UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
on
FORM 10-K/A
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended
December 31, 1999 Commission File No. 0-14710
XOMA LTD.
(Exact name of registrant as specified in its charter)
BERMUDA 94-2756657
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2910 Seventh Street,
Berkeley, California 94710
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code:
(510) 644-1170
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Shares, US$.0005 par value
Preference Share Purchase Rights
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ______
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
The aggregate market value of voting stock held by nonaffiliates of the
registrant, as of February 29, 2000: $595,197,559.
Number of Common Shares outstanding as of February 29, 2000: 64,716,757.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Company's Proxy Statement for the Company's 2000 Annual
Meeting of Shareholders are incorporated by reference into Part III of this
Report.
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) List of documents filed as part of this Report.
(1) Financial Statements:
All financial statements of the registrant referred to in Item 8 of
this Report on Form 10-K.
(2) Financial Statement Schedules:
All financial statements schedules have been omitted because the
required information is included in the consolidated financial
statements or the notes thereto or is not applicable or required.
(3) Exhibits:
See "Index to Exhibits".
(b) Reports on Form 8-K.
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on this 25th day of
April, 2000.
XOMA Ltd.
By /s/ John L. Castello
----------------------------------
John L. Castello,
Chairman of the Board, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ John L. Castello Chairman of the Board, President April 25, 2000
- - - - --------------------------------- and Chief Executive Officer
(John L. Castello)
/s/ Patrick J. Scannon Chief Scientific and Medical April 25, 2000
- - - - --------------------------------- and Director
(Patrick J. Scannon)
/s/ Peter B. Davis Vice President, Finance and April 25, 2000
- - - - --------------------------------- Chief Financial Officer (Principal
(Peter B. Davis) Financial and Accounting Officer)
/s/ James G. Andress Director April 25, 2000
- - - - ---------------------------------
(James G. Andress)
/s/ William K. Bowes, Jr. Director April 25, 2000
- - - - ---------------------------------
(William K. Bowes, Jr.)
/s/ Arthur Kornberg Director April 25, 2000
- - - - ---------------------------------
(Arthur Kornberg)
/s/ Steven C. Mendell Director April 25, 2000
- - - - ---------------------------------
(Steven C. Mendell)
/s/ W. Denman Van Ness Director April 25, 2000
- - - - ---------------------------------
(W. Denman Van Ness)
</TABLE>
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number
- - - - -------
3.1 Memorandum of Continuance of XOMA Ltd. (Exhibit 3.4).1
3.2 Bye-Laws of XOMA Ltd. (Exhibit 3.5).1
4.1 Amended and Restated Shareholder Rights Agreement dated as of October
27, 1993 and amended and restated December 31, 1998 by and among XOMA
Corporation (to be renamed XOMA Ltd.) and ChaseMellon Shareholder
Services L.L.C. (successor to First Interstate Bank of California) as
Rights Agent (Exhibit 4.1).2
4.2 Form of Resolution Regarding Preferences and Rights of Series A
Preference Shares (Exhibit 4.2).1
4.3 Form of Resolution Regarding Preferences and Rights of Series B
Preference Shares (Exhibit 4.3).1
4.4 Form of Resolution Regarding Preferences and Rights of Series C
Preference Shares (Exhibit 4.4).1
4.5 Form of Common Stock Purchase Warrant (1996 Warrants) (Exhibit 4.9).3
4.6 Form of Common Stock Purchase Warrant (1997 Warrants) (Exhibit 3).4
4.7 Form of Common Stock Purchase Warrant (1998 Warrants) (Exhibit 3).5
4.8 Form of Common Stock Purchase Warrant (Incyte Warrants) (Exhibit 2).6
4.9 Form of Common Share Purchase Warrant (January and March 1999 Warrants)
(Exhibit 5).7
4.10 Form of Common Share Purchase Warrant (July 1999 Warrants) (Exhibit 4).8
4.11 Form of Common Share Purchase Warrant (2000 Warrants) (Exhibit 4).9
10.1 1981 Share Option Plan as amended and restated (Exhibit 10.1).10
10.1A Form of Share Option Agreement for 1981 Share Option Plan (Exhibit
10.1A).10
