THIS WARRANT (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT
FROM REGISTRATION UNDER SECTION 4 OF THE UNITED STATES SECURITIES ACT OF 1933
(THE "ACT"), AND NEITHER THIS WARRANT NOR ANY SHARES ACQUIRED UPON EXERCISE OF
THIS WARRANT MAY BE OFFERED, SOLD, RESOLD, PLEDGED, ASSIGNED OR OTHERWISE
TRANSFERRED OR DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
EXEMPTION THEREFROM. IN ADDITION, THE HOLDER OF THIS WARRANT HAS AGREED FOR THE
BENEFIT OF THE ISSUER THAT SUCH WARRANT MAY NOT BE OFFERED, SOLD, RESOLD,
PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED OR DISPOSED OF EXCEPT TO A SUCCESSOR
TO ALL OR SUBSTANTIALLY ALL OF SUCH HOLDER'S BUSINESS BY MERGER, SALE OF ASSETS,
SALE OF STOCK OR OTHERWISE.
No. W-1 Right to Purchase
Common Stock
WARRANT
THIS CERTIFIES THAT, for value received, Incyte Pharmaceuticals, Inc., a
Delaware corporation ("Incyte"), is entitled to purchase from XOMA Corporation,
a Delaware corporation (the "Company"), at any time or from time to time during
the period specified in Paragraph II hereof, 250,000 fully paid and
nonassessable shares of the Company's Common Stock, par value $.0005 per share
(the "Common Stock"), at an exercise price per share equal to U.S. $6.00 (the
"Exercise Price"). The term "Warrant Shares," as used herein, refers to the
Common Stock purchasable hereunder. The Warrant Shares and the Exercise Price
are subject to adjustment as provided in Paragraph IV hereof.
This Warrant is being issued in connection with a License Agreement
effective as of July 9, 1998 (the "License Agreement") between Incyte and the
Company.
This Warrant ("Warrant") is subject to the following terms, provisions, and
conditions:
I. Manner of Exercise; Issuance of Certificates; Payment for Shares.
Subject to the provisions hereof, this Warrant may be exercised from time to
time by the holder hereof, in whole or in part (but not as to a fractional
Warrant Share and not for any number of Warrant Shares less than 10,000 or such
lesser number equal to the total number of Warrant Shares remaining available
for purchase hereunder), by the surrender of this Warrant, together with a
completed Exercise Agreement in the form attached hereto as Annex A, to the
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Company during normal business hours on any trading day at the Company's
principal office located at 2910 Seventh Street, Berkeley, California 94710,
Attention: Legal Department (or such other office or agency of the Company as it
may designate by notice to the holder hereof), and upon either (a) payment to
the Company in cash in United States dollars or by certified or official bank
check payable in United States dollars of the Exercise Price for the Warrant
Shares specified in said Exercise Agreement or (b) consent by the Company to the
application of the Exercise Price for the Warrant Shares specified in said
Exercise Agreement to the prepayment of royalty obligations under the License
Agreement in accordance with the provisions thereof. The Warrant Shares so
purchased shall be deemed to be issued to the holder hereof or its designee as
the record owner of such shares as of the close of business on the date on which
the original of this Warrant shall have been surrendered, the original,
completed Exercise Agreement delivered, and payment made for such shares or
consent given to the application of the Exercise Price to the prepayment of
royalties, as the case may be, as aforesaid. Certificates for the Warrant Shares
so purchased, representing the aggregate number of shares specified in said
Exercise Agreement, shall be delivered to the holder hereof within a reasonable
time, not exceeding seven trading days, after this Warrant shall have been so
exercised. The certificates so delivered shall be in such denominations as may
be requested by the holder hereof and shall be registered in the name of said
holder or, with the prior written consent of the Company, in such other name as
shall be designated by said holder. If this Warrant shall have been exercised
only in part, then, unless this Warrant has expired, the Company shall, at its
expense, at the time of delivery of said certificates, deliver to said holder a
new Warrant representing the number of shares with respect to which this Warrant
shall not then have been exercised. The Company shall pay any and all United
States federal and state taxes and other expenses and charges payable in
connection with the preparation, execution, and delivery of share certificates
(and any new Warrants) pursuant to this Paragraph I except that, in case such
share certificates shall be registered in a name or names other than the holder
of this Warrant, funds sufficient to pay all transfer taxes which shall be
payable in connection with the execution and delivery of such share certificates
shall be paid by the holder hereof to the Company at the time of the delivery of
such share certificates by the Company as mentioned above.
