REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of July 9, 1998,
by and among XOMA Corporation, a Delaware corporation with its headquarters
located at 2910 Seventh Street, Berkeley, California 94710 (the "Company"), and
Incyte Pharmaceuticals, Inc., a Delaware corporation with its headquarters at
3174 Porter Drive, Palo Alto, California 94304 (the "Investor").
WHEREAS:
A. In connection with the License Agreement between the parties hereto
effective as of even date herewith (the "License Agreement"), the Company has
agreed, upon the terms and subject to the conditions contained therein, to issue
and sell to the Investor (i) ( ) shares (the "Advance Shares") of common stock
of the Company, par value $.0005 per share (the "Common Stock"), and (ii) a
warrant (the "Warrant") to acquire two hundred fifty thousand (250,000) shares
of Common Stock (the "Warrant Shares"), upon the terms and subject to the
limitations and conditions set forth in the Warrant. In addition, the License
Agreement provides that shares of Common Stock (the "Prepayment Shares") may be
issued in prepayment of royalties thereunder, upon the terms and subject to the
limitations and conditions set forth in the License Agreement; and
B. To induce the Investor to execute and deliver the License Agreement, the
Company has agreed to provide certain registration rights under the Securities
Act of 1933, as amended, and the rules and regulations thereunder, or any
similar successor statute and rules (collectively, the "Securities Act"), and
applicable state securities laws.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Investor
hereby agree as follows:
1. Definitions.
(a) As used in this Agreement, the following terms shall have the following
meanings:
(i) "Register," "Registered" and "Registration" refer to a
registration effected by preparing and filing a Registration Statement or
Statements in compliance with the Securities Act and pursuant to Rule 415
under the Securities Act or any successor rule providing for offering
securities on a continuous basis ("Rule 415"), and the declaration or
ordering of effectiveness of such Registration Statement by the United
States Securities and Exchange Commission (the "SEC").
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(ii) "Registrable Securities" means (i) the Advance Shares, the
Prepayment Shares and the Warrant Shares issued or issuable (collectively,
the "Shares") and (ii) shares of Common Stock issued prior to the Effective
Date (as defined herein) of the Registration Statement covering such Shares
as a dividend or other distribution with respect to, in exchange for or in
replacement of, the Shares, excluding in all cases, however, any
Registrable Securities sold by a person in a transaction in which such
person's registration rights are not assigned; provided, however, that any
Shares sold pursuant to an effective registration statement or pursuant to
Rule 144 under the Securities Act shall cease to be Registrable Securities.
(iii) "Registration Statement" means a registration statement of the
Company under the Securities Act.
(b) Capitalized terms used herein and not otherwise defined herein shall
have the respective meanings set forth in the Securities Purchase Agreement.
2. Registration.
(a) Mandatory Registration. (i) The Company shall prepare, and, on or prior
to the date which is thirty (30) days after the Effective Date (as defined in
the License Agreement), file with the SEC a Registration Statement on Form S-3
covering the resale of the Registrable Securities (other than the Prepayment
Shares and any shares of Common Stock issued prior to the Effective Date of such
Registration Statement as a dividend or other distribution with respect thereto,
in exchange therefor or in replacement thereof) which Registration Statement, to
the extent allowable under the Securities Act, shall state that such
Registration Statement also covers such indeterminate number of additional
shares of Common Stock as may become issuable upon exercise of the Warrant (i)
to prevent dilution resulting from stock splits, stock dividends or similar
transactions or (ii) by reason of changes in the Exercise Price (as defined in
the Warrant) of the Warrant in accordance with the terms thereof.
(ii) Upon issuance of any Prepayment Shares in prepayment of royalties
under the License Agreement, the Company shall prepare, and, on or prior to the
date which is thirty (30) days after the date of such issuance, file with the
SEC a Registration Statement on Form S-3 (or, if Form S-3 is not then available,
on such other form of Registration Statement as is then available to effect a
registration of the Registrable Securities) covering the resale of the
Prepayment Shares so issued and any shares of Common Stock issued prior to the
Effective Date of such Registration Statement as a dividend or other
distribution with respect thereto, in exchange therefor or in replacement
thereof.
(b) Effectiveness. The Company shall use its commercially reasonable
efforts to obtain effectiveness of the Registration Statements within ninety
(90) days after the filing of the applicable Registration Statement.
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(c) No Underwriting. The registration of any Registrable Securities
provided for in this Section 2 shall not be underwritten.