10.2 Restricted Share Plan as amended and restated (Exhibit 10.2).10
10.2A Form of Share Option Agreement for Restricted Share Plan (Exhibit
10.2A).10
10.2B Form of Restricted Share Purchase Agreement for Restricted Share Plan
(Exhibit 10.2B).10
10.3 1992 Directors Share Option Plan as amended and restated (Exhibit
10.4).10
<PAGE>
-2-
Exhibit
Number
- - - - -------
10.3A Form of Share Option Agreement for 1992 Directors Share Option Plan
(initial grants) (Exhibit 10.4A).10
10.3B Form of Share Option Agreement for 1992 Directors Share Option Plan
(subsequent grants) (Exhibit 10.4B).10
10.4 Management Incentive Compensation Plan as amended and restated (Exhibit
10.5).10
10.5 1998 Employee Share Purchase Plan (Exhibit 10.1).11
10.5A Amendment No. 1 to 1998 Employee Share Purchase Plan (Exhibit 10.2).11
10.6 Form of indemnification agreement for officers (Exhibit 10.6).10
10.7 Form of indemnification agreement for employee directors (Exhibit
10.7).10
10.8 Form of indemnification agreement for non-employee directors (Exhibit
10.8).10
10.9 Employment Agreement dated April 29, 1992 between the Company and John
L. Castello (Exhibit 10.9).10
10.10 Employment Agreement dated April 1, 1994 between the Company and Peter
B. Davis (Exhibit 10.10).12
10.11 Employment Agreement dated March 25, 1999 between XOMA (US) LLC and
Patrick J. Scannon, M.D., Ph.D.*
10.12 Lease of premises at 890 Heinz Street, Berkeley, California dated as of
July 22, 1987 (Exhibit 10.12).10
10.13 Lease of premises at Building E at Aquatic Park Center, Berkeley,
California dated as of July 22, 1987 and amendment thereto dated as of
April 21, 1988 (Exhibit 10.13).10
10.14 Lease of premises at Building C at Aquatic Park Center, Berkeley,
California dated as of July 22, 1987 and amendment thereto dated as of
August 26, 1987 (Exhibit 10.14).10
10.15 Letter of Agreement regarding CPI adjustment dates for leases of
premises at Buildings C, E and F at Aquatic Park Center, Berkeley,
California dated as of July 22, 1987 (Exhibit 10.15).10
10.16 Lease of premises at 2910 Seventh Street, Berkeley, California dated
March 25, 1992 (Exhibit 10.16).10
10.17 Lease dated June 22, 1992, between the Company and Richard B. Gomez,
Josephine L. Gomez, TTEE-U/A/D, 10,31-90, FBO Gomez Family Trust
(Exhibit 10.17).10
<PAGE>
-3-
Exhibit
Number
- - - - -------
10.18 Sublease dated January 20, 1997, between the Company and UroGenesys, Inc
(Exhibit 10.18).10
10.19 Lease dated October 2, 1992, between the Company and Virginia Merritt,
as Trustee of the Bowman Merritt and Virginia Merritt Trust (Exhibit
10.19).10
10.19A First Extension of Lease dated April 23, 1997, between the Company and
Virginia Merritt and Kim Merritt Campot, as Trustees of the Bowman
Merritt and Virginia Merritt 1987 Trust (Exhibit 10.19A).10
10.20 License Agreement dated as of August 31, 1988 between the Company and
Sanofi (with certain confidential information deleted) (Exhibit
10.27).10
10.21 Amended and Restated Research and License Agreement dated September 1,
1993 between the Company and New York University (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) (Exhibit
10.28).10
10.21A Third Amendment to License Agreement dated June 12, 1997 between the
Company and New York University (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) (Exhibit 10.28A).10
10.21B Fourth Amendment to License Agreement dated December 23, 1998 between
the Company and New York University (Exhibit 10.22B).13
10.21C Fifth Amendment to License Agreement dated June 25, 1999 between the
Company and New York University (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).*
10.22 Cross License Agreement dated December 15, 1993 between Research
Development Foundation and the Company (with certain confidential
information deleted) (Exhibit 10.23).13
10.23 Cross License Agreement dated December 15, 1993 between the Company and
Research Development Foundation (with certain confidential information
deleted) (Exhibit 10.24).13
10.24 Technology Acquisition Agreement dated June 3, 1994 between Connective
Therapeutics, Inc. (now called Connetics Corporation) and the Company
(with certain confidential information deleted) (Exhibit 10.46).12
10.24A Amendment Number One to Technology Acquisition Agreement dated December
8, 1999 between Connetics Corporation and XOMA (US) LLC (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).