II. Period of Exercise. After July 9, 1998 and before the earlier of (i)
5:00 p.m. California time on July 9, 2008 and (ii) 5:00 p.m. California time on
the date which is 10 days after the date on which the License Agreement becomes
fully paid up as provided therein, this Warrant is exercisable at any time or
from time to time.
III. Certain Agreements of the Company. The Company hereby covenants and
agrees as follows:
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A. Shares to be Fully Paid. All Warrant Shares will, upon issuance, be
validly issued, fully paid, and nonassessable and free from all liens, with
respect to the issue thereof.
B. Reservation of Shares. During the period within which this Warrant
may be exercised, the Company will at all times have authorized, and
reserved for the purpose of issue upon exercise of this Warrant, a
sufficient number of shares of Common Stock to provide for the exercise of
this Warrant. The Company will not take any action which results in any
adjustment of the Exercise Price if the total number of shares of Common
Stock issuable after the action upon the exercise of this Warrant would
exceed the total number of shares of Common Stock then authorized by the
Company's charter and available for the purpose of issue upon such
exercise.
C. Registration. Registration of the Warrant Shares will be governed
by a Registration Rights Agreement dated July 9, 1998 (the "Registration
Rights Agreement") between the Company and Incyte.
IV. Antidilution Provisions. The Exercise Price and the number of Warrant
Shares purchasable hereunder shall be subject to adjustment from time to time as
provided in this Paragraph IV. Upon each adjustment of the Exercise Price, the
holder of this Warrant shall thereafter be entitled to purchase, at the Exercise
Price resulting from such adjustment, the largest number of Warrant Shares
obtained by multiplying the Exercise Price in effect immediately prior to such
adjustment by the number of Warrant Shares purchasable hereunder immediately
prior to such adjustment and dividing the product thereof by the exercise price
resulting from such adjustment.
A. Definition. For the purpose of this Paragraph IV, "Capital Stock" shall
include the Common Stock and any additional class of shares of the Company
having no preference as to dividends or distributions on liquidation which may
be authorized in the future by an amendment to the Company's certificate of
incorporation or bylaws; provided that the shares purchasable pursuant to this
Warrant shall include only shares of Common Stock, or shares resulting from any
subdivision or combination of the Common Stock, or in the case of any
reorganization, reclassification, consolidation, merger, or sale of the
character referred to in Paragraph IV hereof, the shares or other securities or
property provided for in said Paragraph.
B. Treatment of Stock Dividends, Stock Splits, etc. In case the Company, at
any time or from time to time after the date hereof, shall declare or pay any
dividend or other distribution on the Capital Stock payable in Capital Stock, or
shall effect a subdivision of the outstanding shares of Capital Stock into a
greater number of shares of Capital Stock (by reclassification or otherwise than
by payment of a dividend in Capital Stock), then, and in each such case, (a)
subject to Paragraph IV.D hereof, the Exercise Price shall be reduced,
con-
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currently with such issue or sale, to a price determined by multiplying such
Exercise Price by a fraction
1. the numerator of which shall be the number of shares of Capital
Stock outstanding immediately prior to such issue or sale, and
2. the denominator of which shall be the number of shares of Capital
Stock outstanding immediately after such issue or sale,
and (b) such additional shares of Capital Stock shall be deemed to have been
issued (i) in the case of any such dividend, immediately after the close of
business on the record date for the determination of holders of any class of
securities entitled to receive such dividend, or (ii) in the case of any such
subdivision, at the close of business on the day immediately prior to the day
upon which such corporate action becomes effective.
C. Adjustments for Combinations, etc. In case the outstanding shares of
Capital Stock shall be combined or consolidated, by reclassification or
otherwise, into a lesser number of shares of Capital Stock, the Exercise Price
in effect immediately prior to such combination or consolidation shall,
concurrently with the effectiveness of such combination or consolidation, be
proportionately increased.
D. Minimum Adjustment of Exercise Price; Effective Date for Adjustments. If
the amount of any adjustment of the Exercise Price required pursuant to this
Paragraph IV would result in an increase in the number of Warrant Shares
purchasable hereunder which is less than one percent (1%) of the number of
Warrant Shares purchasable hereunder immediately before such adjustment is
otherwise so required to be made, such amount shall be carried forward and
adjustment with respect thereto made at the time of and together with any
subsequent adjustment which, together with such amount and any other amount or
amounts so carried forward, shall result in an increase in the number of Warrant
Shares purchasable hereunder which is at least one percent (1%) of number of
Warrant Shares purchasable hereunder immediately before such adjustment;
provided that, upon the exercise of this Warrant, all adjustments carried
forward and not theretofore made up to and including the date of such exercise
shall, with respect to the portion of this Warrant then exercised, be made.
