[*] 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
================================================================================
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
-i-
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-
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;
-2-
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
-3-
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
-4-
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
-5-
(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
-6-
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.
-7-
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
-8-
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,
-9-
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
-10-
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
-11-
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-
-12-
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
-13-
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-
-14-
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
-15-
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,
-16-
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
-17-
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
-18-
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-
-19-
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
-20-
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-
-21-
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.
-22-
(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;
-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,
-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
-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
-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-
-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
-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
-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.
-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.
-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
-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-
-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.
-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
-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.
-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.
-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
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
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-
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-
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-
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."
EXHIBIT 6(b)-1
INTERFERENCE SETTLEMENT AGREEMENT
[*]
EXHIBIT 6(b)-2
INTERFERENCE SETTLEMENT AGREEMENT
[*]
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
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.
-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