<PAGE>
-4-
Exhibit
Number
- - - - -------
10.24B Agreement dated December 8, 1999 by and between The Immune Response
Corporation and XOMA (US) LLC (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).*
10.25 Collaboration Agreement, dated as of April 22, 1996, between the Company
and Genentech, Inc. (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 (Exhibit 10.1).3
10.25A Amendment to Collaboration Agreement, dated as of April 14, 1999,
between the Company and Genentech, Inc. (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 (Exhibit 10.5).14
10.26 Common Stock and Convertible Note Purchase Agreement, dated as of April
22, 1996, between the Company and Genentech, Inc. (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) (Exhibit 10.2).3
10.26A Amendment to Common Stock and Convertible Note Purchase Agreement, dated
as of April 14, 1999, between XOMA Ltd. and Genentech, Inc. (Exhibit
10.6).14
10.27 Convertible Subordinated Note Agreement, dated as of April 22, 1996,
between the Company and Genentech, Inc. (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) (Exhibit 10.3).3
10.27A Amendment to Convertible Subordinated Note Agreement, dated as of June
13, 1996, between the Company and Genentech, Inc. (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) (Exhibit 10.4).3
10.27B Second Amendment to Convertible Subordinated Note Agreement, dated as of
April 14, 1999, between the XOMA Ltd. and Genentech, Inc. (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) (Exhibit
10.7).14
10.28 Form of Registration Rights Agreement by and between the Company and the
holders of the 1996 Warrants (Exhibit 10.6).3
10.29 Form of Convertible Preferred Stock Purchase Agreement by and between
the Company and the purchasers of Series G and Series H Preferred Stock
(Exhibit 4).4
<PAGE>
-5-
Exhibit
Number
- - - - -------
10.29A First Amendment to Convertible Preferred Stock Agreement, dated as of
January 1, 1998 (Exhibit 10.1).15
10.29B Second Amendment to Convertible Preferred Stock Agreement, dated as of
June 26, 1998 (Exhibit 10.3).16
10.30 Form of Registration Rights Agreement by and between the Company and the
purchasers of Series G and Series H Preferred Stock (Exhibit 5).4
10.31 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) (Exhibit 1).6
10.32 Registration Rights Agreement dated as of July 9, 1998 by and among the
Company and Incyte Pharmaceuticals, Inc. (Exhibit 3).6
10.33 Form of Subscription Agreement, dated as of January 28, 1999, by and
between XOMA Ltd. and the purchasers of Common Shares in the January
1999 Private Placement (Exhibit 2).7
10.34 Form of Registration Rights Agreement, dated as of January 28, 1999, by
and between XOMA Ltd. and the purchasers of Common Shares in the January
1999 Private Placement (Exhibit 3).7
10.35 Form of Escrow Agreement, dated as of January 28, 1999, by and between
XOMA Ltd., Brian W. Pusch, as Escrow Agent and the purchasers of Common
Shares in the January 1999 Private Placement (Exhibit 4).7
10.36 License Agreement dated as of June 25, 1999 between XOMA Ireland Limited
and Allergan Sales, Inc. (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) (Exhibit 2).17
10.37 Supply Agreement dated as of June 25, 1999 between XOMA (US) LLC and
Allergan Sales, Inc. (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) (Exhibit 3).17
10.38 Form of Subscription Agreement, dated as of July 21, 1999, by and
between XOMA Ltd. and the purchasers of Common Shares in the July 1999
Private Placement (Exhibit 2).7
10.39 Form of Registration Rights Agreement dated as of July 21, 1999 by and
between XOMA Ltd. and the purchasers of Common Shares in the July 1999
Private Placement (Exhibit 3).8
<PAGE>
-6-
Exhibit
Number
- - - - -------
10.40 Form of Registration Rights Agreement dated as of July 21, 1999 by and
between XOMA Ltd. and the placement agents of Common Shares in the July
1999 Private Placement (Exhibit 5).8
10.41 License Agreement dated as of January 25, 2000 between XOMA Ireland
Limited and Baxter Healthcare Corporation (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) (Exhibit 2).18
10.42 Supply and Development Agreement dated as of January 25, 2000 between
XOMA (US) LLC and Baxter Healthcare Corporation (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) (Exhibit 3).18
10.43 Form of Subscription Agreement, dated as of February 8, 2000 by and
between XOMA Ltd. and the purchasers of Common Shares in the February
2000 Private Placement (Exhibit 2).9
10.44 Form of Registration Rights Agreement, dated as of February 11, 2000 by
and between XOMA Ltd. and the purchasers of Common Shares in February
2000 Private Placement (Exhibit 3).9
10.45 Form of Registration Rights Agreement, dated as of February 11, 2000 by
and between XOMA Ltd. and the placement agents in the February 2000
private placement (Exhibit 5).9
16.1 Letter re: change of certifying accountant.10
23.1 Consent of Ernst & Young LLP, Independent Auditors.*
23.2 Consent of Arthur Andersen LLP as Independent Public Accountants.*
27.1 Financial Data Schedule.*
- - - - -------------------------
Footnotes
* Previously filed.
1 Incorporated by reference to the referenced exhibit to the Company's
Registration Statement on Form S-4 filed November 17, 1998, as amended
(File No. 333-68045).