3. Obligations of the Company.
In connection with the registration of the Registrable Securities, the
Company shall have the following obligations:
(a) Once declared effective, the Company shall use its commercially
reasonable efforts to keep each Registration Statement effective pursuant to
Rule 415 at all times (subject to Section 3(e)) until such date as is the
earlier of (i) the date on which all of the Registrable Securities have been
sold and (ii) the date on which the Registrable Securities may be immediately
sold without restriction (including without limitation as to volume by each
holder thereof) without registration under the Securities Act (the "Registration
Period").
(b) The Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to each Registration
Statement and the prospectus used in connection with the Registration Statement
as may be necessary to comply with the provisions of the Securities Act with
respect to the disposition of all Registrable Securities of the Company covered
by such Registration Statement .
(c) The Company shall furnish to the Investor such number of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act and such other documents as the Investor may
reasonably request in order to facilitate the disposition of the Registrable
Securities owned by the Investor.
(d) The Company shall use commercially reasonable efforts to register and
qualify the Registrable Securities covered by each Registration Statement under
such other securities or "blue sky" laws of such jurisdictions in the United
States as the Investor may reasonably request and maintain such registrations
and qualifications in effect at all times during the Registration Period;
provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to (a) qualify to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 3(d), (b) subject itself to general taxation in any such jurisdiction,
(c) file a general consent to service of process in any such jurisdiction, (d)
provide any undertakings that cause the Company undue expense or burden, or (e)
make any change in its charter or bylaws.
(e) In the event that, in the reasonable judgment of the Company, it is
advisable to suspend use of the prospectus relating to a Registration Statement
for a discrete period of time (a "Deferral Period") due to pending material
corporate developments or similar material events that have not yet been
publicly disclosed and as to which the Company believes public disclosure will
be prejudicial to the Company, the Company shall deliver a notice in
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writing, to the Investor, to the effect of the foregoing (but in no event shall
the Company be obligated to disclose to the Investor the facts and circumstances
giving rise to the foregoing) and, upon receipt of such notice, the Investor
agrees not to dispose of any Registrable Securities covered by such Registration
Statement (other than in transactions exempt from the registration requirements
under the Securities Act) until the Investor is advised in writing by the
Company that use of the prospectus may be resumed; provided, however, that the
aggregate number of days in any such Deferral Period or Deferral Periods shall
be no more than sixty (60) in any 12-month period.
4. Obligations of the Investors.
In connection with the registration of the Registrable Securities, the
Investor shall have the following obligations:
(a) It shall be a condition precedent to the obligations of the Company to
take any action pursuant to this Agreement that the Investor shall furnish to
the Company such information regarding itself, the Registrable Securities held
by it and the intended method of disposition of the Registrable Securities held
by it as shall be required to effect the registration of such Registrable
Securities and shall execute such documents in connection with such registration
as the Company may reasonably request.
(b) The Investor, by acceptance of the Registrable Securities, agrees to
cooperate with the Company as reasonably requested by the Company in connection
with the preparation and filing of the Registration Statement hereunder, unless
such Investor has notified the Company in writing of the Investor's election to
exclude the Registrable Securities from the Registration Statement.
(c) For any offer or sale of any of the Registrable Securities under a
Registration Statement by the Investor in a transaction that is not exempt under
the Securities Act, the Investor, in addition to complying with any other
federal securities laws, shall deliver a copy of the final prospectus (together
with any amendment of or supplement to such prospectus) of the Company covering
the Registrable Securities, in the form furnished to the Investor by the
Company, to the purchaser of any of the Registrable Securities on or before the
settlement date for the purchase of such Registrable Securities.
(d) Upon the receipt by the Investor of any notice from the Company of (1)
the existence of any fact or the happening of any event as a result of which the
prospectus included in a Registration Statement, as such Registration Statement
is then in effect, contains an untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, (2) the
issuance by the SEC of any stop order or injunction suspending or enjoining the
use or the effectiveness of a Registration Statement or the initiation of any
pro-
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ceedings for that purpose, or the taking of any similar action by the securities
regulators of any state or other jurisdiction, or (3) the request by the SEC or
any other federal or state governmental agency for amendments or supplements to
a Registration Statement or related prospectus or for additional information
related thereto, the Investor shall forthwith discontinue disposition of its
Registrable Securities covered by such Registration Statement or related
prospectus (other than in transactions exempt from the registration requirements
under the Securities Act) until receipt of the supplemented or amended
prospectus or until the Investor is advised in writing by the Company that the
use of the applicable prospectus may be resumed, and, if so directed by the
Company, the Investor shall deliver to the Company or destroy (and deliver to
the Company a certificate of destruction) all copies in the Investor's
possession, of the prospectus covering such Registrable Securities current at
the time of receipt of such notice. In such a case, subject to Section 3(e), the
Company shall as promptly as reasonably practicable (i) prepare an amendment to
correct or update the prospectus, (ii) use its commercially reasonable efforts
to remove the impediments referred to in subclause (2) above, or (iii) comply
with the requests referred to in subclause (3) above.