E. Changes in Capital Stock. In case at any time the Company shall be a
party to any transaction (including, without limitation, a merger,
consolidation, sale of all or substantially all of the Company's assets,
liquidation, or recapitalization of the Capital Stock) in which the previously
outstanding Capital Stock shall be changed into or exchanged for different
securities of the Company or common shares, other securities of another
corporation or interests in a noncorporate entity or other assets (including
cash) or any combination of any of the foregoing (each such transaction being
herein called the "Transaction"), then lawful and adequate provision shall be
made whereby the holder of this Warrant shall thereafter have the
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right to receive upon the basis and upon the terms and conditions specified
herein and in lieu of the Common Stock immediately theretofore purchasable
hereunder, such shares of stock, securities or assets (including, without
limitation, cash) as may (by virtue of such Transaction) be issued or payable
with respect to or in exchange for a number of outstanding shares of Common
Stock equal to the number of shares of Common Stock immediately theretofore so
purchasable hereunder had such Transaction not taken place, and in any such case
appropriate provisions shall be made with respect to the rights and interests of
the holder of this Warrant to the end that the provisions hereof shall
thereafter be applicable, as nearly as may be, in relation to any shares of
stock, securities or assets thereafter deliverable upon exercise of this
Warrant.
F. Certain Issues Excepted. Anything herein to the contrary
notwithstanding, the Company shall not be required to make any adjustment of the
Exercise Price (i) in the case of the issuance of this Warrant, (ii) in the case
of the issuance of Common Stock issuable upon exercise of this Warrant, (iii) in
the case of the issuance of Capital Stock (a) upon the exercise of options
outstanding on the date hereof or hereafter granted and issued pursuant to (I)
the Company's 1981 Stock Option Plan, as in effect on the date hereof and as it
may be amended from time to time, (II) the Company's Restricted Stock Plan, as
in effect on the date hereof and as it may be amended from time to time (the
"Restricted Stock Plan") and (III) the Company's 1993 Directors Stock Option
Plan, as in effect on the date hereof and as it may be amended from time to
time, (b) pursuant to the Restricted Stock Plan or the Company's 1998 Employee
Stock Purchase Plan, as in effect on the date hereof and as it may be amended
from time to time (the option and purchase plans referred to in clauses (I),
(II), (III) and (b) above being collectively preferred to as the "Plans"), or
(c) pursuant to, or upon the exercise of options or similar rights granted
and/or issued pursuant to, any successor to or replacement of any of the Plans
or any similar plan or arrangement adopted by the Company for compensatory,
incentive or other similar purposes (collectively, the "Future Plans"), (iv) in
the case of the granting or issuance of options or similar rights to acquire
Capital Stock pursuant to the Plans or the Future Plans or (v) in the event such
adjustment will result in an Exercise Price below the existing par value of the
Company's Common Stock.
G. Notice of Adjustment. Upon the occurrence of any event requiring an
adjustment of the Exercise Price, then and in each such case the Company shall
deliver to the holder of this Warrant a notice stating the Exercise Price
resulting from such adjustment and the increase or decrease, if any, in the
number of shares of Common Stock issuable upon exercise of this Warrant, setting
forth in reasonable detail the method of calculation and the facts upon which
such calculation is based.
H. Certain Events. The Company may make such reductions in the Exercise
Price or increase in the number of shares of Common Stock purchasable hereunder
as it deems advisable, including any reductions or increases, as the case may
be, necessary to en-
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sure that any event treated for federal income tax purposes as a distribution of
stock or stock rights will not be taxable to recipients.
I. No Rights or Liabilities as a Stockholder. This Warrant shall not
entitle the holder hereof to any voting rights or other rights as a stockholder
of the Company. No provision of this Warrant, in the absence of affirmative
action by the holder hereof to purchase Warrant Shares, and no mere enumeration
herein of the rights or privileges of the holder hereof, shall give rise to any
liability of such holder for the Exercise Price or as a stockholder of the
Company, whether such liability is asserted by the Company or by creditors of
the Company.