2 Incorporated by reference to the referenced exhibit to the Company's
Registration Statement on Form 8-A filed May 21, 1999 (File No.
0-14710).
3 Incorporated by reference to the referenced exhibit to the Company's
Registration Statement on Form S-3 filed June 28, 1996 (File No.
333-07263).
4 Incorporated by reference to the referenced exhibit to the Company's
Current Report on Form 8-K dated August 13, 1997 filed August 18, 1997
(File No. 0-14710).
5 Incorporated by reference to the referenced exhibit to the Company's
Current Report on Form 8-K dated June 28, 1998 filed June 29, 1998 (File
No. 0-14710).
6 Incorporated by reference to the referenced exhibit to the Company's
Current Report on Form 8-K dated July 9, 1998 filed July 16, 1998 (file
No. 0-14710).
<PAGE>
-7-
7 Incorporated by reference to the referenced exhibit to the Company's
Current Report on Form 8-K dated January 28, 1999 filed January 29,
1999, as amended (File No. 0-14710).
8 Incorporated by reference to the referenced exhibit to the Company's
Current Report on Form 8-K dated July 23, 1999 filed July 26, 1999 (File
No. 0-14710).
9 Incorporated by reference to the referenced exhibit to the Company's
Current Report on Form 8-K dated February 11, 2000 filed February 14,
2000 (File No. 0-14710).
10 Incorporated by reference to the referenced exhibit to the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1997,
as amended (File No. 0-14710).
11 Incorporated by reference to the referenced exhibit to the Company's
Registration Statement on Form S-8 filed October 27, 1998 (File No.
333-66171).
12 Incorporated by reference to the referenced exhibit to the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1994
(File No. 0-14710).
13 Incorporated by reference to the referenced exhibit to the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1998
(File No. 0-14710).
14 Incorporated by reference to the referenced exhibit to the Company's
Quarterly Report on Form 10-Q for the quarterly period ended March 31,
1999 (File No. 0-14710).
15 Incorporated by reference to the referenced exhibit to the Company's
Quarterly Report on Form 10-Q for the quarterly period ended March 31,
1998 (File No. 0-14710).
16 Incorporated by reference to the referenced exhibit to the Company's
Registration Statement on Form S-3 filed July 16, 1996 (File No.
333-59241).
17 Incorporated by reference to the referenced exhibit to the Company's
Amendment No. 1 to Current Report on Form 8-K/A dated and filed July 19,
1999 (File No. 0-14710).
18 Incorporated by reference to the referenced exhibit to the Company's
Amendment No. 2 to Current Report on Form 8-K/A dated and filed March 9,
2000 (File No. 0-14710).
[*] indicates that a confidential portion of the text of this agreement
has been omitted.
AMENDMENT NUMBER ONE TO TECHNOLOGY ACQUISITION AGREEMENT
THIS AMENDMENT NUMBER ONE TO TECHNOLOGY ACQUISITION AGREEMENT is entered
into as of December 8, 1999, by and between XOMA (US) LLC ("XOMA") and Connetics
Corporation ("Connetics" or "CT").
A. XOMA (under the name "XOMA Corporation") and Connetics (under the name
"Connective Therapeutics, Inc.") are parties to a Technology
Acquisition Agreement effective as of June 3, 1994 (the
"XOMA/Connetics Agreement"), and an Assignment and Assumption
Agreement effective as of June 3, 1994, pursuant to which XOMA
assigned to Connetics and Connetics assumed XOMA's rights and
obligations under that certain Research Collaboration and License
Agreement between XOMA and Dr. Arthur A. Vandenbark ("Vandenbark")
effective February 27, 1990 (the "1990 Research Agreement") and that
certain License Agreement between XOMA and Vandenbark effective
February 27, 1990 (the "1990 License Agreement") (collectively, the
"Assigned Agreements").
B. Connetics desires to assign all of its rights, title and interest in
and to the Agreements to The Immune Response Corporation ("IRC") and
XOMA is willing to agree to such assignment.
C. Prior to assuming Connetics' obligations under the Assigned
Agreements, IRC has requested that certain amendments be made to the
Assigned Agreements, and XOMA and Connetics agree to such changes in
return for consideration from IRC.
NOW, THEREFORE XOMA and Connetics hereby agree as follows:
AGREEMENT
Section 1 of the XOMA/Connetics Agreement is hereby amended to add the
following sections:
<PAGE>
-2-
1.23 "Affiliate" shall mean, with respect to any Person, any other
Person which directly or indirectly controls, is controlled by, or is under
common control with, such Person. A Person shall be regarded as in control
of another Person if it owns, or directly or indirectly controls, greater
than fifty percent (50%) of the voting stock or other ownership interest of
the other Person, or if it directly or indirectly possesses the power to
direct or cause the direction of the management and policies of the other
Person by any means whatsoever.