5. Expenses of Registration.
All reasonable expenses incurred by the Company in connection with
registrations, filings or qualifications pursuant to Sections 2 and 3,
including, without limitation, all registration, listing and qualification fees,
printers and accounting fees and the fees and disbursements of counsel for the
Company shall be borne by the Company. The Investor shall be responsible for the
fees and disbursements of counsel for the Investor, any stock transfer taxes
that may be payable by the Investor, and all brokerage commissions relating to
Registrable Securities.
6. Indemnification.
In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify and hold
harmless the Investor, its directors and officers and each person who controls
the Investor within the meaning of the Securities Act or the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), if any (each, an "Indemnified
Person"), against any joint or several losses, claims, damages or liabilities to
third parties (collectively, "Claims") to which any of them may become subject
under the Securities Act, the Exchange Act or other federal or state law,
insofar as such Claims arise out of or are based upon: (i) any untrue statement
or alleged untrue statement of a material fact in a Registration Statement or
the omission or alleged omission to state therein a material fact required to be
stated or necessary to make the statements therein not misleading; (ii) any
untrue statement or alleged untrue statement of a material fact contained in any
preliminary prospectus if used prior to the effective date of such
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Registration Statement, or contained in the final prospectus (as amended or
supplemented, if the Company files any amendment thereof or supplement thereto
with the SEC) or the omission or alleged omission to state therein any material
fact necessary to make the statements made therein, in light of the
circumstances under which the statements therein were made, not misleading; or
(iii) any violation or alleged violation by the Company of the Securities Act,
the Exchange Act, any other law, including, without limitation, any state
securities law, or any rule or regulation thereunder relating to the offer or
sale of the Registrable Securities (the matters in the foregoing clauses (i)
through (iii) being, collectively, "Violations"). Subject to the provisions set
forth in Section 6(c), the Company shall reimburse the Indemnified Person for
any legal fees or other expenses reasonably incurred by them in connection with
investigating or defending any such Claim. Notwithstanding anything to the
contrary contained herein, the indemnification agreement contained in this
Section 6(a): (i) shall not apply to a Claim arising out of or based upon a
Violation which occurs in reliance upon and in conformity with information
furnished in writing to the Company by any Indemnified Person or underwriter for
such Indemnified Person expressly for use in connection with the preparation of
the Registration Statement or any such amendment thereof or supplement thereto,
if such prospectus was timely made available by the Company pursuant to Section
3(c) hereof; (ii) shall not apply to amounts paid in settlement of any Claim if
such settlement is effected without the prior written consent of the Company,
which consent shall not be unreasonably withheld; and (iii) with respect to any
preliminary prospectus, shall not inure to the benefit of any Indemnified Person
if the untrue statement or omission of material fact contained in the
preliminary prospectus was corrected on a timely basis in the prospectus, as
then amended or supplemented, such corrected prospectus was timely made
available by the Company pursuant to Section 3(c) hereof, and the Indemnified
Person was promptly advised in writing not to use the incorrect prospectus prior
to the use giving rise to a Violation and such Indemnified Person,
notwithstanding such advice, used it.
(b) In connection with any Registration Statement in which the Investor is
participating, the Investor agrees to indemnify and hold harmless, to the same
extent and in the same manner set forth in Section 6(a), the Company, each of
its directors, each of its officers who signs the Registration Statement, each
person, if any, who controls the Company within the meaning of the Securities
Act or the Exchange Act (each, an "Indemnified Party"), against any Claim to
which any of them may become subject, under the Securities Act, the Exchange Act
or other federal or state securities law, insofar as such Claim arises out of or
is based upon any Violation by such Investor, in each case to the extent (and
only to the extent) that such Violation occurs in reliance upon and in
conformity with written information furnished to the Company by the Investor
expressly for use in connection with such Registration Statement; and subject to
Section 6(c) the Investor will reimburse any legal or other expenses reasonably
incurred by it in connection with investigating or defending any such Claim;
provided, however, that the indemnity agreement contained in this Section 6(b)
shall not apply to amounts paid in settlement of any Claim if such settlement is
effected without the prior writ-
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ten consent of the Investor, which consent shall not be unreasonably withheld;
provided, further, however, that the Investor shall be liable under this
Agreement (including this Section 6(b) and Section 7) for only that amount as
does not exceed the gross proceeds to the Investor as a result of the sale of
Registrable Securities pursuant to such Registration Statement. Notwithstanding
anything to the contrary contained herein, the indemnification agreement
contained in this Section 6(b) with respect to any preliminary prospectus shall
not inure to the benefit of any Indemnified Party if the untrue statement or
omission of material fact contained in the preliminary prospectus was corrected
on a timely basis in the prospectus, as then amended or supplemented.
