnified Person for
any legal fees or other expenses reasonably incurred by them in connection with
investigating or defending any such Claim. Notwithstanding anything to the
contrary contained herein, the indemnification agreement contained in this
Section 6(a): (i) shall not apply to a Claim arising out of or based upon a
Violation which occurs in reliance upon and in conformity with information
furnished in writing to the Company by any Indemnified Person or underwriter for
such Indemnified Person expressly for use in connection with the preparation of
the Registration Statement or any such amendment thereof or supplement thereto,
if such prospectus was timely made available by the Company pursuant to Section
3(c) hereof; (ii) shall not apply to amounts paid in settlement of any Claim if
such settlement is effected without the prior written consent of the Company,
which consent shall not be unreasonably withheld; and (iii) with respect to any
preliminary prospectus, shall not inure to the benefit of any Indemnified Person
if the untrue statement or omission of material fact contained in the
preliminary prospectus was corrected on a timely basis in the prospectus, as
then amended or supplemented, such corrected prospectus was timely made
available by the Company pursuant to Section 3(c) hereof, and the Indemnified
Person was promptly advised in writing not to use the incorrect prospectus prior
to the use giving rise to a Violation and such Indemnified Person,
notwithstanding such advice, used it.
(b) In connection with any Registration Statement in which the Investor is
participating, the Investor agrees to indemnify and hold harmless, to the same
extent and in the same manner set forth in Section 6(a), the Company, each of
its directors, each of its officers who signs the Registration Statement, each
person, if any, who controls the Company within the meaning of the Securities
Act or the Exchange Act (each, an "Indemnified Party"), against any Claim to
which any of them may become subject, under the Securities Act, the Exchange Act
or other federal or state securities law, insofar as such Claim arises out of or
is based upon any Violation by such Investor, 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 to the Company by the Investor
expressly for use in connection with such Registration Statement; and subject to
Section 6(c) the Investor will reimburse any legal or other expenses reasonably
incurred by it in connection with investigating or defending any such Claim;
provided, however, that the indemnity agreement contained in this Section 6(b)
shall not apply to amounts paid in settlement of any Claim if such settlement is
effected without the prior writ-
<PAGE>
-7-
ten consent of the Investor, which consent shall not be unreasonably withheld;
provided, further, however, that the Investor shall be liable under this
Agreement (including this Section 6(b) and Section 7) for only that amount as
does not exceed the gross proceeds to the Investor as a result of the sale of
Registrable Securities pursuant to such Registration Statement. Notwithstanding
anything to the contrary contained herein, the indemnification agreement
contained in this Section 6(b) with respect to any preliminary prospectus shall
not inure to the benefit of any Indemnified Party if the untrue statement or
omission of material fact contained in the preliminary prospectus was corrected
on a timely basis in the prospectus, as then amended or supplemented.
(c) Promptly after receipt by an Indemnified Person or Indemnified Party
under this Section 6 of notice of the commencement of any action (including any
governmental action), such Indemnified Person or Indemnified Party shall, if a
Claim in respect thereof is to be made against any indemnifying party under this
Section 6, 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, to assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified Party (which
consent shall not be unreasonably withheld), as the case may be; provided,
however, that an Indemnified Person or Indemnified Party shall have the right to
retain its own counsel with the reasonable fees and expenses to be paid by the
indemnifying party, if, in the reasonable opinion of counsel retained by the
indemnifying party, the representation by such counsel of the Indemnified Person
or Indemnified Party and the indemnifying party would be inappropriate due to
actual or potential differing interests between such Indemnified Person or
Indemnified Party and any other party represented by such counsel in such
proceeding. The indemnifying party shall pay for only one separate legal counsel
for the Indemnified Persons or the Indemnified Parties, as applicable, and such
legal counsel shall be selected by the Investor, if the Investor is entitled to
indemnification hereunder, or the Company, if the Company is entitled to
indemnification hereunder, as applicable. The failure to deliver written notice
to the indemnifying party within a reasonable time of the commencement of any
such action, if materially prejudicial to its ability to defend such action,
shall relieve such indemnifying party of any liability to the Indemnified Person
or Indemnified Party under this Section 6.
7. General Provisions.
(a) Registered Holder. A person or entity is deemed to be a holder of
Registrable Securities whenever such person or entity owns of record such
Registrable Securities. If the Company receives conflicting instructions,
notices or elections from two or more persons or entities with respect to the
same Registrable Securities, the Company shall act upon the basis of
instructions, notice or election received from the registered owner of such
Registrable Securities.
<PAGE>
-8-
(b) Notices. All notices which may be required pursuant to this Agreement
(i) shall be in writing, (ii) shall be addressed as follows:
If to the Company:
XOMA Corporation
2910 Seventh Street
Berkeley, California 94710
Attn: Legal Department
Facsimile: (510) 649-7571
If to the Investor:
Incyte Pharmaceuticals, Inc.
3174 Porter Drive
Palo Alto, California 94304
Attn: Legal Department
Facsimile:
(or to such other person or address as either party may so designate from time
to time), (iii) shall be mailed, postage prepaid, by registered mail or
certified mail, return receipt requested, sent by nationally-recognized
overnight carrier or transmitted by courier for hand delivery and (iv) shall be
deemed to have been given on the date of receipt. Any such notice may be sent by
facsimile transmission but shall in such case be subsequently confirmed by a
writing mailed, sent or transmitted as set forth above and shall be deemed to
have been given on the date of receipt of such facsimile transmission subject to
receipt of such confirmation.
(c) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAW.
(d) Entire Agreement; Amendment. This Agreement, the License Agreement
(including the Exhibits thereto) and the Warrant constitute the entire agreement
between the parties regarding the subject matter hereof and thereof, and there
are no prior written or oral promises or representations not incorporated herein
or therein. No amendment or modification of the terms of this Agreement shall be
binding on either party unless reduced to writing and signed by an authorized
officer of the party to be bound.
(e) Binding Effect; Assignability. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns. This Agreement shall not be assignable by either party,
either in whole or in part, except to a
<PAGE>
-9-
successor to all or substantially all of a party's business by merger, sale of
assets, sale of stock or otherwise.
(f) Waiver. The waiver by a party hereto of any breach of or default under
any of the provisions of this Agreement or the failure of a party to enforce any
of the provisions of this Agreement or to exercise any right thereunder shall
not be construed as a waiver of any other breach or default or as a waiver of
any such rights or provisions hereunder.
(g) Severability. If any part of this Agreement shall be invalid or
unenforceable under applicable law, such part shall be ineffective only to the
extent of such invalidity or unenforceability, without in any way affecting the
remaining parts of this Agreement. In addition, the part that is ineffective
shall be deemed reformed in such a manner as to as nearly approximate the intent
of the parties as possible.
(h) Further Assurances. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
(i) Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original but all of which shall constitute one and the
same agreement.
<PAGE>
-10-
IN WITNESS WHEREOF, the Company and the Investor have caused this Agreement
to be duly executed as of the date first above written.
XOMA CORPORATION
By:
----------------------------------------
Name: John L. Castello
Title: Chairman of the Board, President
and Chief Executive Officer
INCYTE PHARMACEUTICALS, INC.
By:
---------------------------------------
Name: Roy A. Whitfield
Title: Chief Executive Officer