1.24 "New Drug Application" or "NDA" shall mean a New Drug
Application, as defined in the U.S. Food, Drug and Cosmetic Act and its
regulations promulgated thereunder, and any corresponding foreign
application, registration or certification.
1.25 "Pivotal Trial" shall mean a clinical trial that is designed to
provide data establishing the safety and efficacy of a Product in support
of an NDA, PLA or BLA.
1.26 "Product License Application" or "PLA" shall mean a Product
License Application, as defined in the U.S. Food, Drug and Cosmetic Act and
the regulations promulgated thereunder, and any corresponding foreign
application, registration or certification.
1.27 "Valid Claim" shall mean (a) an issued claim under an issued
patent within the Patent Rights, which has not (i) expired or been
canceled, (ii) been declared invalid by an unreversed and unappealable
decision of a court or other appropriate body of competent jurisdiction,
(iii) been admitted to be invalid or unenforceable through reissue,
disclaimer otherwise, or (iv) been abandoned, and (b) a claim of a patent
application included within the Patent Rights as of the Effective Date.
Section 2. Section 1.2 of the XOMA/Connetics Agreement is hereby amended to
read in its entirety as follows:
1.2 "Agreement" shall mean this Technology Acquisition Agreement dated
as of June 3, 1994, as amended December 8, 1999.
Section 3. Section 1.3 of the XOMA/Connetics Acquisition Agreement is
hereby amended to read in its entirety as follows:
<PAGE>
-3-
1.3 "Assignment and Assumption Agreement" shall mean the agreement
whereby XOMA assigned to CT its rights under and CT assumes XOMA's
obligations under the Vandenbark License Agreement as provided in Section
3.3 which is attached as Exhibit A to the XOMA/Connetics Agreement and
incorporated by reference therein.
Section 4. Section 1.6 of the XOMA/Connetics Agreement is hereby deleted.
Section 5. Section 1.9 of the XOMA/Connetics Agreement is hereby deleted.
Section 6. Section 1.10 of the XOMA/Connetics Agreement is hereby amended
to read in its entirety as follows:
1.10 "Net Sales" shall mean, with respect to any Product, the invoiced
sales price of such Product billed by CT, its Affiliates or licensees of
the TCR Technology to customers who are not Affiliates, less (to the extent
incurred and absorbed by CT, its Affiliates or any such licensee) (a)
credits, allowances, discounts and rebates to, and chargebacks from the
account of, such customers for spoiled, damaged, out-dated, rejected or
returned Product; (b) transportation and insurance costs incurred in
transporting such Product in final form to such customers; (c) actual cash,
quantity and trade discounts, rebates and other price adjustments or
reduction programs; (d) sales, use, value-added and other direct taxes, or
any other governmental charge imposed upon the production, importation, use
or sale of the Product; (e) customs, duties, surcharges and other
governmental charges incurred in the exportation or importation of such
Product; and (f) bad debts accruals.
Section 7. Section 1.13 of the XOMA/Connetics Agreement is hereby amended
to read in its entirety as follows:
1.13 "Patents" shall mean (a) all United States and foreign (including
regional authorities such as the European Patent Office) regular or
provisional patent applications and issued patents listed on Schedule A;
(b) all United States and foreign patents that have issued or issue from
such patent applications, including utility, model and design patents and
certificates of invention; (c) all divisionals, continuations,
continuations-in-part, reissues, reexaminations, renewals, extensions or
additions to any such patents and patent applications described in clauses
(a) or (b) above.
Section 8. Section 1.14 of the XOMA/Connetics Agreement is hereby deleted.
<PAGE>
-4-
Section 9. Section 1.16 of the XOMA/Connetics Agreement is hereby amended
to read in its entirety as follows:
1.16 "Product" shall mean a composition or a product the manufacture,
use, offer for sale, sale or import of which is within the scope of a Valid
Claim.
Section 10. Section 1.18 of the XOMA/Connetics Agreement is hereby amended
to read in its entirety as follows:
1.18 "TCR Related Improvements" shall mean all technology and know-how
developed by or on behalf of CT prior to December 8, 1999, to the extent
such technology and know-how are related to the TCR Technology, other than
TCR Sole Improvements.
Section 11. Section 1.19 of the XOMA/Connetics Agreement is hereby amended
to read in its entirety as follows:
1.19 "TCR Sole Improvements" shall mean all technology and know-how
developed by or on behalf of CT prior to December 8, 1999, to the extent
such technology and know-how are improvements of the TCR Technology and may
have applications related to the TCR Technology.