V. Transfer Restrictions. Incyte, by acceptance hereof, agrees that this
Warrant is being acquired for investment and that Incyte will not offer, sell,
resell, pledge, assign or otherwise transfer or dispose of this Warrant, except
to a successor to all or substantially all of Incyte's business by merger, sale
of assets, sale of stock or otherwise under circumstances which will not result
in a violation of the Act or any applicable state Blue Sky laws or similar laws
relating to the sale of securities. In addition, Incyte, by acceptance hereof,
agrees that it will not offer, sell, resell, pledge, assign or otherwise
transfer or dispose of any Warrant Shares, except under circumstances which will
not result in a violation of the Act or any applicable state Blue Sky laws or
similar laws relating to the sale of securities.
VI. Replacement of Warrant; Cancellation.
A. Replacement of Warrant. Upon receipt of evidence reasonably satisfactory
to the Company of the loss, theft, destruction, or mutilation of this Warrant
and, in the case of any such loss, theft, or destruction, upon delivery of an
indemnity agreement reasonably satisfactory in form and amount to the Company,
or, in the case of any such mutilation, upon surrender and cancellation of this
Warrant, the Company, at its expense, will execute and deliver to the registered
holder, in lieu thereof, a new Warrant of like tenor.
B. Cancellation. Upon the surrender of this Warrant in connection with any
transfer, exchange, or replacement as provided in this Paragraph VI, this
Warrant shall be promptly cancelled by the Company.
VII. General Provisions.
A. Notices. All notices which may be required pursuant to this Warrant (i)
shall be in writing, (ii) shall be addressed, in the case of the holder of this
Warrant to such holder at the address shown for such holder on the books of the
Company, and in the case of the Company to the Legal Department at 2910 Seventh
Street, Berkeley, California 94710 (or to such other person or address as either
party may so designate from time to time), (iii) shall be mailed, postage
prepaid, by registered mail or certified mail, return receipt requested, sent
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by nationally-recognized overnight carrier or transmitted by courier for hand
delivery and (iv) shall be deemed to have been given on the date of receipt.
Subject to the requirements of Paragraph I regarding delivery of original
documents upon exercise hereof, any such notice may be sent by facsimile
transmission but shall in such case be subsequently confirmed by a writing
mailed, sent or transmitted as set forth above and shall be deemed to have been
given on the date of receipt of such facsimile transmission subject to receipt
of such confirmation.
B. GOVERNING LAW. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICTS OF LAW.
C. Amendment. No amendment or modification of the terms of this Warrant
shall be binding on either the holder hereof or the Company unless reduced to
writing and signed by an authorized officer of the party to be bound.
D. Binding Effect; Assignability. This Warrant shall be binding upon and
inure to the benefit of the holder hereof and the Company and their respective
successors and permitted assigns. This Warrant shall not be assignable by either
such party, either in whole or in part, except to a successor to all or
substantially all of a party's business by merger, sale of assets, sale of stock
or otherwise.
E. Obligations of Warrant Holder. By accepting this Warrant, the holder
hereof agrees to all of its obligations contained herein.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its
duly authorized officer on this 9th day of July, 1998.
XOMA CORPORATION
By:
-----------------------------------
Name: John L. Castello
Title: Chairman of the Board,
President and Chief Executive
Officer
FORM OF EXERCISE AGREEMENT
Dated: ______, _____
To: XOMA CORPORATION
The undersigned, pursuant to the provisions set forth in the within
Warrant, hereby agrees to purchase _______ shares (which number shall be not
less than 10,000 or such lesser number equal to the total number of shares
remaining available for purchase under the within Warrant) of Common Stock
covered by such Warrant, and makes payment herewith in full therefor at the
price per share provided by such Warrant in the amount of U.S.$_______ either
[CHECK ONLY ONE]: (a) in cash or by certified or official bank check or (b) with
the consent of the Company (to be indicated below), to be applied, without
requiring any cash to be provided herewith, as a prepayment of royalty
obligations under the License Agreement. Please issue a certificate or
certificates for such shares of Common Stock in the name of:
Name:_________________________
Signature:____________________
Title of Signing Officer or Agent (if
any):_____________________
Note: The above signature should correspond
exactly with the name on the face of the
within Warrant or with the name of the
assignee appearing in the assignment\
form.
Signature guaranteed by:
---------------------------------
NOTE: Signature must be guaranteed by a
commercial bank, trust company, or by a mem-
ber firm of a registered national securities
exchange.
and, if said number of shares of Common Stock shall not be all the shares
purchasable under the within Warrant, a new Warrant is to be issued in the name
of said undersigned covering the balance of the shares purchasable thereunder.
The undersigned hereby consents to
the application of the amount indi-
cated above to the prepayment of
A-1
royalties under the License Agree-
ment as of the date first above writ-
ten:
XOMA CORPORATION
By:_________________________
Name:
Title:
A-2