(c) Promptly after receipt by an Indemnified Person or Indemnified Party
under this Section 6 of notice of the commencement of any action (including any
governmental action), such Indemnified Person or Indemnified Party shall, if a
Claim in respect thereof is to be made against any indemnifying party under this
Section 6, deliver to the indemnifying party a written notice of the
commencement thereof, and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, to assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified Party (which
consent shall not be unreasonably withheld), as the case may be; provided,
however, that an Indemnified Person or Indemnified Party shall have the right to
retain its own counsel with the reasonable fees and expenses to be paid by the
indemnifying party, if, in the reasonable opinion of counsel retained by the
indemnifying party, the representation by such counsel of the Indemnified Person
or Indemnified Party and the indemnifying party would be inappropriate due to
actual or potential differing interests between such Indemnified Person or
Indemnified Party and any other party represented by such counsel in such
proceeding. The indemnifying party shall pay for only one separate legal counsel
for the Indemnified Persons or the Indemnified Parties, as applicable, and such
legal counsel shall be selected by the Investor, if the Investor is entitled to
indemnification hereunder, or the Company, if the Company is entitled to
indemnification hereunder, as applicable. The failure to deliver written notice
to the indemnifying party within a reasonable time of the commencement of any
such action, if materially prejudicial to its ability to defend such action,
shall relieve such indemnifying party of any liability to the Indemnified Person
or Indemnified Party under this Section 6.
7. General Provisions.
(a) Registered Holder. A person or entity is deemed to be a holder of
Registrable Securities whenever such person or entity owns of record such
Registrable Securities. If the Company receives conflicting instructions,
notices or elections from two or more persons or entities with respect to the
same Registrable Securities, the Company shall act upon the basis of
instructions, notice or election received from the registered owner of such
Registrable Securities.
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(b) Notices. All notices which may be required pursuant to this Agreement
(i) shall be in writing, (ii) shall be addressed as follows:
If to the Company:
XOMA Corporation
2910 Seventh Street
Berkeley, California 94710
Attn: Legal Department
Facsimile: (510) 649-7571
If to the Investor:
Incyte Pharmaceuticals, Inc.
3174 Porter Drive
Palo Alto, California 94304
Attn: Legal Department
Facsimile:
(or to such other person or address as either party may so designate from time
to time), (iii) shall be mailed, postage prepaid, by registered mail or
certified mail, return receipt requested, sent by nationally-recognized
overnight carrier or transmitted by courier for hand delivery and (iv) shall be
deemed to have been given on the date of receipt. Any such notice may be sent by
facsimile transmission but shall in such case be subsequently confirmed by a
writing mailed, sent or transmitted as set forth above and shall be deemed to
have been given on the date of receipt of such facsimile transmission subject to
receipt of such confirmation.
(c) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAW.
(d) Entire Agreement; Amendment. This Agreement, the License Agreement
(including the Exhibits thereto) and the Warrant constitute the entire agreement
between the parties regarding the subject matter hereof and thereof, and there
are no prior written or oral promises or representations not incorporated herein
or therein. No amendment or modification of the terms of this Agreement shall be
binding on either party unless reduced to writing and signed by an authorized
officer of the party to be bound.
(e) Binding Effect; Assignability. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns. This Agreement shall not be assignable by either party,
either in whole or in part, except to a
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successor to all or substantially all of a party's business by merger, sale of
assets, sale of stock or otherwise.
(f) Waiver. The waiver by a party hereto of any breach of or default under
any of the provisions of this Agreement or the failure of a party to enforce any
of the provisions of this Agreement or to exercise any right thereunder shall
not be construed as a waiver of any other breach or default or as a waiver of
any such rights or provisions hereunder.
(g) Severability. If any part of this Agreement shall be invalid or
unenforceable under applicable law, such part shall be ineffective only to the
extent of such invalidity or unenforceability, without in any way affecting the
remaining parts of this Agreement. In addition, the part that is ineffective
shall be deemed reformed in such a manner as to as nearly approximate the intent
of the parties as possible.
(h) Further Assurances. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
(i) Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original but all of which shall constitute one and the
same agreement.
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IN WITNESS WHEREOF, the Company and the Investor have caused this Agreement
to be duly executed as of the date first above written.
XOMA CORPORATION
By:
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Name: John L. Castello
Title: Chairman of the Board, President
and Chief Executive Officer
INCYTE PHARMACEUTICALS, INC.
By:
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Name: Roy A. Whitfield
Title: Chief Executive Officer