Section 12. Section 1.20 of the XOMA/Connetics Agreement is hereby amended
to read in its entirety as follows:
1.20 "TCR Technology" shall mean the Patents and all other technology
and know-how developed, owned or controlled by XOMA, including that
technology acquired by XOMA pursuant to the Vandenbark Agreements and that
technology described in Exhibit E to this Agreement.
Section 13. Section 1.21 of the XOMA/Connetics Agreement is hereby amended
to read in its entirety as follows:
1.21 "Vandenbark License Agreements" shall mean the Research
Collaboration and License Agreement, between Dr. Vandenbark and XOMA dated
as of February 27, 1990, and any and all amendments thereto.
Section 14. Article 2 of the XOMA/Connetics Agreement is hereby amended to
read in its entirety as follows:
<PAGE>
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2. Assignment of TCR Technology.
----------------------------
Subject to the terms and conditions of, and for the consideration set
forth in this Agreement, XOMA, effective as of the Closing, did sell,
convey, assign, transfer and deliver to CT and CT shall purchase and
acquire from XOMA all right, title and interest in and to the TCR
Technology, including without limitation the right to sue for and collect
upon past infringements (the "Assignment"). The Assignment includes the
right to all preclinical and clinical data related to a Product, which XOMA
owned or controlled as of the Closing. XOMA agrees to execute and deliver
to CT all instruments necessary to evidence and document such Assignment to
CT as set forth in Section 6.5. XOMA hereby appoints CT its
attorney-in-fact to execute and deliver on behalf of XOMA all such
instruments upon XOMA's breach of its obligations under this Section 2,
which breach is not cured within 30 days of receipt by XOMA of written
notice from CT.
Section 15. Section 3.2 of the XOMA/Connetics Agreement is hereby deleted.
Section 16. Section 3.3 of the XOMA/Connetics Agreement is hereby amended
to read in its entirety as follows:
3.3 Assumption of Vandenbark License Agreement. As partial
consideration for the purchase of the TCR Technology, CT shall assume and
agree to perform all of the obligations of XOMA under the Vandenbark
License Agreement; and, at Closing, CT shall execute and deliver to XOMA
for delivery to Vandenbark the Assignment and Assumption Agreement in the
form attached as Exhibit A to this Agreement. From and after the Closing
Date, CT shall indemnify and hold harmless (except as set forth below) XOMA
from all claims of loss or damage of any nature whatsoever arising out of
or in connection with the Vandenbark License Agreement; provided, however,
that XOMA shall indemnify and hold harmless CT from all claims of loss or
damage of any nature whatsoever arising out of or in connection with any
breach by XOMA of its obligations under the Vandenbark License Agreement.
Section 17. Section 5.1 of the XOMA/Connetics Agreement is hereby amended
to read in its entirety as follows:
5.1 Amount of Royalty.
-----------------
5.1.1 CT shall pay XOMA a royalty equal to [*] of Net Sales in each
country where Products are sold by CT, its Affiliates and licensees.
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For purposes of Connetics' royalty obligations pursuant to Section
5.1.1, in the event that Connetics materially narrows the scope of or
abandons a claim within the Patent Rights, then the narrowed claim in the
form existing as of the Effective Date or the abandoned claim in the form
existing as of the Effective Date, as applicable, shall be considered a
Valid Claim with respect to such Product for purposes of this Agreement for
a period of [*] after the first commercial sale of such Product.
Notwithstanding the foregoing, Connetics shall not abandon claims within
the Patent Rights prior to [*].
Section 18. Section 5.2 of the XOMA/Connetics Agreement is hereby amended
to read in its entirety as follows:
5.2 Term of Royalty Payments. Royalty payments shall continue to
accrue and be payable with respect to Net Sales of Products and will
automatically expire on a country-by-country basis on the later of (i) [*]
from first commercial sale of a Product in any country or (ii) the
expiration (or revocation) of the last to expire (or be revoked) of the
Valid Claims in such country with respect to a Product.
Section 19. Section 5.3 of the XOMA/Connetics Agreement is hereby deleted.
Section 20. Section 5.4 of the XOMA/Connetics Agreement is hereby amended
to read in its entirety as follows:
5.4 Reports. During the term of this Agreement following the first
commercial sale of a Product by CT or its Affiliates, or the grant of a
sublicense hereunder by CT or its Affiliates, CT shall furnish to XOMA a
quarterly written report showing in reasonably specific detail the
calculation of amounts payable, if any, which shall have accrued hereunder
during the reporting period. With respect to sales of Products invoiced or
revenues received in United States dollars, all amounts shall be expressed
in United States dollars. With respect to sales of Products invoiced or
revenues received in a currency other than United States dollars, all
amounts shall be expressed in the domestic currency of the party making the
sale together with the United States dollar equivalent of the amounts
payable, calculated using the average closing buying rate for such currency
published in the United States Western Edition of The Wall Street Journal
under the heading "Currency Trading - Exchange Rates" on the last business
day of each month in the quarter prior to the date of payment. Reports
shall be due on the thirtieth (30th) day following the close of each
calendar quarter. CT shall keep complete and accurate records in sufficient
detail to properly permit the calculation of amounts payable hereunder to
be determined.
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Section 21. Section 5.5 of the XOMA/Connetics Agreement is hereby amended
to read in its entirety as follows:
5.5 Exchange Control. If at any time legal restrictions prevent the
prompt remittance by CT of part or all amounts with respect to any country
where a Product is sold, the parties shall use their reasonable commercial
efforts, in cooperation with the applicable authorities in such country or
otherwise, to facilitate payment of all royalties affected thereby. If,
notwithstanding the good faith efforts of the parties, such remittance is
prevented, CT shall have the right, in its sole discretion, to make such
payments by depositing the amount thereof in local currency to XOMA's
account in a bank or other depository institution in such country.
Section 22. Section 5.6 of the XOMA/Connetics Agreement is hereby amended
to read in its entirety as follows:
5.6 Records. CT shall keep for four (4) years from the date of each
payment of amounts due pursuant to Section 5.1 complete and accurate
records of sales and all other information necessary to calculate Net Sales
of each Product in sufficient detail to allow the accrued royalties to be
determined accurately. XOMA shall have the right to cause an independent,
certified public accounting firm of nationally recognized standing (who has
executed a confidentiality agreement with CT reasonably acceptable to CT)
to audit such records at the place or places of business where such records
are customarily kept in order to verify the accuracy of the reports of Net
Sales and payments for the preceding four years. Such audits may be
exercised during normal business hours once a year upon 30 days' advance
written notice to CT. The accounting firm shall disclose to XOMA only
whether the reports are correct or not and the specific details concerning
any discrepancies. No other information shall be shared. XOMA shall bear
the full cost of such audit unless such audit discloses a variance of more
than 5% from the amount of the payments due under Section 4.1 of this
Agreement, in which event, CT shall bear the full cost of such audit and
shall pay to XOMA the amount payable. XOMA shall not disclose confidential
information concerning payments and reports, and all information learned in
the course of any audit or inspection unless such information is or becomes
publicly known or available (unless such information becomes publicly known
or available through breach of this Agreement), except to the extent
necessary for XOMA to reveal such information in order to enforce its
rights under this Agreement or if disclosure is required by law.
Section 23. Section 5.7 of the XOMA/Connetics Agreement is hereby deleted.
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Section 24. Section 6.1 of the XOMA/Connetics Agreement is hereby amended
to read in its entirety as follows:
6.1 CT hereby assumes sole responsibility for the prosecution,
maintenance, enforcement and defense of the Patent Rights and the TCR
Technology. CT shall use its commercially reasonable efforts to prosecute
and maintain the Patent Rights consistent with CT's patent practices. XOMA
shall assist CT, to the extent of any reasonable request of CT and at CT's
expense, in CT's prosecution and maintenance of the Patent Rights in any
and all countries, and to vest title thereto in CT or its successors and
assigns. CT shall reimburse XOMA for all Costs incurred by XOMA under this
Section 6.1; provided, however, that such assistance by XOMA which is
reasonable and not costly shall be without charge to CT.
Section 25. Section 6.2 of the XOMA/Connetics Agreement is hereby deleted.
Section 26. Section 6.3 of the XOMA/Connetics Agreement is hereby deleted.
Section 27. Section 7 of the XOMA/Connetics Agreement is hereby amended to
read in its entirety as follows:
7. Diligence Milestones.
--------------------
7.1 CT shall use its commercially reasonable efforts to commence (or
to cause its Affiliate or licensee of the TCR Technology to commence) the
first Pivotal Trial of a Product on or before [*]. For purposes of this
provision, "commence" shall mean the date the first patient is enrolled. CT
shall use its commercially reasonable efforts to submit (or to cause its
Affiliate or licensee of the TCR Technology to submit) an NDA, PLA or BLA
to the FDA by or before [*] .
7.2 If CT is unable to achieve either of the diligence milestones
prior to the applicable dates set forth in Section 7.1 for reasons outside
of CT's reasonable control, CT shall prepare and submit to XOMA a
reasonable plan for the continued diligent development of Products and a
revised schedule for achieving the remaining diligence milestones (which
shall extend the applicable dates to accommodate the delay caused by such
reasons outside of CT's reasonable control).
7.3 If (a) CT is unable to achieve either of the diligence milestones
prior to the applicable dates set forth in Section 7.1 other than for
reasons outside of CT's control, or (b) CT is unable to achieve remaining
diligence milestones prior to the revised
<PAGE>
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schedule submitted under Section 7.2, CT shall either (i) at its option in
its sole discretion, make a one-time payment to XOMA of $1,000,000, or
(ii) otherwise, convey to XOMA CT's rights in the TCR Technology and TCR
Sole Improvements (and transfer to XOMA of the know-how within the TCR
Technology and TCR Sole Improvements). In either event, CT shall have no
further diligence obligations under this Agreement.
Section 28. Section 10 of the XOMA/Connetics Agreement is hereby deleted in
its entirety.
Section 29. Section 15.2 of the XOMA/Connetics Agreement is hereby deleted.
Section 30. During the term of the XOMA/Connetics Agreement, neither XOMA
nor any of its Affiliates shall take any action or initiate any proceeding to
prevent the issuance of, invalidate, revoke or otherwise render unenforceable
any of the Patent Rights (as defined in the Assignment Agreement dated as of
December 8, 1999, between IRC and Connetics). Within ninety (90) days after the
date hereof, XOMA and its Affiliates shall terminate, dismiss and withdraw all
such actions and proceedings which were taken or initiated by it or any of its
Affiliates on or before the date hereof.
Section 31. Without limiting the rights and remedies of IRC at law, in
equity or otherwise, if XOMA or any of its Affiliates (a) takes during the term
of the XOMA/Connetics Agreement any action or initiates any proceeding to
prevent the issuance of, invalidate, revoke or otherwise render unenforceable
any of the Patent Rights (as defined in the Assignment Agreement dated as of
December 8, 1999, between IRC and Connetics), or (b) fails within ninety (90)
days after the date hereof to terminate, dismiss and withdraw any such action or
proceeding which was taken or initiated by it or any of its Affiliates on or
before the date hereof, then, if IRC is not itself in material breach of this
the XOMA/Connetics Agreement or the IRC/XOMA Agreement, within ten (10) days
after written notice from IRC, (x) XOMA shall refund to IRC all amounts paid by
IRC to XOMA under the Agreement dated as of the date hereof, between IRC and
XOMA (the "IRC/XOMA Agreement"); (y) XOMA shall sell, assign and transfer to IRC
(at no cost to IRC) the number of shares of Common Stock of IRC issued to XOMA
under Section 3.1.2 of the IRC/XOMA Agreement (or if XOMA no longer owns the IRC
shares, XOMA shall pay to IRC an amount equal to the full amount of
consideration received for the sale of such shares); and (z) if IRC is not
itself in material breach of the XOMA/Connetics Agreement or the IRC/XOMA
Agreement, IRC(z) IRC shall have no further obligation to pay any amounts to
XOMA under the XOMA/Connetics Agreement or the IRC/XOMA Agreement.
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Section 32. Without limiting the rights and remedies of IRC at law, in
equity or otherwise, if Connetics, Vandenbark or any of their respective
Affiliates (a) takes during the term of the XOMA/Connetics Agreement any action
or initiates any proceeding to prevent the issuance of, invalidate, revoke or
otherwise render unenforceable any of the Patent Rights (as defined in the
Assignment Agreement dated as of December 8, 1999, between IRC and Connetics),
or (b) fails within ninety (90) days after the date hereof to terminate, dismiss
and withdraw any such action or proceeding which was taken or initiated by it or
any of its Affiliates on or before the date hereof, then, if IRC is not itself
in material breach of the XOMA/Connetics Agreement or the IRC/XOMA Agreement,
IRC shall have no further obligation to pay any amounts to XOMA under Section
3.1.1 of the IRC/XOMA Agreement.
Section 33. IRC shall be a third party beneficiary of the provisions of
Sections 30, 31 and 32 of this Amendment.
Section 34. Except as specifically modified or amended hereby, the
XOMA/Connetics Agreement shall continue in full force and effect and, as so
modified or amended, is hereby ratified, confirmed and approved. No provision of
this Amendment may be modified or amended except expressly in a writing signed
by both parties nor shall any terms be waived except expressly in a writing
signed by the party charged therewith. This Amendment shall be governed in
accordance with the laws of the State of California, without regard to
principles of conflicts of laws.
<PAGE>
IN WITNESS WHEREOF, XOMA and Connetics have entered into this Amendment
Number One to Technology Acquisition Agreement as of the date first written
above.
"XOMA" "Connetics"
XOMA (US) LLC Connetics Corporation
a Delaware corporation
By:______________________________ _______________________________________
Name: Thomas G. Wiggans
Title: President and Chief Executive Officer
